Chancellor Angela Merkel speaks during a budget debate at the German parliament… (Herbert Knosowski / EPA )
Reporting from London — Germany's constitutional court has upheld the country's participation in bailing out its financially ailing Eurozone neighbors, in a ruling Wednesday that was met with relief by many analysts and investors.
But the high court also said that the German government should consult parliament for future rescues, a requirement that could slow down efforts to address the galloping debt crisis facing Europe, where markets have regularly outpaced politicians' ability to respond.
The high court's qualified support for Berlin's participation in bailouts was largely expected by analysts who have followed the case. Nonetheless, officials throughout Europe nervously awaited the court's decision because of the potential of an adverse ruling to wrench the debt crisis deeper into uncharted territory.
Germany has already joined with other Eurozone nations in bailing out Greece, Ireland and Portugal. As the region's largest economy, it is the largest contributor to the European Union's bailout fund, and so any doubt over its involvement in the rescues could thwart the whole enterprise.
But many Germans are angry that they are on tap to save countries they regard as having been profligate and irresponsible. A group of academics and others opposed to the rescue fund filed complaints alleging that Berlin's participation was unconstitutional because it violated the German parliament's control over taxpayer money.
The ruling rejected that argument, paving the way for the German government to continue to take part in the bailouts.
German Chancellor Angela Merkel, one of the key architects of the bailout fund, welcomed the ruling. "If the euro collapses, Europe collapses," she said.
European stock markets were up Wednesday morning, following steep losses in previous days.
But the court's demand that lawmakers be consulted before such measures in the future, however, could drag down European response time to the fast-moving debt crisis. Investor concern over public debt in Europe has helped drive down stocks and boosted government borrowing costs to painful levels not only for the three bailed-out nations but also larger countries such as Spain and Italy.
European leaders are scrambling to assure markets that they are committed to bringing down public spending and implementing austerity measures. But there is growing fear that Spain and Italy could be pushed closer to default, beyond the capacity of their neighbors to bail them out.
Questions are already dogging the Eurozone as to whether a second emergency package for Greece, which was approved by leaders in July, will go through. The deal must be approved by national parliaments; in some countries, such as Finland, popular opposition to bailouts could pose a problem.