Undemocratic EU Institutions

The Democratically Not Legitimized EU Institutions

An Article in the Compendium of Market-Based Social-Ecological Economics

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Key issues in view of the neoliberal crisis:
How can we guarantee employment and fair income?
How can we protect the environment effectively?
How should we shape the economic globalization?
What should the economic sciences contribute?
What must be the vital tasks of economic policy?
How can we legitimize economic policy democratically?

Click here for the list of all articles: Compendium
Click here for the German language version: Undemokratische EU-Organe

Table of Contents

  1. Abstract
  2. The Self-Empowerment of the EU Institutions
  3. The Democratically Not Legitimized EU Institutions:
    3.1 The European Council
    3.2 The Council of the European Union
    3.3 The European Parliament
    3.4 The European Commission
    3.5 The Court of Justice of the European Union
    3.6 The European Central Bank
  4. Conclusion

1. Abstract

DirekteDemokratie01After more than 60 years of encouraging progress in democratic awareness in Germany the time has come to complement the representative form of public authority emanating from the people with an appropriate direct participation of the people, that is, with citizens’ initiatives and referenda at all levels, including the federal level.

However, in the course of the European integration it can be observed that (1) political and economic decisions are being taken in closed supranational circles, that (2) an industrial policy reduced to capital interests is regarded as synonymous with general economic policy, that (3) the European integration is being corrupted by unleashed economic power, and that (4) the political-industrial protagonists undermine the democratic foundation consisting of sovereign nation-states to subject Europe to the dictates of their oligarchic self-interest through supranational institutions detached from political reality.

Thus, the European Union (EU) poses a specific threat to the democratic structures of its constituent states, because, under the pressure built up by oligarchic self-interest, national governments and parliaments are inconsiderately conferring national powers to European institutions. To institutions which do not bear responsibility before the sovereign people of the EU Member States, and which are not subject to democratic scrutiny and therefore are not democratically legitimized.

For what follows, it is crucial to be aware that the EU does not represent a pan-European constitutive peoples, and that, consequently, the EU does not possess popular sovereignty, and that the latter could only be established if all nation-states gave up their sovereignties in referenda with the aim to integrate them into a supranational European sovereignty.

But, as a matter of fact, the existing political, socio-cultural and economic inhomogeneity of the continent stands in the way of integrating the nation-states into a federal European superstate. In light of this reality only a confederation of sovereign nation states is conceivable as a future-oriented model of integration (see also EU: Federal Superstate or Confederation?).

As for now, the European Parliament serves as a »fig leaf« to camouflage the undemocratic intensions and interests of the political-industrial protagonists. It is obvious that this parliament can not claim democratic legitimacy, since it lacks an explicit constitutional foundation. Its members are a mixed-up bunch of national candidates elected by national voters only. Accordingly, the »European elections« are a cheap farce.

2. The Self-Empowerment of the EU Institutions

The ratification of the Lisbon Treaty exemplarily illustrates the gap between the popular sovereignty guaranteed by the German Basic Law (constitution) and the surrender of sovereignty rights to EU institutions pursued by the German government and parliament. The explanatory notes of the Federal Constitutional Court (Bundesverfassungsgericht) to the judgment of 30 June 2009 state on the one hand:

»To join into a European federal state Germany would have to introduce a new constitution with a declared renunciation of the sovereign statehood ensured by its present constitution. Such an act is not the case here.«

On the other hand, the Court points to a practically existing risk:

»The approving act to a European reform treaty (here the Lisbon treaty) and the national legislation on collateral must be such that the European integration furthermore proceeds in compliance with the principle of conferral of powers, without the possibility for the European Union to take possession of the competence-competence or to infringe, with reference to integration, the constitutional identity of its Member States, here with reference to the German constitution … The once again with the Lisbon Treaty increased delegation of powers and the increased independence of decision-making procedures therefore require effective ultra vires reviews and identity checks of legislative acts of European origin within the scope of the Federal Republic of Germany.«

The principle of conferral of powers means that the legislation of EU institutions based on conferred powers must be limited to the primary rights agreed upon in the EU treaties. The competence-competence shall therefore not be surrendered to EU institutions, that is, their competence must always be limited such that they are not able to autonomously acquire additional competences. Ultra vires refers to legislative acts, which go beyond an existing legal framework. Altogether the explanatory notes show that the Constitutional Court is quite aware of the danger posed by the temptation for EU institutions to misuse limited competences conferred to the EU as a basis to expand their competences in violation of the EU treaties.

