Munchau: why the German Constitutional Court could reject the Recovery Fund

Wolfgang Munchau has written an article on his blog, Eurointelligence , which strongly questions the possibility that the Recovery Fund will pass the examination of the German Constitutional Court unscathed, and does not seem to be completely wrong.

According to the German constitutional lawyer, Benedikt Riedl, reported by Munchau, the court will not accept all the arguments of the appellants, but some would have a very good chance of being upheld.

In previous EU cases, the court has always ruled against the applicants, but has established fixed points which have since formed the position of the German government. In this case, as Riedl argues, there is a non-trivial risk that the court could issue an injunction against German law, and even end up ruling in favor of the plaintiff. All this, however, is consistent with the Court's previous interpretation of German constitutional law. We advise readers not to take the result for granted.

There are several delicate points:

• the EU should not include loans among the instruments at its disposal, a very German topic already discussed in the past;
• The legal basis for the Recovery Fund, or NGEU is the art. 122 TFEU, which states that "If a Member State is in difficulty or is seriously threatened by serious difficulties caused by natural disasters or exceptional events beyond its control, the Council, on a proposal from the Commission, may grant, to certain conditions, financial assistance to the Member State concerned “. But strictly understood it means that these means must be used to repair the damage of the "natural disaster", not for long-term programs such as digitization. So the obligation to spend 30% on digital should disappear. The Commission cannot use the excuse of the emergency pursuant to art. 122 TFEU to make its own economic and fiscal policy. Yet even the German government has repeatedly mentioned this point in Parliament
• Thus the German constitution states that the Bundestag is fiscally sovereign, which means that decisions made outside of Germany – a default by a member state on its debt – should not Constitute a constraint for the German parliament and this has always been a fixed point of the previous sentences. The loan for the entire € 75obn program is guaranteed by the Member States, so that the default of one would have to be financed by the other countries, placing a constraint on the non-constitutional German Bundestag.
• Another problem is the long maturity of the loans, which will not be repaid in full until 2058. It is not reasonable to expect that there will be no emergencies in the future. a new application of the same NGEU criterion would make European debt and economic policy something permanent.

There are a number of subtle issues to be addressed in this case, such as a precise determination of the maximum risk size for Germany. How the EU raises the funds will also be an issue.
At this point it would be wise for the Commission to come up with a Plan B, with much less resources or with the possibility of continuing without Germany. An increasingly probable possibility.

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The article Munchau: why the German Constitutional Court could reject the Recovery Fund comes from ScenariEconomici.it .

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This is a machine translation of a post published on Scenari Economici at the URL https://scenarieconomici.it/munchau-perche-la-corte-costituzionale-tedesca-potrebbe-bocciare-il-recovery-fund/ on Wed, 31 Mar 2021 16:53:25 +0000.