GERMAN FINANCE minister Wolfgang Schäuble has conceded that market “contagion” has spread and that the entire eurozone is caught up in the financial crisis. Mr Schäuble urged constitutional court judges yesterday to approve new measures to expedite future bailout decisions, arguing that confidentiality and speed are essential to market stability.
He was speaking during oral arguments into a constitutional complaint against letting a new nine-member parliamentary panel, rather than the Bundestag, rule on bailout payments.
“We have contagion in the entire euro zone, we now have the situation we warned about a year ago,” said Mr Schäuble.
He said the committee was “essential for confidentiality” to give the EFSF bailout fund access, as necessary to Germany’s €211 billion in guarantees.
Mr Schäuble said financial investors had difficulty understanding the EU’s “complicated, fragmented” decision-making and thus had a tendency to over-react.
“And when they over-react, there is panic,” he said, saying this required faster reaction than existing budgetary committee allowed. Constitutional court judges appeared unimpressed by this argument.
“I have my doubts about that,” said constitutional court president Andreas Voßkühle. “Surely crises are precisely the moment when you are supposed to stick to the constitutional rules?”
Another judge, Udo di Fabio, said he saw “dangers” if nine MPs were given “exclusive” information about bailouts rather than all 620 parliamentarians.
Yesterday’s complaint was brought by two Bundestag MPs from the opposition Social Democratic Party (SPD). They argue that the smaller committee, meeting in secret, curbs the constitutional right of the Bundestag to co-determine German financial policy. The court has indicated that a ruling is likely before Christmas.
Meanwhile Fine Gael TD Paschal Donohoe said in Berlin yesterday that the most effective way of reducing financial market influence over the euro zone was for member states to borrow less.
“The financial markets didn’t force Ireland to spend too much and tax too little or force our banks to do certain things,” said Mr Donohoe at a discussion at the Konrad Adenauer Foundation. He warned against the “subsuming of the nation state” in the financial crisis and of the “collective cost” of mulling euro zone exits.
Berlin officials have vowed to resist pressure from Paris over the appointment of Jörg Asmussen, state secretary at the federal finance minister in Berlin, to the ECB board next year.
Mr Asmussen was widely expected to take over from outgoing board member Jürgen Stark, but Berlin officials said there was “probably a bit of truth” in reports that Paris wanted the job for Benoît Cœuré, number two at the French treasury.