3. The Democratically Not Legitimized EU Institutions

3.1 The European Council

EuropäischerRat01The European Council brings together the Heads of State or Government of the EU Member States. The Council usually holds quarterly meetings – the so-called EU summits – to prepare reforms of the EU treaties and to decide unanimously about strategies and guidelines for the further integration to be imposed as binding directions upon the Council of the European Union (the Counsil composed of national ministers) and the European Commission. For certain policy areas the European Council may overrule the actually required unanimity in the Council of the European Union and impose a majority decision so as not to block the progress of integration. Besides, the European Council has the right to propose candidates for the presidency of the European Commission, while the European Parliament has the right to elect a proposed candidate, however, by taking into account the outcome of the European elections.

The European Council is the oligarchic center of power of an integration targeted at a neoliberal and centralist federal state. The Council enforces its totalitarian claim by empowering its members – who, in their home countries, serve as national executive power –, to act at the European level both as executive and legislative power for the purpose of imposing binding targets upon the the two institutions supposedly intended to act sovereignly: the European Commission as EU executive, and the European Parliament as EU legislature.

Through the concentration of power (and in the absence of a separation of powers) wrong incentives and opportunities arise for the Council members to launch projects via the Council that would have no chance to be enforced at the national level. They keep succeeding in doing so, because the national parliaments keep caving in under the alleged pressure of a European consensus and because the peoples of Europe are not asked anyway.

To counter a widespread misconception: A »separation of powers« among the EU institutions is indeed laid down in the EU treaties as a perspective – mainly to keep up the appearance of democracy and rule of law – and is also repeatedly and publicly requested. But a separation of powers could not legitimize the pursued bureaucratic and centralist European integration, neither democratically nor juridically. At best, the decision-making processes would slow down a bit.

The first summit of the Heads of State or Government already took place in 1969 at the time of the European Communities (EC). Thereafter, the European Council succeeded in enforcing the following decisions that give evidence of its self-empowerment: In 1976 the decision for the direct election of the European Parliament, in 1985 for the completion of the Common Market, and in 1991, with the Maastricht Treaty, for the establishment of the European Union and the European Monetary Union. The only democratic participation was exercised by the citizens of France and the Netherlands, when they rejected the already signed EU Constitutional Treaty in national referenda in 2005. The European Council then used a cunning ploy and successfully enforced the Treaty in 2007 by inserting convoluted legal language and renaming it to Treaty of Lisbon. As of 2010, several summits were held on the euro crisis.

The activities of the European Council are far removed from the European people, because the Heads of State or Government consider themselves to fulfil a historical role in which they mutually reinforce one another by virtue of their domestic executive authority. That’s why they feel the need to take matters into their own hands and deny to give the people credit for the required »breadth of vision«. A risky attitude, since the Council tends to develop a »positivist« momentum that castigates any admission of a wrong decision as defeatist and backward-looking and pays homage to an uncritical »forward strategy«.

The Monetary Union as such and the management of the euro crisis contravene, in the name of selfish interests, against economic logic and are exemplary of the ignorance against economic expertise and the undemocratic attitude of the Council members. Repeatedly they have declared their decisions on the euro crisis as collapse-averting emergency measures that were without alternative and could not be deferred, notably in order to exert pressure on their national parliamentarians and motivate them to keep quiet or nod in agreement.

Rather than to acknowledge that vulnerable countries can not produce their own wealth anymore under the price pressure in euro, and that they should, supported by the EU, reintroduce their own currencies, the European Council has established a gigantic redistribution machinery including rescue packages, unlimited import credits, Target-2 credits between national central banks, purchase of government bonds by the European Central Bank, a European Banking Union, a European Fiscal Pact, and a designated European economic government – all the redistribution to be financed, unsolicitedly and permanently, by the citizens of Europe. This is a political attitude that prompted Roger Koeppel to comment that the EU is »a profoundly anti-democratic entity with an unsympathetic contempt for its citizens …«

3.2 The Council of the European Union (Council of Ministers)

Eurogroup finance ministers talk before signing a treaty establishing the European Stability Mechanism in BrusselsThe Council of the European Union is the extended legislative arm of the European Council of Heads of State or Government. It meets, depending on the policy area, in ten different formations composed of national ministers or other representatives at ministerial level delegated by the Member States. Formations are being implemented for General Affairs, Foreign Affairs, Economic and Financial Affairs, Justice and Home Affairs, and so on. They normally meet every three months, in urgent cases possibly every month. If they fail to agree, they have to hand over (or hand back resp.) the issues in dispute to the European Council for decision. By the way, to avoid confusion, the Council of the European Union is often referred to as the Council of Ministers.

