At the moment, the German Federal Consitional Court - the German Supreme Court - is occupied with a case concenring the constitionality of the European Central Bank purchasing government bonds on the secondary market.
One side - represented by the head of the German Central Bank, argues that if a state should default on bonds purchased by the ECB, among others the German Central Bank and consequently the German people would be financially responsible. This, he argues, requires a mandate of the German parliament, which however does not exist. For that matter, there exists no mandate for fiscal policy of whatever kind.
The other side, represented by the German Asmussen who in turn represents the ECB, argues that the purchase of bonds has to be understood as a necessary option to stabilize the currency, for which the ECB already was mandated by the parliament.
Here is the translated final piece of an interesting article of the German newspaper "Handelsblatt" on the matter.
http://www.handelsblatt.com/meinung/...8318136-7.html
Is that okay? A necessary evil? I find it a bit disturbing how openly the court seems to piss on the rule of law. Then again, the German constitutional court has quite a reputation with regards to making politics on his own account*, so simply bending laws for already established policy should be expected I suppose.
*A recent example is the Constitutional Court ruling that Turkish journalists had to be guaranteed seats in the trial of German murders of (Turkish) immigrants (no Turkish newspaper managed to get a seat - though not due to some bias of the court, just were too late). As reasonable as that may be, quit some nerve to claim that the constitution says so.
**Though I would not be surprised if that too was accompanied by the German government advising the court.
One side - represented by the head of the German Central Bank, argues that if a state should default on bonds purchased by the ECB, among others the German Central Bank and consequently the German people would be financially responsible. This, he argues, requires a mandate of the German parliament, which however does not exist. For that matter, there exists no mandate for fiscal policy of whatever kind.
The other side, represented by the German Asmussen who in turn represents the ECB, argues that the purchase of bonds has to be understood as a necessary option to stabilize the currency, for which the ECB already was mandated by the parliament.
Here is the translated final piece of an interesting article of the German newspaper "Handelsblatt" on the matter.
Quote:
|
Already last summer The British Guardian reported, that, while a judgment on the ESM by the constitutional court still was underway, actually illegal direct contact between the Constitutional Court and the federal government "at the highest level" had taken place. Already a week before the judgment of 12 September 2012 the "Süddeutsche Zeitung" correctly predicted the ruling - its content had been leaked from the court to the ECB, the Federal Government and leading investment banks long before sentencing. Before the (new) case against the EZB itself the German Constitutional Court is similarly outspoken. Already at a reception of German students at the University of Oxford in October last year - actually a rather unusual setting for the appearance of the fifth highest man of the Federal Republic, and perhaps one of the reasons for the lack of time of the Court - president of the court Voßkuhle revealed in a causal gathering, despite the obvious mandate violation by the central bank and the concerns of the Bundesbank, that the German highest court will not stand in the way of the ECB. He would postpone the judgment until further notice and in the end would circumvent a ban of bond purchases by Draghi. Similar if perhaps more gentlemen-like formulated information was given to the Deutsche Bank and other leading banks. How most of all the ECB is will informed, Draghi accidentally hinted himself in his press conference of 6 June 2013. He said to be sure that the court would not stop the OMT program, he also was sending its director Asmussen, who "is very close to the German legal system." This Freudian slip of his tongue was removed discreetly from the text subsequently published by the ECB. It was one of the few indiscretions that befell the ECB President in his public appearances. The remark confirms also on account of the ECB that busy wheeling and dealing is going on closely behind the scenes between the Court, the Ministry of Finance (Asmussen's former employer) and the ECB. The excellently informed Reuters news agency has reported a few days ago with reference to court sources that it was conceivable that for the first time the Constitutional Court will call the European Court on the issue of bond purchases. This would be a first, the German court would give up its own jurisprudence to check all acts of the European institutions with regard to the constitutionality of the German territory in the last instance. To Voßkuhle and his colleagues, however, this option offers the advantage to shift responsibility to another court, whose preference for European integration in matters of principle leave no room for doubt. Alternatively, it is conceivable that the Constitutional Court will wave through the ECB's bond purchases with the proven "Yes, but" formula: Yes to the OMT program, but the ECB must take care in own responsibility, that in the future its functioning and independence won't be tied up by its monetary policy. Parliamentary supervising, of course, would not be possible. Since its Maastricht judgment twenty years ago, the Federal Constitutional Law takes on a leading and law-distorting role on questions of European integration and the dismantling of basic democratic rights. It is the self-understanding of the rule of law that both the Government and Parliament must act only within the limits of the Constitution, and that under the separation of powers, an independent supreme court is to watch over any violations. Meanwhile however, the Federal Constitutional Court has rendered the rule of law a matter of convenience. To uphold the law, which the ECB feels assured to count on, the German judges lack the necessary courage and character. |
Is that okay? A necessary evil? I find it a bit disturbing how openly the court seems to piss on the rule of law. Then again, the German constitutional court has quite a reputation with regards to making politics on his own account*, so simply bending laws for already established policy should be expected I suppose.
*A recent example is the Constitutional Court ruling that Turkish journalists had to be guaranteed seats in the trial of German murders of (Turkish) immigrants (no Turkish newspaper managed to get a seat - though not due to some bias of the court, just were too late). As reasonable as that may be, quit some nerve to claim that the constitution says so.
**Though I would not be surprised if that too was accompanied by the German government advising the court.