* Nine-person body formed to decide on key euro funding
* Constitutional Court to probe if body infringes MPs'
* Key Merkel MP assures this will not affect EFSF
* Ruling could prevent EFSF from secondary bonds purchases
By Alexandra Hudson and Sarah Marsh
BERLIN, Oct 28 A German court on Friday
suspended a parliamentary committee's right to approve urgent
actions by the euro zone's bailout fund, potentially delaying
decision-making in Europe's top economy on key moves to tackle
the bloc's crisis.
A spokeswoman for the Constitutional Court said it would
investigate whether the planned use of a small closed-door
committee of 9 German lawmakers to consider urgent matters
relating to the European Financial Stability Facility (EFSF)
infringed on lawmakers' rights.
The parliamentary leader of Chancellor Angela Merkel's
conservative bloc, Peter Altmaier, said the suspension meant
parliament's entire lower house would need to decide on urgent
matters relating to the EFSF.
But he said the court's action -- pending a final ruling on
a complaint from two opposition lawmakers alleging the
committee's powers breach Germany's basic law -- would not tie
the hands of either the Bundestag or the EFSF.
"The German parliament will ensure that, until the main
ruling, Germany's ability and the EFSF's ability to act are
secured," he said.
Germany has frequently been accused of dragging out its
decision-making, most recently when Chancellor Angela Merkel had
to obtain a mandate from parliament to negotiate on the EFSF at
a summit in Brussels on Wednesday.
Lawmaker Otto Fricke, a budget expert for Merkel's junior
coalition partners the Free Democrats (FDP), said the suspension
of the committee made it de facto impossible for the EFSF to buy
bonds in secondary markets, as such purchases must be agreed in
secret. Germany's parliament cannot meet in plenary in secret.
"The instrument of secondary bond market purchases is as
good as dead for now," he said.
Analysts gave a measured response to the court ruling,
noting that while it brought added complications the EFSF would
be subject to all kinds of teething problems, and they were sure
parliament and the government would find a way around it.
"I think the Germans have been quite difficult for some time
so it is not a particular surprise," said Guillaume Menuet, an
economist at Citigroup. "It is certainly not helpful because it
means the European Central Bank has to hold the buck for longer
(on bond market intervention)."
But he reminded that the details of how the EFSF could be
used had not been determined and getting the bailout fund up and
running was still weeks if not months away.
"I don't think [the court ruling] is going to be a big thing
for markets, just a blip on radar screen of getting everything
sorted and up and running. There are a few hurdles to jump
through, but we will get there eventually."
A court spokeswoman said a final ruling could come by late
The Constitutional Court said in a statement on Friday it
was temporarily suspending the use of the special committee
after two lawmakers lodged a complaint on Thursday.
"The second senate of the Constitutional Court has decided
... that until a full decision is taken, the Bundestag's right
of participation may not be replaced by the new committee," the
Court said in a statement.
A ruling by the same court last month resulted in a bigger
say to German lawmakers on matters involving the bailout fund,
obliging the government to seek approval from parliament's
41-member budget committee or from the chamber as a whole on
participation in euro zone bailouts.
Ironically the idea of using a 9-member committee came about
as a way of trying to speed up decision-making.
Analyst Christian Schulz from Berenberg Bank said if
parliament as a whole had to approve changes to the EFSF it
would make things more cumbersome, but he expected there would
be a way to work around it.
"This issue is not of immediate concern but I am sure they
will find a way to get around it. This isn't a decision that the
committee is not legal, it is a statement that it may not be
legal and therefore cannot be used for the time being," he