Friday, October 28, 2011

German court suspends parliament's bailout committee

A German court today suspended a parliamentary committee's right to approve urgent actions by the euro zone's bailout fund, potentially delaying decision-making in Europe's top economy on key moves to tackle the bloc's crisis.

A spokeswoman for the Constitutional Court said it would investigate whether the planned use of a small closed-door committee of 9 German lawmakers to consider urgent matters relating to the European Financial Stability Facility (EFSF) infringed on lawmakers' rights.

The parliamentary leader of Chancellor Angela Merkel's conservative bloc, Peter Altmaier, said the suspension meant parliament's entire lower house would need to decide on urgent matters relating to the EFSF.

But he said the court's action – pending a final ruling on a complaint from two opposition lawmakers alleging the committee's powers breach Germany's basic law –would not tie the hands of either the Bundestag or the EFSF.

"The German parliament will ensure that, until the main ruling, Germany's ability and the EFSF's ability to act are secured," he said.

Germany has frequently been accused of dragging out its decision-making, most recently when Chancellor Angela Merkel had to obtain a mandate from parliament to negotiate on the EFSF at a summit in Brussels on Wednesday.

Lawmaker Otto Fricke, a budget expert for Merkel's junior coalition partners the Free Democrats (FDP), said the suspension of the committee made it de facto impossible for the EFSF to buy bonds in secondary markets, as such purchases must be agreed in secret. Germany's parliament cannot meet in plenary in secret.

"The instrument of secondary bond market purchases is as good as dead for now," he said.

A court spokeswoman said a final ruling could come by late December.

The Constitutional Court said in a statement today it was temporarily suspending the use of the special committee after two lawmakers lodged a complaint on Thursday.

"The second senate of the Constitutional Court has decided ... that until a full decision is taken, the Bundestag's right of participation may not be replaced by the new committee," the Court said in a statement.

A ruling by the same court last month resulted in a bigger say to German lawmakers on matters involving the bailout fund, obliging the government to seek approval from parliament's 41-member budget committee or from the chamber as a whole on participation in euro zone bailouts.

Ironically the idea of using a 9-member committee came about as a way of trying to speed up decision-making.