The voting procedure in the Council of Ministers is regulated such that blockades are avoided so far as possible, however, at the cost of intergovernmental justice. The injustice is due to the ordinary legislative procedure being applied, the so-called double majority, that has been agreed upon in the Lisbon Treaty and that stipulates that a law is passed with the majority of at least 55% of the Member States and a majority of at least 65% of the EU population. Thereby even large countries such as Germany can be overruled and are, as sovereign states, exposed to a permanent threat of foreign rule. After all, unanimity is only applied for very sensitive issues such as security policy.

The Council of Ministers shares the totalitarian claim to power of the European Council: Although its players act as executive power in their home countries, they are authorized to exercise legislative power at the European level and, in that capacity, frequently submit draft legislation to the alleged second EU legislative power, the EU Parliament. For the EU parliamentarians it is difficult to amend or reject these proposals because they are backed by the European Council of Heads of State or Government.

The members of the Council of Ministers also abuse their European privileges, just like the heads of state or government do, to take every opportunity to impose projects upon their national parliaments that would have no chance without the alleged pressure of European consensuses.

3.3 The European Parliament (EP)

EU-Parlament01The European Parliament is the outstanding curiosity among the EU institutions: Composed of national representatives being directly elected by national voters, it can not claim democratic legitimacy for the European Union. It is rather intended to serve the EU oligarchy as a »fig leaf« for the camouflage of its totalitarian claim, while the Council of Ministers – as an extended arm of the European Council – is responsible for the actual legislative fine-tuning of the EU. The existence of the EP is a result of the neoliberal-oligarchic indoctrination that successfully spreads the belief, the (sovereign) nation-states and their parliaments had to be complemented with a supranational parliament – or directly expressed: to thrust the EP under the noses of the natonal parliaments – in order to create a democratic Europe. This is absurd, because sovereignty rights are indivisible – how could it be otherwise. The absurdity indeed applies to all EU institutions, but in the form of the EP it is intended to act as a tranquillising pill for the public.

Even the German Constitutional Court sees the EP merely as a »representative body« of the peoples of the EU Member States that does not possess sovereignty. In the press release of 30 June 2009 the Court states:

»The European Parliament is not a representative body of a sovereign peoples of Europe, but rather a supranational representative body of the peoples of the Member States, so that the principle of electoral equality common to all European countries does not apply to the European Parliament. The German Basic Law (constitution) does not empower the German authorities to confer sovereign powers such that their sheer pursuance allows to autonomously justify additional competences. It prohibits the transfer of the competence-competence.«

Then the Constitutional Court spreads slightly convoluted plain text, because its judges are obviously aware that the EU is moving towards a uniform federal state due to the increasing decision-making power of its institutions, although the necessary prerequisite, namely a European sovereign peoples, is not conceivable in the short or medium run given the inhomogeneity of the continent. Here is the corresponding text from the press release:

»By expanding the powers of the European Parliament, the gap between the level of decision-making power of the Union’s institutions and the democratic potency of the citizens in the Member States can be reduced, but not closed. The European Parliament is not sufficiently prepared, neither in its composition nor within the European structure of competences, to take representative and attributable majority decisions as coherent strategical decisions. When measured against national requirements on democracy it is not bound to electoral equality and not authorized to take relevant decisions regarding the supranational balancing of interests among the nation-states. Therefore, it can not support a parliamentary government and organize itself politically in a government-opposition manner such that a strategic decision of European electors could induce a decisive political impact. Given this structural democratic deficit, that can not be resolved within a compound of states, further steps towards integration beyond the current status shall neither undermine the policy-making ability of the nation-states nor the principle of conferral.«

Conclusion: The Constitutional Court notes that the EU is a compound of states (Staatenverbund). With this newly created label the Court avoids the term confederation of states (Staatenbund) that would imply national autonomy, meaning that the integration towards a uniform federal state was already well advanced with the EU being constituted as a unique new entity, virtually a hybrid under international law. Thus the Court contradicts itself and subverts the binding nature of the German Basic Law.

At the same time, the court sets decisive terms: Additional steps towards a federal integration shall not be persued, because they would confer too much power upon the EU institutions with the subsequent danger of self-empowerment. And further: There is no justification for the EP in the »compound of states«, because principally no supranational institution shall intervene with the supranational balancing of interests among the sovereign states, since the balancing should be determined solely by the national parliaments and their governments.

