AP Business Writer
KARLSRUHE, Germany (AP) – Germany’s high court on Wednesday rejected calls to block the Europe’s permanent rescue fund, paving the way in a much-anticipated ruling for its ratification by the country’s president.
Investors breathed a sigh of relief that Germany’s highest court was not putting up a roadblock in a central part of Europe’s efforts to contain its near three year debt crisis. Stocks across Europe rallied strongly, the euro spiked to a four-month high of $1.2897 and the borrowing rates of troubled economies, such as Spain and Italy, eased further too.
Opponents had challenged Germany’s ratification of the European Stability Mechanism _ a new, permanent (EURO)500 billion ($638.8 billion) bailout fund for the 17 countries that use the euro _ arguing that it violated the country’s constitution. They had sought an injunction preventing the country’s president from signing the legislation into law.
Germany’s ratification of the ESM is key, because the fund cannot work without the country’s participation. Germany, as Europe’s biggest economy, is the number one contributor the fund.
The taxpayer-backed fund is crucial to the eurozone’s debt crisis resolution efforts because it can loan money to governments that can’t borrow otherwise, and markets had been nervously awaiting the ruling.
Federal Constitutional Court Chief Justice Andreas Vosskuhle said the case posed “special challenges” _ not just because of the political significance of the ESM, but because the financial and political consequences of a possible delay were “almost impossible to estimate reliably.”
But, he said, the court’s “examination showed that the law with high probability does not violate the constitution.”
Still, he said Germany must get legal guarantees before ratification that the provisions of the ESM can’t be interpreted in such a way that Germany’s financial liability could be increased without the approval of Berlin.
Germany must also ensure that provisions in the ESM treaty demanding “professional secrecy” from fund employees don’t stand in the way of the German Parliament being informed in full about fund decisions.
Germany is liable for about 27 percent _ about (EURO)190 billion _ to the overall European bailout scheme of (EURO)700 billion, which includes the ESM and remaining money from the current temporary fund, the European Financial Stability Facility.
It was not immediately clear when the President Joachim Gauck would be able to sign the measure, which was already approved by Parliament.
Chancellor Angela Merkel was due to address lawmakers later Wednesday.
David Rising and Geir Moulson contributed from Berlin.
(Copyright 2012 The Associated Press. All rights reserved. This material may not be published, broadcast, rewritten or redistributed.)
- Tech-related injuries your parents never experienced
- Workers comp: Signs your co-worker could be a fraud
- Who's the real founder of America's pastime?
- Epidemic rising? What you need to know about Alzheimer's in Arizona
- 5 unforgettable Wooden Award winners
- Family and hard work are keys to success of modern dairy farmers
- Genetic testing could hold answers for colon cancer survival
- Cold beers and baseball: A beer lover's guide to Spring Training
- Telecommuting: 5 tips to make it work for employers and employees
- See how top CFOs feel about economic growth in the Valley
- Migraine myths that keep patients from effective treatments
- Here’s why Gaydos went tankless with his water heater
- Bocce ball and basketball: How you can help Arizona's Special Olympics athletes
- Tips on building the best wine room in Arizona
- Avoid the nightmare: 6 tips to choose a great contractor
- Breast cancer: Improved testing and treatments means more survivors
- Failed back surgery: New hope for patients living in pain
- Ticking time bombs: Telltale signs your water heater is about to explode
- Reading glasses could be a thing of the past
- 6 cool ways teachers are using technology in the classroom
- Emerging tech jobs in Phoenix and how to get one in 2017
- 4 top treatments athletes use for pain
- Emergency! What to do when bathrooms flood
- Arizona kids in crisis: How you can help
- New treatment offers hope for migraine sufferers
- 11 stadiums to watch your favorite football team
- Shopping for a TV? Best models for 2016
- Avoid this holiday plumbing disaster in your home
- 7 tips to avoid holiday weight gain
- New treatments mean better prostate cancer survival rates