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Europe’s fiscal treaty on the way

, June 29, 2012, 0 Comments


In March, EU countries endorsed the fiscal treaty and ESM rescue fund. Now, on the last day before the parliamentary summer break, Germany’s upper and lower houses are expected to ratify it. But there is a snag.

German parliamentarians and state ministers are expected to ratify the European fiscal treaty and the permanent European Stability Mechanism (ESM) on Friday evening. This would end months of protracted political wrangling.

However, contrary to initial plans the fiscal treaty can not come into effect on July 1 because German President Joachim Gauck has said he won’t sign the law until constitutional complaints, which are expected to be filed as soon as the law is passed by parliamentarians, are examined by Germany’s top court in Karlsruhe.

Fighting for the new law

The fiscal treaty called for by German Chancellor Angela Merkel was endorsed at an EU summit in Brussels earlier this year. The pact envisages a German-style debt brake for the rest of Europe. This would force member states to balance their budgets and amend their national legislation accordingly. Twenty-five of the 27 EU member states endorsed the fiscal pact – Great Britain and the Czech Republic rejected it. British Prime Minister David Cameron vetoed plans to change the EU treaties for the fiscal pact, and as a result the other member states decided to endorse it as an international pact outside the EU treaties. However, it is to become European law within five years and has to be ratified by nine member states to take effect.

Milestone for Europe
Merkel, who described the fiscal pact as a “milestone for Europe,” did not waste any time and presented a draft bill to parliament at the end of March which stipulates that a European debt brake be included in national legislation. But German opposition parties were divided over the fiscal pact. The Social Democrats (SPD) and the Green party called for an additional stimulus package and the introduction of a financial transactions tax. During subsequent cross-party talks an additional stimulus package was agreed on and the government also pledged to push for a comprehensive financial transactions tax in Brussels.

This compromise secured broad support for the fiscal treaty, only the Left party and a small number of SPD lawmakers continued to reject it.

Constitutional complaints

But now the government has hit a new snag – this time from within its own ranks. Peter Gauweiler of the Christian Social Union – the conservative Bavarian sister party of Merkel’s CDU – said he would take legal measures against the fiscal pact and the ESM, arguing that both infringed Germany’s constitution because they undermined the rights of parliament and its control over German taxpayers’ money.

Former Justice Minister Herta Däubler-Gmelin, SPD, wants to file a complaint with Germany’s Constitutional Court the day after the law is passed by parliament.

“If the ESM and fiscal pact are implemented, all citizens are risking that they will in future be electing a parliament which has little or no say on core budget issues,” she told DW.

Dissidents in parliament

The FDP parliamentarian Frank Schäffler, a notorious euroskeptic, would also like to see the fiscal treaty and ESM shot down in Friday’s vote. “This week will decide the future of Europe,” he told DW. He argues that the billions earmarked to support struggling countries are not a firewall against contagion but rather a fire accelerant because they disable the principle of liability. “Germany would sink ever deeper into the debt mire, and ultimately citizens would lose their savings,” says Schäffler.

Source: Deutsche Welle | www.dw.de






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