How should Brussels respond to Germany’s constitutional court issuing a “declaration of war” on the EU’s legal order? Less than a week after the explosive Karlsruhe ruling, the options are coming into view.
Out of all of them, the European Commission’s “nuclear” option is an infringement procedure against Germany, where Berlin’s government would be taken to court (yes, the European Court of Justice). Ursula von der Leyen, commission president, on Sunday said Brussels "will look into possible next steps, which may include the option of infringement proceedings" in response to pressure for the commission to defend the sanctity of the EU’s legal order against upstart national judges.
Franz Mayer, an influential German jurist, makes the powerful case for the nuclear option in Verfassungsblog. He argues that Karlsruhe’s challenge to the ECJ’s supremacy is a blatant breach of EU law. If it continues, Brussels has little option but to embark on a “calm and civilised” infringement process as laid out under EU law, he says.
There is legal precedent for a member state to be reprimanded over the actions of its courts. In 2018, France was the subject of an infringement over the failings of its Conseil d’État. But the Karlsruhe moment is of a different order of magnitude altogether — both for Germany and the EU. The decision on an infringement will ultimately boil down to politics and not the law.
First, the case for those in favour. By keeping the infringement option alive, Ms Von der Leyen wants to fend off criticism that Brussels is quick to launch legal action against recalcitrant governments in Poland and Hungary, but shies away from the same against its “core” member states. As a German, Ms Von der Leyen is more exposed to that charge than most.
For Mr Mayer, if the commission does not defend the EU’s rule of law, the system risks descending to a “judicial rule of thumb” where the interpretation of the strongest national judges wins. “This will be based on the parameters of size, power, political influence and economic weight of the respective member state,” he warns. For this reason, expect Ms Von der Leyen to keep repeating Brussels’ willingness to take action — including at a hearing with MEPs later this week.
In general, supporters of legal action want the commission to use the full force of its legal armoury to bring Germany’s unruly red-robed judges to heel and set an example for others. They think the threat to the ECJ’s hegemony and the independence of the ECB is so acute that the commission cannot merely stand by and watch. Plenty in Brussels sympathise.
But is legal action the best tool for that job? In practice, it will mean the commission suing the German government for the actions of its independent court in a case where Berlin is not the offender. During the Karlsruhe hearing the government defended the ECB’s bond-buying against the litigants, and last week Olaf Scholz was trying to reassure his fellow finance ministers that a way would be found to keep the Bundesbank involved in bond-buying.
A case would create an invidious situation where Angela Merkel's government is thrown on the defensive and pose fresh legal difficulties about the separation of powers — another EU fundamental right — in Germany. Berlin would not be in a position to issue instructions to Karlsruhe following the infringement given the court’s independence. The result, said one EU expert, would be an "absurd situation" legally.
Commission infringements are also notoriously laborious and can take years to resolve. At their most severe, they result in financial sanctions against said governments. Although they serve a useful purpose in standard violations of EU law, the Karlsruhe judgment poses such profound constitutional questions for the EU, that they won’t be answered by suing Germany. At its essence, the issue is about “who governs the governors?” writes Katharina Pistor.
Still, supporters would argue that even a symbolic legal process is better than nothing. The absurdities of the situation, they argue, should precipitate a serious debate about the relationship between national and supranational courts under EU law. Ultimately supporters want that question resolved not with another legal fudge but a fundamental change to the EU’s treaties to decide the matter once and for all.
Chart du jour: easing up
Asia and Europe have seen steadily falling death rates from the pandemic, turning attention on the US and Brazil as the new epicentres of the disease (chart via FT).
A host of European governments usher in their first steps towards deconfinement on Monday but with warnings ringing about rising infection rates. France will start on Monday the first phase of a three-week deconfinement process where people will be allowed to travel 100km from their homes and use public transport (albeit wearing masks). Belgium will allow all non-essential businesses to open and the Netherlands will partially reopen primary schools. Spaniards outside Madrid and Barcelona will be able to access cafes and restaurants for outdoor services. The UK's Boris Johnson meanwhile has come under fire for issuing mixed messages about allowing Brits to go back to work but keeping most restrictions in place. (Connexion)
Governments are being told to stay prudent. Germany — which lifted restrictions in some states earlier than most — has reported rising infection rates last week, according to the Robert Koch Institute (Reuters). The Sunday Times reports that UK experts have said 100,000 people could die from Covid-19 if the lockdown is lifted too fast. Bloomberg reports on a Harvard study which finds lockdowns should be in place for at least 12 weeks to really make an impact on death rates:
“The lesson for the ongoing coronavirus pandemic in 2020 is that, to curtail overall deaths, the NPIs [non-pharmaceutical interventions] used have to be maintained for substantially longer than a few weeks. Most likely, 12 weeks work much better than 4-6 weeks,” Robert Barro writes in the National Bureau of Economic Research working paper.”
When will it end?
The New York Times digs through the annals of history to discover that pandemics usually end in two ways: medically (when death rates fall) or socially (when fear of the disease wanes and people learn to live with it). Historians now think we may be reaching the point of social “exhaustion” with Covid-19 despite its still fatal health impact.
Brexit’s virtual reality
EU negotiator Michel Barnier and his counterpart David Frost dial in for the resumption of their stalled Brexit talks on Monday. The FT reports that Brussels negotiators want the UK to make progress in key areas like fishing rights and energy if a trade deal is to be struck this year. EU negotiators now think an agreement must be reached by October for ratification to be complete before December 31 .
Revolving door update
The EU’s independent ethics watchdog will give its verdict on Monday on the appointment of a former top banking regulator who is now one of the industry’s chief lobbyists. Last year, Adam Farkas, formerly of the European Banking Authority, took up the role of CEO at the Association for Financial Markets in Europe (AFME), sparking uproar among MEPs who have since banned Mr Farkas from their premises. The Ombudsman’s verdict is out at 10am (CET).
The EU’s three Baltic nations — Estonia, Latvia, and Lithuania — have written to European Council president Charles Michel urging him not to forget the “backbone” of the EU's recovery effort: the single market. The letter calls on Mr Michel to find money in the next budget to fund common projects in the field of transport, energy and digital policy.
Modern monetary nonsense
Willem Buiter lays into advocates of Modern Monetary Theory who think governments can vastly expand their deficits to fight the crisis and suffer few consequences (PS):
“We should anticipate that the year following the end of the Covid-19 lockdown could be when MMT falls flat on its face – starting, perhaps, with a burst of inflation in the UK. But, even barring that specific outcome, policymakers are flirting with disaster if they accept MMT’s main message, which can be paraphrased as: “Deficit, schmeficit. Just boost public spending or cut taxes, then monetize the resulting imbalance.”
Democracy in the time of Covid-19
In the latest Bruegel/FT livestream discussion with EU policymakers, Vera Jourova, commission vice-president for values, will be in conversation with Michael Leigh, senior fellow at Bruegel and Sam Fleming, FT Brussels bureau chief. The online event will be on Thursday at 12:30 CET.
Coming up this week
EU and UK negotiators restart virtual Brexit talks on Monday. Ms Von der Leyen and Mr Michel address MEPs on Wednesday morning over the EU’s recovery plan and next budget. Later on Wednesday, the commission releases its guidelines on how to help revive Europe's tourist sector. Germany’s first quarter GDP figures are released on Thursday, followed by a second reading of eurozone GDP on Friday.
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