Bundesverfassungsgericht

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Temporary injunction to prevent giving of guarantee for loans to Greece is not issued

Press Release No. 30/2010 of 07 May 2010

Order of 7 May 2010
2 BvR 987/10

As a consequence of the difficult financial situation of Greece and the resulting volatility in the financial markets, the Heads of State and Government of the euro countries declared in March 2010 their fundamental willingness to support Greece with their own bilateral loans, in addition to financing by the International Monetary Fund (IMF). The EU Commission subsequently negotiated, with the participation of the European Central Bank (ECB), the details and conditions of an aid package with the IMF and Greece. Greece was intended to be supported only if support should actually prove necessary. The states participating in the aid package were to decide about the payments then. On 23 April 2010, Greece applied for financial aid of the states of the euro group and the IMF. On 2 May 2010, the states of the euro group decided to make available, in connection with a three-year IMF programme with estimated total financing requirements of 110 billion euros, up to 80 billion euros as financial aid to Greece in the shape of coordinated bilateral loans; up to 30 billion euros of the aid were to be provided in the first year. The euro group's financial aid is intended to be provided in the context of a strict conditionality, which was negotiated with Greece by the IMF and the European Commission, involving the ECB. To take the measures required on the national level, the German Bundestag adopted on 7 May 2010 a law on the giving of guarantees to maintain the Hellenic Republic's ability to pay which is required for financial stability in the monetary union. This law authorised the Federal Government to give guarantees to provide security for loans up to a total amount of 22.4 billion euros for loans to the Hellenic Republic. The law shall enter into force on the day after its promulgation. Germany's share of the aid measures is to be extended by the Reconstruction Loan Corporation (Kreditanstalt für Wiederaufbau - KfW).

On 7 May, the complainants lodged a constitutional complaint together with an application to issue a temporary injunction. They essentially apply for the Federal Republic of Germany to be prohibited from giving financial aid to the Hellenic Republic to stabilise the European currency area.

The Second Senate of the Federal Constitutional Court did not grant the complainant's application for the issuing of a temporary injunction. In the weighing of consequences which is required for the issuing of a temporary injunction, the Federal Constitutional Court employs a strict standard. The result of the weighing which is required in this context was that the general public would be under the threat of more serious disadvantages if the temporary injunction were issued and the assumption of the guarantees later proved permissible under constitutional law. In this case, the Federal Republic of Germany would have to give up its participation in the emergency measures intended to maintain the Hellenic Republic's ability to pay at the very point in time at which it is required. This would not only disappoint expectations, nurtured by previous conduct, which had been entertained by the partners in the euro currency area. The urgency of the measure and the volume of the share in the aid which would then be missing would above all call into question the realisability of the entire relief package.

In the view of the Federal Government, this would probably create serious economic disadvantages for the general public. Should the objective pursued by the Currency Union Financial Stability Act be missed, i.e. should it not be possible to prevent an imminent inability to pay on the part of Greece, the stability of the entire European Monetary Union would, in the view of the Federal Government, be endangered. The Federal Constitutional Court has no sufficient indications which would oblige it to assume that the Federal Government's currency-policy and financial-policy assessment is erroneous. Among the constitutional bodies, it is above all for the Federal Government to make such assessments, which the Federal Constitutional Court can review only to a restricted extent.

In comparison, the disadvantages which ensue if the temporary injunction is not issued but the agreed participation in the financial aid proves impermissible later on carry less weight. The possibility of the Federation being burdened if the loan is made use of, a possibility whose probability of realising is regarded as minor, will not cause substantial damage to the common good. In the Federal Government's assessment, the potential liability risk is compensated by a reduction of the current risks for the Federal budget which might result from the financial instability in the European Monetary Union. Damages to an amount that is relevant to the national economy as a whole which are thus avoided must be taken into account at least in an overall balance. The complainants have not submitted any specific indications to substantiate that in comparison, especially their right under Article 14 of the Basic Law could be directly impaired in a serious and irreversible manner precisely as a consequence of the guaranteed grant of a loan.