Obstacle removed

Court ruling doesn't alter Germany's euro equation

The Euro zone has been spared the extra crisis it didn’t need. That’s the only real consequence of the decision by Germany’s Constitutional Court to give its qualified blessing to the monetary union’s new, permanent bailout fund, the European Stability Mechanism.

Forget the immediate sighs of relief heard in all European capitals. The ruling doesn’t much change the fundamental dynamics of the crisis. Every step of the way, Germany will have to be convinced that its own financial well-being is not being threatened by the fiscal situation of the periphery. And, Angela Merkel is unlikely to be moved in her belief that austerity is the first answer to the Euro zone’s woes.

Euro zone leaders — and Merkel herself — have often expressed frustration at the Karlsruhe court’s jealous protection of German fiscal sovereignty. But Germany should serve as an example to other governments, all-too-prompt to bypass normal democratic procedures in the pursuit of urgent solutions. The only way governments will get public support for the next phase of integration of the Euro zone is if they make sure democratic procedures are scrupulously respected, in both letter and spirit.

The Court’s decision now allows the ESM to take over the role of its predecessor, the European Financial Stability Facility. The main condition is that Merkel’s government will have to ask for parliamentary approval, if the need arises, to increase German liabilities beyond euro 190 billion, the figure agreed in the treaty creating the bailout fund.

The perennial europtimists shouldn’t get carried away by Wednesday’s decision. Merkel may pass for a hardliner among her euro colleagues, but she is facing a public that doesn’t take lightly what it perceives as undeserved largesse extended to irresponsible countries. By contrast, the Bundesbank’s opposition to the European Central Bank’s planned bond-buying programme seems to be rather popular.

Above all, Merkel’s belief that the main problem in Europe only comes from countries with deficits - not, like Germany, with surpluses — will remain unchanged. The court has spoken. And the crisis endures.