This means in particular, that (1) within the balancing of interests among the nation-states every unanimity achieved under pressure undermines the sovereignty and the will of the peoples of individual states, that (2) the integration must of course proceed with differing national speeds, and that (3) the sustainability of the process is best granted if the individual steps are reinforced by national referenda.

Despite all the contradictions in the Constitutional Court’s press statement that means: The mere existence of supranational institutions poses a disturbance and distortion to the multilateral balancing of interests among the EU countries – a fact that is impressively confirmed in practice.

In the light of this conclusion it obviously makes no sense to consider an upgrading of the EP, for example by increasing its power of legislative initiative, since a top-down democratization is an illusion anyhow, all the more so when trying to integrate extremely inhomogeneous nation-states by means of top-down directives. Therefore, I will not go into any more detail relating to the current competences of the EP and the increase of its influence in the oligarchic concert.

It should be added that the EP has so far not succeeded, and will never succeed, to make the EU citizens understand its existence, which is why the turnout in European elections continues to fall every five years. In theory, the EU citizens could make the EP inoperative by jointly ignoring the European elections. With a turnout of zero not a single candidate would be elected and the plenary would be deserted. But that will probably remain a pipe dream.

In February 2014, the German Constitutional Court overturns the three-percent threshold for German parties campaigning in the European elections, because, according to its justification, solid majorities were not required since the EP was not commissioned to elect an effective government. In plain text that means: The EP is not a parliament in the strict sense. The question however why the EU should maintain such a costly and useless »representative body« of the peoples of its Member States remains unanswered.

With the Lisbon Treaty the European Citizens’ Initiative (ECI) has been introduced: The ECI is meant to supplement the EP as the citizens of the EU can prompt the European Commission (the EU executive) to deal with a topic within its field of competence. However, the rights of the ECI have been curtailed from the outset as its initiatives are not binding for the Commission.

For each EBI a total at least one million signatures encompassing at least one quarter of the EU countries must be collected within twelve months. Apart from its absolute non-binding nature, the ECI denies citizens to demand reforms of the EU treaties. So it is obvious that the ECI is the second »fig leaf« next to the EP to disguise the totalitarian claim of the EU oligarchy.

Furthermore, the above-cited judgment of the Constitutional Court on the EP analogously applies for the ECI: Supranational citizens’ initiatives would, if binding one day, interfere with the supranational balancing of interests among the EU states, a task that must be determined solely by the sovereign national parliaments and their governments and, so far as provided, by national referenda.

The consequences of interfering with the supranational balancing of interests can be illustrated by an example: Given a continued integration towards a uniform federal state, a majority in the EP or in a European referendum could enforce unlimited and unconditional rescue measures for countries affected by the euro crisis, thus overriding the budgetary sovereignty of donor countries, but at the same time cementing the dependence and incapacitation of the crisis countries without touching the causes of the crisis.

3.4 The European Commission (EU Commission)

EU-Kommission01The EU Commission is referred to as the executive power of the EU because it partially fulfills functions like a national government. The member countries expect from the Commission an independent, supranational commitment »for the benefit of the community«. The President of the Commission, who is regarded as the »political leader« of the EU, is elected by the EP on a proposal from the European Council, taking into account the election results for the EP. Thereafter, the President, together with the Heads of State and Government, can elect his Commissioners (Ministers).

The Commission has the sole right to initiate European legislative proposals to fill out the framework set by the European Treaties. The proposals can only become law by resolution of the EU Council of Ministers, increasingly with the involvement of the EP. Member States that see their national interests violated by legal acts can turn directly to the EU Council of Ministers. In addition to the right of initiative, the Commission has the responsibility of implementing legal acts in the event of infringements and, if necessary, of bringing proceedings against Member States or companies before the European Court of Justice. The Commission also prepares the EU draft budget, monitors the rules of the EU common market, and represents the EU in the negotiation rounds of the World Trade Organization (WTO).

Although the European Council of Heads of State and Government is still the EU’s oligarchic power center, the European Commission has established itself, based on the European Treaties, as a kind of additional government to the national governments. Its draft laws emerge from Brussels backrooms. The EP, which is not involved in this process, can subsequently only vote yes or no. EU citizens experience it again and again that proposals made by the Commission result in stunned disapproval, especially when they affect original national competencies, even worse when they interfere with the political subgroupings of the nation-states.

