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Nicolas Goetzmann: "Germany seeks to Germanize European law"

2020-05-06T16:00:20.042Z


FIGAROVOX / INTERVIEW - In an ultimatum to the ECB, the German Constitutional Court threatened to exclude the Bundesbank from its policy of buying debts. It is a virulent challenge to the primacy of European law and an additional sign of the weakening of the community structure, believes Nicolas Goetzmann.


Nicolas Goetzmann is responsible for research and macroeconomic strategy at Financière de la Cité.

FIGAROVOX.- The German Constitutional Court asked the European Central Bank to justify the purchases of debt from the German Bundesbank on behalf of the ECB. Could you detail this judgment and the questions it raises?

Nicolas GOETZMANN.- The German Federal Constitutional Court plays a particular role in Europe by recognizing the capacity to control the limits of competence of European law, so that the latter respects “German constitutional identity”, which is a flaw in the principle of the rule of European law. This role was regularly justified by the attitude deemed "constructive" by the Court of Karlsruhe and its influence on European law, perceived as a form of support. This contrasts sharply with the violence of the judgment on the monetary policy of the European Central Bank rendered on May 5. In the present case, after having been seized on a question of regularity of the European quantitative easing program set up by the ECB in 2015, the Court then itself seized the Court of Justice of the EU (CJEU) for rule on the matter. On this basis, the CJEU, on December 11, 2018, validated the action of the ECB: since the objective of the monetary stimulus program was to allow the ECB to fulfill its mandate of price stability, it was justified and therefore "proportionate". It is this analysis of the CJEU which is attacked directly by the German constitutional judge, considering on the one hand that the CJEU rendered a decision "incomprehensible" and which also represents "an abuse of authority" .

The underlying idea is that the ECB debt buy-back program is behind low rates, which would penalize savers.

In the present case, the Court considers that the action of the ECB is not "proportionate" because it considers that the monetary authority cannot "do everything" to fulfill its mandate of "near inflation" but less than 2% ” because it must also take into account the consequences of this monetary stimulus program, in particular and mainly on savers. The underlying idea is that the ECB's debt buyback program is behind low rates, which would penalize savers. This corresponds to a deep concern of the population in Germany for which the Federal Court is the voice.

To remedy this, the Court asked the ECB to show it, within 3 months, that its action was proportionate, otherwise the Bundesbank will cease its participation in the quantitative easing program.

The first question raised is that of the legitimacy of the German constitutional judge who now considers himself a European supreme judge, the words used with regard to the CJEU are violent, and tend to considerably weaken the principle of the rule of European law. By this decision, the Court of Karlsruhe no longer accompanies European law - which was already a problem - but ostensibly seeks to play a role of Germanization of European law.

The second question raised is obviously monetary, because the ECB finds itself weakened in its action at the very moment when it must be bold. We are therefore in the presence of a situation where the Federal Constitutional Court attacks the building wall of the European Union, the rule of European law, on the basis of an economic error which stems from its lack of understanding of monetary mechanisms.

Does this judgment, which reduces the ECB's room for maneuver, endanger the future of the single currency?

The ECB can very well choose not to respond directly to the Karlsruhe Court because it is not subject to its authority. This is not the case with the Bundesbank , the German Central Bank, which today finds itself caught between its obligation to respond to requests from the ECB, but which is also subject to the German constitutional judge. It will therefore be up to the Bundesbank , and its president, Jens Weidmann, to respond to the Court's requests, within 3 months.

The consequence of this judgment reinforces the idea of ​​a rotten European Union.

Regarding the future of the euro zone, the problem is indeed major. The questioning of the participation of the Bundesbank in European monetary policy shatters Mario Draghi's "whatever it takes" in 2012, that is to say the idea that the ECB will do everything in its power to "preserve the euro" . Beyond the problems posed in the short term, this decision sends a message to the ECB, it will have to be careful in its actions if it does not want to deprive itself of the participation of Germany. It is a warning. However, the current economic context of the European Union, and in this case, the euro area, is dramatic. Strong and unreserved action by the ECB is necessary to deal with it. Without this, we can prepare for a new decade lost in Europe. The consequence of this judgment - beyond the risk of an explosion in the euro zone - rather reinforces the idea of ​​decay, of a Europe sinking into its streak of slow growth, high unemployment, and inaction by authorities.

It is not the first time that the German Constitutional Court has questioned the authority of a European institution. Isn't Germany more attached than ever to the defense of its national sovereignty? What lessons should the French learn from it?

Germany occupies the vacuum left by France. The course of these last years shows a strong loss of influence of France at the European level. We have seen this with François Hollande's Growth Pact in 2012, but also with Emmanuel Macron's Eurozone Budget, not to mention the French proposals - the Coronabonds - to combat the effects of the crisis. French proposals are emptied of their content before being implemented, which simply allows French leaders not to lose face at the national level. This May 6, the Jacques Delors Institute published a survey highlighting the distrust of the French with regard to the European Union, and in particular on what would be a disagreement of the French with regard to the culture of compromise and the negotiation that would reign in Europe. It seems biased to me.

The voice of France weighs less and less in the functioning of the European Union.

The functioning of the EU is more the result of power struggles than compromises, which is clearly demonstrated during the European Councils. However, the voice of France weighs less and less. Despite appearances Emmanuel Macron does not get more results than François Hollande, precisely because there is a refusal to enter into a logic of power relations with Berlin. Compromise and negotiation are an illusion fostered by the concept of "Franco-German" couple. It is this loss of influence and this weakness of Paris that is regretted by the French. And the logical consequence is that Germany fills this void by imposing its choices. We can still see it with this decision. But this is not inevitable.

Source: lefigaro

All news articles on 2020-05-06

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