German court paves way for deployment of EU stimulus fund

The German Constitutional Court has lifted a major obstacle to the creation of the EU’s post-pandemic recovery fund by rejecting an emergency motion aimed at preventing the country from ratifying the bloc’s main anti-crisis program.

The Karlsruhe court said it would consider legal action challenging the fund, but would not suspend ratification while its decision on the main case is pending, a decision that will be greeted with sighs of relief. in Berlin, Paris and Brussels.

The judges declared that the main complaint was “not inadmissible per se, nor manifestly without merit”. But he said on the basis of a “summary examination” it was unlikely that the court would find out that the collection fund violated Germany’s constitution.

He also said that giving the European Commission the power to raise up to 750 billion euros in the capital markets to finance the stimulus fund “does not create direct liabilities for Germany or its federal budget”.

“The result was roughly as expected, but refreshingly clear and very quick,” said Lucas Guttenberg, deputy director of the Jacques Delors Center. “It’s a good day for Europe and a good day for Germany’s role in it.”

Valdis Dombrovskis, executive vice-president of the European Commission, welcomed the court ruling and said it “tightens” the EU’s timetable for the stimulus fund which “can be finalized by the end of June and allow funding to start flowing in July “.

As part of the stimulus fund, the EU will take unprecedented powers to borrow hundreds of billions of euros from the capital markets and distribute them as budget support to member states affected by the coronavirus pandemic.

In order for the stimulus fund to come into effect, each of the EU’s national parliaments had to ratify the EU decision on ‘own resources’. The German Bundestag did so in March.

But a German group calling itself ‘Bündnis Bürgerwille’, or the Alliance of Citizens’ Wills, has taken legal action against the law, saying the EU should not be allowed to issue debt to finance the fund. recovery.

The plaintiffs had wanted to put an end to the entire legislative process pending a final decision on their main action and, to this end, filed a petition with the Constitutional Court asking for a provisional injunction against the law.

The court responded by preventing German President Frank-Walter Steinmeier from signing the law ratifying the “own resources” decision until he rules on the interim injunction.

On Wednesday, he rejected Bündnis Bürgerwille’s request for an interim injunction. In a statement, he said the underlying case “would likely take a long time,” but any delay in establishing the recovery fund “would undermine its economic purpose.”

The negative effects of a delay “could prove to be irreversible” and “defeat the whole purpose” of the fund – given that it was created to cope with the effects of the pandemic and is was supposed to be deployed “over a relatively short period of time.” “.

Any delay in the entry into force of the stimulus fund could lead to “major upheavals in terms of foreign and European policy”, the judges wrote in their decision.

The court said that any inconvenience of not issuing the temporary injunction and that ratification of the fund would subsequently be found unconstitutional would be “much less serious” than the consequences of issuing an injunction and that the complaint in l The underlying case proved to be unfounded.

Olaf Scholz, Minister of Finance, said the judgment was “an important step in efforts to overcome the pandemic across Europe”. “It is right that we are spending huge tax dollars to save lives, jobs and businesses in our country and together in Europe,” he told the Bundestag.

Bürgerwille called the decision “disappointing”. But the pro-EU MP congratulated herself: Franziska Brantner, spokesperson for Europe’s opposition Greens in Germany, said that the German government should now “act quickly to ensure that EU money begins to circulate and has an effect as quickly as possible ”.

With additional reporting by Martin Arnold in Frankfurt and Mehreen Khan in Brussels