Abuse of the state of emergency (1): budgetary dictatorship of Scholz, von der Leyen & Co.
Citing an "emergency situation", Germany has plunged its national budget into chaos. Citing an "emergency situation", the Commission has borrowed billions, causing the Union's debt to explode. While in Germany the Federal Constitutional Court has now handed down at least one ruling, control at European level appears to be totally lacking: since the financial crisis of 2010, the Commission has introduced, with the active support of the Council and the connivance of the European Parliament, a whole series of powerful instruments that are only partially covered by the EU treaties. The misuse of the "emergency clause" is paving the way for an authoritarian system for the elites.
As we already know, Germany is in the throes of a real budget crisis. In order to remain in a position to act, Olaf Scholz's government has also declared a retroactive "emergency situation" for 2023, in order to suspend the so-called "debt brake" once again. This is nothing more and nothing less than a desperate act to buy time. The government is acting in this way even though it is perfectly clear that this decision may once again be unconstitutional. It is clear that the fiscal policy pursued by this government to date has failed utterly and is doing serious damage to the country. Putting things right will not only take years, but will also require massive cuts that will be felt by all citizens.
Abuse of emergency measures in Germany...
Article 109 of the Basic Law prescribes the principle of a balanced budget for the Federal State and the Länder, with no (!) revenue from borrowing. Germany is thus aligning itself with the fundamental principle of the European Stability and Growth Pact and the Fiscal Treaty, according to which the budgets of the Member States must be close to balance or in surplus as a medium-term budgetary objective.
Where there are rules, there are also exceptions - and therefore also for the "debt brake". An exception clause is provided for in the event of natural disasters or exceptional emergencies beyond the control of the State and which significantly affect the State's financial situation. If the exception clause is invoked, the loans contracted for this purpose and which exceed the authorised ceiling must be repaid according to a compulsory repayment plan. [1]
This "exceptional emergency situation" has already been declared in Germany during the Covid-19 pandemic. In order to mitigate the serious damage caused to the economy by the country's own confinements, credit authorisations worth billions were granted under suspension of the "debt brake". When the Scholz government took office in December 2021, there would - in theory - still be 60 billion "in the pot" - money that the coalition did not want to give up.
That's why this 60 billion was transferred to the "climate fund" in January 2022. However, as we know, the Federal Constitutional Court has ruled that this measure is illegal. The "Covid state of emergency" should have become a "climate state of emergency". It is now a "state of fiscal emergency".
For politicians like Olaf Scholz, Robert Habeck and Christian Lindner, everything would have been so simple: once declared, the "state of emergency" serves as a convenient mechanism for justifying the ability to incur debt in order to achieve one's own political agenda. The "emergency situation" that Olaf Scholz's government is now relying on is the one that he himself created - a "budgetary emergency situation", so to speak. It sounds paradoxical, and it is.
...and in the EU
Yet this concept is becoming established at EU level! And if the Union had an effective legal control mechanism, the political abuse of emergency measures would have been discovered and stopped a long time ago. However, for several years now, the Commission and the Council have been massively extending their power and influence, without due legislative process, without the involvement of the European Parliament, and in defiance of the Member States' sovereignty reservations - but by accepting massive new debts.
This is made possible by the use of Article 122 of the TFEU, under which the Council, acting on a proposal from the Commission, can take measures by qualified majority voting. What was intended to be an emergency mechanism is becoming a permanent solution, eroding the principles of the rule of law and the democratic bond within the Union.
The term of office of European Commission President Ursula von der Leyen, which is drawing to a close, has been marked by a number of "crises". But her term has also been marked by an unprecedented number of "emergency measures" which, in a short space of time, have plunged the European Union into deep debt: The EU budget is clearly underfunded: the annual report of the European Court of Auditors puts the figure at 344 billion euros. [2]
How was it possible to increase the debt to such an extent? How was it possible to manoeuvre such large sums in the space of a few years without going through the cumbersome structures of the European Union?
