Debt crisis: ECB’s Draghi Plan doused by rebellions in Germany and Greece

Monday, September 10, 2012
By Paul Martin

By Louise Armitstead
10 Sep 2012

Germany’s federal constitutional court said it might be forced to delay its ruling on the legality of the European Stability Mechanism (ESM) because of an eleventh hour objection by an MP. Peter Gauweiler, a member of Angela Merkel’s ruling coalition, argued that the court ruling, due on Wednesday, should take time to assess the impact of the ECB’s “outright monetary transactions”, announced last week.

The German Chancellor’s spokesman insisted that the ECB’s plan to buy unlimited sovereign bonds from countries being supported by the bail-out funds – dubbed the Draghi Plan – should not impact the court ruling. However, the court said it would consider the request and announce its decision on Tuesday. A delay could push ratification of the fund back until next year, when countries including Spain are expected to require help imminently.

Meanwhile, Antonis Samaras, the Greek prime minister, failed to deliver the approval of his two coalition partners for the €11.5bn (£9.2bn) programme of cuts needed to secure the next tranche of international aid.

Athens said Greece’s finance minister Yannis Stournaras will meet with senior officials from the ECB and International Monetary Fund mission on Wednesday afternoon to discuss the latest upheaval. Experts said that Greek politicians were expected to show resistance to the package but were likely to agree to it eventually to secure the €31bn instalment from its €130bn EU-IMF rescue loans. However, traders balked at the spectre of another roller-coaster countdown to a potential Greek default.

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