August 7, 2012 6:01 pm
Germany’s judgment day
Next month’s court ruling will be a decisive moment in the struggle to save the single currency
©AFP
Decision time: judges at the Karlsruhe court have spent months pondering the impact on German democracy of treaties critical to eurozone survival, defying calls by the government of Angela Merkel to rule swiftly
The date for Germany’s day of judgment on the eurozone’s €500bn rescue fund is fixed. On September 12, eight scarlet-robed judges will solemnly file into their courtroom in the city of Karlsruhe – former seat of the grand dukes of Baden, on the east bank of the Rhine – and announce its fate.
It will be a seminal moment, not just in the struggle to sustain the euro and stabilise the most debt-laden economies in the 17-nation eurozone that has lasted almost three years. It may also define the relationship between Germany and the rest of its partners in Europe for the foreseeable future.
On the face of it, the judges in the federal constitutional court are supposed simply to decide whether to issue an injunction to delay the establishment of the European Stability Mechanism while they ponder its legality according to the Grundgesetz (“basic law”), as the nation’s constitution is known. They have to do the same for the fiscal stability pact, the parallel treaty agreed in January that lays down strict budget rules for the common currency members.
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In effect, however, the five men and three women in Karlsruhe may be sealing the fate of the euro.
The ESM cannot come into existence unless and until Germany, its main financier, ratifies the treaty.
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Even if the judges give it a green light, any conditions they impose could bring to a head simmering tension with the government over European integration. Despite an appeal by Berlin for a swift judgment in July, when they heard 10 hours of arguments for and against, the judges are taking all summer to debate the implications of the case. Their decision on the injunction will be taken as a clear indication of their final ruling on the central plank of the eurozone rescue efforts – the €500bn “firewall” to defend countries such as Spain and Italy from soaring borrowing costs in the financial markets.
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“If they kill the ESM, the next day the euro is gone,” says Arnim von Bogdandy, director of the Max Planck Institute for Comparative Public Law in Heidelberg. “They see that, and they cannot do it.”
Even the country’s strongest critics of the eurozone rescue measures, and Germany’s role as the biggest guarantor of emergency lending, admit that they do not expect the plaintiffs to win the day.
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The challengers (including the far-left Linke, the only party in the Bundestag to vote against the two treaties in question; and 35,000 citizens supporting the More Democracy movement) argue that the ESM – and the fiscal pact – are instruments that will undermine the sovereignty of the Bundestag, the national parliament, transfer powers to Brussels without democratic control and expose the nation to incalculable future costs.
“They may give a signal for further steps to protect the constitution,” says Oliver Sauer of the Centre for European Policy, one of Germany’s rare eurosceptic think-tanks. “Certain state competences must be preserved.
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Only a certain amount of integration is compatible with the Grundgesetz. I don’t think they will say [the ESM] is not acceptable at all. They will say: ‘Yes, but . . .’”
It is the “but” that matters, however. The judges have taken a string of recent decisions reprimanding Chancellor Angela Merkel’s government on questions ranging from her eurozone crisis management to the treatment of asylum seekers and the law governing the conduct of future general elections. The question on this occasion is just how far they will seek to tie the hands of the government and the Bundestag – which in July approved the treaties with a two-thirds majority – in pressing ahead with moves towards a “fiscal union”.
The court’s ruling is expected to build on a series of decisions – on the 2009 Lisbon treaty that redesigned EU institutions, and the first bailout for Greece in 2011 in particular – questioning how much further integration would be compatible with Germany’s constitution, and how far its taxpayers could guarantee the rescue funds.
On Lisbon, the judges ruled that the primacy of European jurisdiction, when exercised in Germany, “only extends as far as the Federal Republic has agreed to this . . .and was constitutionally entitled to do so,” says Christian Calliess of Berlin’s Free University. “Such national reservations are very sensitive issues from a European perspective – on the basis that there is no unity without primacy,” he wrote in a recent paper for the College of Europe in Bruges. “If the 27 constitutional courts of the member states were to follow the example of the German constitutional court, European law would become a fragmented legal system indeed.”
He and other legal experts believe the court may use this opportunity to suggest a national referendum is held before further powers, such as budget sovereignty, are transferred to EU institutions.
Until now, the idea of such a referendum has been anathema to the political establishment. The fear has been that it would undermine parliamentary democracy, as the Nazis did in the 1930s. The same dark history shaped the creation of the constitutional court. “After the dictatorship of the Third Reich, the mothers and fathers of the Grundgesetz had to think about dealing with a situation where a majority might abuse fundamental human rights,” says Christine Hohmann-Dennhardt, a former member of the court, now on the board of German carmaker Daimler. “They decided that we needed an independent judicial authority which can have the last word to clarify such questions.”
Karlsruhe has a history of defending the rights of the individual – for example, to data protection or a minimum standard of living. “They give a voice to those parts of the population that don’t have an influence,” says Prof von Bogdandy. “It is largely successful. The court enjoys very high public reputation.”
