* All 20 experts polled see green light for ESM, fiscal
* Law professors expect court to set tough conditions
* Majority don't see court paving way for referendum
BERLIN, Sept 7 (Reuters) - Legal experts polled by Reuters
unanimously expect Germany's top court to approve the euro
zone's new bailout fund and budget rules next week, but they
also believe it will impose tough conditions limiting Berlin's
flexibility on future rescues.
All 20 public and constitutional law professors surveyed
predicted that Wednesday's ruling would throw out the temporary
injunction request against the European Stability Mechanism
(ESM) and the fiscal compact for budget discipline in Europe.
If the court backed the injunction request, it would have a
devastating impact on bond and currency markets, pushing the
17-state currency zone deeper into turmoil by casting doubt on
its ability to launch further rescue bids of heavily-indebted
southern member states.
The experts polled all expected the Constitutional Court in
Karlsruhe to qualify their approval, with 12 saying it will set
strong conditions, in part to limit German exposure to bailouts
and strengthen parliamentary oversight.
A quarter of the law professors believe the court will also
signal European integration has reached the limits permitted by
Germany's "Basic Law", raising the prospect of an unprecedented
referendum on a new constitution to permit deeper integration.
"I think the Constitutional Court will let both treaties
pass," said Kai von Lewinski at Berlin's Humboldt University,
adding that it might insist on attaching a "clarifying sentence
that German liability has to be limited".
The conditions imposed "will be far-reaching because the ESM
isn't constitutionally justifiable", said Florian Becker of Kiel
University, who would like to see the judges take stronger
action to defend German sovereignty.
None of the experts, mostly from law faculties in Germany
but including academics overseas, believed the eight judges of
the Second Senate of the court would stop Germany from ratifying
Europe's new tools for fighting the three-year-old debt crisis.
The European Central Bank declared on Thursday it was
prepared to buy the bonds of struggling euro zone members in
unlimited amounts but only after they first sought help from the
rescue fund and signed up to the conditions attached.
The plaintiffs now number 37,000, including eurosceptic
rebels from Chancellor Angela Merkel's coalition and academia,
as well as the hardline Left Party and members of the public.
They argue that the two treaties undermine lawmakers'
constitutional right to decide on budget matters and could
expose Europe's top economy to unlimited liability if other
states fail to pay into the ESM.
Daniel Thym from the University of Konstanz said the court
in the southwestern city of Karlsruhe had become the "lightning
rod" for euroscepticism in Germany, which has not yet spawned a
major political party but is nurtured by part of the news media.
However, academics say its earlier rulings on the European
Union's Lisbon Treaty in 2009 and Greek loans and the European
Financial Stability Facility (EFSF) in 2010 suggest the court
will give the green light, while imposing certain conditions.
These could range from reiterating that the Bundestag (lower
house) must be consulted before the ESM is deployed to seeking
more parliamentary involvement if its funding or instruments are
to be changed. It could even demand that Germany's ratification
include a reservation making clear its liability is limited.
One of the most unsettling scenarios for Merkel and her euro
zone peers would be the inclusion in next week's ruling of a
clear signal from the court that it considers a referendum on
Europe is necessary before Germany agrees to more integration.
Fifteen of the 20 experts do not expect such a sign, but
many still see the time approaching when the Basic Law, which
does not give a framework for national plebiscites, will need
replacing to allow Germans a direct vote on Europe.
Opinion polls suggest that would be popular with the public
but it would also be hugely disruptive if it came near the 2013
elections when Merkel will seek a third term. Experts say the
red-robed judges -- and especially their media-savvy 48-year-old
court president, Andreas Vosskuhle -- are well aware of this.
"The judges are not professors in an ivory tower, they know
what they are doing and that their decision can affect European
history," said Lewinski.
Hugely respected in Germany, the court's political influence
far exceeds that of the U.S. Supreme Court, according to
Russell Miller, a U.S. academic and co-editor of the German Law
He said the court has been building up jurisprudence for
decades "that says 'just this much Europe and no more'. At some
point that 'no more' has to bite, doesn't it?" said Miller, the
co-author of a new book on German constitutional law.
(Additional reporting by Matthias Sobolewski; Writing by
Stephen Brown; Editing by Noah Barkin)