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Monday, June 03, 2013

The future of the eurozone: Will it be the lawyers who have the last laugh?

Update 18:00 The new German anti euro party Alternative für Deutschland have put out a press release claiming that di Fabio's report is a "body blow for the euro rescuers" and that he is corroborating AfD's stance that the ECB's bond buying constituting illegal state financing.


We have frequently pointed out the significant role played by the German Constitutional Court in the eurozone crisis, including before it came to be in vogue. The Court is due to hold hearings next week into the ECB’s handling of the eurozone crisis, specifically whether the legality of the new OMT bond-buying programme. In an interesting development ahead of the hearings, Udo Di Fabio – a prominent legal scholar and former German Constitutional Court judge has warned that if the Court rules that the ECB has violated its ban on state financing, in the most extreme case, the Court could then commit the German Parliament and Government to withdrawing from the euro.

This is the key quote from his report:
"If the rulings of the Constitutional Court were unsuccessful in influencing the federal acting bodies, it [the GCC] would have to make an extreme-case ruling that the further participation of Germany in such a system would be constitutionally untenable."
This is admittedly an unlikely scenario – we expect the Court to approve the measure albeit with some additional conditionality and carefully expressed warnings for the ECB not to go too far – this has been standard procedure in the big EU/eurozone cases recently. Ultimately, despite the legal ambiguity surrounding the ECB and the wider handling of the eurozone crisis, the Court is mindful of the fact that it does not operate in a political vacuum. Di Fabio’s warning does however highlight that compliance of the German legal establishment cannot be taken for granted indefinitely.


Rollo said...

As OE mentions, the judges on the Court understand that they have their hands tied by political pressures: they have to allow Germany to bleed money towards the rest of Europe, though they know the legality is very dubious; They are still swayed by ghosts of the past into giving in.

Anonymous said...

Call me cynical but.....the er, GCC has not had any material impact on Germany's participation in the EU or Eurozone.....

Suspect as you indicate, a slight reprimand or warning at most - the GCC in all matters European appears to have been neutered at birth ....but then, the EU has not been substantially challenged by anyone or anything ....classic case of sovereignty does not rule sadly

Anonymous said...

Smoke and mirrors.

The German "Constitutional" court is just one more tool that the Eurofascists wield to add a patina of legitimacy to their tyranny through the EUSSR and other globalizing weapons.

That court will do what so many other cowardly institutions have already done: what the banksters tell it to do.

christina speight said...

There's one thing that';s certain and that is the PEOPLE will never have the last laugh or even get consulted unless they fight for it.

The EU is undemocratic and likes being that way for it doesn't have to bother about elections - or AUDITS

the lawyers are happy too with an endless supply of bones of unknown origin to pick over at enormous fees.

What Open Europe is doing trying to shore up this disgraceful edifice while all the while the EU impoverishes almost all the rest of us.

Denis Cooper said...

It's easy: if the German court says that the actions of the ECB breach the German constitution then the case will go to the ECJ, which will say that the actions of the ECB are OK under EU law and therefore the Germans must change their constitution.