A German high court decision on bailout funding and Greek coalition infighting this week threaten to derail the European Central Bank’s bid to wrest control over the euro area’s three-year-old crisis.
Germany’s Federal Constitutional Court in Karlsruhe will decide whether to suspend the 500 billion-euro ($639 billion) European Stability Mechanism on Sept. 12. In Athens, Prime Minister Antonis Samaras’s governing partners balked at budget cuts demanded by the country’s so-called troika of creditors.
Merkel and German Finance Minister Wolfgang Schaeuble have expressed their confidence that the ESM will survive the constitutional test. Officials voiced greater concern over the details of the court’s ruling rather than the possibility of an outright rejection of the permanent bailout fund.
Spain is likely to seek assistance in the coming weeks, Der Spiegel reported, citing unidentified officials in the European Commission. The ECB’s plan foresees conditions on countries that want to participate in the bond operations.