September 7, 2011
Germany's highest court has rejected three lawsuits against euro bailout measures, but its ruling also strengthens the role of the German parliament in determining aid for heavily indebted euro-zone countries. The new procedures are more democratic, but they could also lead to fresh turbulence on the finance markets.
Both the plaintiff and the defendant seemed in good spirits. Shortly before the start of proceedings, economics professor Wilhelm Nölling and German State Secretary of Finance Steffen Kampeter stood in the provisional courtroom in Karlsruhe talking shop. The were speaking about the appreciation of the franc , which Switzerland is now trying to stop by placing a ceiling on the exchange rate. Kampeter let his opponent know that he was well informed on the issue. "I want to take vacation in Switzerland," he said.
Shortly thereafter, the fun came to a halt. Germany's highest judicial authority, the Federal Constitutional Court, issued its anxiously awaited ruling on the euro rescue package on Wednesday morning. Although their cases were rejected, the decision still represented a partial victory for Nölling and the remaining plaintiffs. The justices declared that the billions in guarantees for Greece and other highly indebted euro-zone countries were fundamentally constitutional, but they also demanded a greater say and participation in future bailouts by Germany's parliament, the Bundestag.
In the past, the justices of the Constitutional Court have shown themselves to be cautious skeptics of deeper European integration. The court gave its blessing in 1993 to the Maastricht Treaty, the founding document of the European Union, but noted that "democratic legitimation necessarily comes about through the feedback of the actions of the European institutions into the parliaments of the member states." The court also initially rejected a law accompanying the ratification of the Lisbon Treaty in 2009 because the justices didn't feel it sufficiently protected this legitimation.
At the time of these initial rulings, most of the justices had no way of imagining just how much additional responsibility would soon fall on parliament. At the peak of the financial crisis, the German government was forced to approve guarantees and capital aid of over €500 billion within the course of a single weekend in order to save the banking system from collapse. After its approval by Chancellor Merkel's cabinet, it was pushed through both houses of German parliament within five days.
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