Germany Welcomes Court Ruling

"We welcome the ruling by the European Court of Justice. It affirms the legality of the decision by the council of ministers on Nov. 25, 2003," German finance ministry spokesperson Jörg Müller said in a statement on Tuesday.

In the ruling, which annulled the decision by the council of finance ministers to suspend disciplinary sanctions against Germany and France for violating the Stability Pact's budget deficit ceiling of three percent, the court also noted that "responsibility for making the member states observe budgetary discipline lies essentially" with the ministers.

"There is no automatism in the deficit procedures," Müller said interpreting the court's verdict. "In fact, the council has room to make decisions and the council made use of that room for maneuver."

He said the court's decision was also a "clear signal to the council of ministers and the EU Commission to cooperate in issues regarding the application of the Stability and Growth pact.

A red flag for Eichel?

German opposition politicians, however, didn't put the same positive spin on the court's ruling. The Christian Democrats Union (CDU) referred to the verdict as a "slap in the face" for Finance Minister Hans Eichel, who has been unable to rein in the country's high deficit. Deputy CDU parliamentary fraction leader Friedrich Merz said the court "dished out a defeat for all those in favor of watering down the Stability Pact."

The neo-liberal Free Democrats (FDP) interpreted the verdict as a "victory for the euro." The designated EU Commission President José Manuel Durao Barroso now has the "opportunity to demonstrate his independence and commitment to principles, which the German and French government have tried to undermine with their questionable finance policies," said the head of the FDP fraction in the European Parliament, Silvana Koch-Mehrin.