German Court Upholds Euro Bailouts, But With A Catch
President of the German Constitutional Court Andreas Vosskuhle (L) pronounces judgment on euro bailouts at the German Constitutional Court in Karlsruhe Sep. 7, 2011.
Yes to the first bailout of Greece, but little else.
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(Reuters) - Germany's top court handed the country's parliament a greater say over euro zone bailouts on Wednesday, in a closely-watched ruling that could hamper Berlin's ability to act swiftly to counter a debt crisis that has plagued the currency bloc for two years.
The Constitutional Court in the southern city of Karlsruhe rejected, as expected, a series of lawsuits aimed at blocking German participation in emergency loan packages. Chancellor Angela Merkel hailed that decision as validation of her much-criticized euro zone policy.
But the court also said her government must get approval from parliament's budget committee before granting such aid and appeared to rule out more radical solutions floated by Germany's European partners for solving the crisis, such as joint euro zone bonds.
"This was a very tight decision. But it should not be mistakenly interpreted as a constitutional blank check authorizing further rescue measures," the chief judge Andreas Vosskuhle told plaintiffs, government officials and members of parliament in the courtroom.
The euro briefly rose against the dollar in response.
"Today's ruling should bring some relief to financial markets as a total chaos scenario has been avoided, but it should not lead to euphoria," said Carsten Brzeski, an economist at ING.
Sep 7, 2011 at 2:19 PM
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