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Germany's top court approves permanent Eurozone bailout fund

The ruling may mean the Dáil will need another vote on approving it – but also give it a vote on increasing its size in future.

Image: Winfried Rothermel/AP

GERMANY’S TOP COURT has rejected attempts from opponents of the proposed permanent Eurozone bailout fund to stop the country from ratifying the treaty that establishes it – clearing the way for the Eurozone’s largest economy to participate in the ruling.

The Constitutional Court in Karlsruhe dismissed applications from a coalition of eurosceptics who had tried to stop President Joachim Gauck from ratifying the European Stability Mechanism (ESM) treaty, and also the Fiscal Compact deal.

The ruling means Gauck can now ratify the Fiscal Compact on Germany’s behalf – but put conditions on Germany’s approval of the ESM, saying the country’s liability to the fund must be explicitly capped within the Treaty itself.

Though the ruling is welcome – as it does not put a permanent roadblock on the overall plan of European leaders to create a permanent bailout fund to aid stricken members – it means that other countries may have to re-ratify the treaty, or approve amendments to it, so that the ESM can come into effect.

Because the wording of the treaty must be identical in each participating country, the explicit limit to Germany’s contributions – which make up 27.146 per cent of the entire fund – may now mean that Ireland and the other 13 countries which had already ratified it will be forced into approving amendments.

This would also mean that any attempts to increase the size of the fund – which could otherwise be increased simply by the unanimous agreement of the participating governments – would need parliamentary approval, adding another layer of decision-making to the process.

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In a separate decision, the court also rejected complaints that the European Central Bank’s programme of buying eurozone countries’ bonds was in breach of its mandate – removing another potential legal obstacle to the ECB plans which could kick in for Ireland when it emerges from the bailout programme.

Read: German ESM ruling: Foreign minister confident of treaty approval

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Gavan Reilly

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