The Euro and German Democracy

Yesterday, Germany’s Supreme Court decided that the “European Stability Mechanism [EMS]” did not violate Germany’s constitution, the Grundgesetz [Basic Law]. It also stated however, that Germany’s current liability stops at the level of the 190 Billion Euros the country had so far contributed to the so-called “Euro rescue umbrella” financed by all European Union members. Any future contribution will require the official agreement of Germany’s representative on the ESM board, which in turn requires a decision by the German parliament.

All of this might sound dry and boring, but it has significant repercussions. Over the last year, Germany and the other stronger EU countries had constructed the EMS to save the Eurozone from collapse. In a series of crisis moments, the chancellors, prime ministers, and presidents–the executives–of these countries have increased the amount of the ESM. But people wondered: Does this group of people even have any legal grounds on which to act? Basically, they were changing each participating nation’s budget without going through the normal budgeting process, promising huge amounts of taxpayer money to be spent in the case of another Euro nation’s collapse. In Germany, a group of people sued the government, arguing that the current legislation does not provide for such a sweeping handover of German budgetary authority to the supra-national body of the EU. This was the lawsuit the Supreme Court in Karlsruhe decided yesterday.

What makes the decision so historic, are basically two things: First, the Supreme Court enabled Germany and the EU to come to the rescue if the currency crisis worsens again. Second, the Court put the sovereign, a.k.a. the German people via their elected representatives, back in charge. The hope is that this will also have a signal for strengthening parliamentary control in the EU in general, where executive power has trumped the elected parliament repeatedly in recent years.

Here’s more in an article in the international edition of the German weekly Der Spiegel.


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