The start of Europe’s permanent bailout fund may be delayed next month after Germany’s Constitutional Court asked the president to withhold his signature pending potential lawsuits challenging the law.
Germany’s Federal Constitutional Court asked President Joachim Gauck to hold back from signing the European Stability Mechanism and the fiscal pact into law to allow sufficient time to examine potential lawsuits, Gauck’s office said today in e- mailed statement, adding that the president will honor the request.
The court will probably ask Gauck to wait a “few days” before signing the ratification of the ESM, which is scheduled to be approved by both houses of parliament on June 29 along with the European fiscal pact, court spokeswoman Judith Blohm said today. The European Union has been planning for the ESM to start operating on July 9.
The request is normal procedure to allow the court to rule on a potential emergency action seeking to block the law, Blohm said in an interview from the western city of Karlsruhe. Groups including Germany’s Left Party -- the former East German communists -- which wants to stop the fiscal pact, have said they’ll challenge the legislation.
The 500 billion-euro ($629 billion) ESM, designed to bail out indebted euro-area member states beginning this year, will replace the temporary 440 billion-euro European Financial Stability Facility, which was set up in May 2010 to fight the bloc’s debt crisis.
Because the EFSF still has unused funds, a delay for the ESM won’t deny European leaders a backstop tool.
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