Wednesday, 13 May 2020

Is EU heading for another constitutional crisis?

It is not one of the obstreperous newcomers, Hungary and Poland, challenging the EU establishment this time, but founder-member Germany. Euronews reports:

“If every constitutional court of every member state starts giving its own interpretation of what Europe can and cannot do, it’s the beginning of the end” proclaimed MEP Guy Verhofstadt last week.

The beginning of the end of the EU? Even by Verhofstadt’s usual punchy standards, this was quite punchy.

His comments followed an explosive decision by the German Constitutional Court, which ruled that the European Court of Justice had acted outside its mandate in allowing the European Central Bank's quantitative easing measures. German judges have now given the ECB a three-month deadline to produce a proportionality assessment that justifies its two-trillion-euro bond-buying to keep Germany’s central bank participating. Essentially, the court is challenging the ECJ’s supremacy.

But the Commission President has hit back. Ursula von der Leyen – herself German – exclaimed yesterday: “The final word on EU law is always spoken in Luxembourg. Nowhere else.” The Commission is even talking about taking legal action against the German government. The Vice President, Věra Jourová, said: “We will look into possible next steps, which may include the option of infringement proceedings”.

Now that seems both pretty unlikely and pointless. It's also a provocation the German Chancellor, Angela Merkel, will want to avoid. But the threat will help protect Von der Leyen from allegations she is being soft or favourable towards Germany. So what will this "extraordinary judgement" actually change?

Well, in the short term, not very much. For now, the ECB has no need to stop any of its bond-buying, but will it heed the German court’s demands to produce a “proportionality” assessment on the impact of Quantitative Easing within three months? And if it does produce one, who judges it as meeting the required criteria? Essentially, the European Court of Justice might well get involved again.

In many ways, the German court was reflecting a sense of national public opinion – the deep frustration that Germany is unjustly underwriting the debts of other countries.

It also got to the intrinsic problem at the heart of the EU. For years the ECB has provided cover for governments that have failed to deal with the fiscal implications of a monetary union. This is a sign that those same eurozone governments might have to get their act together.

But there are wider implications, too. The ECJ enforces the rules, regulations and laws of the European Union, of the single market. And that’s led some EU politicians and some German politicians to worry. The leader of the European People’s Party, Manfred Weber, has said: “The supremacy of EU law is at stake, which, for example, keeps the single market together and gives investors the confidence to invest in all corners of Europe. Politicians celebrating this ruling should be careful what they wish for.”

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