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President Gauck delays EU bailout approval

22 June 2012 15:01 (UTC +04:00)

Baku - APA-Economics. German President Joachim Gauck will delay approving German participation in the EU fiscal pact and new bailout fund, his office said on Thursday after the top court said it would need more time to examine a likely legal challenge.

Lawmakers are due to ratify both tools for fighting the eurozone’s debt crisis on June 29 but the president’s decision now undermines the European Stability Mechanism (ESM) bailout fund’s planned entry into force on July 1.

The constitutional court earlier announced it would need up to three weeks to consider a threatened challenge by the far-left Linke party and would ask Gauck to postpone signing off on the legislation.

It came hours after a hard-fought accord was reached following weeks of wrangling between the governing centre-right coalition and main opposition, whose support Chancellor Angela Merkel needs to ratify the pact and rescue fund.

The German parliament must pass the draft laws on the fiscal treaty, a new European budgetary rule book, with a two-thirds majority, meaning Merkel needed to secure opposition backing.

The final compromise includes measures for growth and employment and backing for the introduction of a tax on financial transactions.

The government wanted to ratify both the fiscal pact and the ESM in one fell swoop before the start of the summer recess on July 6.

The ESM cannot come into effect without the ratification of Europe’s biggest economy.

Designed as a successor to the EU’s current bailout fund, the ESM will have â‚¬500 billion to help struggling eurozone countries deal with the debt crisis.