Eurozone's fate hangs with court in Germany

GERMANY'S Constitutional Court is to pass judgment this week on whether the eurozone has a chance of survival.

If the judges rule that the European Stability Mechanism is compliant with the German constitution, the final hurdle will be overcome in establishing a €700 billion bailout fund to prop up struggling eurozone economies.

The panel of eight judges has had a two-month extension to get to grips with the technicalities of the complex legal arguments and will deliver their findings in Karlsruhe, a little known southern town near the French border.

If they rule that the bailout breaches the German constitution by handing too much responsibility to Brussels, the fund will be blocked for months, or even years. Greece, Spain and possibly even Italy could plunge into the abyss and depart, dragging with them any remaining hopes of eurozone survival. ''It is not an exaggeration to say that this decision is the most important in the court's history,'' said Michael Efler, campaigner with More Democracy, a German pressure group, and one of those petitioning the court.

Nor is it an exaggeration to say that Wednesday is a huge day for the euro - a ''D-Day'' for the single currency. Voters in the Netherlands will choose a new government and may usher in a previously unthinkable era of Eurosceptic rule.

And in Brussels the European Commission will issue proposals for a banking union, seen as a vital step to safeguarding the single currency and preventing new catastrophes.


The European Stability Mechanism - a permanent replacement for the sticking plaster European Financial Stability Facility - was due to come into existence in July.

All of the 17 eurozone countries except Estonia (which accounts for 0.19 per cent of capital requirements, and thus can be ignored) had ratified the treaty. Germany's parliament and senate had approved it.

All that was left was for the President, Joachim Gauck, to sign on the dotted line, for an extensive bailout fund to be created, intended to end uncertainty about the single currency.

But 37,000 Germans had other ideas. Academics, left-wing politicians, Eurosceptics and democracy campaigners petitioned the court, claiming the European Stability Mechanism and the fiscal pact (allowing the EU to fine countries that overspend) contravened the constitution.

If the court agrees that there is merit to the constitutional challenges, Mr Gauck will be unable to sign the European Stability Mechanism into law, meaning more delay. The eurozone might not survive the wait.

Protesters in Greece have voiced opposition to tough fiscal measures to restore their economy. More than 12,000 marched on Saturday against measures their government has prepared to win another slice of an international bailout loan.

As auditors from Greece's international creditors inspected the government's books, four marches took place in the northern city of Thessaloniki.

Trade unions, opposition parties including the radical left Syriza Party and communist activists joined the protest.

The cuts, according to the government's own figures, have driven down the standard of living in Greece by 35 per cent as wages, perks and even pensions have been slashed.

Unemployment has shot up with nearly a quarter of the workforce out of work, which in turn has driven the country deeper into recession, now in its fifth year. But further cuts to public service wages, pensions and other public expenditure are on the cards.

Telegraph, London; Agence France-Presse