2.3.3.5. The Role of the German Constitutional Court

The German Constitutional Court ruled on September 7, 2011 on whether the German participation in the first Greek bail-out and the EFSF is consistent with the German Basic Law (or German Constitution). We always thought it unlikely that, whatever the technical legal merits of the case, the German Constitutional Court would want to go down in history as the entity that destroyed the European Union. And the Court duly complied. It ruled that the German participation in the first Greek bailout and the EFSF do not have to be rolled back.

The Bundesbank doesn't seem to have the same qualms as the Court.

The case before the German Constitutional Court concerned the interpretation of the various `no bailout' Articles in the Treaty. The Court ruled that Germany's participation in the rescue measures had not violated parliament's right to control spending of taxpayer money, and that it did not give a rubber-stamp to the chancellor's office.

The court also noted, however, that its rulings "should not be misinterpreted as a constitutional blank cheque for further rescue packages." It said that "the government is obligated in the cases of large expenditures to obtain the approval of the parliamentary budgetary committee" - a rather manageable nuisance and certainly much less burdensome than having to obtain the approval of the Bundestag.

Even in the case that the German Constitutional Court had mandated a roll-back of German participation, this would hardly have been the end of the matter, on procedural grounds. It is clear that the fate of the EA will not be decided in the courtrooms.