What Governance Role Is the German Constitutional Court Playing?
English-language OJ readers are fortunate to have University of Connecticut’s Peter Lindseth spending the semester in Berlin as the Daimler Fellow at the American Academy, where among other things he is posting to the Eutopia law blog on various governance issues in Europe. (As I indicated in my earlier post, I plan to concentrate on international economic law, governance issues, and international and comparative law issues – including ones like this one, EU governance, in which as a non-specialist, I plan to act as facilitator, raising questions.) In a recent Eutopia post, Lindseth pointed to an interview in Der Spiegel with Udo di Fabio, outgoing member of the German Federal Constitutional Court (FCC). The interview is fascinating, particularly as glossed in Lindseth’s post:
As readers of [Eutopia blog] know well, the FCC has played, and will continue to play, a critical role in defining the constitutional parameters of Germany’s role in the ongoing struggle to resolve the Eurozone crisis. The Court’s jurisprudence will necessarily loom large as long as Germany serves as the Eurozone’s paymaster, and as long as the Court insists, as a matter of domestic constitutional law, on two conditions related to that function: first, that Germany’s financial participation in any bailouts must be determinate and not open-ended (i.e., no Eurobonds or other instruments amounting to joint and several liability); and second, that the national legislature must, consistent with historically grounded yet evolving conceptions of parliamentary democracy, be given an effective voice in approving the extent of Germany’s financial participation. The FCC views these two conditions as essential to preserving Germany’s democratic sovereignty in the face of the evident functional demands of the crisis, even as the Court otherwise permits, indeed even encourages, further European integration. In the current environment, these parameters will be critical because the resolution of the crisis will almost certainly demand some very costly sacrifices by the German taxpayer.
A second post from Lindseth, following the French credit downgrade, asks two key questions about German governance institutions:
Let’s begin by recalling the following statement of Udo Di Fabio in his interview in Der Spiegel, the subject of my last post: ‘If financial guarantees were to become colossal or Germany were to be made liable against its will, then the judges [on the German Federal Constitutional Court (FCC)] would perhaps say: This can no longer conceivably be regarded as covered by the principle of democracy’. This, according to Di Fabio, is the ‘sticking point’ in the FCC’s approach to Germany’s participation in European Monetary Union (EMU).
My first question relates to the implications of the French downgrade for the strategy pursued by the Eurozone to date, via the European Financial Stability Facility (EFSF) and eventually the future European Stability Mechanism (ESM): the leveraging of the blended credit of the Eurozone members in order to reduce overall borrowing costs. As Dan Alpert recently noted on Nouriel Roubini’s Economonitor blog: ‘The S&P downgrade puts more pressure on Germany to support EFSF and ESM, as the credit of its fellows in the EMU is diminished’. But as Alpert also notes, the logic of the blended-credit strategy ultimately could lead to precisely the sort of open-ended or joint-and-several-liability measures that the FCC believes are constitutionally out of bounds: ‘the problem in the Eurozone ultimately rests in the unwillingness of the core, especially Germany, to monetize the problem debt and start over with greater fiscal integration (and the corresponding restrictions on sovereignty) and a better capitalized banking system. Until that changes – more of the same’.
My second question relates, then, to implications of the weekend downgrades for the ultimate stability and solvency of the European Central Bank (ECB), for which Germany and other core members may similarly have to serve as the financial back-stop, at least if they want to preserve the common currency. Would Germany’s ultimate back-stop responsibility, whether in law or fact, ever cross the ‘colossal’ threshold or amount, in effect, to a liability ‘against its will’, in the sense that it was not covered in a predictable manner by earlier democratic commitments under the FCC’s case law? In extremis, is Germany’s ultimate, de facto backstop role (on which the EMU may now functionally depend) unconstitutional?
So here is my question: What is the right way(s) to explain the behavior of the FCC? Nationalist atavism? Genuine commitment to a vision of democratic principle as part of constitutionalism? Channeling in indirect fashion the anxieties of the German taxpayer? Seeking to thread the needle between the legitimacy of the supranational structures and the legitimacy of national democracy? Seeking to serve as a mediating institution by which the legitimacy of the German nation-state can be used to reinforce the legitimacy of European institutions? All of the above (they are not necessarily in contradiction to each other)?
One reason I often refer to Lindseth’s writing is that he takes the notions of legitimacy seriously – meaning in the triple sense that it matters to both European institutions and national institutions; that it is not automatic for any institution and cannot be taken for granted; and that legitimacy is most usefully thought of, not as a general abstraction, but in terms of the question, “Legitimate for what?” In that regard, I tend to reject explanations of the FCC’s behavior that are merely brutalist reductivism; I think it much more likely that the FCC is trying very hard to thread a needle of multiple legitimacies for multiple institutions to multiple ends. One cannot understand the behavior, or offer a convincing rationale for its behavior, without appeal to a sophisticated theory of legitimacy. But am I wrong about this? How do you explain the jurisprudence in this area of the FCC? I would welcome responses, either to the comments or by email.