Germany's Constitutional Court is giving a preliminary ruling today on whether the Eurozone's new permanent bailout fund and the region's new fiscal pact are in line with the German constitution. Separately, the Netherlands is holding parlimentary elections today. The election is seen as a gauge of how much support there is in Western European countries for continued austerity and bailouts to keep the Eurozone afloat.
German Court Rules on Eurozone's Bailout Fund, Fiscal Pact
Germany's Constitutional Court is expected to give its approval on Wednesday to the Eurozone's new bailout fund. The Court is ruling on whether the bailout fund and the fiscal pact limiting the budgets of states are in line with the German constitution.
A final decision by the court on the rescue fund is expected in December, but Wednesday's preliminary ruling should give a clear indication of whether the ESM will become operational in October as planned.
The new European Stability Mechanism (ESM), with a lending capacity of 500 billion euros ($640 billion), was due to become operational earlier this year, but the requirement that it be ratified by the parliaments of many Eurozone members has caused delays. Although Germany's parliament has already backed the bailout fund, it has not yet been signed into law. Critics say the ESM violates Germany's constitutional authority over its budget, and had asked for an injunction.
Although most analysts don't expect the court to block the ESM, it could call for more limits and conditions, so Germany's parliament has a say on future aid to other Eurozone countries.
Report: German court seen okaying EU bailout fund, strings attached [Reuters, 12 Sep 2012]
Report: German Constitutional Court to Rule on ESM [Wall Street Journal, 11 Sep 2012]
Dutch Election - A Vote on the Eurozone
In the Netherlands, voters are going to the polls for parliamentary elections on Wednesday. The vote has been dominated by concerns about the Eurozone crisis. The result is expected to be a close race, though analysts suggest that mainstream pro-European parties will still win more seats than the Eurosceptics, dispelling concerns that a new Dutch government might push to quit the European Union or flout its budget rules.
The Netherlands is one of the few triple-A rated countries left in Europe and a longstanding ally of Germany in demanding strict adherence to fiscal discipline. The election is thus seen as a barometer of northern European stamina both for austerity and for bailouts to keep the single currency bloc intact.
The Liberals under caretaker Prime Minister Mark Rutte and the centre-left Labour Party of Diederik Samsom are very close in polls, but observers say it is likely - though not certain - that Mr. Rutte will stay as premier due to his strong international profile.
But a fifth of the country's 12.5 million voters say they are still undecided, leaving room for surprises.
Report: Dutch voters seen shunning euro radicals at polls [Reuters, 11 Sep 2012]
Report: Dutch vote overshadowed by eurozone debt crisis [BBC, 12 Sep 2012]