The European Commission threatened Germany with a lawsuit due to the fact that the German constitutional court challenged the legality of the European Central Bank's program to redeem government bonds. The EC reminded Berlin that European Union laws take precedence over national ones. 

“The recent decision of the German Federal Constitutional Court called into question two principles of the European Union: the euro currency system and the European legal system ... The European Commission adheres to three basic principles: the monetary policy of the union is within the exclusive competence, the EU legislation takes precedence over national legislation, European court rulings are binding on all national courts, ”said Ursula von der Leyen, President of the European Commission. 

She emphasized that the decisions of the European Court, the highest instance of the Court of Justice of the European Union located in Luxembourg, are decisive for all countries of the association. 

“The last word on EU legislation is always left for Luxembourg. And only after him, ”said the head of the EC. 

In a statement, Ursula von der Leyen also said that the European Commission could initiate the so-called “violation procedure” of EU agreements. It involves sending the German authorities a note on non-compliance with European law, to which Berlin must respond and eliminate the violations in due time. If this does not happen, a lawsuit will be initiated, as a result of which the violating country may be required to pay a fine.  

  • European Commissioner Ursula von der Layen
  • Reuters
  • © Vincent Kessler

The head of the Center for German Studies at the Institute of Europe, Vladislav Belov, believes that such a situation is a unique precedent for the European Union. 

“The German Federal Constitutional Court considers this a violation of national law. Ursula von der Leyen has a different opinion, saying that the German Constitutional Court is wrong. Now they have moved to action, will understand the correlation of national and supranational law. This contradiction is a precedent, let's see what decision will be made. Until now, this has not happened in the entire EU, ”the political scientist said in an interview with RT.  

Cash dispute

The European Commission has previously warned Berlin against non-compliance with the principle of the supremacy of European laws over national ones. 

“Despite the fact that a detailed analysis of the decision of the Federal Constitutional Court of Germany is being carried out, today we reaffirm the primacy of EU law and the fact that the decisions of the European Court are binding on all national courts,” the EC said on May 5.  

The reason for the discord between Berlin and the European Commission was the decision of the German Federal Constitutional Court that the purchase by the European Central Bank of government bonds of EU countries contradicts the main law of Germany and undermines its economic sovereignty.

Thus, the German Constitutional Court challenged the decision of the European Court of Justice, which in 2018 recognized the ECB's practice of buying bonds as legal. The German Constitutional Court held that the European Court did not properly apply the so-called “principle of proportionality” in assessing the need for such a monetary policy.

In this regard, after a three-month transitional period, the Federal Bank of Germany was prohibited from participating in the ECB's program of buying government bonds until evidence was submitted to the European Central Bank that such a practice was in its competence.

However, German Chancellor Angela Merkel has already stated that conflict can be avoided. However, at the same time, she, in fact, supported the decision of the Constitutional Court of the Federal Republic of Germany, noting that in order to get out of this situation the ECB needs to provide justification for the need to purchase bonds.

According to Vladimir Olenchenko, a senior fellow at the Center for European Studies at IMEMO RAS, the FRG constitutional court considered that such a policy could cause Brussels to have “a powerful lever of pressure” on Berlin, and therefore made such a decision.

  • European Court of Justice in Luxembourg
  • AFP
  • © JOHN THYS

Unity in doubt

Experts recall that Germany is a leading EU economy, and a similar split between Berlin and Brussels could undermine EU unity. There is no longer a consensus between EU countries on the methods of restoring a pan-European economy that has been undermined by the coronavirus pandemic. Thus, the countries of Northern and Western Europe are not ready to allocate funds from their budget to restore the economies of their southern and eastern neighbors.  

For example, Germany, Austria and the Netherlands rejected the idea of ​​creating the so-called “coronabond” - joint government bonds of the eurozone countries - which was proposed by Italy and Spain, the hardest hit by the pandemic. 

According to the director of the Institute of the Newest States, Alexei Martynov, the Federal Republic of Germany opposed the said scheme for purchasing bonds by the European Central Bank in order to remove the disproportionate burden on its budget.

“As you know, Germany is the largest donor of the EU budget, and in this situation it turns out that their sovereign securities are bought for their money, which limits the economic sovereignty of Germany. This contradiction escalated especially in the context of the economic crisis caused by the coronavirus pandemic. To overcome its consequences, trillions of euros may be needed, ”the expert recalled. 

Alexei Martynov noted that some economies of European donor countries that feed the European budget may not be able to withstand such a load. 

“Today they are clearly not ready to save the European bureaucracy at the cost of the lives of their own citizens, since this can lead to a serious social explosion. This situation seems to me unprecedented, since the response of the European Commission will be sanctions against Germany, which is the main donor of the European budget, ”he said. 

According to Martynov, this conflict indicates that serious changes have ripened in the EU’s internal policy.   

“In its current form, this organization has exhausted itself; it needs changes to resolve these conflict situations. Whether this conflict will worsen or it can be overcome on conditions acceptable to all depends on the competence and responsibility of modern European politicians, ”the political scientist concluded.