There was a lot of EU-related news on Wednesday 12th September 2012: besides the eagerly-awaited decision of the German Federal Constitutional Court (located in Karlsruhe), J. M. Barroso addressed the European Parliament in his “State of Union” speech, and Dutch voters elected their new MPs.
This article will focus on the first event: the constitutional judges gave the green light to the German ratification of the TSCG (Treaty on Stability, Coordination and Governance) and of the ESM Treaty (European Stability Mechanism). They declared these two treaties compatible with the Grundgesetz, with some interpretation’s restrictions.
This decision was awaited not only by jurists, but also by political and economic circles. Let us take advantage of this opportunity to discuss the links between Politics and Law.
What are the outlines of the judgement of the Bundesverfassungsgericht?
The German constitutional judges have put two conditions to their approval of the ratification of the two European Treaties which had been challenged by several organisations and elects: the respect of the Parliament’s right to be informed and the respect of the Parliament’s fiscal sovereignty.
The constitutional court has recalled a former decision of September 7th, 2011 (on Greece’s rescue and on the EFSF), in which it stated that the decisions on public receipts and expenses had to be left to the Parliament, as it is an essential basis of the democratic self-determination process.
The judges have also specified that the Parliament would have to be consulted in case the current amount of loans and guarantees (around 190 billion euros for Germany) were to be exceeded. This means that automatic changes by European organs or by the ESM itself would not be compatible with the German constitution.
Furthermore, the German solidarity should benefit other countries only if the counterparties given by the latter are clearly determined. That way, the judges have excluded any “blank check” for other countries. Nevertheless, they have defined that the amounts must have a certain importance (which is the case, in the current situation). Besides, the Bundestag shall have the opportunity to control the good use of the granted funds.
Moreover, the Parliament must be sufficiently informed, without any limitation that could potentially result from the duty of discretion imposed on all ESM members and collaborators.
The judges want the two interpreting conditions (information and fiscal sovereignty of Parliament) to be guaranteed in the concerned treaties or, at least, in the ratification laws.
Apart from these two requirements, the federal constitutional court has declared that both treaties (TSCG and ESM Treaty) were compatible with the German constitution.
First, they have noticed that, if there was indeed a significant change in the functioning of the European and Monetary Union (EMU), the latter nevertheless continued to base on principles guaranteeing its stability, such as the independence of the ECB, the duty of fiscal discipline for all Member States and the national fiscal sovereignty (and responsibility). Article 136, §3 of the TFEU does not transfer new powers to the EU; it only opens the possibility to set up a stability mechanism. The effective establishing of such a mechanism requires the ratification of the Parliament. That way, there is still a potential for scrutiny.
The loss of voting rights for a country that does not meet its deadlines for payments to the ESM is not contrary to the Grundgesetz either, as the Parliament is responsible for fiscal decisions and, as such, has the duty to respect the commitments it has agreed to.
Furthermore, it is not proved that the maximal amount set for the German contribution (around 190 billion euros) exceeds what is bearable for the German budget. So, according to the judges, there is no reason to believe that this amount would lead the German fiscal sovereignty to become a void concept. Additionally, it was the Parliament’s competence to assess that the costs of contributing to the ESM were greater than those incurred in case of an absence of trans-European solidarity.
Moreover, the ESM Treaty must be interpreted in a manner compliant with the other EU Treaties. It is therefore excluded that the ESM could be used as a vehicle for States’ financing by the ECB. It is worth noting that the decision taken by the ECB on September 6th, 2012, to buy sovereign bonds on the secondary market, was not challenged in the frame of this case.
The constitutional court also specifies that the ratification laws of both treaties guarantee in a sufficient manner the Parliament’s implication on the national level and the sharing of competences within it (among the plenary, the budget commission and a special commission).
Regarding the TSCG, its content does not make a big difference with the constitutional limit of deficits (Schuldenbremse) and with the rules set in the TFEU. The TSCG does not foresee any intervention of EU organs in the national fiscal decision-making process: neither the competences of the European Commission, nor those of the European Court of Justice preclude the exercise of national sovereignty. And drawing inspiration from the yearly economic recommendations of the EU Council and the Commission does not imply transferring new competences to the EU; European rules on this matter are more institutional than material.
Finally, the constitutional judges remind us that the ratification of these treaties is not irreversible, in accordance with international custom.
Let us also note that the Bundesverfassungsgericht does not exclude changes in European or German (if appropriate, constitutional) law! By doing so, it shows that Law provides a structural and procedural framework for political decision-making, but does not impede evolutions.
On the relationship between Law and Politics
It is important to keep in mind that Law is fundamentally political: it is determined by democratically elected representatives.
As the German constitutional court puts it, Law provides a procedural framework, guidelines, and rules intended to make smooth political decision-making and life in society possible.
This framework has to retain some stability, some continuity. Yet, it should be able to evolve and adapt to the political and economic situation. It is not the judge’s role, in its judgements and decisions, to express political opinions aimed at keeping the current Law.
Meanwhile, elected representatives should not hide behind legal arguments to fight necessary political changes and to avoid difficult choices. In my opinion, it is in such a way that the recent decisions of the Bundesverfassungsgericht should be understood: the German constitutional judges are not against the European integration, they do not exclude a change in the (European or German) Law, but they require the respect of democratic guarantees, via the respect of the Parliament’s rights, and they want the elects to behave responsibly and to modify existing norms if they want to adopt a new political path.
Note: This article has also been published on the “EU Law Blog” of King’s Student Law Review (KSLR) on September 28th, 2012.