A German economist plans to launch a legal challenge at the Constitutional Court against the euro zone aid package for Greece agreed by finance ministers at the weekend, a German newspaper reported today.
The looming challenge highlights the problems German Chancellor Angela Merkel faces in convincing a sceptical public of the benefits of the fallback €30 billion support programme, especially before a crucial state vote next month.
Joachim Starbatty, a professor at Tuebingen University and prominent euro sceptic, was quoted by the Rheinische Post paper as saying the aid package breached the EU's Maastricht Treaty.
"We will file a suit at the Constitutional Court against the credit from euro states," Mr Starbatty told the paper.
Several other academics and constitutional lawyer Wilhelm Hankel, who failed to prevent the introduction of the euro in 1998 at the Constitutional Court, are working with Starbatty.
Separately, Handelsblatt business daily quoted an unidentified member of the German cabinet as saying the €30 billion aid package for Greece was only a first step and could end up being "at least double the amount".
The Rheinische Post said Mr Starbatty viewed the aid package as a subsidy which was forbidden as the interest rate offered was under the market rate for Greek bonds. Mr Starbatty, who has for weeks been threatening legal action if aid for Greece was granted, was not immediately available to comment.
Any legal challenge could take months and the court could decide to put any aid for Greece on ice, said some experts.
"This was expected and the court will have to make, as a first step, a decision on whether it needs to react immediately or not," wrote a Goldman Sachs economist in a research note.
The court would have to decide whether to halt the aid, at least temporarily, to assess whether it was legal or whether to let it go ahead and possibly decide later it was not in accord with the constitution, the bank added.
Ms Merkel and other top conservatives were reluctant to agree on aid before a vote in the state of North Rhine-Westphalia on May 9th which could see her centre-right coalition lose power there and rob it of a majority in the federal upper house.
Ms Merkel was also worried about legal challenges after a Constitutional Court last year gave more powers of scrutiny of EU business to the German parliament. But in the end, Germany accepted that Greece would not be forced to pay going market rates to secure loans.
Several conservative politicians and newspapers have criticised the Greece deal. Conservative deputy floor leader Michael Fuchs said he thought the EU was making life too easy for Greece and other countries would see less reason to consolidate their budgets.
Handelsblatt attacked politicians for hypocrisy in failing to describe the deal as a bailout.
"The founders of the European currency excluded the possibility that the euro zone members would take on each others debt. Bailouts are banned. But that isn't stopping the euro zone. They are simply avoiding the term. The deception of the public continues," the paper said in an editorial.
Reuters