Published in Business Spectator (Melbourne), 12 July 2012
It was Thomas Jefferson who once said that “those who desire to give up freedom in order to gain security will not have, nor do they deserve, either one”.
In today’s euro crisis, this quote needs to be modified: Those who desire to give up democracy in order to gain economic stability may also end up empty-handed.
This is the question at stake in the German Federal Constitutional Court. Germany’s highest court is currently considering an injunction to stop the German president from signing international treaties to establish a permanent European rescue fund and new fiscal rules for EU members. Markets are watching anxiously as they fear that constitutional difficulties will prevent the next bailout rounds and an eventual mutualisation of European debt.
What the court needs to consider is this: Can the continued shifts of power from national parliaments (like the Bundestag) to unelected and unaccountable European institutions (like the European Stability Mechanism) be reconciled with the principles of parliamentary democracy and the rule of law? Is it right for elected lawmakers to divest themselves of their most fundamental responsibility, the right to decide on the use of taxpayers’ money?
These are not primarily economic questions. These are questions that go to the very heart of a country’s system of governance. They demand a reflection on nationhood, sovereignty and constitutionalism, and thus they go far beyond the short-sightedness of modern politics. Staving off Spanish banking collapse may be the priority of the day. But if this short-term fix requires radical changes in the relationship between the citizen and the state it is only right and just that the constitutional legality of such manoeuvres is established.
To Europe’s top decision makers this procedure is most annoying. They are used to deploying hundreds of billions at the stroke of a pen. They are not used to having to explain the legality of their complicated dealings to anyone. And they are unwilling, or maybe simply unable, to explain to parliamentarians what they are doing, let alone explain it to their peoples. Now in the face of the German Constitutional Court they have to do just that.
At Tuesday’s court hearing the worlds of politics and the law clashed. On the one hand, German Treasurer Wolfgang Schäuble warned that delays in the ratification of the ESM Treaty could have severe implications for the economy. On the other, the court’s President Andreas Vosskuhle underlined that a country’s constitution was valid also in times of crisis.
Vosskuhle is right, but he could have been clearer. When, if not in times of crisis, does a constitution really matter? A constitution that only works in a fair-weather democracy with an evenly rotating economy is of no great value. It is precisely in times of crisis when a country’s foundations are tested and need to be maintained. Jefferson’s warning not to give up one’s deeply-held values for an uncertain temporary gain come to mind.
After the catastrophe of the “Third Reich” and the Holocaust, West Germany created a constitution that made it virtually impossible to deviate from the principles of a democratic republic. The Basic Law contains a so-called ‘Eternity Clause’ in Article 79 (3) to lock in these principles and prohibit amendments to alter them.
Treasurer Schäuble, a trained lawyer, is only too aware of the constitution’s limits. He knows that a hollowing out of parliamentary democracy by transferring power to institutions like the ESM cannot easily be squared with the Basic Law. It would almost certainly clash with Article 79. And it would always involve lengthy trials in the Constitutional Court to assess the legality of every single euro rescue plan.
However, Schäuble also knows that the Basic Law leaves a loophole that would make it possible to shorten the length of eternity.
According to Article 146 of the Basic Law the constitution “shall cease to apply on the day on which a constitution freely adopted by the German people takes effect”. By drafting a new constitution and putting it to a referendum, the built-in safeguards of the Basic Law could be overcome. Take out the principles of democracy, curb the power of the Constitutional Court, enshrine a permanent shift of sovereignty to the EU and all of the measures the court currently debates would be automatically legal. Little wonder that Schäuble recently raised the possibility of holding a referendum on a new constitution.
Whether the German people would actually give up the Basic Law that, by and large, has served them well over the decades, is debatable. It is even less certain whether they would do so in order to transfer more money and power to Brussels, Athens or Madrid. If opinion polls are anything to go by, there does not seem to be any such appetite among the Germans. And rightly so, why should they be enthusiastic about curbing democracy only in order to take on other countries’ debt?
This makes the current court proceedings all the more important. Should the Constitutional Court now block the immediate signing of the new euro treaties, and should it eventually declare these moves illegal, it would effectively mean the end of debt mutualisation and probably also the end of the euro in its current form.
To those Germans who want to keep their democracy, who still hold seemingly antiquated beliefs in national sovereignty, and who refuse to give up their Constitution’s celebrated values for the dubious benefits of moving into a European superstate, the Constitutional Court may well be their last hope.
If, however, the court lets these latest laws pass, the transfer of sovereignty from national capitals to European bureaucracies may indeed prove to be irreversible.