KARLSRUHE (MNI) – Judges of Germany’s Constitutional Court showed
concern Tuesday over finding the right balance between making a quick
decision on the European Stability Mechanism and taking the necessary
time for proper evaluation of the ESM’s constitutionality.

What they did make clear is that there will be no final decisions
today on the constitutionality of the ESM and Fiscal Compact approved by
European leaders and passed with a two-thirds majority by Germany’s
parliament last month.

But judges also acknowledged that granting even a temporary
injunction could be interpreted as a sign that they were leaning against
approving the ESM’s constitutionality.

An injunction “will be interpreted by the foreign press as
‘euro-rescue is halted'” said Constitutional Court President Andreas
Vosskuhle, during a hearing into the injunctions sought by opponents of
European rescue fund.

Opening the hearing earlier Tuesday, Vosskuhle said he recognized
that it was “not easy” for the court to decide whether to grant a
temporary injunction — which would prevent the ESM from taking
immediate effect — or allow the treaty to take effect at the risk that
it can no longer be halted if ruled unconstitutional at a later date.

Vosskuhle emphasized that the court could only hold a hearing over
the injunction itself Tuesday, and would not discuss the broad
constitutional questions stemming from the ESM and Fiscal Compact, which
were both approved last month by Germany’s parliament.

“It is clear that this constitutional court cannot hold a full
substantive, but rather a summary examination, given the tight time
constraints” of the temporary injunction requests, Vosskuhle said. “That
means that a final decision can not be taken in this hearing today about
the constitutionality of the ESM, the Fiscal Pact and its accompanying
laws.”

Judges during the hearing suggested a two-part decision was likely,
first on the injunction in about three weeks, and then in early 2013 on
the broader constitutional question.

But Vosskuhle and others on the court suggested uncertainty over
just how far even a decision over the temporary injunction should go,
and pressed Germany’s government representatives over exactly how much
time the court has to reach a ruling.

German Finance Minister Wolfgang Schaeuble told the court that a
long delay before the ESM takes effect would have serious consequences
for market confidence and the Eurozone’s fragile economies.

Schaeuble said the ESM was a more “lasting, dependable instrument”
than the temporary EFSF fund and had put Europe on the path toward
regaining confidence.

“A considerable delay … would have serious consequences far
beyond Germany,” Schaeuble said. It would entail “dangers for financial
stability” and cause a “clear strengthening” of the Eurozone crisis,
which could once again lead some European countries to have serious
refinancing problems.

A delay could have “serious economic consequences” for the Eurozone
as well as Germany, and in turn would risk placing the entire euro
project “in question,” Schaeuble warned.

Opposition demands for an injunction have already stopped the ESM
from taking effect on July 1 as originally planned. The Constitutional
Court had earlier asked Germany’s president not to sign the ESM and
Fiscal Compact into law until it could rule on the injunctions.

Opponents argue the ESM and Fiscal Compact will permanently curb
the German parliament’s budgetary powers, and would therefore require a
change of the constitution to be approved. They also argued an
injunction would not be especially damaging, given the existence of the
EFSF.

— Frankfurt bureau: +49 69 720 142; email: ccermak@marketnews.com

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