The Federal Constitutional Court (FCC) of Germany this week attacked one of the fundaments of the European Union, the primacy of Union law. It is long settled practice that, in its field of operation, EU law has superiority over national law.
The FCC of Germany has also rejected the primacy of decisions of the European Court of Justice (ECJ), over decisions of national courts, on the meaning of EU Treaties.
The FCC has furthermore attacked the independence from the politics of any one country, of the European Central Bank. It instructed the German Bundestag and the German government to ensure that the ECB did a new analysis of its bond buying programme in light of the principles it laid down. Failing that, the ECB bond buying in question should not be applied in Germany, it said.
This is wrong. It is not the prerogative of any one EU country to instruct the ECB!
I remember how, at the Dublin EU Summit of 1996 which I chaired, Helmut Kohl defended the independence of the soon to be created European Central Bank. He did not want member states to be able to pressurize it to pursue loose monetary policies.
Now, A German Court wants a German government to interfere with the independence of the ECB, something that would have horrified Helmut Kohl.
The decision that the German FCC announced this week was about the bond purchasing programme of the European Central Bank instituted by Mario Draghi to support the Euro in the wake of the 2008/10 economic crisis. This bond buying programme was known as the PSPP.
The ECJ had found this PSPP programme to be legal under the EU Treaties, in a decision on 11 December 2018. The German Court this week flatly rejected this ECJ decision. It described it as “untenable”.
It condemned it in the following terms;
“In its Judgment of 11 December 2018, the ECJ held that the Decision of the ECB Governing Council on the PSPP and its subsequent amendments were still within the ambit of the ECB’s competences.
This view manifestly fails to give consideration to the importance and scope of the principle of proportionality (Art. 5(1) second sentence and Art. 5(4) TEU) – which applies to the division of competences between the European Union and the Member States – and is simply untenable from a methodological perspective given that it completely disregards the actual economic policy effects of the programme”
The German Court added that the PSPP bond buying programme of the ECB is “ultra vires (beyond its powers) and not to be applied in Germany” and instructed the German authorities to this effect.
It even criticised the methodology of the ECJ in reaching its decisions. A remark designed to annoy.
The EU can only work if its laws are interpreted consistently in all 27 EU member states. If a German Supreme Court can overrule the ECJ interpretation of the EU Treaties, so also could the Hungarian Supreme Court or the Polish Supreme Court.
Soon we could have 27 different interpretations of what EU law meant, and the EU Single Market would quickly disappear!
The German Court did say that it was not making a decision about the more recent bond buying programme, introduced in the wake of the Covid 19 outbreak, and which is supporting countries like Italy and Spain, hardest hit by Covid 19.
But the logic of the German FCC’s decision this week clearly implies that it would also find against that programme too when, as is likely, the same German litigants bring a case against the new programme before the German courts.
A major showdown is now inevitable, at a time of maximum vulnerability for the European economy.
A robust answer must be given by the EU institutions to the German Court.
The Inter governmental Conference, including the then German government, that finalised the Lisbon Treaty in 2007 said, when it promulgated that Treaty ;
“In accordance with the well settled case law of the EU Court of Justice, the Treaties and the law adopted by the Union on the basis of the Treaties, have primacy over the laws of Member States, under the conditions laid down by the said case law”.
The European Heads of Government, including Angela Merkel, must urgently reaffirm that declaration, and declare their unequivocal support for the ECJ decision of December 2018, and for the independence of the ECB from the authorities of Germany, and from those of any other EU state.
By undermining the ECJ, the German Court is providing a precedent that could be used by semi authoritarian governments in some EU states, who do not like some EU decisions on matters like the rule of law , academic freedom, or media pluralism.
To be fair, the doctrine underlying the German Basic Law is one which has democracy, and respect for democratic procedures, at its centre. The German Federal Constitutional Court has frequently defended the democratic prerogatives of the German Federal State.
It has, however, failed adequately to recognise that the EU is a democracy too.
It has an elected Parliament, to which the ECB accounts for itself.
That is where German concerns should be pursued, by political means, and not by mischief making court cases, decided by judges who set themselves above the European Union.