The recent decision of the Constitutional Court of Karlsruhe (Germany), which directly challenges the way the European Central Bank (ECB) has implemented the quantitative easing program since 2014, directly calls into question, among other things, the institution of the European Court of Justice.
The European Court of Justice has ruled since 2018 in favor of the ECB’s quantitative easing program and in accordance with European rules, with this decision in force that European law prevails over national law.
What does the decision of the German Constitutional Court mean?
The decision of the German Constitutional Court makes it even more difficult to deal with the economic crisis resulting from the attempt to deal with the Covid-19 pandemic.
It takes just three months for the German Federal Government to justify its involvement in the ECB’s quantitative easing program, proving that the so-called proportionality applies.
The implications of the consequences of the decision of the German Constitutional Court can be summarized as follows:
1. Strengthens within Germany the ECB’s critics, who have been accused for several years (from 2014 until today) that the implementation of the quantitative easing program indirectly finances European economies and governments of specific eurozone member states (via government bond market).
2. It directly challenges the institution of the European Court of Justice, which since 2018 has issued a ruling in favor of the ECB’s quantitative easing program.
3. The German Constitutional Court is setting off an uncontrollable “bomb” on the foundations of the ECB and the Eurozone (EU), repeating in its own terms the controversy that has engulfed Brexit. More specifically, Brexit supporters wanted to put an end to the jurisdiction of the European Court of Justice, which was binding on the British Courts.
4. The possibility of Germany’s cooperation in issuing a Eurobond is further removed.
5. Significant political pressure is exerted on the ECB, even though the ECB has institutionalized independence.
Germany’s Indifference to the EU
Germany is the EU member state with the strongest economy. In recent years, it has shown a lack of European course and strongly does not support the pioneering ideas of French Liberal President Emmanuel Macron on the evolutionary course of the EU. France has political ideas, political will, and ability equally but no economic power. Germany has economic power but not political will.
Germany is refusing to increase its net contribution to the European budget to cover the net contribution of the outgoing UK.
At the same time, Germany is putting the German rebates on the table of European talks, following a policy first implemented by the UK under Prime Minister Margaret Thatcher (1979-1990).
The issue becomes even more complicated and as the Covid-19 pandemic in Europe tackles the economic crisis, Germany is increasing public spending to support the German economy by €1 trillion while not accepting a €30 – € 40 billion increase a year for the European budget.
Political parties in Germany, whether they belong to the German government or belong to the German opposition, have a common political line on this issue.
None of these political parties wants to increase Germany’s net contribution to the European budget, nor to issue a Eurobond, nor to guarantee EU bank deposits.
The growing European budget is creating a wave of malfunctions that are not helping to deal with crises together, reflecting the indifference of many member countries’ governments to future EU integration.
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