A New Hurdle for Europe: German Parliament Slows Euro Rescue Decisions

Published on Spiegel Online International, by Ralf Neukirch, Christian Reiermann and Christoph Schult, October 23, 2011.

… The complication is the result of a ruling by Germany’s constitutional court, which grants the Bundestag a substantial say in crisis measures. But the German government is also at fault. To convince euro skeptics in its own ranks to approve the bailout fund, it allowed the parliament to give itself far more influence than required by the judges on the constitutional court in the southwestern city of Karlsruhe. 

The budget committee is now authorized to participate, at an early juncture, in almost every measure taken by the bailout fund.

Chancellor’s Hands Tied:

The first test of the new crisis procedure already proved to be problematic. In the past, the heads of state and government approved measures at EU summits that then had to be ratified in the national parliaments. But now, under the new German laws, Germany’s representatives will have to follow the parliament’s instructions. As a result, the chancellor will now have to enter the negotiations with her hands more or less tied.

The outcome became clear in last week’s conflict between Germany and France over the configuration of the European Financial Stability Fund (EFSF). The governments of the two countries were sharply at odds over how to boost their financial strength, when members of the German parliament began getting involved. The first, on Wednesday morning, was Free Democratic Party (FDP) floor leader Rainer Brüderle, who said that his members of parliament would not address the summit until it was clear what exactly was to be decided there. Brüderle and his CDU counterpart Volker Kauder had agreed to convene the members of parliament in the two coalition parties for a special meeting on Friday … //

… Parliament Refuses to Delegate Power of the Purse:

A solution to the problem is not in sight, either. Until now, it was often the case that Germany, France and other partners had different interests on important issues. Europe is built on compromises, which are often reached only at the last minute during summits. The EU could not have continued to develop under a different system.

In the past, the parliament only had the power to approve or reject the complex decisions made at these summits. Ironically, this principal appears to have been suspended when it comes to rescuing the euro. The Bundestag does not wish to simply delegate its most important instrument, the power of the purse. For this reason, it is right in demanding a say in important decisions.

On the other hand, speed is particularly important in crisis situations, when there is sometimes no time for protracted democratic procedures. This is a problem for which there is no clean solution in the complicated structure of the EU, in which the European Parliament does not have the same rights as a national parliament.

The new German legal position leads to a paradoxical situation. Although the Bundestag has more rights with respect to the EFSF, its fundamental dilemma remains unchanged. In the past, governments negotiated compromises at their summit meetings, but now they’ll have to do so ahead of time. For members of parliament, nothing has really changed. If they reject the deal, there will be no agreement within Europe, which would be a political disaster for the administration.

There is now a new hurdle in Germany’s European policy, but not necessarily more democracy.  (full text).

Links:

The Kowalski Constitution, July 30, 2011;

Where does Money Come From? by Paul Grignon, on Moonfire Studio/Money as Dept, not dated;

The Banking System, Itself, is the ROOT CAUSE of Money System Instability, by Paul Grignon, on Moonfire Studio/Money as Dept, not dated.

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