Germany's top court will hand down a momentous ruling on a new European crisis firewall Wednesday, in a decision with far-reaching implications for the future of the euro.
The Constitutional Court is to decide at 10:00 am (0800 GMT) whether German President Joachim Gauck can sign into law the European Stability Mechanism (ESM) and the European fiscal pact, which both sailed through German parliament at the end of June with a two-thirds majority.
The ruling comes on a day of risks for the euro, which has enjoyed calmer times in recent weeks, as an anti-austerity party is set to score big gains in Dutch elections and EU leaders unveil plans for the first step towards a eurozone banking union.
While the German government has expressed confidence that the court will play ball, most analysts believe Wednesday's ruling will be a conditional "yes, but", with the judges ordering a number of changes to the ESM treaty.
Several legal challenges have held up the ratification of the ESM and fiscal treaty in Germany, preventing them from coming into force.
The plaintiffs include the far-left Die Linke party, a citizens' initiative called More Democracy and a well-known eurosceptic from the Bavarian sister party to Chancellor Angela Merkel's conservatives, Peter Gauweiler.
They argue that the ESM -- the EU's permanent 500-billion-euro ($630-billion) rescue fund -- and the fiscal pact are incompatible with Germany's "Grundgesetz" or Basic Law.
The ESM is set to replace the temporary European Financial Stability Facility (EFSF) and should have been in place by July 1.
But it needs Germany's share of the rescue money to function and has thus been held up pending the court ruling.
The critics argue that the two key crisis-fighting tools are unconstitutional because they irreversibly delegate national sovereignty to the European level and interfere with parliament's right to draw up budgets.
Moreover, this is all being decided without the necessary democratic backing, they complain.
A former Social Democrat justice minister, Herta Daeubler-Gmelin, who is behind the More Democracy initiative, said she expected the court to rule that "the red line has been crossed and parliament's core budgetary power cannot simply be handed over to the EU Commission and banking institutions."
The European project can only succeed with the express will and consent of the people, she told the daily TAZ in an interview on Tuesday.
Technically, the court will not actually rule on the constitutionality of either the ESM or the fiscal pact on Wednesday.
It will simply decide whether to grant temporary injunctions sought by the plaintiffs that will prevent Gauck from signing the legislation into law until a final ruling can be made -- which would take several months.
But analysts believe the initial assessment will provide a very clear indication as to what the final ruling will look like.
They see four possible scenarios: a clear-cut "yes"; a conditional "yes, but..."; a further delay or a clear-cut refusal.
Foreign Minister Guido Westerwelle said on the eve of the ruling he expected a "pro-European decision from the Constitutional Court."
At a grassroots level, the ESM and the fiscal pact do not seem to have much popular support in Germany.
A poll conducted by YouGov for the DPA news agency found that 54 percent of Germans believe the court should order a review of the parliamentary votes on the ESM and the fiscal pact.
Only 25 percent said the court should give its green light.
While the court's ruling, especially if it blocks the ESM, is expected to have important repercussions for the financial markets in the short term, analysts insist it will not be the end of the euro if the ESM is blocked.
"It would neither be the end of the eurozone nor the end of German contributions to future bailouts," since the EFSF would still be in place, said ING Belgium analyst Carsten Brzeski.
And with the ECB setting up its own firewall by promising to buy up unlimited volumes of sovereign bonds of crisis-wracked countries, "between them, the temporary EFSF and the ECB would have virtually unlimited means to combat contagion if need be," said Berenberg Bank chief economist Holger Schmieding.
Nevertheless, the court's ruling will "show the legal limits to bailouts and further European integration" and therefore be "another game changer," said ING's Brzeski.