Sven Giegold
Member of the European Parliament – Greens/EFA Group

Speaker of the German Green Delegation

Letter to Ursula von der Leyen on Europe Day: EU Commission considering of infringement proceedings against Germany

Dear interested,

 

On the occasion of Europe Day with the 70th anniversary of the Schuman Declaration I wrote to the President of the Commission, Ursula von der Leyen. Over the last eleven years I have helped to shape the monetary union and the EU’s financial market policy. I was involved in the creation of single banking supervisor in the ECB as rapporteur in the European Parliament. And it is precisely as a German MEP focusing on economic and monetary affairs that the recent ruling of the German constitutional court on the ECB bond purchasing programme PSPP has left me no peace in the last few days.

 

In a record time of only two hours on Europe Day, Commission President Ursula von der Leyen responded to my letter calling for infringement proceedings. In it, she says that an infringement procedure is being considered.

 

This is good news for the European community of law. In order to protect the monetary union from worse, the EU Commission must protect the community of law. This gives the ECB and the Bundesbank room to look for pragmatic solutions to protect the Euro.

 

It was important for me to write this letter as a German MEP. It is gratifying that Ursula von der Leyen is showing so much determination to defend the European community of law on Europe Day.

 

Best European regards

Sven Giegold

 

 

You can find an unofficial translation of my letter and the Commission President’s response below.

 

 

LETTER TO THE PRESIDENT OF THE COMMISSION

 

Düsseldorf/Brussels, 9 May 2020

 

Dear Madam President of the Commission von der Leyen

 

70 years ago visionaries laid the foundations of our European Community of law. Today, it is precisely this community of law that is threatened by the recent escalation of a dispute that has been smouldering for many years between the German Federal Constitutional Court and the European Court of Justice. The European Monetary Union as the subject of this dispute over the Community based on the rule of law comes at an inopportune moment in view of the deepening of divisions in the eurozone as a result of the Corona crisis.

 

The Federal Constitutional Court forces the German Bundesbank as well as the Federal Government and the Bundestag into a conflict with the ECB. Although the Federal Constitutional Court rejects many of the claims and therefore leaves room for the Eurosystem to continue its bond purchases. However, the court demands a more detailed demonstration of a proportionality test. As such, the Federal Constitutional Court’s ruling did not attack the independence of the central banks per se. It is precisely the political independence of the ECB and the national central banks, as well as the ECB’s unique power, which is probably unique in the world, that provides good reasons for the legitimacy and necessity of judicial control. The reasons for the judgements of the European Court of Justice and the Federal Constitutional Court in fact show which debates in the European Parliament should have been conducted more deeply in the context of the monetary policy dialogue – admittedly as European debates.

 

Now the judges in Karlsruhe are offering the ECB Governing Council the opportunity to avoid the Bundesbank’s withdrawal from the PSPP by means of a new, more precisely justified decision. This would enable the ECB to comply with the ruling of a national court to which it is not subject in any way. In this way, the ECB could just let the Karlsruhe demands stand in the room. However, this would only be a short-term gain at best, as the conflict with the economically even more important bond purchases under PEPP is already apparent in the ruling. De jure, the PSPP ruling expressly does not apply to PEPP. However, it is to be feared that the Bundesbank, the Federal Government and the Bundestag now feel obliged to take action at least against the current conditions of PEPP. Therefore, the consequences of the Karlsruhe ruling are too serious to ignore it.

 

But the importance of the decision for the European Community of law is more fundamental than for monetary union. We live in times of many signs of renationalisation, attacks on democracy and the rule of law in several EU member states and a lack of European cohesion in the crisis. In these times, the decision has the effect of inviting other national supreme courts to declare European decisions to be “ultra vires”, thus circumventing the interpretation of European law by the European Court of Justice in the ultimate instance.

 

The construction of the European house has already survived many crisis situations thanks to a mixture of clarity in European policy objectives and pragmatism in its approach. It would therefore also be a mistake here if all the European institutions were now to ignite the fuses set up by the Federal Constitutional Court in the PSPP ruling. Ultimately, this European conflict must also be resolved by a face keeping compromise. There is more room for pragmatism in the area of monetary union than in that of a community of law. An escalating conflict over bond purchases between the Bundesbank and the ECB would simply not help the stability of the monetary union. On the other hand, all EU institutions must now clearly back the European Court of Justice. The Council of Member States and the European Parliament are called upon to adopt appropriate declarations without delay. But as guardian of the treaties, the European Commission is first and foremost called upon. It must initiate infringement proceedings against the Federal Republic of Germany on the basis of the judgement. The objective of establishing a violation of the treaty does not force the Commission to strive for more extensive sanctions. Whoever says A does not have to say B in view of the independence of courts involved. But the EU Commission must leave no doubt as to which side it is on. This clarity on the part of the guardian of the treaties would also give urgently needed room for pragmatic solutions in the Eurosystem. In view of the lack of a common fiscal policy, we need a common monetary policy more than ever for the stability of our currency. At the same time, the court ruling in times of higher debt in the wake of the Corona crisis is a wake-up call to step up political efforts to achieve a deeper common fiscal and tax policy. The forthcoming German and French presidencies offer a good opportunity to do so.

 

Yours sincerely

Sven Giegold,

 

Greens/EFA coordinator in the European Parliament’s Committee on Economic and Monetary Affairs

 

Text of the original German letter: https://wolke.netzbegruenung.de/s/b8gNss2okKygCAb

 

 

RESPONSE BY THE PRESIDENT OF THE COMMISSION

 

Translated from the original German answer here: https://sven-giegold.de/antwort-uvdl-auf-brief-bverg/

 

“Dear Member,

I share your view that the recent ruling of the Federal Constitutional Court raises questions that touch the very core of European sovereignty. Questions that are important not only for the Union’s monetary policy, but also for the rule of law in the EU. I can assure you: The Union’s monetary policy is a matter of exclusive competence. EU law takes precedence over national law, and of course the rulings of the European Court of Justice are binding on all national courts. The European Court of Justice in Luxembourg always has the last word on EU law. I take this matter very seriously. The Commission is now in the process of analysing in detail the more than 100-page judgment of the German Federal Constitutional Court. On the basis of these findings, we are considering possible next steps, including infringement proceedings.

The European Union is a community of values and law, which we will uphold and defend at all times and in all directions. That is what holds us together.

 

With best regards

Ursula VON DER LEYEN

President

European Commission.”

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