Tuesday, 14 July 2009

constitutional court: sovereignty lies in berlin


Berlin has dealt a blow to European unity

By Wolfgang Münchau

Published: July 12 2009 19:55 | Last updated: July 12 2009 19:55

There was a collective sigh of relief in Brussels this month when Germany’s constitutional court ruled that the Lisbon treaty was consistent with German law. This means Germany will be able ratify the treaty before the end of the year.

But not so fast. If you read the entire 147-page ruling, you realise that the court has given a damning verdict on future European integration. For example, it declared a hypothetical fiscal policy co-ordination or the establishment of a single European Union military command as unconstitutional.

The ruling is not only relevant for Germany’s future position on further European integration but also has important implications for anyone who has yet to make up their minds about the Lisbon treaty. The Irish electorate, for example, which will hold a second referendum on the treaty in October, might wish to look closely at the judgment. Those who vote Yes in the referendum will have do so in the knowledge that because of this verdict there will not be another treaty for a very long time. It may be our generation’s last shot.

I want to focus on three aspects of this complex ruling: the separation of powers between member states and the EU; the court’s view of the European parliament; and its view on European integration.

First, Germany’s constitutional court takes a clear stance on sovereignty. Ultimate authority always has to rest in a single place – and that is the member state for now. If you wanted to transfer sovereignty to the EU, you would have to dump your national constitution and adopt a European version in its place. As this is not going to happen, the court, in effect, ruled that all sovereignty in the EU is national. Power may be shared, but sovereignty may not.

Second, the court does not recognise the European parliament as a genuine legislature, representing the will of a single European people, but as a representative body of member states. A particular criticism made by the court is that the European parliament does not behave like a true parliament. There is no formal opposition. There is no grouping that supports a government. While the Lisbon treaty increases the powers of the European parliament, it does not, in the court’s view, fix its ultimate short-coming: that the parliament does not constitute an effective control of EU executive power.

Arguing purely from the narrow perspective of German constitutional law, it is partly for that reason that the court decided to strengthen the relative position of the German parliament. As a result, Germany will be able to ratify the Lisbon treaty only after a change in a domestic power-sharing law.

Third, and perhaps most important, the court has given an explicit opinion on the question of European integration. Where does it end? The answer is: right here. The court said member states must have sovereignty in the following areas: criminal law, police, military operations, fiscal policy, social policy, education, culture, media, and relations with religious groups. In other words, European integration ends with the Lisbon treaty. It is difficult to conceive of another European treaty in the future that could be both material and in line with this ruling.

You might have noted the reference to fiscal policy in the list of policy areas reserved for member states. This is interesting in view of the debate about the policy response to the financial crisis, and the introduction of a constitutional balanced budget law in Germany. I have some sympathy with the court’s view that macroeconomic policy has to be anchored in a firm decision-making structure. In other words, macroeconomic policy cannot be run on the basis of loose inter-governmental co-operation as it is now. In a crisis, somebody needs to be in charge.

But I fear that the court jumped to the wrong conclusion by anchoring the responsibility for fiscal policy exclusively at the national level, once and for all, thus ignoring the economic and geopolitical issues that may arise from the existence of a monetary union.

Consider, for example, the combination of this judgment and the recently-passed balanced budget law, and ask what this will do to the coherence of the eurozone? Some commentators hope the balanced budget law will not be rigorously applied, as it contains several loopholes, such as the Bundestag’s prerogative to suspend the rules in an emergency. But remember, this is not ordinary law; it is enshrined in the constitution. I have no doubt that this hard-headed court will enforce the balanced budget principle like a religious dogma.

In terms of economic policy, the court’s view may have been consistent with the realities that prevailed before the Maastricht treaty in the early 1990s. But a decision that essentially rules out effective economic crisis management in a monetary union, by anchoring all relevant political decisions at the national level, is hardly consistent with a sustainable single currency. Something will have to give, and I would not be prepared to predict what will happen if an actual conflict were to arise.

The court’s judgment reflects the nationalistic, post-Bismarck era political mood in Berlin at the moment. At the very least, anyone locked in a monetary union with Germany should be very worried.

More columns at www.ft.com/wolfgangmunchau

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