Top German court approves ESM
时间：2012-09-13 08:16:01
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Top German court approves ESM
BERLIN, Sept. 12 (Xinhua) -- Federal Constitutional Court of Germany approved the ratification1 of the European Stability Mechanism2 (ESM) Wednesday, paving the way for the permanent bailout fund and other crisis-battling instruments to go into operation.
The Karlsruhe-based court
decided3 not to issue a temporary injunction demanded by plaintiffs to prevent German President Joachim Gauck from completing the ratification process of the ESM and the European
fiscal4 pact5 by signing them into law.
But the court said the German parliament should "receive comprehensive information" over future decisions made by the ESM and Germany's financial burden in the fund should be limited to its share of the capital stock or about 190 billion euros (245 billion U.S. dollars).
Any increase of the burden should not happen "without agreement of German representatives," said Court President Andreas Vosskuhle in a statement.
The court said Germany must state clearly that German interest should be respected in the ESM and Germany reserves the right to
opt6 out of the mechanism.
The court has been considering more than 1,000 petitions against the ESM and the fiscal pact filed by German lawmakers,
economists7, professors and ordinary people since July. Around 37,000 plaintiffs were involved.
The opponents argue that the ESM, as well as the fiscal pact to enforce budget discipline, strips the parliament of the power to decide how
taxpayers8' money should be used, thus
infringing9 German constitution.
They fear that Germany's contribution to the fund could be increased when the debt crisis spreads further in Europe.
Once coming into force, the ESM will have a capacity of 500 billion euros for lending and purchasing bonds of indebted countries, such as Greece and Portugal.
However, this will not happen until the ESM is
ratified10 by countries contributing more than 90 percent of its 700-billion-euro capital stock, among which 27 percent comes from Germany.
German parliament has approved the ESM, together with the fiscal pact, late June. But the ratification process was suspended because President Gauck decided not to sign the treaty establishing the ESM into law as the Constitutional Court requested enough time to review complaints.
A final verdict over the constitutionality of the ESM is expected in December. Wednesday's decision, however, has given a clear signal of how the court will rule eventually.
Once Gauck gives his signature, which is expected to happen soon, Germany will be obliged to contribute to the ESM, even if it is found unconstitutional in the future.
The court's decision also removed an obstacle for the European Central Bank's (ECB) open-end bond purchasing program, another instrument announced last week to battle the three-year-old debt crisis in Europe.
According to ECB President Mario Draghi, applying for bailout from European Financial Stability Facility (EFSF) or the ESM is one of the preconditions for a European country to receive ECB's bond-purchasing aid.
The temporary fund EFSF is set to expire on June 30, 2013, and has around 140 billion euros of bailout fund left available. The ESM, which was originally scheduled to come into force in July 2012, has been expected to help increase the "firewall" and calm market. (1 euro = 1.29 U.S. dollars)
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