The behavior of the Commission proves that supranational institutions of a federal superstate like the EU, once let off the leash, can no longer be restrained in their self-empowerment. In fact, since the Treaties of Maastricht, the EU is actually subject to the principle of subsidiarity, and it would therefore be the Commission’s duty to propose only legal acts which are appropriate for the supranational level and advantageous overall. But the EU bureaucracy, supported by a civil service that is subverted by industrial interests, prevents this.

Conclusion: The construction of the EU as a federal superstate can not be reformed, it can only be replaced by a confederative cooperation between autonomous nation-states.

Concluding remark: As the European project slips away from its protagonists, tensions between the Commission and national governments are increasing. Also because the national representatives in the European Council and the Council of Ministers have been carried away by their supposed historical mission and now stubbornly maintain their oligarchic course nourished by group-dynamics and their »now-more-than-ever« attitude. Their behavior becomes comprehensible when bringing to mind the »success factors« of the neoliberal project: The political centralism and dirigism is the basis and the starting point for the undisturbed economic policy deregulation, which in turn guarantees the »free« EU common market. This market construct enjoys the status of a sacred cow, finds its perfection in the Eurozone and is complemented by the global »free trade« based on dollar prices. For the global complementation to function seamlessly, the EU Commission and the World Trade Organization are pulling together in the same direction.

3.5 The European Court of Justice (ECJ)

EuGH01The ECJ considers itself to be an authority superior to the national courts. It sees its task in consistently »observing the law in the interpretation and application« of the European Treaties for all EU Member States through definitive judgments. EU Institutions and Member States, as well as individuals, businesses and organizations may bring charges before the court. National courts may submit current legal issues to the ECJ for examination and authoritative interpretation of the EU law. Each Member State sends one judge to the ECJ. The court decides in about 500 legal cases annually; the decisions are taken by majority vote. The judges are only allowed to take part in decisions which do not affect their own country of origin. This rule points, at the same time, to the fundamental dilemma of the ECJ: Its judges intervene with 28 different national jurisdictions which they are not familiar with in detail.

The ECJ, founded in 1952, allowed itself its most far-reaching self-empowerment as early as 1963 and 1964 by declaring EU legislation as a sui generis legal system superior to national legislation; with the subjects of this system not to be restricted to the nation-states but extended to their citizens and enterprises. Since then, the ECJ defines itself as the driving force behind the integration towards a federal superstate by means of legal unification. By doing so, the ECJ curtails the freedom of the nation-states to determine for themselves the steps and the speed of their integration, and: the ECJ devalues the nation-states’ democratic constitutions.

Its self-empowerment has transformed the ECJ into an extremely powerful institution of the EU, only comparable to the European Council of Heads of State and Government. But one thing is true for the ECJ that is also true for all other EU institutions: It is part of an oligarchy that is digging the grave of democracy in Europe and thwarting an integration that would be beneficial for its citizens!

I recall that, contrary to the German Federal Constitutional Court, the ECJ cannot act as an authority on behalf of any nation-state, constitution or popular sovereignty. It was originally founded on the matter of international dispute settlement, and, for the benefit of Europe, should have better focussed on that task. The legal system, on the basis of which the ECJ today acts like a European Constitutional Court, is a product of its arrogance and power fantasies.

Unfortunately, even the German Federal Constitutional Court has now, for the first time, directly confirmed the ECJ’s legal perception in presenting a legal issue before the ECJ in March 2014: Whether the European Central Bank (ECB) would be exceeding its powers by its decision to buy an unlimited amount of government bonds from crisis-ridden euro countries if necessary – keeping in mind that the ECB is contractually not authorized to intervene in economic policy (the result of the assessment is still pending).

If the German Federal Constitutional Court were to approach further towards the ECJ’s anti-contractual legal system, the misuse of law as a vehicle of neoliberal industrial integration could no longer be halted.

Undoubtedly, policies of a constitutional state have to be subjected to the state’s legal system, in contrast, the present application of this principle to the European level and the ECJ’s unauthorized legal system turns priorities upside down. Because for a European legal system, as well as for the premature common currency (euro,) the following applies: A uniform jurisdiction, as well as a common currency, can only be the result of a successful formation of a supranational (European) state, not its prerequisite. The development of national legal systems must therefore be reserved for national parliaments and governments for the time being, just as the associated jurisdiction must remain with the national courts. In a European confederation of autonomous nation-states, which I see as the only realistic alternative, common goals are agreed upon as temporary normative guidelines, subject to democratic choice and without the need for unanimity. Supranational institutions pursuing a sui-generis doctrine are inconceivable in a confederation.

