This brief reaction to the German Federal Constitutional Court (GFCC)'s landmark ruling of May 5 was just published on the Atlantic Council's Blog.
The GFCC’s latest ruling is best viewed as part of a long sequence that started a generation ago in the wake of the Maastricht Treaty. As such, it should not be overdramatized. All players involved are playing a complex game of quest for institutional dominance. To use an American word, this week's ruling stops well short of outright nullification. The GFCC does not directly question the primacy of EU law.
Even so, this step marks an escalation, if only because it’s the first time that the GFCC labels a decision of the Court of Justice of the European Union (CJEU) to be ultra vires, beyond its powers. It also has impact on euro-area monetary policy. To a large extent, the ECB is taking stray bullets from the raw turf warfare between the GFCC and CJEU. The GFCC is not substantially interested in monetary policy, nor does it ostensibly understand it.
In the immediate short term, the pressure is on the Bundesbank, which has three months to decide on which side it stands, possibly subject to other players’ moves in the meantime. If it keeps participating in the Eurosystem’s Public Sector Purchase Program, it risks being blamed and possibly sued for non-compliance with the GFCC’s instructions. But if it exits the program (arguably only then), Germany could be sued by the European Commission for infringement of EU law.
This case raises profound questions about the sustainability of the euro and beyond it, of the European Union itself. But don’t expect these questions to be settled anytime soon. Rather, expect more lawsuits.
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