Das Ende?

Almost four years after we voted to leave the European Union (EU), Boris Johnson delivered on his promise to 'GET BREXIT DONE'. Little did we know at the time (on 31^st January 2020) that the year was going to bring its own woes, which are now threatening to bring down the European dream of unity, solidarity, and borderless territory.

In addition to the increasing number of victims across the world due to Covd-19, the European Union has been dealt the biggest blow of all by one its more prominent members: Germany. It is still baffling that the ruling earlier this month by the German constitutional court of Karlsruhe received scant media attention despite its significance.

Germany vs the EU

The German court has challenged the European Central Bank's (ECB) extensive bond buying exercise, questioning the proportionality of the programme giving the ECB three months to justify its actions. The ruling could easily be dismissed as mere power play by the most powerful member of the Union, but it has deeper meaning. With our departure, the European Union has lost of its biggest contributors to its budget and no one is willing to foot the bill.

The outbreak has exposed economic disparities and raised tensions between a disunited union but not to worry the ECB will step up and it did. Christine Lagarde did a 180 by announcing in March 2020 that the ECB would be launching a €750bn bond-buying programme. This move led to an unprecedented set of events culminating in the ruling in Karlsruhe that the ECB's move to flood the system with cheap credit was in breach of German law. Worse, the Bundesbank may not be allowed to participate in any future financialisation programme – and may be compelled to liquidate the 30% it currently holds. Several people in Brussels have expressed rather meekly that EU law supersedes national law, but this does not appear to the case.

Back to the future

In order to understand the significance of what transpired in Germany, one must refer to an earlier judgement by the same federal court on 30^th June 2009. At the time, there were concerns about the European Constitution, and whilst Germany eventually signed the Lisbon Treaty, it did so by adding notwithstanding clauses to protect German sovereignty. These include:

1. Article 23 of the Basic Law grants powers to take part in and develop a European Union designed as an association of sovereign states (Staatenverbund ). The concept of Verbund covers a close long-term association of states which remain sovereign, a treaty-based association which exercises public authority, but whose fundamental order is subject to the decision-making power of the Member States and in which the peoples, i.e. the citizens, of the Member States remain the subjects of democratic legitimation.
2. a) In so far as the Member States elaborate treaty law in such a way as to allow treaty amendment without a ratification procedure, whilst preserving the application of the principle of conferral, a special responsibility is incumbent on the legislative bodies, in addition to the Federal Government, within the context of participation which in Germany has to comply internally with the requirements under Article 23.1 of the Basic Law (responsibility for integration) and which may be invoked in any proceedings before the Federal Constitutional Court.
3. b) A law within the meaning of Article 23.1 second sentence of the Basic Law is not required, in so far as special bridging clauses are limited to subject areas which are already sufficiently defined by the Treaty of Lisbon. However, in such cases it is incumbent on the Bundestag and, in so far as legislative competences of the Länder are affected, the Bundesrat, to assert its responsibility for integration in another appropriate manner.
4. European unification on the basis of a treaty union of sovereign states may not be achieved in such a way that not sufficient space is left to the Member States for the political formation of economic, cultural and social living conditions. This applies in particular to areas which shape the citizens' living conditions, in particular the private sphere of their own responsibility and of political and social security, protected by fundamental rights, as well as to political decisions that rely especially on cultural, historical and linguistic perceptions and which develop within public discourse in the party political and parliamentary sphere of public politics.
5. The Federal Constitutional Court examines whether legal instruments of the European institutions and bodies keep within the boundaries of the sovereign powers accorded to them by way of conferral (see BVerfGE 58, 1 <30-31>; 75, 223 <235, 242>; 89, 155 <188>: see the latter two concerning legal instruments transgressing the limits), whilst adhering to the principle of subsidiarity under Community and Union law (Article 5.2 ECT; Article 5.1 second sentence and 5.3 of the Treaty on European Union in the version of the Treaty of Lisbon < Lisbon TEU >). Furthermore, the Federal Constitutional Court reviews whether the inviolable core content of the constitutional identity of the Basic Law pursuant to Article 23.1 third sentence in conjunction with Article 79.3 of the Basic Law is respected (see BVerfGE 113, 273 <296>). The exercise of this review power, which is rooted in constitutional law, follows the principle of the Basic Law's openness towards European Law (Europarechtsfreundlichkeit ), and it therefore also does not contradict the principle of sincere cooperation (Article 4.3 Lisbon TEU); otherwise, with progressing integration, the fundamental political and constitutional structures of sovereign Member States, which are recognised by Article 4.2 first sentence Lisbon TEU, cannot be safeguarded in any other way. In this respect, the guarantee of national constitutional identity under constitutional and under Union law go hand in hand in the European legal area. (See full text here).

The end of the Eurozone?

It is undeniable that this latest judgement has raised serious questions about the future of the Eurozone. Will member states bow down to German constitution or will they try to emulate the German constitutional court to challenge the European Court of Justice? Germany was not the only country weary of the Lisbon Treaty. Both French and Dutch citizens rejected the European Constitution in 2005 (which later morphed into the Lisbon Treaty). Now the same accord is threatening the very foundation of the union. When the judgement in Karlsruhe was pronounced in 2009, there were concerns about its future implications but all that mattered then was that the Germany would sign the Treaty.

The ruling at the time was a real pandora box, which is now exacerbating tensions and could break up the union. Why would Germany's constitutional court take such a stance at such critical moment in the project's history? Could it be that the economic disparity between southern and northern country could disrupt German financial stability? Germany is probably one of the countries which has benefitted the most from the introduction of the Euro but has the single currency passed its sell by date? With this financial uncertainty Python for Finance can be the answer if there is any fiscal tightening and shortage of liquidity in the eurozone. 

As Spain, France and Italy push for fiscal union, Germany cannot fathom using its well-earned cash on countries that have failed to impose economic discipline. Any move towards fiscal union would be political suicide for Angela Merkel's Christian Democrats who have not fared well in regional elections as Alternative for Germany gained a foothold in the parliament.

Ramifications for the UK

The United Kingdom can breathe a sight of relief since it left the EU on 31^st January 2020. Who will the UK deal with should it sign a barebone agreement by the end of the year? Will any disagreement be resolved by different constitutional courts in each member state? This demonstrates that the European Union is an ideology. It only seems to live in the minds of those who believe in its existence. Any extension will equate to an act of self-sabotage now. However, one question remains, why was this not brought to the attention of her Majesty's government sooner?