Merkel Faces Revolt, Including
from the Constitutional Court
June 13, 2011 (EIRNS)En route to Washington, German Finance Minister Wolfgang Schäubele sent a letter to the IMF, ECB, EU Commission and his colleagues of the Eurozone, reiterating Berlin's standpoint that only an orderly, "soft" restructuring of the Greek state debt could prevent an unorderly default of Greece in early July, with severe consequences. That letter created a commotion in the private banks and media in Europe and internationally.
Then, at a joint press conference with Merkel on June 7, President Obama said: "We think it would be disastrous for us to see an uncontrolled spiral and default in Europe, because that could trigger a whole range of other events." Obama's awarding to Merkel the Presidential Medal of Freedom, the highest US honor that can be bestowed on a civilian, just as she prepares to impose an eco-dictatorship in Germany, was also designed to pressure her into accepting the bailout.
However, the government faces massive domestic opposition. A special session of the parliamentary group of the CDU arranged within hours of Merkel's return from the U.S. on June 8, featured calls for not only far-going restrictions on future bailouts, but also restructuring of the Greek state debt and, again from Arnold Vaatz, for Greece to leave the euro as the best possible solution.
At another special session of the entire Bundestag two days later, on concrete emergency aid to Greece, a group of 8 Christian Democrats voted against any new rescue package, calling for a cancellation/restructuring of at least 50% of the Greek debt instead. Their resolution states:
"Greece is not just illiquid but insolvent. ... Cuts alone will not be sufficient..."
"The only alternative left is therefore a rescheduling, i.e. a debt cut (haircut) that reduces by at least half the Greek debt." They suggest that the bondholders, who often took in very high yields, must undertake a real reorganization, without dumping the entire burden on European taxpayers.
Then, on June 8, the German Constitutional Court announced a public hearing on three prominent legal challenges against the Eurozone's bailout mechanism and against the Greek bailout in particular, to take place on July 5. The court ruling could place far-reaching constitutional restrictions on any German bailout decisions, or even ban bailouts on principle as unconstitutional. Schäubele, who has been summoned to appear at that public hearing to present the government's views, will have to be very careful not to create doubts on the constitutionality of the government's policies.