An End to European Multilateralism: A Comment on the German Bundesverfassungsgericht’s OMT decision

Oliver Gerstenberg

When it comes to adjudicating the European sovereign debt crisis, the German Bundesverfassungsgericht emerges as a sharply divided court. Back in August 2012, Mario Draghi pledged to do “whatever it takes” to prevent a single currency break-up. His words were followed by the Outright Monetary Transactions Programme (OMT), allowing the ECB to buy unlimited government bonds of over-exposed eurozone countries. The so-called “magic” of the OMT was that it has worked without ever being activated—the statement of a credible commitment alone was sufficient to stabilize markets without the ECB ever having to buy a single bond so far and to stop sovereign bond spreads.

In its pronouncement of February 7, 2014, on whether the ECB’s sovereign bond-buying program is “ultra vires,” the 2. Senate of the BVG, with a majority of 6:2, has for the first time ever turned to the CJEU for a preliminary ruling. But, appearances to the contrary, the deployment of the reference procedure is anything but an act of European-friendliness and judicial comity. The senate’s majority opinion uncompromisingly expressed its categoric view that essentially due to its unlimited nature the OMT programme indeed amounted a “structurally significant transgression of powers” under EU Treaty law: according to the six judges, “there are important reasons to assume that [the OMT-programme] exceeds the ECB’s monetary policy mandate and thus infringes the powers of the Member States, and that it violates the prohibition of monetary financing of the budget.” The consequences of these words are dramatic. For starters, those words may well set the stage for a constitutional conflict between the BVG and the CJEU, should the latter—as observers think is likely—see things differently and provide the OMT with a clean bill of health by declaring it an act of monetary policy. Perhaps even more fundamentally, rather than recant or eat its words, the BVG, upon a future constitutional complaint which the ruling self-consciously invites, has fully put itself on course of ordering Germany to leave the Eurozone entirely. In an ironic reversal of Draghi’s words, and in its own peculiar way, the BVG, too, seems bent on doing “whatever it takes.” Continue reading

The People’s Court

Dr Oliver Gerstenberg

The German Constitutional Court (Bundesverfassungsgericht) in a 7:1 decision on September 7, upheld Germany’s participation in the bailout of Greece. But the Court simultaneously required a strengthening of the role of the parliament by requiring the prior approval of the Bundestag to any larger scale aid measure “taken in a spirit of solidarity.” Overall, the Court’s ruling  expressed a longstanding undertone of Euroscepticism, which increasingly falls in tune with changing public opinion in Germany.

Art. 38(1) of the German Basic Law stipulates that “Members of the German Bundestag shall be elected in general, direct, free, equal, and secret elections. […].” Read in conjunction with Art 20 (1), which enshrines the democratic principle, and with Art 20 (2), “[a]ll state authority is derived from the people” and with the eternity clause of Art. 79(3), Art 38(1) guarantees the sovereignty of the people and, concomitantly, the right of citizens to participate in politics through their vote, as a “quasi-constitutional” [grundrechtsgleiches] individual right, rooted in human dignity. Was the “act of voting” devalued by recent German aid measures for Greece and the Euro rescue package? The complainants, a group of four prominent professors and Peter Gauweiles, argued that it was. In particular, they argued that the rescue measures amounted to a wholesale transfer of an essential and inalienable competence of modern German democratic statehood, the autonomy and democratic control over the national budget, away from German Bundestag  where that control naturally belonged as the locus of democratic legitimacy and accountability, to an abstract “system of intergovernmental governance.”

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