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Decisions in Germany And Netherlands Shore-up EU’s Crisis Strategy …

  • September 14th, 2012
  • Posted by EUEditor

eu-symbol-coins.jpgSquabbling over the back-up plans for the Euro, eased off this week; with decisions in Germany, by the Constitutional Court, and in the Netherlands, by the voting public.

DECISIONS ON A THEME

The New York Times, 13.9.12, published a summary on the theme:

“There was a general sigh of relief in the European Union this week. The cause was not better performance in the troubled and highly indebted southern countries of the euro zone, but crucial decisions made in the rich northern nations with perfect credit ratings, where skepticism about the common currency is running high.

“On Wednesday, the German Constitutional Court found a way to declare that the permanent bailout fund, the European Stability Mechanism [ESM], is legal, clearing the way to use it in time to recapitalise troubled banks as well as governments. And the Dutch voted for mainstream parties in a parliamentary election, choosing not to be enticed by parties wanting to leave the euro.

“Combined with the European Central Bank’s decision to restart its bond-buying program in return for more budget discipline, immediately lowering interest rates on Italian and Spanish bonds, European leaders could begin to feel that perhaps the worst is over in the euro crisis, at least for now.”

See EU intervention, ESM, in EUAustralia Online: “”Europe, debt and 2012″, 27.12.11; ” EU summit agrees on financial pct”, 31.1.12; “A country under pressure …”, 7.7.12.

GERMAN COURT DECISION

Eight judges on the bench in Karlsruhe affirmed the authority and legitimacy of the national parliament to authorise the contribution of funds to the European Stabilisation Mechanism (ESM), for the defence of European Union member countries under pressure.

They rejected a motion for an injunction against such action, sponsored by generally “Europe-sceptic” interests including the Left Party, and a dissident member of parliament from the second conservative party in government, the CSU.

A case was made that the workings of the EMS can mean loss of control of control of the amounts of money being required from the government, and paid into the central account, implying loss of sovereignty.

The Court did impose a limit of €190-billion (A$235.07; xe.com, 14.9.12) on commitments, requiring that it would require a vote of parliament to exceed that amount.

It also affirmed the legality of recently proposed intervention by the European Central Bank (with Germany represented in its structure), in the form of loan guarantees or bond purchases to support struggling members.

The decision now enables the German government, the last to ratify the agreement on the EMS, to sign on, enabling the scheme to be implemented – and as the largest contributor Germany will account for some 25% of the funding.

merkel-bxl-council-dec-06.jpgThe Chancellor, Angela Merkel (picture), who has held a firm line, demanding countries such as Greece must stick to strict conditions on spending, was relieved nevertheless about the European Union plan being cleared to go.

“This is a good day for Germany and a good day for Europe,” she said.

DUTCH VOTE

rutter-mark-resize.jpgAnother contented Prime Minister was Mark Rutte (picture) of the centre-right Dutch Liberals, who returned to power on Thursday, picking up ten parliamentary seats to win 41 out of 150.

The Labour Party also fared better, in second place with 39 seats, up by nine.

Mr Rutte governed for nearly two years in uneasy alliance with the anti-immigration, anti-EU Freedom Party (PVV), which on a wave of popular support had got 24 seats in 2010 – cut down to 15 this time. The left wing Socialist party also got 15 seats on Thursday.

The election was brought on when the PVV balked at endorsing spending cuts, leaving the government without its parliamentary majority.

The new government, while it is committed to cooperate in European measures like the EMS, to try and deal with the crisis over debt, undermined the PVV’s electoral campaign by indulging in some “Eurosceptic” pledges of its own, notably a declaration that there’d be no more money for Greece.

Reference

Steven Erlanger, “Dutch and Germans Give European Union Reasons to Cheer”, New York Times, NY, 13.9.12. http://www.nytimes.com/2012/09/14/world/europe/european-union-celebrates-german-and-dutch-decisions.html, (14.9.12).

Forex Live, (Market News International), NY, “Update: German Constitutional Court Backs ESM Ratification”, 12.9.12. http://www.forexlive.com/blog/2012/09/12/update-german-constitutional-court-backs-esm-ratification/, (14.9.12).

Roland Nelles and Severin Weiland, “Constitutional Court Ruling A Setback for Germany’s Euroskeptics”, Der Spiegel, Hamburg, 12.9.12. http://www.spiegel.de/international/europe/constitutional-court-ruling-a-setback-for-germany-s-euroskeptics-a-855413.html, (14.9.12).

RTE, Dublin, “German Constitutional Court says ESM, fiscal compact approach is constitutional”, 12.9.12. http://www.rte.ie/news/2012/0912/german-court-to-decide-on-esm-fical-compact.html?3390402,3390402,255,247, (14.9.12).

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