“The Brussels Diary with Yana Toom”: German Court Against Europe

As if the pandemic and its consequences were not enough, lightening struck out of the blue. On 5 May, the Federal Constitutional Court (Germany) delivered a judgement that could lead to a political crisis in the EU.

The German judges attacked the European Central Bank (ECB) – the main bank of the Eurozone. The ECB is quite independent, although restricted by EU laws. Usually, the Central Bank applies an interest rate; however, in the current situation this is impossible, which is why other measures are being taken. In short, the ECB buys the bonds of Eurozone countries in need, i.e. grants them a loan at a low interest rate. This year, the ECB has bought bonds of 30-40 billion euros from Italy. A loan is a loan; formally, everything is in order. However, there is a ‘but’.

Whose money is kept in the ECB? Clearly, money is contributed by the members. The size of contributions given by members varies; for example, Estonia’s contribution is zero point twenty-three per cent of the ECB capital. The principal member is Germany, which provides one fifth of the bank’s capital. This means that help granted to Italy relies mostly on German taxpayers’ money. Some of these taxpayers are not overly keen on this.

German citizens contested the activity of the ECB in the European Court of Justice, which took the side of the bank. The citizens then turned to their national Constitutional Court, which suddenly announced that the activities of the ECB were questionable. Now, the bankers have to prove in three months that they have the right to operate as they are operating. Even worse, the Germans revoked the judgement of the Court of Justice – this has never happened before.

What does this all mean? There are people who believe this to be nothing special: the judgement delivered is ludicrous, and for years German judges have been hinting to their colleagues at the Court of Justice that they are cut from the same cloth. These two courts have been dancing the tango for a long time. By the way, the Court of Justice responded immediately by stating that the Germans were threatening the common legal order in Europe. Germany cannot revoke a decision of the Court of Justice – and that is that.

Nevertheless, a writer from the Financial Times is convinced that the ECB is unable to provide any explanations and that the judgement on 110 pages includes everything that would force the bankers not to help Italy and Greece with overly large amounts of money.

This dispute between a national court and the Court of Justice plays directly into the hands of other countries. If Germany does not accept the supremacy of European Union law, nothing will keep Hungary and Poland from showing disobedience to Brussels. The Polish prime minister is not even trying to hide how glad he is about this turn of events.

Now, if the judges will not be satisfied with the explanations they demanded, they can order the Central Bank of Germany to exit the ECB programme, which could easily lead to the start of the end of the EU. Everyone will be a loser, including Germany. This is like shooting your own foot not once but emptying an entire magazine into it. The decision of the German court was criticised by the president of the Bundestag and Ursula von der Leyen, the President of the European Commission, who has threatened to lodge a complaint against her homeland of Germany with the Court of Justice.

Conspiracy theorists are speculating that Germany might want to destroy the EU and establish a new, smaller and more solid, union on its ruins. It may also be that the Germans are preparing us for extensive changes during their time of presidency of the Council. By the way, the presidency of Germany begins in July.

I am not a conspiracy theorist and I hope that the German court is simply dancing the tango. One thing is to love dancing; the other is to know how to dance. In the midst of a crisis, such dances do not seem appropriate.

Leave a reply

Your email address will not be published. Required fields are marked *