Apr 10, 2014 | 09:08 GMT

8 mins read

Germany Prepares for the Next Challenge in the Eurozone Crisis

Germany Prepares for the Next Challenge in the Eurozone Crisis
(ULI DECK/AFP/Getty Images)

The rise of nationalist parties such as the National Front in France and Jobbik in Hungary has been well publicized, but a more subtle challenge to European integration is emerging from constitutional courts and national parliaments. Reports that Berlin is investigating potential reforms to gain greater parliamentary control over the German constitutional court show that the main economic and political force in Europe can already foresee much larger institutional hurdles in its attempts to stabilize the eurozone.

With no end in sight for the eurozone crisis, Europe's perennial tension between integration and national sovereignty will only intensify. EU member states will eventually begin serious negotiations to reform the bloc's institutional framework. These negotiations will be contentious at the EU level, but for Germany they could also ignite serious debates and institutional challenges.

Last week German media reported that members of Chancellor Angela Merkel's government met with experts on constitutional law at a restaurant to debate potential reforms in the country's legal framework. The meeting was informal and mostly exploratory, but according to German newspaper Frankfurter Allgemeine Zeitung, Interior Minister Thomas de Maiziere and several scholars debated amendments in the German Constitution and changes in the role and term of members of the Federal Constitutional Court. De Maizere admitted that the meeting happened but refused to provide details on what was discussed.

Reforms on the Table

One of the main reforms that was reportedly discussed included changing the articles that define Germany as a member of a "democratic" European Union, where the rule of law and the principle of subsidiarity (according to which most decisions should be made at the national instead of the supranational level) are respected. In recent years, the German constitutional court has used these articles to question the democratic accountability of the European Union. Another reform would reportedly involve reducing the 12-year term of the members of the constitutional court.

Berlin has many reasons to want to reduce the constitutional court's influence on EU affairs. In late 2012, the court warned Berlin that the European Union's permanent bailout fund, the European Stability Mechanism, could breach German law if it increased its funds without legislative approval. Then in February, the court referred to the European Court of Justice an assessment of the legality of the European Central Bank's program to buy sovereign debt from troubled eurozone members.

An immediate crisis was averted in both cases because the court proceeded with caution. Both the European Stability Mechanism and the European Central Bank's actions are key to preserving the eurozone, so the German judges were forced to seek a balance between protecting Germany's sovereignty and keeping the common currency alive. But although an escalation in the eurozone crisis was avoided in the short term, these episodes are a reminder that governments are not monolithic and that democratic institutions could challenge policies adopted by a national government.

According to German media, another reform discussed at the meeting concerned the incorporation in the constitution of an electoral threshold of 5 percent for parties to enter the federal government. Germany's 5 percent threshold, which is currently in the electoral law but not in the constitution, is relatively high by European standards.

The high threshold was designed to prevent extremist parties from entering the parliament. For example, it has typically affected the far-right National Democratic Party, and in 2013 it kept the Euroskeptical Alternative for Germany, which received 4.5 percent of the vote, out of the parliament. The German constitutional court has removed this threshold for European Parliament elections and could do the same for federal elections unless the threshold is included in the constitution. This would mean that anti-EU forces in Germany could eventually win seats in the EU Parliament, giving them visibility and financial resources.

That de Maiziere, a close ally of Merkel, participated in the discussions shows that the chancellor herself is quite worried about the effect that a more combative constitutional court could have on the process of EU integration. Because of the "grand coalition" between the center-right Christian Democratic Union; its sister party, the Christian Social Union; and the center-left Social Democratic Party, Berlin technically has the two-thirds control of one of the legislative chambers that is necessary for constitutional change, though it could need support from smaller parties in the Bundesrat, the chamber that represents the country's regions. The German Constitution has been amended several times since it was approved in 1949, but reform would be controversial in the current context, especially if it is intended to limit the role of one of the country's main democratic institutions.

Germans deeply respect the court, so any attempts to reduce its powers could lead to substantial frictions within Merkel's Christian Democratic Union and between the party and its partners in the Social Democratic Party. Many voters and the media would also be staunchly opposed. And the issue could be controversial in the rest of Europe — the German Constitution is a legacy of post-war Allied designs to contain Germany in Europe. As a result, constitutional changes are unlikely in the short to medium term.

Institutions, Constitutions and the Process of EU Integration

For six decades the European Union has tried to balance integration with national sovereignty. Because the bloc is neither a federal state nor an international organization, complex voting mechanisms and decision-making procedures have been designed to ensure integration while protecting national interests.

Eurozone and Non-Eurozone Countries

Eurozone and Non-Eurozone Countries

The EU and Potential Future Members

The EU and Potential Future Members

This institutional architecture was problematic long before the eurozone crisis. The Maastricht Treaty, which created the European Union in 1993, was rife with painful compromises. All the treaties that followed included concessions and compromises because the unanimity voting system meant that any member state could veto any agreement. Even after agreement, domestic institutions often refused to accept what the national governments had agreed to at the supranational level. For instance, the German and Italian constitutional courts held long and bitter legal disputes with the European Court of Justice because they refused to accept that European legislation could be above national legislation.

The European crisis is making this phenomenon even more acute. During most of its history, prosperity and the promise of continental peace were the glue holding the European Union together. The bloc is still successful at ensuring peace, but the promise of prosperity is in doubt. With political and economic fragmentation deepening in Europe, traditionally dormant issues such as the bloc's lack of democratic legitimacy are re-emerging and weakening the union's foundations.

Different institutions are reacting to this situation. The British Parliament is arguing that it should be able to block legislation approved at the EU level. In the Netherlands, the parliament is demanding that the principle of subsidiarity be respected. In France, the Elysee has recently said it would meet the European targets for debt and deficit on its own terms and schedule. In Portugal, the constitutional court has blocked several of the austerity measures approved by Lisbon and demanded by Brussels.

Berlin's suspicion regarding the German constitutional court is not unusual. In most Western democracies there are frequent tensions between governments and supreme courts, which are designed to control and assess the legitimacy of governmental policies. But the fact that this is happening in Germany, the main political and economic force in Europe, is telling of the status of the crisis in the Continent. So far Berlin has managed to find a balance between taking a hard stance on eurozone issues for domestic consumption and being relatively flexible in terms of bailouts, fiscal targets and austerity measures abroad.

But with several groups challenging the process of European integration, the Germans are starting to worry about losing control of the political process at home and in Europe. The constitutional court does not act on its own initiative but as a reaction to cases brought by individuals and institutions. Growing Euroskepticism at home means more potential cases will be brought to the court. More measures designed to mitigate the European crisis mean more room for the court to decide that the parliament's moves are unconstitutional.

The European crisis is far from over, so reactions — in the form of new legislation by national governments and potential rejection by constitutional courts or other institutions — are likely to intensify. The European Union is reaching the limits of what it can do to mitigate the continental crisis without reforming the bloc's institutional and legal framework. EU nations have managed to get some things done, such as allowing the European Central Bank to purchase bonds from nations in distress, by bending instead of reforming the existing treaties. But Brussels will eventually need to update its legal framework.

The result will be intense debates between member states as some push to reverse the process of integration. The reforms will also trigger institutional challenges in several countries. With controversial issues at stake, such as allowing some kind of debt mutualization (in the form of eurobonds or similar instruments) in Europe or reforming the European Central Bank's charter, some institutions — such as the German constitutional court — could see the changes as a violation of the domestic legal framework. The closer this tension gets to Europe's political and economic core, the more dangerous it will become for the continental bloc.

Editor's note: A previous version of this analysis misstated the degree of representation that the German grand coalition has in the legislative bodies.

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