A ‘walk-back’ is American political jargon to describe the strategic retreat that politicians sometimes make when an initiative stirs more political controversy than expected, or when they simply say something stupid or ill-considered. Barak Obama’s recent effort to find a compromise on the exemption for religiously-affiliated employers providing contraception and other reproductive health coverage under his new health-care plan is an example of the former; Newt Gingrich’s innumerable efforts to dig the toenails out of his gums after shoving his foot in his mouth are examples of the latter (moon base anyone?).
Alas, sometimes scholars must also do some walking back from time to time—albeit never of the import, say, of the Obama example, or (hopefully) required to correct the sheer stupidity of the many Gingrich examples.
In my case, I’d like to walk back a bit from a post of November 9, 2011, entitled Greek ‘Sovereignty’ and European ‘Democracy’, whose imprecision on a key point has been troubling me for a while. The vote of the Greek parliament on Sunday night on the most recent round of austerity measures (under Eurozone, and particularly German, pressure), combined with rioting in the streets of Athens, have shown that the time is right to make plain some of my reservations about that earlier post.
I stand by much of the post’s claims regarding the evolving nature of sovereignty and democracy in the face of functional and political demands, not least flowing from past choices. But there was an element of my discussion that has always caused me a bit of concern. Here are the key passages:
Certainly the Greeks are paying a severe price for their past profligacy, as well as for their failure to live up to legal commitments as members of the Eurozone. And perhaps the Greeks did not fully understand, or did not want to understand (out of a prestige imperative), what these commitments entailed when they first undertook them nearly a decade ago. . . .
( . . . )
Whether the delegation of power is to an institution operating inside or outside the nation-state, the key moment of democratic and sovereign decision necessarily comes at the moment of delegation itself, subject to forms of ongoing national participation in subsequent decision making pursuant to that delegation.
It is in this sense that the situation of Greece today is better understood, not as the negation of its sovereignty or democracy, but rather as the (very) painful realization of these concepts in their modern guise. Greece is now paying the price for its prior commitments. And if the Greek people did not understand that price initially, they certainly understand it now.
There is much that remains true in these statements. But the problem is not merely that they are insensitive to the plight of the Greek people. Rather, they are also not entirely accurate as to what the law is, or should be, with regard to democracy, delegation, and the enforcement of prior commitments, whether supranational or otherwise.
Ironically, I am led to this view by statements of Udo Di Fabio, until very recently a judge on the German Federal Constitutional Court, in his December Der Spiegel interview that was the subject of a post here last month. When Di Fabio got to the question of supranational policing of national commitments in the integration process, he was (surprisingly for his interviewers at least) somewhat flexible. But he noted this ‘sticking point’: ‘If financial guarantees were to become colossal or Germany were to be made liable against its will, then the judges would perhaps say: This can no longer conceivably be regarded as covered by the principle of democracy’. Note that the test articulated by Di Fabio is two-fold: not merely ‘liable against its will’ (the standard delegation concern) but also ‘colossal’ liability (even if entered into knowingly).
It is the second, ‘colossal’ test that my last post failed to explore more fully. My thoughts on this point are still inchoate, and I certainly invite readers’ comments to help me clarify. My sense here, based on conversations with a few German colleagues, is that Di Fabio was driving at a subtle distinction in German constitutional law between, on the one hand, the so-called Parlamentsvorbehalt (or the scope of normative power that, in any instance of potential delegation, must be reserved to the national parliament), and, on the other, the Wesentlichkeitstheorie (the ‘theory of essentialness’, or the notion that ‘essential’ questions cannot be delegated outside the parliamentary realm at all). Obviously, the two concepts are related, with the Parlamentsvorbehalt (or Vorbehalt des Gesetzes, as it is sometimes called) perhaps being merely the operationalization of the theory of essentialness. But arguably the theory of essentialness is more demanding, in that it implies that there are some matters that are not merely NOT subject to delegation, but also NOT subject to legislation, consistent with maintaining the democratic character of the state. Even if the German Bundestag wanted to do so, it could not undertake such ‘colossal’ financial commitments to the EMU that would undermine the democratic capacities of future parliaments. (German readers, please correct me if I’m wrong on this.)
