Germany’s top court agreed on Tuesday to examine complaints lodged against the EU’s bailout fund and new budget rules, but gave no date for its verdict, keeping investors on tenterhooks over the prospects for overcoming the eurozone crisis.
German Finance Minister Wolfgang Schaeuble urged the Constitutional Court to reach a speedy decision and said any significant delay in approval of the anti-crisis tools would stoke financial market turbulence and erode confidence in the common currency.
“We are in a very serious situation. Nobody can predict what will happen,” he told the eight red-robed judges at the end of a day-long hearing at the court in Karlsruhe.
Schaeuble, a keen proponent of greater European integration, said he did not want to put undue pressure on the court, but added: “The alternative to stabilizing the common currency is a breakup, with consequences that are difficult to predict.”
Legal experts and politicians had made clear that Tuesday’s hearing would not deliver any verdicts in the complex case, but financial markets are anxiously seeking clear signs that the eurozone is getting on top of its long-running debt crisis.
Earlier, the euro fell sharply against the US dollar and the Japanese yen as investors took fright at the risk of a lengthy process before Europe’s largest economy can approve the bailout fund, the European Stability Mechanism (ESM).
The German Finance Ministry put out a statement late on Tuesday expressing confidence that the court would eventually reject the complaints brought against the ESM and the fiscal pact, and would also rule that they are in line with Germany’s constitution.
“The fiscal pact and the European Stability Mechanism are important steps towards a European stability union. They are inseparable and this is a basic precondition for overcoming the crisis. They illustrate the principle that solidarity and solidity belong together,” the statement said.
The plaintiffs, who include rebels from German Chancellor Angela Merkel’s center-right coalition, contend that the ESM and the fiscal pact undermine Germany’s budget sovereignty and overstep constitutional limits to European integration.
They hope their request to the court for an emergency injunction will prevent German President Joachim Gauck from signing the ESM and fiscal pact into law, pending arguments on the substance of the legislation that could take many months. The president has said he will await the court’s green light before signing.
Without German backing, the ESM, which was originally meant to start on July 1, then on July 9, cannot come into effect, a state of affairs that could quickly see several heavily indebted eurozone states pushed into bankruptcy.
The government hopes the court will decide within weeks to dismiss the request for an injunction.
It was not clear on Tuesday whether, in addition to examining the plaintiffs’ petitions, the judges might also speed up their review — requested by the government itself — of whether the ESM and fiscal pact conform to the constitution.
Schaeuble, putting the Merkel government’s case, left the judges in little doubt about what is at stake.
“A considerable postponement of the ESM, which was foreseen for July this year, could cause considerable further uncertainty on markets beyond Germany and a considerable loss of trust in the eurozone’s ability to make necessary decisions in an appropriate timeframe,” Schaeuble said.