In short, a future-oriented integration can only succeed by accepting the complex constitutional status quo in Europe as the basis and starting point. A complete harmonization of national legal systems, if at all necessary or desirable, must follow political integration as a subordinate, lengthy process.

3.6 The European Central Bank (ECB)

EZB01The ECB is like a spider in the web of the so-called Eurosystem. The highest governing body, the ECB’s Governing Council, is composed of the 6 ECB directors and the governors of the currently 18 euro zone national central banks. The contractually agreed task of the system is to ensure price stability in the euro zone and to subordinately support economic policy. Price stability is defined as a year-on-year increase in the Consumer Price Index (CPI) of below but close to 2% over the medium term. The monetary policy decisions are taken by the Governing Council by simple majority and without national weighting. Thus, when excluding the 6 ECB directors, large countries have the same weight as small countries. The national central banks are responsible for the implementation of the ECB’s monetary policy in the euro zone countries. The Eurosystem is institutionally and methodically independent and not bound by political directives. In order to strictly separate monetary and fiscal policies and to avoid dependencies, the ECB is contractually prohibited from granting loans to public budgets.

As already mentioned, the introduction of the euro and the Eurosystem against all economic expertise and, as might be expected, without asking the citizens concerned. The political actors acted to make the integration of the federal state irreversible by the single currency, although they were warned by economists that the less productive countries were in direct price competition, without the protection of exchange rates, customs duties, trade quotas and controls on capital movements, From the more productive countries. Displacement means the loss of one’s own production and value added, increasing dependence on imports, lack of balance of payments, private and public over-indebtedness, and finally insolvency followed by economic collapse. The practice of the Eurozone has impressively confirmed this inevitable economic mechanism and has thus proved to be a bearer of the integration.

Wie schon erwähnt, erfolgte die Einführung des Euro und des Eurosystems gegen jeden ökonomischen Sachverstand und, wie nicht anders zu erwarten, ohne die betroffenen Bürger zu fragen. Die politischen Akteure handelten in der Absicht, die bundesstaatliche Integration durch die gemeinsame Währung unumkehrbar zu machen, obwohl sie von Ökonomen gewarnt waren, dass die weniger produktiven Länder im direkten Preiswettbewerb, also ohne den Schutz durch Wechselkurse, Zölle, Handelskontingente und Kontrollen des Kapitalverkehrs, von den produktiveren Ländern verdrängt würden. Verdrängung bedeutet Niedergang eigener Produktion und Wertschöpfung, zunehmende Abhängigkeit von Importen, Zahlungsbilanzdefizite, private und öffentliche Überschuldung, und schließlich Zahlungsunfähigkeit gefolgt von wirtschaftlichem Zusammenbruch. Die Praxis der Eurozone hat diesen zwangsläufigen ökonomischen Mechanismus eindrucksvoll bestätigt und der Integration damit einen Bärendienst erwiesen.

A return to national currencies would be the only sensible way out of the crisis and would be practicable with a common effort, but the dependencies, the imaginary fear, might make things worse, not least because of the impending loss of the face Oligarchy. Above all, German industry is afraid of a slump in its exports to the Eurozone (which is already the case as a result of the crisis), while the Greeks are steering their frustration at the expense of the austerity of the EU and the suppression of the causes, including their own Sloppiness, claim to monetary “rescue” without savings. All in all, a mixture that gives the EU oligarchy any freedom.

Eine Rückkehr zu nationalen Währungen wäre zwar der einzige vernünftige Weg aus der Krise und wäre bei gemeinsamer Anstrengung auch praktisch durchführbar, ist aber durch die entstandenen Abhängigkeiten, die imaginäre Angst, es könnte alles noch viel schlimmer kommen, und nicht zuletzt durch den drohenden Gesichtverlust der Oligarchie blockiert. Allen voran fürchtet die deutsche Industrie einen Einbruch bei ihren Exporten in die Eurozone (was infolge der Krise ohnehin der Fall ist), während die Griechen ihren Frust nach außen auf die Sparauflagen (Austerität) der EU lenken und in Ausblendung der Ursachen, einschließlich der eigenen Schlamperei, Anspruch auf monetäre »Rettung« ohne Sparauflagen kundtun. Alles in allem eine Gemengelage, die der EU-Oligarchie beliebigen Freiraum verschafft.