Let’s assume that the German jurisprudence in fact expresses more general principles as to the relationship between democracy and delegation. Might we then say that Greece, in its ill-considered accession to the currency union, with all the attendant downside risks that that choice entailed, made such a ‘colossal’ commitment? Might we then say that, on this basis, the original legislative decision was itself unconstitutional? If the answer to this question is ‘yes’, then obviously I need seriously to reconsider (or at least to qualify) my earlier statement that ‘the situation of Greece today is better understood, not as the negation of its sovereignty or democracy, but rather as the (very) painful realization of these concepts in their modern guise’.
I am led down this path of reflection after reading a passage from an opinion piece by the always-excellent Ambrose Evans-Pritchard. An extended quotation is worthwhile:
Premier Lucas Papademos [of Greece] pleaded for national unity . . . . “We are just a breath away from ground zero. A disorderly default would set the country on a disastrous adventure. Living standards would collapse and it would lead sooner or later to an exit from the euro.”
Well, perhaps, but remaining in EMU is also a disastrous adventure, and living standards will certainly collapse, which is why it ultimately makes no difference whether or not the Greek parliament backs the latest accord (I write before knowing the outcome of Sunday’s vote).
The policy cannot command democratic consent over time. The once dominant Pasok party has collapsed to 8pc in the polls. Support is splintering to the far Left and far Right, just like Weimar Germany under the Bruning deflation.
(. . . )
If you think, as I do, that Greece did indeed commit a host of sins but is also the first of several victims of a mad ideological experiment that shackled together economies with different growth rates, wage bargaining systems, productivity patterns, sensitivity to interest rates, and inflation proclivities – without fiscal transfers or sufficient labour mobility to cushion the effects – and that this disaster was compounded by Germany’s (beggar-thy-EMU-neighbour?) wage squeeze, and compounded yet further by sharp monetary and fiscal contraction at the wrong moment in the states most at risk, then you will expect the crisis to grind on whatever happens in Greece.
This last paragraph is critical, because it summarizes so succinctly the problems with the EMU, not just in implementation but also in actual design. Although national high courts are loathe to involve themselves in the ‘expediency’ of a particularly policy choice (l’opportunité as the French put it), the ‘colossal’ test suggests that, at the outer margins at least, where the policy choice is so thoroughly risky (or when those risks are sadly realized, as in the ‘mad ideological experiment’ that is the EMU), then judicial intervention may be appropriate.
And I am not just talking about Greece here (I frankly don’t know the jurisdiction of its high courts). Rather, as Andreas Voßkuhle, the President of the German Federal Constitutional Court, was quoted as saying in a speech last week, ‘It would be tragic and fatal if we were to lose democracy on the road to saving the euro and to more integration’. Indeed, Voßkuhle is apparently much more concerned than Di Fabio about the democratic implications of delegating supranational authority to enforce national commitments to fiscal discipline. But beyond that question, there is the problem of Germany’s ‘colossal’ exposures in the event of a Eurozone break-up (a topic that takes us into the risks associated with the so-called TARGET2 payment system, which will have to await another post). As Evans-Pritchard concluded:
The EMU end-game is harrowing for Greece, but it is also ghastly for Germany. Berlin has accumulated ruinous liabilities without yet solving anything, and is fast squandering sixty years of diligent statecraft.
By demanding a budget viceroy for Greece, and now an escrow account to seize Greek revenues at source, the Merkel-Schäuble government has crossed a diplomatic line and brutalised EU politics. “Memorandum Macht Frei”, as one Greek newspaper splashed.
Would Konrad Adenauer ever have made such a blunder?
I’ll leave it at that for now. There is still a great deal I need to think about. But the question that is pressing on me is this: Is Germany’s blunder not merely political or economic, but also constitutional? If that is the case for Germany, it is certainly the case for Greece. And the costs of unwinding that disaster, not just for the Eurozone but the world, may truly be ‘colossal’.