Germany court strikes bailout lawsuit, parliament approval required

BERLIN (Reuters) – Germany’s top court handed its country’s parliament a greater say over euro zone bailouts, potentially hampering Berlin’s ability to act decisively against a debt crisis which Chancellor Angela Merkel said needed a fundamental rethink to solve.

The Constitutional Court rejected a series of lawsuits aimed at blocking the participation of Europe’s biggest economy in emergency loan packages but said the government must get approval from parliament’s budget committee before granting such aid.

“This was a very tight decision. But it should not be mistakenly interpreted as a constitutional blank check authorizing further rescue measures,” the judge told plaintiffs, government officials and members of parliament in the courtroom in Karlsruhe.

The euro briefly rose against the dollar in response.

“Today’s ruling should bring some relief to financial markets as a total chaos scenario has been avoided, but it should not lead to euphoria,” said Carsten Brzeski at ING.

“The ruling confirms our view that the German piecemeal approach on the debt crisis is not likely to change but eventually the German parliament will vote in favor of a second Greek bailout package and the beefed-up EFSF (euro zone rescue fund).”