Sunday

25th Feb 2018

EUobserved

That German court decision

  • 'Whatever it takes' (Photo: Valentina Pop)

There is a long-standing tradition in politics of only dealing with something when really necessary. Why put your hand in a political hornet’s nest now, when others, down the line, could do it instead? It's a tradition which amounts to not thinking now about problems that will arise later.

After all, that was the reasoning behind those who set up the single currency. It was a political project to, as far as Helmut Kohl, was concerned, stop future conflict. The detail, like proper political, economic, and monetary union to back up the currency, would follow. Somehow. Which is where we find ourselves (struggling) now.

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So maybe that is what is happening with the hugely significant ruling by the German constitutional court last week. The court referred a decision to the European Court of Justice (ECJ) on the European Central Bank’s (ECB's) never-been-used, save-the-eurozone bazooka. Also known as Outright Monetary Transactions (OMT).

At first light it seemed positive. The court had deferred, as it should, to the ECJ on a matter of EU law. And no EU politician wants to look too hard beyond that.

But the court also said that it found the OMT decision breaches EU law. And offered a clutch of conditions on how the EU court would have to interpret OMT in order for the German court to find it acceptable.

The ECJ is unlikely to oblige.

So what the German court has done is knocked a large chink in the ECB's psychological, and thus far, theoretical armour. The question that arises is whether it is really an effective tool if the Bundesbank cannot take part?

The thing is that markets, that capricious entity, have almost entirely ignored the ruling.

The relative silence has been punctuated only by the head-scratching by a few academics and analysts as to why.

For now, in any case, nothing really changes.

But any other wobbles in the eurozone and there could be a risk markets will ask whether they can believe ECB chief Mario Draghi when he promises to do "whatever it takes."

Which is why political changes in Italy should be watched very carefully indeed.

Yes, after just 10 months in office, Enrico Letta has thrown in the towel, ousted by the cente-left Matteo Renzi, mayor of Florence.

He is to be, at 39 years old, the youngest Italian PM ever. Rather ambitiously, Renzi has said he wants to stay in office until 2018 - several eternities in Italian politics.

Meanwhile, the country's economic problems remain the same - and each successive leader (now four since the start of the economic crisis in 2008) - only serves to highlight this fact.

GMOs

While the prevailing wind seems to be that the EU should do less, a showcase policy for this would be decisions on GMOs.

The middle of the week was clogged with headlines about how the European Commission is entitled to - and would likely - authorise the production of insect-resistant maize despite opposition from the vast majority of member states.

Explaining that the commission is abiding by the rules - it can take some decisions if there is no majority of states blocking it - is plainly not good enough. Could it be that after over a decade of indecision - the company first applied for authorisation in 2001 - that it is time to admit that this is not the way things should be done?

If there was ever case for an issue to be decided at national level - this was it.

Limbering up

MEPs are dusting off their boxing gloves and climbing into the ring. And it's all about what happens just after the May EU elections.

The Lisbon Treaty open the door somewhat to the European Parliament by noting that leaders must take into account the result of the elections when choosing a new president for the EU commission.

MEP are busy trying to wedge it open even further.

Member states should no longer have the sole right to send any old person off to Berlaymont - Germany's commissioner was reportedly given the post to get him off the domestic politcal scene - the European Parliament wants in on the action too.

As many members from their ranks as possible should be made commissioners, they argue. Perhaps as a consolation prize for disappointed Spitzenkandidaten ...

ECB overstepped its mandate, German top court says

The German constitutional court has said the ECB overstepped its mandate when promising to buy as many government bonds as necessary to stabilise the euro, but it referred the verdict to the EU's top judges.

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Agenda

Election fever picks up This WEEK

Italian general elections, a German coalition in the balance, and the European parliament fighting to get a voice in nominating an EU commission president. This and much more in a week packed with intrigue.

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