By Chris Cermak

KARLSRUHE (MNI) – Germany’s Constitutional Court may have paved the
way for ratification of the European Stability Mechanism, but
Wednesday’s ruling suggests the judges will remain in the game as the
Eurozone embarks on a more fundamental overhaul of monetary union.

While the court backed Europe’s latest crisis-fighting measures, it
set conditions for ratification that include a strict cap on Germany’s
liabilities under the ESM rescue fund, and the close involvement of the
lower parliament, the Bundestag, in all ESM programs going forward.

That puts the decision in line with the Constitutional Court’s
track record of keeping Germany’s parliament involved in the European
decision-making process, and suggests Germany will need more fundamental
constitutional changes if Europe moves towards a full monetary union.

The eight-member “Senate” panel in Karlsruhe will also get another
crack next year at the ESM and “fiscal compact,” which aims to tighten
enforcement of EU budget rules. The court’s “summary decision” Wednesday
only rejected temporary injunctions filed against the two treaties.

Court President Andreas Vosskuhle said the summary judgement –
reached after an unprecedented three-months of deliberations – found
the two treaties to be constitutional “with a high probability”. Court
experts agree the panel is extremely unlikely to reverse its decision in
the main proceeding, given its clear interest in removing uncertainty.

But that does leave some details for the main review: notably, the
court reserved the right to conduct a full review of the European
Central Bank’s new OMT bond-buying program, though it rejected a
temporary injunction sought against the ECB’s plans.

The ECB’s OMT program is closely linked with the ESM, as the
central bank insists it will only consider buying sovereign debt on the
secondary market from countries that first sign up for an aid deal with
the bailout fund. Opponents argue it, too, imposes potential liabilities
on Germany that the Bundestag cannot control.

Vosskuhle, in summarizing Wednesday’s decision, suggested the court
will maintain its laser-like focus on preserving democratic
accountability, though he praised government efforts to ensure recent
EMU legislation didn’t infringe on constitutional principles.

“How long and how far these (government) efforts will carry in the
end however – in light of also opposite tendencies – remains to be
seen,” Vosskuhle said. “In contrast, one thing is certain: only as a
democratically-legitimate community, governed by laws, does Europe have
a future.”

Even with ESM and fiscal compact now cleared, it seems a German
referendum on European integration may be more a question of when, not
if, assuming plans for deeper European integration – banking union,
fiscal union, political union – move forward.

Wednesday’s decision reaffirmed its finding, initially made in a
2009 review of the EU’s Lisbon Treaty, that the Bundestag “must
retain control of fundamental budgetary decisions even in a system of
intergovernmental governing.”

Vosskuhle has already suggested Germany will at some point run out
of room to delegate more powers to European institutions without making
more fundamental changes to its constitution.

Already in 2011, shortly after the court’s ruling on the EFSF and
Greece rescue package, Vosskuhle said “more Europe is barely allowed in
the basic law,” in an interview with Germany’s Frankfurter Allgemeine
Zeitung.

Policymakers seem well aware that a public referendum may be needed
at some point in the future. ECB Executive Board member Joerg Asmussen
said last week: “There will be a point, especially in Germany, when the
population will have to be asked directly.”

German Finance Minister Wolfgang Schaeuble told Spiegel in June
that a referendum will “happen more quickly than I would have expected a
few months ago.”

Yet there are other voices. Former Constitutional Court judge Udo
Di Fabio, who authored the court’s Lisbon Treaty decision, told Spiegel
in July that there is still plenty of room left in the constitution for
further European integration, as long as the Bundestag maintains a key
role in the process.

Even Vosskuhle insists he is not anti-European, merely a supporter
of more democracy in Europe. But his comments suggest at least some of
the court’s judges could be prepared at some point to force a referendum
in Germany, if policymakers don’t take the first step.

“We are guaranteeing that the basic values of our constitution are
not lost on the path to deeper European integration. Most of all, we
value the democratic right of citizens to influence this process through
parliament. In that sense, the court is furthering European
integration,” Vosskuhle told German weekly Die Zeit in June.

— Frankfurt bureau: +49 69 720 142; email: ccermak@mni-news.com —

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