The European Commission at war with everyone else

323603667Motus in fine velotior – as the end approaches, the movement accelerates. It appears the final days of the EU are coming closer, not least thanks to the ill-advised actions of the European Commission.

One might have been expected that in the wake of Brexit, having lost its second biggest Member State in economic terms (which also happened to be the biggest Member State in terms of military capabilities and, hence, international influence) the EU establishment would be careful to avoid any action that might ultimately lead to the loss of further Members. But what is happening is the opposite: the European institutions, egged on by some Western European governments, continue the culture war they have been waging for years against Poland and Hungary, allegedly to defend “the Rule of Law” and “our common European values”. Given that both countries can help each other, Hungary by blocking any sanctions against Hungary and Hungary by blocking any sanctions against Poland, the attempt to “normalize” these two Member States appears rather futile. Despite this, the Commission has now discovered a third “enemy within”: tiny Slovenia, where the new government is headed by a stalwart anti-Communist, Janez Jansa, who was the leading figure in the country’s fight for independence thirty years ago. Will the EU’s executive be able to win against three Member States, when it was not able to win against two?

If all that were not enough, the Commission, in announcing a new infringement procedure against Germany, is now taking on not just the EU’s biggest and wealthiest remaining Member State, but all Member States at the same time. One is tempted to wonder: are they behaving this way because they are like rats trying to fight their way out of a corner in which they have been trapped, or are they just over-confident? Or perhaps both at the same time – over-confident rats in a corner? In any case, this is folly: a fight that the Commission cannot win even if it wins.

The casus belli, in a nutshell is this: in May 2020 the German Bundesverfassungsgericht (BVG),  Germany’s supreme constitutional tribunal has issued a decision in which it declared a judgment of the Court of Justice (C-493/17, Weiss and Others), and Decisions of the European Central Bank (ECB), to be ultra vires and not applicable in Germany (BVerfG, Judgment of the Second Senate of 5 May 2020 – 2 BvR 859/15). The case originated from a complaint brought by German citizens to the BVG  in the context of the ECB’s Public Sector Purchase Programme (PSPP) programme, a highly controversial asset purchase programme launched in 2015 and still in force. The BVG, expressing doubts over the compatibility of the PSPP Decisions with the Treaty’s prohibition on monetary finance and the principle of conferred powers, referred the case to the CJEU, questioning the validity of the ECB’s Decisions. However, when the EU Court confirmed the legality of the ECB’s Decisions, the BVG was not satisfied by that ruling. It declared the CJEU decision to be arbitrary due to its lack of sound reasoning in its proportionality assessment and the poor standard of review employed, and proceeded to itself . review the validity of the ECB Decisions, concluding that these Decisions also lacked proper reasoning and needed to be amended to justify the programme.

That judgment did not produce an immediate effect, because the BVG left a backdoor open, granting the German Government and the Bundesbank three months to start negotiations with the ECB in order to push the ECB to enact a new, better reasoned, decision. The German government and the ECB followed that path, and the BVG ultimately accepted the new decision.

The original conflict has thus been resolved, and the ECB can continue its asset purchasing program – but the authority of EU institutions has been damaged by this affirmation of national sovereignty. What is more, the “usual suspects”, i.e. the governments of Poland and Hungary, have jumped on this remark and are quoting it, saying that, if the BVG can declare EU acts to be ultra vires, so can the Constitutional Court of any other EU Member State. Indeed, the Polish Constitutional Tribunal, unpopular in the EU inter alia because of its recent decision to restrict abortion rules that were found to discriminate against handicapped children, is expected to formally make, at the Polish Government’s request, a similar statement in the course of next month, and the Romanian Constitutional Court has already done so. In other words, what we are seeing is that the EU’s authority is beginning to erode.

The Commission’s threatened infringement case against Germany is thus an attempt to restore the authority of EU institutions over EU Law. As Commission President Ursula von der Leyen put it: “The European Court of Justice alone has the right to decide whether any legal act infringes the EU Treaties or not”.

From a strictly legal point of view, she is probably right, because that is what the EU Treaties say. Therefore, it is rather likely that the CJEU, if ever it gets to decide this case, will rule in the Commission’s favor – if not for any other reason, then for the very obvious reason that by doing so it would affirm its own institutional authority. But such a judgment would probably turn out a Pyrrhic victory: national Constitutional Courts would very likely be provoked to retaliate in kind, follow the Polish and Romanian examples and declare the supremacy of their respective Constitutions over EU law. It is hardly possible for them to do otherwise, if they don’t want to publicly surrender their respective country’s claim to sovereignty.

It is, moreover, very difficult to understand what the European Commission expects the German Federal Government, with which it is now engaged in pre-litigation consultations, to do in order to avoid the case to be referred to the CJEU. Should the Government tell the Constitutional Court to recant its obiter dictum (which, mind, is actually just the expression of a legal opinion, not more)? That would be impossible in a country where the judiciary is supposed to be independent, and it seems hardly becoming for the Commission, which likes to paint itself as a champion for “the Rule of Law” to make such requests. But if there is no way for the Government to make the BVG recant, then the only other theoretical solution would be to modify Germany’s constitution, the “Grundgesetz” (Basic Law), e.g. by adding a sentence to clarify that the Constitutional Court has no right to declare ultra vires acts of the EU to be ineffective. That would require Germany (and by extension all other EU Member States as well), quite perversely, to publicly acknowledge that an outside power has the right to adopt illegal ultra vires acts that no German institution can declare ineffective. Even if Angela Merkel wanted, it is very improbable that she or her successor would be able to find a two-thirds supermajority in the Bundestag to get such an amendment to the Basic Law adopted.

The Commission’s action is senseless and shows a terrible lack of sound political judgment. It is silly enough for the Commission to be permanently at war with two or three Member States. But with this infringement procedure against Germany, it is likely that the Commission will soon be at war with all Member States at the same time. Poland and Hungary, the habitual scapegoats will hardly be isolated on this issue.

Already at this early stage, there seems to be no face-saving exit strategy for Mrs. Von der Leyen. There is nothing that the German Government can offer her; she will either have to desist without having obtained anything, or file an action with the CJEU. If she loses the case before the Court it will be a terrible loss of face, but if she wins it will be even worse, because such a win will foreseeably be followed by a backlash. The best the Commission can hope for is that the CJEU, in an extraordinary act of self-restraint, will refuse to hear the case on the grounds that it is merely theoretical and that, before a case can be heard, a Member State must first actually declare an EU legal act to be ultra vires, and hence ineffective. This would postpone the debate. The Commission would then be well advised to prevent such a situation from arising, ideally by abstaining from any action that could be termed ultra vires by a Member State.

This is a conflict that appears to be inbuilt into the structure of the EU, and that cannot be expected to be resolved by judicial means. The wisest course of action would be to leave the question open rather than forcing a decision. For the Commission, this means that it must henceforward be more cautious to avoid actions or statements that are clearly outside the competences that have been conferred to it. The same advice toavoid open conflict might be given to Member States, were it not for the fact that the creeping self-empowerment by EU-institutions is a very palpable reality.