Since the oligarchy is a backward, it fosters the growing fear of justifying the high price of the “Euro-Rescue”, and it reverses its cause and effect by reinterpreting the euro crisis as a state debt crisis. It helps her argumentatively that, in addition to the price competition in euros, bank speculation and financial market crisis have contributed to national debt. “Euro-Rescue” is therefore called for: financing of over-indebted states plus Capitalization of distressed banks.

Da für die Oligarchie ein Zurück undenkbar ist, schürt sie die zunehmende Angst, um den hohen Preis der »Euro-Rettung« zu rechtfertigen, und sie vertauscht Ursache und Wirkung, indem sie die Eurokrise zur Staatsschuldenkrise umdeutet. Es hilft ihr argumentativ, dass neben dem Preiswettbewerb in Euro auch Bankenspekulation und Finanzmarktkrise zur Staatsverschuldung beigetragen haben. »Euro-Rettung« heißt folglich: Finanzierung überschuldeter Staatshaushalte plus Kapitalisierung notleidender Banken.

Hier nun schlägt die große Stunde der EZB. Sie steigt, ergänzend zu den steuerfinanzierten Rettungsschirmen, mit den Mitteln der Geldschöpfung in die »Euro-Rettung« ein. Es gilt zunächst, das Vertrauen in die Staatsanleihen der Krisenländer zurückzugewinnen, um die globalen Finanzmärkte in die Rettung einzubeziehen. Dazu muss die Rückzahlung der Anleihen garantiert sein, auch um zugleich deren Zinsniveau zum Vorteil der Krisenländer zu senken. Also verkündet die EZB (in ihrer Funktion als Kreditgeber und Garant letzter Instanz), wann immer notwendig, unbegrenzt Staatsanleihen aufzukaufen. Sie kauft dann tatsächlich, aber nicht direkt bei den Krisenländern, sondern am Sekundärmarkt bei Banken, um Vertragstreue vorzugaukeln. Die Finanzmärkte reagieren wie beabsichtigt, aber die Aktion weckt auf allen Seiten dauerhafte Begehrlichkeiten und geht an der Ursache der Eurokrise vorbei:

Here is the big hour of the ECB. In addition to tax-financed rescue parcels, it is also being used as a means of creating money in the “Euro-Rescue”. Firstly, we need to regain confidence in the sovereign debt of the crisis countries in order to involve the global financial markets in the rescue. To this end, the repayment of the bonds must be guaranteed, also in order to reduce their interest rates to the benefit of the crisis countries. Thus, the ECB (in its function as a lender and guarantor of the last instance) proclaims, whenever necessary, an unlimited number of government bonds. It actually buys, but not directly with the crisis countries, but on the secondary market with banks, in order to pre-eminence contracts. The financial markets react as intended, but the action arouses lasting covetousness on all sides and goes past the cause of the euro crisis:

The donor countries of the eurozone are liable for the scrap paper that accumulates at the ECB when it comes to oath. The citizens of these countries are asked to pay several times by the tax-financed rescue parachutes, the low interest rate and the possible losses from scrap paper. And strategically, the matter can only go wrong, since the redistribution of financial resources, in which the ECB is now involved, not only damages the donor countries, but also puts the recipient countries in a paralyzing dependency, which permanently prevents them from generating their own prosperity.

Für die Schrottpapiere, die sich bei der EZB anhäufen, haften, wenn es zum Schwur kommt, die Geberländer der Eurozone. Die Bürger dieser Ländern werden durch die steuerfinanzierten Rettungsschirme, das tiefe Zinsniveau und die möglichen Verluste aus Schrottpapieren gleich mehrfach zur Kasse gebeten. Und strategisch kann die Sache auch nur schiefgehen, denn die Umverteilung von Finanzmitteln, an der nun auch die EZB beteiligt ist, schädigt nicht nur die Geberländer, sondern befördert die Nehmerländer in eine lähmende Abhängigkeit, die sie dauerhaft daran hindert, ihren Wohlstand selbst zu erwirtschaften.

The Eurosystem has a further risk for the donor countries, in particular for Germany. The national central banks also grant credit to each other in the Eurosystem, which means that the Deutsche Bundesbank has been making demands (so-called target 2 balances) against the other central banks of around 500 bn. The overall risk of Germany from rescue shields, guarantees for government bonds and target 2 balances amounts to around three quarter trillions.

