By Michelle Martin
BERLIN (Reuters) - Politicians in Germany's ruling centre-right coalition have expressed renewed concerns about an increased role for the euro zone's permanent bailout fund, which is at the centre of a court case after the German parliament approved it in basic form.
German Foreign Minister Guido Westerwelle told Germany's weekly Focus magazine he was opposed both to broadening the European Stability Mechanism (ESM), the euro zone's permanent bailout mechanism, and to stepping up purchases of European sovereign bonds.
"I can't imagine the Bundestag lower house of parliament would give a majority to a policy of unlimited joint liability for Germany. As an MP I certainly couldn't agree to that," he said in an advance copy of the article due to appear on Sunday.
The European Central Bank indicated on Thursday it may again start buying government bonds to reduce crippling Spanish and Italian borrowing costs, but any move would not come before September - and only if governments activated the euro zone's bail-out funds to join the ECB in buying bonds.
Germany's parliament approved the fiscal pact and the ESM by a large two-thirds majority in late June but since then discussion about giving the ESM a banking license has been rife.
Giving Europe's permanent ESM rescue fund a banking license, as called for by Italy and France, would allow it to tap the European Central Bank for funding so it could intervene more authoritatively in bond markets if needed.
"The government cannot agree to joint liability for Europe's debt or to liability for the unknown. That's also true for the proposal under discussion at the moment to give the ESM a banking license," Westerwelle said, adding that such a license would be incompatible with the German constitution.
Peter Gauweiler, a prominent Bavarian eurosceptic member of parliament and conservative backbencher who has filed a complaint against the ESM with Germany's Constitutional Court, has broadened his complaint to include opposition to a banking license for the bailout fund, Frankfurter Allgemeine daily said.
ECB President Mario Draghi said on Thursday such a license was against European law.
But Gauweiler's lawyer said the ECB's Governing Council could change its position with a simple majority vote, the paper reported on Saturday.
The court is due to announce on September 12 whether Germany can legally ratify the ESM and fiscal pact. The ESM was originally meant to be implemented on July 1, then July 9, but it requires ratification by countries representing 90 percent of its capital base so it cannot start working without Germany's rubber stamp.
Bavarian Finance Minister Markus Soeder, a member of the Christian Social Union (CSU), the regional sister party of Merkel's Christian Democrats, criticized the ECB for its indication it is prepared to buy bonds from indebted states, telling Germany's Bild am Sonntag newspaper that this was a "dangerous path".
Soeder also called for Greece to leave the euro zone and said Germany's economy would suffer more in the long run if the struggling state stayed in the euro zone, according to an advance copy of an article due to appear in the popular tabloid on Sunday.
"In this situation you have to apply the old mountain climbing rule: If someone is hanging on your rope and pulling you down into the abyss with him, you have to cut the rope," he was quoted as saying.
"We are at that stage now. If we don't cut the rope on which Greece is hanging in time, Germany could get into danger," he said, adding he expected Greece to quit the single currency bloc by the end of the year.
Bundesbank head Jens Weidmann's opposition was highlighted by ECB President Mario Draghi on Thursday, when he said the ECB's "guidance" on pursuing bond-buying was agreed despite Weidmann's reservations.
The German central bank is opposed to fresh ECB bond buying on the grounds that it amounts to monetary financing of governments, contravening European law.
Alexander Dobrindt, the CSU's General Secretary of the conservative Christian Social Union, was even more critical, accusing Draghi of using the ECB for Italian national interests in the Tagesspiegel newspaper on Saturday.
(Reporting by Michelle Martin; Editing by Toby Chopra and Sophie Hares)