* Merkel should get 2/3 majority with opposition help
* Eurosceptics angered by concessions at EU summit
* Court will delay ratification, may seek referendum
By Stephen Brown and Noah Barkin
BERLIN, June 29 Germany's parliament will
finally approve a permanent euro zone bailout scheme and new
budget rules on Friday drawn up by Angela Merkel, but legal
hurdles remain and her overnight concessions to euro zone
partners Italy and Spain may make them harder to overcome.
A deal with the opposition should give the chancellor,
hurrying back from a tense European Union summit, the required
two-thirds majority in the Bundestag (lower house) and Bundesrat
(upper house) votes beginning at 5 p.m. (1500 GMT).
But ratification of the tools for combating the debt crisis,
the European Stability Mechanism (ESM) and "fiscal pact" for
budget discipline, may force Germany to test its commitment to
Europe in a referendum as anger grows over aid to weaker states.
Merkel insisted the deal at the summit to use the rescue
funds to ease Spanish and Italian borrowing costs without extra
austerity measures, and to recapitalise banks directly, did not
violate her mantra of no aid without conditionality.
"In this respect we remain entirely in the scheme we have
followed until now, that entails performance,
counter-performance and control," Merkel told reporters.
But it could exacerbate impatience with the bailouts in
Germany, which has no big Eurosceptic party but where Merkel's
centre-right coalition includes a small band of rebels who will
vote "no" in the Bundestag on Friday.
Klaus-Peter Willsch, a member of the Bundestag from Merkel's
Christian Democrats (CDU), said the concessions would result in
"Germany being liable for everyone". Fellow MP Wolfgang Bosbach
called a decision to scrap the ESM's preferred creditor status
"good news for private creditors but bad news for taxpayers".
The summit deal should not harm Merkel's chances of success
in Friday's votes as the opposition Social Democrats (SPD)
favour greater solidarity with Italy and Spain, in line with
France's Socialist president, Francois Hollande.
To secure their votes, Merkel has already granted growth and
job-creation measures in return for them dropping calls for
joint euro bonds, which Merkel says will not exist in her
The euro zone's biggest member is taking ratification of the
ESM and Merkel's fiscal pact to the wire, voting on the last day
possible for the original July 1 deadline for the ESM.
IMPOSING MORE EUROPE
The bailout scheme cannot come into effect without German
backing as it needs approval by countries making up 90 percent
of its capital base. This has now been put back to July 9 with
only a handful of the euro zone's 17 countries having complied.
But Germany risks missing the second deadline too, because
parliament is not the final hurdle. Ratification also requires
approval by the all-powerful Constitutional Court - which has
slapped the government's wrist for taking short cuts on European
policy - and President Joachim Gauck's signature.
This could take weeks. In a series of rulings since 2009,
the court in Karlsruhe has expressed reservations about the
steady transfer of power to Brussels, and affirmed the right of
Germany's parliament to vet decisions taken at European level.
Tension between Germany's democratic principles and a push
to give Brussels more power to intervene in national policy
appears to be approaching breaking point.
The court, bombarded by petitions from politicians and
academics to block the ESM, may decide to clear the bailout and
fiscal pact but demand steps "to ensure that the upper and lower
houses of parliament are sufficiently involved", said Daniel
Thym, law professor at the University of Constance.
There is a chance it could link approval to a change in the
constitution - which would require Germany's first national
referendum in the post-war era. At the very least, experts say
the could warn that approval of any future integration, beyond
the ESM and fiscal compact, would require constitutional change.
Calling a referendum would be a risky ploy in Germany, where
Adolf Hitler gave plebiscites a bad name in the 1930s by using
them to amass power as Fuehrer, stuff the Reichstag with Nazis
and legitimise occupying the Rhineland and annexing Austria.
But europhile Finance Minister Wolfgang Schaeuble says the
changes being contemplated - on the road to "political and
fiscal union" - may need a referendum sooner than many think.
The leader of Merkel's Bavarian allies in the CSU, Horst
Seehofer, wrote in business daily Handelsblatt: "Politicians
cannot simply impose more Europe on us from the top down ...
That's why I'm pleading for our constitution to allow us to have
referendums on all important European matters."
Historian Heinrich August Winkler spoke of Germany being "on
the brink of a referendum" with the court possibly demanding one
and "even linking it to approval of the ESM and Fiscal Compact".
Winkler said if that occurs it could become a central issue
in the 2013 elections when Merkel should seek a third term, with
pro-European parties attempting to call the Eurosceptics' bluff
by making it a "yes" or "no" vote on Europe and the euro.