Das Eurosystem birgt für die Geberländer, insbesondere für Deutschland, noch ein weiteres Risiko: Die nationalen Zentralbanken gewähren sich im Eurosystem auch untereinander Kredit, wodurch bei der Deutschen Bundesbank seit der Finanzmarktkrise Forderungen (sogenannte Target-2-Salden) gegenüber den anderen Zentralbanken von rund 500 Mrd. aufgelaufen sind. Das Gesamtrisiko Deutschlands aus Rettungsschirmen, Garantien für Staatsanleihen und Target-2-Salden beläuft sich auf rund drei Viertel Billionen Euro.

The ECB’s history is miserable: without a democratic mandate, it pursues monetary policy for 18 incompatible countries, becomes one of the protagonists of the continent’s greatest crisis, finally coming to terms with the “savior”, by exerting fiscal policy in excess of its mandate : Firstly, it supports the speculatively engaged global fiancists by announcing the need to take the risk of default on their portfolio of government bonds, and it seduces the Crises into further lightness and sloterrianity by indirectly granting them guarantees of low – Risk profile of the countries. In short, the ECB is a decisive factor in turning the euro crisis into a permanent crisis!

Die Geschichte der EZB ist erbärmlich: Ohne demokratisches Mandat gegründet, betreibt sie die Geldpolitik für 18 unverträgliche Länder, wird zu einem der Protagonisten der größten Krise des Kontinents, um sich schließlich zum vertragsbrüchigen »Retter« aufzuschwingen, indem sie in Überschreitung ihres Mandats Fiskalpolitik betreibt: Zunächst stützt sie die spekulativ engagierten globalen Fianzakteure, indem sie ankündigt, notfalls das Ausfallrisiko für deren Portfolio von Staatsanleihen zu übernehmen, und sie verführt die Krisenländer zu weiterem Leichtsinn und Schlendrian, indem sie ihnen mittels der Garantien indirekt zu Billigkrediten verhilft, die nicht dem Risikoprofil der Länder entsprechen. Kurz gesagt: Die EZB trägt entscheidend dazu bei, die Eurokrise in eine Dauerkrise zu verwandeln!

4. Conclusion

The German Constitutional Court is indeed showing the way to a sustainable European integration, but unfortunately without placing stricter obligations on the Federal Government and the Federal Parliament of Germany: The Court confirms, as stated above, that only a single option is open for a sustainable integration of the traditionally very different European nation-states, namely a confederation of autonomous nation-states. And the Court explicitly names the only possible way forward, namely the supranational balancing of interests among the states. Thus the course for a practical application is clear: Representatives of the nation-states should meet regularly at the supranational level on all subjects relevant for integration to find solutions that meet the interests of as many states as possible and eventually lead to a convergence of national standards at the highest possible level. The different pace of national developments, as a result of different traditions and resources, naturally leads to different individual speeds of integration. It is crucial for the success of a European confederation that (1) the member-states retain their sovereignty, or relinquish sovereign rights only temporarily and on revocation, that (2) the confederation gets along with a minimum of supranational institutions, and that (3) these institutions are prevented from conducting any self-empowerment.

With respect to the failed euro zone it should be noted that a European monetary union can only be and should have only been considered after a successful completion of the extremely slow process of convergence of economic productivities. That is, such a convergence can not serve as a realistic medium-term objective, quite contrary, it is clouding the view for a European integration aimed at general welfare (see also the article Sustainable Social Welfare).

To be more precise: A monetary union can only induce general wealth and welfare when (1) the economies of the participating countries share an almost identical level of productivity, when (2) the participating countries impose a reciprocal obligation to implement subsidiary economic structures in order to avoid centralist concentration of productions and production capital, and thus avoid unemployment and unequal distribution, and when they (3) sign bilateral trade agreements with non-European countries including price-neutralizing exchange rates and autonomy to apply trade quotas and tariffs in order to balance intra- and extra-European trade. As a compliment see the articles Economic Subsidiarity and Excesses of Capitalism.

____________________________________________________________________________________

Click here for the German Language version: Undemokratische EU-Organe

References

https://www.bundesverfassungsgericht.de/pressemitteilungen/bvg09-072.html German Constitutional Court: Press release on the Lisbon Treaty dated 30 June 2009

http://www.weltwoche.ch/index.php Swiss weekly Die Weltwoche, publisher and editor-in-chief: Roger Koeppel

Bibliography

Enzensberger, Hans Magnus: Sanftes Monster Bruessel oder die Entmuendigung Europas. Suhrkamp, 2011, ISBN 978-3-51806-172-5

Schachtschneider, Karl Albrecht: Die Souveraenitaet Deutschlands / Souveraen ist, wer frei ist. Kopp, Oktober 2012, ISBN 978-3-86445-043-3

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