H. W. Sinn: why the judgment of the Karlsruhe Court is right

According to Hans Werner Sinn, the judgment of the Karlsruhe Court on the purchase of government bonds is correct and above all reaffirms a very important principle: European integration must not be pursued neither by the ECB nor by the European Court of Justice, but by parliaments and national governments. Then he gives a suggestion to the Berlin government: be careful, because the French want to save their banks and make the transfer union with the money of the Germans, but they are not willing to share their atomic bomb and their army. First part of the confrontation between the two great German economists H. W. Sinn and Marcel Fratzscher on Handelsblatt

The protests of many commentators against the sentence of the German Constitutional Court, which accuses the European Court of Justice of having gone beyond its mandate, show us that in this case the wishes and the reality of the law are confused with each other with great ease . The hierarchy between the courts does not apply in general, but only in some areas.

It clearly exists for monetary policy issues, but not in other policy areas, in particular not for the overflowing fiscal bailout policy that the ECB has pursued in recent years through the printing of money. Indeed, pursuant to Article 5 of the Union Treaty, the ECB should have received specific authorization to do so. But it didn't happen.

There is no way to argue that the EU with its institutions is sovereign, as the President of the Commission believes, for example. From the point of view of the Treaties, in fact, Europe is still very far from the perhaps desirable statehood that would give the ECB and the European Court of Justice a level of power comparable to that of other countries or other confederations of the world.

The nation states in Europe are still the masters of the treaties and on the basis of these treaties, the highest courts of Denmark and the Czech Republic on other occasions have managed to declare ultra-vires some judgments of the European Court of Justice.

And when it comes to the dispute over the purchase of government bonds, it must be considered that the Fed has never purchased the government bonds of individual American states, which in Europe are instead the object of discord. When California, Minnesota and Illinois were on the verge of bankruptcy, the Fed didn't go to their rescue. By contrast, in the eurozone, the ECB allowed national central banks to acquire one third of the outstanding national government bonds.

This saved the holders of these government bonds from a capital loss and, despite the high level of debt, ensured the states of low interest rates which then led to much higher debt. In doing so, however, the ECB did not support economic policy as it would have been allowed to do, but it countered it by undermining the various tax and debt agreements that had been concluded to counter the growing public debt.

Even if the Bundestag wanted it, it would not even be able to approve with a two-thirds majority of the votes a treaty allowing the ECB to practice a state bailout policy that implies foreseeable losses for the taxpayers of the eurozone. The Federal Republic of Germany should rather be re-founded first and then a new constitution should also be adopted through a referendum. The EU and the Court of Justice have absolutely no means of being able to legally impose it.

It would also not be of much help to start an infringement procedure against Germany by the EU, because the German government would in no way be required to pay an EU penalty for ignoring a judgment of the Court of Justice. which instead the German Constitutional Court considers illegal. And of course the case could not be brought before the Court of Justice because it would be the subject of the procedure itself (nemo judex in sua causa). The consequences for the survival of the EU would be devastating.

The decision of the Federal Constitutional Court was necessary to clarify to all those involved that Europe is a legal community that cannot continue to develop through the broad jurisprudence of the European Court of Justice and not even through the decisions of a technocratic body such as the Governing Council of the ECB, but only through the nation states.

These sovereign states should therefore help each other and help countries that have been particularly affected by the crisis. First of all Italy, which had the highest number of deaths and was the first to be affected by the epidemic. In addition to the unilateral aid measures, which each state can decide independently and freely, states should increase the EU budget in order to guarantee special assistance to the citizens of this country and its hospitals.

And if this were not enough, according to the rules of the Club of Paris, a moratorium on the debt in favor of Italy could be decided, as in the case of Greece, connected to the control of the capitals, above all to contain the huge capital flight from the Italy to Germany and the United States observable since March.

Beyond that, European states should nevertheless endeavor to find an agreement to form a political union that effectively achieves the desired sovereignty. And this should not have in the first place the sharing of portfolios, but the sharing of European armies with everything that follows. A simple fiscal union would block the road to political union, because while some would give the money, others would instead keep the trump card of the military force for themselves.