The answer is simple: unlike the ordinary legislative procedure, the European Parliament has absolutely no involvement in the application of Article 122 (1) TFEU - not even in the form of a right of consultation or information. Neither the reservation of sovereignty of the Member States nor the principle of unanimity in the Council for measures of a fiscal nature apply - a qualified majority is sufficient.
Prior to 2020, EU emergency regulations based on this article were only applied in the context of the economic and financial crisis. [3] During the Covid-19 pandemic [4], Council Regulation (EU) 2020/2094 [5] of 14.12.2020 created a "structural instrument to support recovery from the Covid-19 crisis", again using this legal clause.
However, this is not the only very costly measure taken by the Commission and the Council without the authorisation of the Treaties, without the democratic commitment of the Parliament and in defiance of the Member States' sovereignty reservation. For example, the Commission concluded contracts with eight vaccine developers and obliged the Member States to purchase around 4.2 billion doses through guarantees. [6] The Commission has also carried out procurement procedures for medical supplies and therapeutic products worth almost €13 billion, also without the authorisation of the Treaties, but with the complicity of the Council and Parliament.
A state of pandemic emergency, a state of energy emergency, a state of climate emergency... with the active support of the Council and the connivance of the European Parliament, the Commission has put in place a whole series of powerful instruments that are only partially covered by the EU Treaties. However, these instruments have a structuring character and are used as precedents in subsequent crises to underpin their legitimacy.
The emergency clause in Article 122 TFEU plays a decisive role in this respect: during the pandemic, it was invoked for the joint purchase of vaccines and for credit authorisations amounting to around €900 billion to deal with the economic consequences (SURE [7] and NGEU [8] programmes). Article 122 of the TFEU has been reactivated in 2022 to allow, for example, joint purchases of gas - on the model of the joint purchasing process for vaccines - and to adopt gas and electricity saving targets. At the same time, the EU discussed the advisability of introducing new instruments, based on the SURE model, to deal with the financial consequences of Russia's war against Ukraine. It has also decided to make a joint purchase of munitions for Ukraine, along the lines of the purchase of vaccines. The experience of the Covid pandemic has already been taken into account in the design of other EU instruments. [9]
Towards a dictatorship?
Speaking of the pandemic, many documents justify these "unprecedented measures" on the grounds that "the exceptional situation created by Covid-19, which is beyond the control of the Member States, would have led to serious disruption of economic activity". [10]
Yet it was the Member States themselves who imposed - in coordination with the Commission - sometimes onerous containment measures, which have been shown to have caused (and are still causing) far more damage to the economy than the pandemic.
This pattern of abuse of a "precarious economic situation" by the Commission and the Council can also be clearly reproduced in the so-called "energy crisis". Here, too, the democratic link with the sovereign (the community of the peoples of the Member States) has been severed; the fundamental principles of the rule of law, including due legislative process and corresponding control mechanisms, have been annulled; and the Member States' reserves of sovereignty over their own energy supply have been removed.
But haven't the Commission and the Council themselves largely contributed to the precarious economic situation in the energy sector? Aren't they themselves - even while these measures are being implemented - doing everything in their power to ensure that this precarious situation does not change so quickly? And who benefits from this new energy policy?
Find out more in part two, which will be published here shortly.
This analysis was first published in: Le Courrier des Stratèges on November 8th, 2023
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[2] https://www.eca.europa.eu/en/news/news-ar-2022
[3] https://eur-lex.europa.eu/legal-content/EN/ALL/?uri=CELEX:32010R0407
[4] https://eur-lex.europa.eu/legal-content/EN/TXT/?uri=CELEX:32020R0672
[5] https://eur-lex.europa.eu/legal-content/EN/ALL/?uri=CELEX:32020R2094
[7] https://economy-finance.ec.europa.eu/eu-financial-assistance/sure_en
[9] https://www.swp-berlin.org/en/publication/the-crisis-governance-of-the-european-union
[10] https://eur-lex.europa.eu/legal-content/EN/TXT/PDF/?uri=CELEX:32020R2094