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Germany Clears Next Big Step For Eurozone Recovery
Originally published on Wed September 12, 2012 5:58 pm
AUDIE CORNISH, HOST:
It's ALL THINGS CONSIDERED from NPR News. I'm Audie Cornish.
MELISSA BLOCK, HOST:
And I'm Melissa Block.
Europe's debt crisis has caused havoc, toppling governments, breaking banks, leaving a multitude of young people without jobs. Now there's a glimmer of hope.
As NPR's Philip Reeves reports, today, Germany's highest court cleared the way for the next big step in the eurozone's grand plan to save itself.
UNIDENTIFIED MAN: (Foreign language spoken)
PHILIP REEVES, BYLINE: The verdict from eight red-robbed judges on Germany's Constitutional Court was broadcast live on TV. Those judges spent months deliberating a number of critical issues. The most important of these boiled down to two basic questions: can the German government legally use taxpayers' money to guarantee a huge new fund for bailing out other eurozone nations; or is this unconstitutional, as there is no democratic control over how that money is spent?
Before the court was a bundle of requests, including one supported by some 37,000 Germans. They sought an injunction stopping Germany from signing the European treaty that establishes that big, new fund. The fund, worth $640 billion and known as the European Stability Mechanism, is a central pillar in Europe's plans to save its single currency. Germany is the fund's biggest guarantor. Had the court agreed to those requests, there would have been a full-blown crisis and market panic.
The judges took a different path. They ruled Germany can participate in the fund with certain conditions. The markets were mightily relieved. So were many of Europe's leaders, including Germany's Angela Merkel, who appeared before Parliament in Berlin.
ANGELA MERKEL: (Through Translator) Today is a good day for Germany...
MERKEL: (Through Translator) ...and it is a good day for Europe, ladies and gentlemen.
REEVES: The court's decision means that the eurozone has armed itself with several big new weapons for fighting its crisis. One is the fund. Another is the European Central Bank's recently announced plan to buy unlimited amounts of bonds issued by countries in trouble, like Spain and Italy, so as to bring down their crippling borrowing costs.
Josef Joffe, editor of the German weekly newspaper Die Zeit, thinks today's court decision will cause the eurozone crisis to recede, at least for a while.
JOSEF JOFFE: The euro has received another lease on life. I think for the next six, maybe 12 months, the crisis will be in abeyance.
REEVES: Philip Reeves, NPR News, Berlin. Transcript provided by NPR, Copyright NPR.