September 12 Happenings in Europe: German Bailout Ruling, Dutch Election


On September 12 Germany's Federal Constitutional Court will rule on the constitutionality of the European Stability Mechanism and the Dutch will head to the polls.

The ruling of Germany's high court will determine the nature of future German bailout conditions. The court will probably rule in favor of the constitutionality of the European bailout mechanism. However, the court may decide to impose additional conditions for funds to be released. At the heart of the suit by politicians and academics is the concern that the European Stability Mechanism takes powers away from the Bundestag and illegitimately transfers them to Brussels. Whatever its ruling, the Federal Constitutional Court will have to address the concerns over national decision making and what conditions should be attached to future bailout contributions from Germany.

Representatives from the troika (European Commission, European Central Bank, and International Monetary Fund) have not been impressed by the Greek government's attempts at implementing austerity measures. Given that the Federal Constitutional Court's decision could impose more conditions Greek politicians should be worried about how likely it is that they will be seeing the bailout they were expecting.

Unsurprisingly, the Greek government has been unable to make the privatizations and cuts necessary to secure future bailouts. Greek politicians know that whoever supports the necessary measures will be endangering their political career. The recent rise in suicides in Greece is also a somber reminder to many Greek politicians that imposed austerity will have a human cost.

The Dutch election is being viewed as a gauge of northern European sentiment on the euro crisis. The euro crisis has highlighted the north and south divide that exists in Europe, which will be of particular interest as the patience countries like Germany, the Netherlands, and Finland have for the behavior of countries like Greece and Italy is running thin.

It is unlikely that any one party will win a majority in the Dutch election. So, as per usual in European politics, it is all about who might be able to form a functioning coalition.  Although the economically liberal People's Party for Freedom and Democracy, headed by Prime Minister Mark Rutte, is expected to do well it is unlikely that enough seats will be secured for a functioning government. 

With the left wing looking like they might be able to secure a government Rutte may have to go back into government with the Christian Democratic Appeal with other smaller parties. Many will be watching Geert Wilder's xenophobic and Eurosceptic Party For Freedom closely, as the party's level of support will be some indicator of popular sentiment towards the European project.