Legal Loopholes when Merkel tries saving Europe
Last year everybody “knew” Europe was about to vanish from the World Map. Now, as we still enjoy the last fumes of the Santa Rally, let’s once again reconsider what Europe (Germany) wants to do with Europe. PSI, Greece, Italy/Spain bonds, LTRO are all words in fashion, but what is Merkel actually telling Europe? From Spiegel;
It’s German Chancellor Angela Merkel’s pet project — a new European Union fiscal pact to insure members’ budgetary discipline through stricter controls. But European legal experts have doubts about its viability, while critics say there are more important issues at hand.
People seem to have forgotten what was signed some 20 years ago regarding deficits and budget discipline. Now it is up to Germany to decide what Europe should do.
Because Chancellor Angela Merkel pushed the reform through almost entirely on her own, the new accord reflects a number of German suggestions. Each country that signs must introduce legal limits on budget deficits — a so-called debt brake. If they exceed the structural debt limit of 0.5 percent of gross domestic product (GDP), the debt brake mechanism will automatically go into effect, and they will face fines from the European Court of Justice.
On the other hand, EU is full of contradictory laws, and it will be great joy watching the politicians solving this problem…
Even if it comes to that, the authority of the European Court of Justice’s (ECJ) remains in question. The treaty proposal states that the Luxembourg judges can impose fines of up to 0.1 percent of a country’s GDP if they don’t properly anchor the debt brake in their national law.
But these sanctions aren’t actually provided for by EU law. In fact, they deviate from Article 126 of the Lisbon Treaty. And, according to Matthias Ruffert, a European law expert at the University of Jena, it is likely that all 27 EU members will have to ratify the fiscal pact for any ECJ sanctions to be binding.
Full article here.
(Chart Spiegel International)