Will the ESM be a panacea for countries in economic hardship? Gabriele Zimmer and Gay Mitchell analyse the ins and outs of the eurozone's new permanent rescue fund.

360°: European Stability Mechanism

The highest court in Germany,  the constitutional court,

has passed a landmark ruling  relating to the topic under scrutiny here,

the European Stability Mechanism  or ESM.

The court ruled it didn't contravene  the German constitution,

removing a hefty obstacle  to German ratification of the treaty.

The ESM puts several existing  EU bailout tools under one roof

to countries experiencing  economic hardship.

So how exactly does it function?  Who stands to benefit?

With me in the studio to discuss this  are two MEPs

with close perspectives on the issue.  Gabriele Zimmer from Germany,

Chair of the Confederal Group of the  European United Left - Nordic Green Left,

Gay Mitchell from Ireland and a member  of the European People's Party Group.

Welcome to you both.  First, before we look at a short animation

telling you almost everything  you need to know about ESM,

let's get your reactions  to the court's ruling.

Gabriele Zimmer, what does it mean  for Germany and for the eurozone?

For Germany it means that  we have to support Member States

which have to fight for their own stability,

which are not able to pay their own debts.

That's why we are supporting  a mechanism to find solutions.

We think we have to provide solidarity  between the Member States

and also to help people in other  countries if there are problems.

But we also have to find solutions  in a democratic way.

That's why we had the decision today  from the constitutional court.

It was very interesting and very important

because it's necessary for the national  parliament also to be able to decide

about the amount of  the liability of Germany

Thanks very much.  Gay Mitchell, coming from a nation

which is a recipient nation  of EU-IMF bailouts so far,

what do you think the decision  of the constitutional court

and the signal that it gives  to move ahead with the ESM

In relation to the decision, I think  it indicates the real problem we have.

Europe will become ungovernable.  We must ask ourselves, 'Who are we?'

By 2050, the whole of Europe  will be 6% of the world's population.

That's who we are.  Germany, France and Great Britain

will no longer have a place of right  at the G8 or any of those major places.

So more and more we have to start  looking out for Europe's concerns.

We can't do that if we have to depend on  the constitutional court in Germany,

a referendum in Ireland  or a general election in Finland.

We need more Europe. That's the reality.

When people look back in history,  they will say

that the second half of the 20th century  and the start of the 21st century

was Europe's golden era.  That's what they'll say in the future.

What was thrown at us was the greatest  financial crisis since the '30s

and we managed it. That's what I believe  the ESM will help us to establish

Let's look at some of those  big-button questions in due course,

as well as some of the questions  you raise about conditionality.

prepared by my colleague  Christophe Garach,

looking at the ins and outs  of the ESM in detail.

Hello, my name is Saara.  I'd like to ask about the following.

We all have to pay to save  our common currency, the euro.

I'd like to know how we can make sure  this isn't pouring money down the drain.

With the Greek debt crisis, the whole  eurozone has in the end been weakened.

The end of the euro  presents an incalculable risk

and so to avoid bankruptcy  the eurozone must be stabilised.

Besides the European Central Bank's  monetary policy

and after strengthening  the budget stability pact,

the proposed solution is called the ESM,  the European Stability Mechanism.

Its role is to make loans to states in  difficulty with or without the help of the IMF.

But states won't be bailed out  without conditions.

To benefit from the ESM,  a state will first have to go to the IMF,

while respecting  the ECB's independence,

and it will have to apply  much stricter budgetary rules.

The ESM will represent  the 17 eurozone members.

The Commission and the ECB will  be able to be observers if they wish.

But ESM members won't have  the same weight.

The largest shareholder will be Germany  with 27% of the capital.

The second shareholder will be France,  followed by Italy.

Malta, the smallest eurozone country,  will be the smallest shareholder.

After some hesitation, the capital  of the ESM was set at 700 billion euros,

of which 80 billion will be released at first.

The money will serve as a guarantee  to raise other sources of capital.

These funds could then be made  available to a country in difficulty,

Only states willing to tackle  their problems will be helped.

At the request of Germany, all financial  aid will be subject to strict conditions.

The eurozone will intervene  if the country has asked the IMF for help

If the country helped  doesn't respect its obligations

it will have to pay a fine  in addition to its contribution to the ESM,

and of course it will not be able  to receive any more aid.

But who will control the activities  of the European Stability Mechanism?

that neither the EP nor national  parliaments will have a say in that.

They will be informed of ESM decisions,  but won't be able to oppose them.

Supervision of the ESM will be entrusted

to internal and external auditors  appointed by the ESM.

These inspectors will have powers  to examine ESM accounts

and to obtain all information  on its operations.