29 March 2021

FT: Germany’s highest court blocks ratification of EU recovery fund

Germany’s highest court has stopped a law ratifying the EU’s post-pandemic recovery fund, pending an urgent appeal against the legislation by a group of German Eurosceptics. Under plans for the €750bn recovery fund, agreed by the EU last year, Brussels will gain unprecedented powers to borrow hundreds of billions on the markets and hand it out as budgetary support to member states hit by the coronavirus pandemic.

For the recovery fund to come into force, each of the EU’s national parliaments must ratify the EU’s “own resources” decision. The Bundestag did so on Thursday, with 478 of 645 lawmakers supporting ratification. The law was backed by MPs from Chancellor Angela Merkel’s CDU/CSU bloc, the centre-left Social Democrats, and members of the opposition Greens and Free Democrats. It was also passed by the Bundesrat, the upper house of parliament.

The legislation was due to be signed into law by the German president, Frank-Walter Steinmeier. But on Friday the German constitutional court said its second senate — the court consists of two “senates”, each with eight justices — had stopped the ratification process. It said it must first rule on a motion for an interim injunction on the law.

The motion was brought by a group called Bündnis Bürgerwille, or the Citizen’s Will Alliance. On its website it said that EU treaties do not allow the bloc to take on debt. “That didn’t prevent the European Council from passing an ‘own resources’ resolution which allows the EU to raise debt on capital markets for the first time,” it said. Speaking to the Financial Times, Bernd Lucke, a Eurosceptic who was one of the founders of the rightwing Alternative for Germany party and is now an economics professor at Hamburg University, said he was “relieved” by the court’s ruling. He said he did not oppose the recovery fund per se, but argued that the way it was being financed “is not in compliance with EU treaties”. The own resources decision could, he said, “lead to EU fiscal union”, which would “violate the German constitution by limiting the budgetary powers of the Bundestag”. It is unclear how serious a hurdle the constitutional court’s move will turn out to be.

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