German Constitutional Court (Matthias Hangst/Getty Images)
We don’t like what the European Central Bank is doing – but if someone is going to drop a nuclear bomb on the eurozone, it won’t be us. This seems to be the main message in today’s judgment from Germany’s constitutional court on the ECB’s Outright Monetary Transactions programme.
The OMT is an initiative aimed at saving the eurozone with large-scale ECB purchases of the bonds of governments vulnerable on financial markets, in return for a commitment to deep-seated economic reforms. Germany’s Bundesbank and much of the German public have never warmed to the OMT – even though the programme has never actually been used and, some experts think, never will be.
So the German court’s judgment will come as a relief to Mario Draghi, the ECB president, and all those who hold that the OMT, unveiled in August and September 2012, is the single most important reason why Europe’s monetary union no longer appears in mortal danger. But mixed with this relief will be a feeling that the German court’s judgement is not entirely helpful – and that some of its arguments are not particularly well-founded.
Judges of the German Constitutional Court (Matthias Hangst/Getty Images)
In the beginning, the eurozone crisis was a banking sector, private debt and government bond market emergency. Then economic recession, unemployment and welfare expenditure cuts took hold, propelling the growth of anti-EU, anti-establishment and anti-immigrant political movements. Now the eurozone crisis is acquiring a third dimension: one in which national constitutional courts are moving to centre stage.
True, the judges sitting on Germany’s constitutional court have been going in this direction since 2009, when they issued a judgement on the EU’s Lisbon treaty. But before the eurozone crisis erupted in full force, such rulings were fairly uncontroversial. The judges could reasonably argue in 2009 that they were simply testing if the new EU fundamental treaty was compatible with the democratic principles of Germany’s 1949 constitution, known as the Basic Law.
Now that the eurozone crisis has pushed the German government and the European Central Bank into once unimaginable measures to rescue the 17-nation currency bloc, the constitutional court has parked itself on wholly different territory. The judges would indignantly contest this, but when the court opened hearings in June into the legality of the ECB’s actions to protect the eurozone, it looked from the outside very much as if the judges had appointed themselves the supreme law lords of European integration – to the exclusion of any other EU or national legal authority.
Here are the pieces that got us interested today: