By Karin Matussek
June 10 (Bloomberg) -- Germany’s highest constitutional court rejected a lawmaker’s request for an emergency order to block the nation from participating in the euro-area rescue fund.
The emergency bid, aimed at blocking German Finance Minister Wolfgang Schaeuble from granting loan guarantees while the case is being reviewed, was rejected by the Federal Constitutional Court. The court said that in emergency proceedings it is allowed to base its decision on the government’s assessment of the economic effects of the plan.
“Even a temporary retreat of Germany from the rescue plan could, in the government’s view, jeopardize the rescue fund, at least in the eyes of the financial markets,” the court said in an e-mailed statement today.
After the German parliament approved the nation’s participation in the 750 billion-euro ($908 billion) package on May 21, Peter Gauweiler, a lawmaker from the Bavarian wing of Chancellor Angela Merkel’s Christian Democrats, filed the suit. Gauweiler argues the bailout changes an EU treaty without authorization.
The euro climbed for the third straight day versus the dollar, its longest run of gains in almost three weeks. The 16- nation currency rose on news of the ruling and reports showing that economic growth in Asia is accelerating.
Great Harm
Balancing of the interests shows that it could cause great harm to the public good if the bid was granted now and it later turned out the step was constitutional, the court said. The rescue fund’s aim is to restore trust in the financial viability of states of the euro-area and if Germany cannot shoulder its part, the plan cannot work, the judges said.
Gauweiler had argued that the rescue fund could cause even greater risks to the euro’s stability. The court said that it cannot examine the question in full during emergency proceedings and may rely on the government’s findings.
“In assessing foreign policies, to which also the situation in the international financial markets pertain, the federal government, because of its subject matter knowledge and its political accountability has a discretion which the constitutional court has to respect unless the assessment is clearly refuted,” the judges said.
Government’s Arguments
Gauweiler’s lawyer in the case, Dietrich Murswiek, said the court didn’t rely on the government’s argument that the rescue fund was constitutional. As this question was left open, Gauweiler can still prevail in the final ruling over the issue, Murswiek said in an e-mailed statement.
“I am optimistic that we will succeed in the main proceedings of this case and that the court will stop the unconstitutional rescue fund which starts to tras*form the European currency union into a liability and tras*fer union,” said Murswiek.
The German Finance Ministry welcomes the ruling, which backs the government’s actions, ministry spokeswoman Jeanette Schwamberger said in an e-mailed statement.
The harm caused to Gauweiler by rejecting his bid now can be tolerated even if the court later finds the recue fund does violate the constitution, the court said. The mere possibility that Germany needs to pay for another euro state doesn’t constitute harm to the public and the government has said that scenario isn’t likely, the judges said.
Gauweiler couldn’t show that his individual rights, such as his right to the protection of property, would be irreversibly damaged if the finance minister is allowed to proceed, the court said.
Finishing Touches
European finance ministers on June 7 put the finishing touches on the rescue fund being backed by 440 billion euros in national guarantees, seeking to halt the spread of Greece’s debt crisis.
The European Financial Stability Facility would sell bonds backed by the guarantees and use the money it raises to make loans to euro-area nations in need. The new entity would sell debt only after an aid request is made by a country.
The fund, being created for three years, is the main part of a 750 billion-euro aid package that European Union finance ministers hammered out a month ago to combat a sovereign debt crisis. Another 60 billion euros will come from the European Commission -- the EU’s executive arm -- and 250 billion euros from the International Monetary Fund.
The Karlsruhe, Germany-based court will continue to review the case. It didn’t indicate when it will issue a final ruling or how long further proceedings will take.
Today’s case is BVerfG, 2 BvR 1099/10
