Constitutional issues could stop Merkel buckling
- 21 June 2012
- From the section Business
The German papers portrayed the G20 meeting of world leaders in Mexico as the G19 against one - with no prizes for guessing who the solitary stand-alone was: Germany, in the personage of Chancellor Angela Merkel.
She is a woman under pressure, but anybody expecting the lady to buckle might peruse Article 23 of the German constitution (or the Grundgesetz or Basic Law, as it's properly known).
Article 23 sets out the rules governing relations between Germany and the European Union. It states: "The Federation may transfer sovereign powers by a law with the consent of the Bundesrat."
In other words, if Berlin wants to pass decision-making power to Brussels, it has to do so by passing a law in the lower house of the German parliament and having it approved in the upper house.
So if Berlin wants to let Brussels decide how to spend German taxpayers' money (with a bailout fund for example) the Bundestag and the Bundesrat must approve. So says the Constitutional Court, the highest court in the land.
Those unhappy with bailouts have not been slow in going to the court to bind the government to the provisions of Article 23.
In September last year, Chancellor Merkel's government proposed streamlining the procedure by setting up a committee of nine members of the Bundestag to decide on behalf of the full parliament.
The Court was having none of it. Even before the members had sharpened a pencil or clicked a mouse, the committee was shunted into a legal siding where it has remained unused.
It is conceivable that it may spring to life when and if urgent financial measures are needed and, furthermore, ones that cannot be disclosed to the markets, but it doesn't seem likely.
So the full parliament it has to be, and that is inconvenient for the government and binds the hands of Chancellor Merkel.
That is the way it was meant to be when the German constitution was written after the war, with the Americans having a strong hand on the pen. After the disastrous results of allowing too much power in one pair of hands, the framers of the new constitution put blocks and constraints on government so it couldn't accrue power to itself. The new German constitution of 1949 was about limiting powers of any one part of government, just like in the Constitution of the United States.
Limiting powers means limiting the powers of the chancellor and of her government. It means she has to fight to get measures to do with bailouts through the Bundestag. There has to be wheeling and dealing in a parliament of coalitions.
Chancellor Merkel wants to get the Fiskalpakt agreed by the Summer break. This is the agreement made after many late nights by 25 of the 27 European Union countries to control government borrowing tightly. But to get the votes of the opposition SPD in the Bundestag, Chancellor Merkel has had to promise them a tax on financial transactions.
She needs the SPD because her own party is getting restless about bailouts. When German foreign minister Guido Westerwelle implied that the terms for Greece could be relaxed, Volker Kauder, the leader of the conservative parliamentary group, bluntly contradicted him, saying that, if anything, Greece should implement the austerity measures faster.
"It would be appropriate if the new government were to say: 'Yes, we will try to make up for lost time'," he said. "The new government could, for example, try to speed up the pace of the privatisation of state assets."
Volker Kauder is one of the more forthright members of the Bundestag. He once said that all of Europe was speaking German now, but he's not alone in his scepticism. There is now much discussion in Berlin of what the final reckoning could be if the bailouts fail in a catastrophic collapse.
On one estimate from a reputable German economic research organisation, the bankruptcy of Greece, Ireland, Italy, Portugal and Spain would cost Germany 700bn euros ($900bn; £575) if the euro survived, and 1tn euros if the currency was destroyed. That adds up to a frightening 40% of GDP. Frightening figures lead to frightened law-makers.
So, Chancellor Merkel is boxed in by uneasy lawmakers, including some in her own party, and the Constitutional Court looking over her shoulder.
The country's finance minister, Wolfgang Schaeuble, told the Court that sometimes things needed to be decided fast and in secret. "When markets react they react excessivly, then there is panic," he told the Court.
But its president, Andreas Vosskuhle, was having none of it.
"The constitutional rules of the game need to be maintained even in difficult times," he said.
"The saying 'necessity knows no law' has only ever brought people luck for a short period."
Nobody ever said democracy was easy.