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Tuesday, February 28, 2012

Germany high court rules eurozone stimulus oversight procedure unconstitutional
Hillary Stemple at 12:59 PM ET

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[JURIST] Germany's Federal Constitutional Court [official website, in German] on Tuesday ruled [press release, in German] that use of a parliamentary subcommittee to fast-track decisions related to eurozone bailouts is unconstitutional, and that such decisions require full oversight of the Bundestag, the national Parliament of the Federal Republic of Germany [official website]. Two lawmakers brought the challenge to a parliamentary procedure, which allowed a nine-member parliamentary subcommittee to expedite decisions about lending money in the event of an aid request from the European Financial Stability Facility (EFSF) [official website]. According to the court, under the German constitution, legislators have a "comprehensive budgetary responsibility" that requires broad participation when voting on budgetary matters, including aid requests. The court, however, ruled that the subcommittee does have the authority to authorize EFSF's purchase of emergency bonds on the secondary market in the event of a crisis. The court recognized the need for expediency and confidentiality in the purchase of emergency bonds, if the bonds are to have the desired effect of stabilizing a failing economy. In light of the court's ruling, the Bundestag will have to reevaluate the procedure for parliamentary oversight of the EFSF and could decide to grant oversight responsibilities to the 41-member budget committee, rather than the full chamber. The temporary EFSF is scheduled to be replaced by the European Financial Stabilisation Mechanism (EFSM) [official website] this summer, and the Bundestag will likely extend any parliamentary oversight of the EFSF to the EFSM.

In September, the German constitutional court rejected as unfounded [JURIST report] three constitutional complaints against German and European legal instruments and other measures in connection with both the European Monetary Union rescue package and the financial aid package for Greece. The high court ruled [press release] that by voting through national acts that implement the broader European measures, the Bundestag did not unconstitutionally impair its own ability to adopt and control the nation's budget, nor did it infringe on the budget autonomy of future parliaments. In May 2010, the court refused to issue a temporary injunction [JURIST report] against the German government's €22.4 billion ($28.5 billion) contribution to the bailout package for Greece, which has been gripped by a dire debt crisis [BBC backgrounder] and faces severe austerity measures [JURIST report] as it grapples with its debt. The court held that the complainants seeking the injunction did not produce any concrete evidence that their rights under Germany's Basic Law could be "seriously and irreversibly" affected as a result of the guaranteed loan. The court's press release also noted that potential liability risk as a result of the contribution is outweighed by reducing the risks of damaging Germany's national economy as a result of instability of the European Monetary Union.




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