That is why politicians and commentators are loath to criticise it. In Brussels and other European capitals, officials who negotiate with Germany constantly wonder at its extraordinary influence. Some suspect it is used by Ms Merkel and her ministers as an excuse for not making concessions – for example, on accepting the introduction of eurozone bonds as a joint liability instrument in the sovereign debt markets.
Roman Herzog, president of the court from the late 1980s and German president in the 1990s, argues its authority has deep historical roots. “The 19th century in Germany saw a constant struggle to increase the power of parliament. It never succeeded,” he says – at least until the abdication of Kaiser Wilhelm II in 1918. “Instead, democracy in Germany developed through the courts.
“At first people believed in the monarchy. Then they believed in the wisdom of popular representation. But since 1930 at the latest – not only since 1933 – we knew that representative democracy could be responsible for any stupidity. Then all that was left was the judiciary. That’s probably the thinking behind it.”
There is little doubt that Ms Merkel is frustrated by the court. After a recent judgment that the government was not keeping the Bundestag adequately informed of its moves in the eurozone crisis, she was reported to have told a meeting of her CDU executive: “I have reached my limit.” Yet she would not say it publicly. Her complaint is that, in effect, she is required to reveal her negotiating tactics in the Bundestag before applying them in Brussels.
The judges are unrepentant. At the core of their concern is the “eternity clause” in the Grundgesetz, which states that there shall be “no amendment” to the principles of inviolable and inalienable human rights. Germany is a “democratic and social federal state”, with its authority derived from the people exercised “through elections and other votes”. (Another clause, however, commits the country to work towards a “united Europe”.)
In their ruling on Lisbon, and again on the Greek bailout and the creation of the European Financial Stability Facility – the temporary fund that will be replaced by the ESM if it gets past the court – the judges expressed concern that an effective transfer of budget sovereignty to EU institutions affected a fundamental pillar of national democracy.
Andreas Vosskuhle, president of the constitutional court and chairman of the chamber responsible for the European judgments, revealed some of his thinking in a recent interview with the Frankfurter Allgemeine newspaper. Asked about partially transferring budget sovereignty from the Bundestag to European institutions, he said: “There is not much scope left for the transfer of further core competences to the EU. If it were thought necessary to cross this borderline – which may certainly be politically acceptable and desirable – then Germany will have to have a new constitution. For that, a referendum would be necessary.”
Mr Schäuble, too, has dared to raise the prospect of a plebiscite to open the way to further integration. On Monday, Sigmar Gabriel, leader of the Social Democrats, backed a plan calling for the drafting of constitutional changes to be put to a referendum. All the leading parties are pro-European but as the general election of September 2013 approaches, the issue is likely to become more divisive.
Academics such as Prof Calliess and Prof von Bogdandy are dubious about the referendum tool, for which there is no provision in the constitution except to change the borders of the 16 federal states. “Can a referendum overturn the eternity clause?” Prof Calliess asks. “We said it could never be abolished, except by a revolution.”
In testing the constitutionality of the ESM and the fiscal pact, the judges in Karlsruhe must balance the competing demands of the eternity clause, and the commitment to a “united Europe”. But one thing is sure. They do not want a revolution.
National parliament: How a cautious court benefits the Bundestag
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The institution that has gained most power from the rulings of the German constitutional court on European legislation is the national parliament.
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“We are seeing a new architecture in the relationship between the government and parliament,” says Norbert Lammert, who has won a reputation as an independent-minded Bundestag president, although he is formally a member of Chancellor Angela Merkel’s Christian Democratic Union. “I wouldn’t be surprised if we see a parliament which doesn’t always simply accept what the government places before it,” he told the Financial Times. “Parliament might make its own suggestions more often.”
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The court in Karlsruhe decided in its 2009 ruling on the Lisbon treaty, which advanced the integration of the EU, that the Bundestag should play a more forceful role in scrutinising European legislation, and that the government should inform parliament of its negotiating position before each European Council meeting.
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The judges had questioned democratic control as exercised by the European parliament – in particular because it is not based on one person, one vote, with every member state represented strictly according to population size. In their ruling on the legality of the European rescue funds and the fiscal pact agreed at the start of this year, they are again expected to stress the need to reduce the EU’s “democratic deficit”.
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Democratic control is at the heart of the challenge to the treaties tabled by the More Democracy civic movement. It is represented in court by Herta Däubler-Gmelin, former Social Democrat justice minister.
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“The democratic deficit is so problematic because the future of European monetary union is being decided without proper parliamentary oversight,” she says. Because the two treaties are intergovernmental rather than EU documents (largely because of UK refusal to participate), the European parliament is not fully involved in their implementation.
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“It is not a theoretical argument,” she says. “It is clear from practical experience that this extraordinary project of Europe is simply not feasible without democratic support. I see no other possibility than closer co-operation in Europe. But it must not mean democracy gets left behind.”
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Copyright The Financial Times Limited 2012.
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