German OMT Decision: English Version

The following is a quick translation of the German Constitutional Court's rejection of a lawsuit on the ECB's OMT program.

Constitutional complaints and Jurisdictional proceedings against the OMT program of the European Central Bank unsuccessful
Press release no. 34/2016 of 21 June 2016


Judgment of 21 June 2016-2 BvR 2728/13, 2 BvR 2729/13, 2 BvR 2730/13, 2 BvR 2731/13, 2 BvE 13/13 on the alleged failure of the Federal Government and the Bundestag to take appropriate measures to oppose the basic decision of the European Central Bank of 6 September 2012 on the OMT program. The plaintiffs did not have their rights violated under Art. 38, para., sentence 1, Art. 20 para. 1 and para. 2 in conjunction with Art. 79 para. 3 GG, as ruled by the Court of Justice of the European Union in its judgment of 16 June 2015 (C-62/14), setting conditions on the range of the OMT program.

Under these conditions, the OMT program does not interfere with overall budgetary responsibility of the German Bundestag. This was decided today in the judgment of the Second Senate of the Federal Constitutional Court. The decision on the OMT program adopts the interpretation by the Court that the European Central Bank has not "obviously" exceeded its competences. the OMT program in the interpretation given by the Court poses no constitutionally relevant risk to the Budget Law of the German Bundestag.

Facts:

The constitutional complaints and the institution litigation directed against two programs for the purchase of marketable debt instruments by the European System of Central Banks ( "ESCB"), in particular government bonds issued by member states of the euro zone.

In the press release no. 29/2013 of 19 April 2013 no. 9/2014 of 7 February 2014 and no. 3/2016 of 15 January 2016. In addition, please.

Major considerations of the Senate:

1. The constitutional complaints and the institution disputes are in part inadmissible. In particular, the constitutional complaints are inadmissible as aimed directly at measures of the European Central Bank. In that regard, they are based not compatible complaint objects.

2. Insofar as the constitutional complaints and the dispute between organs procedure are permissible, they are unfounded.

a) authorization contained as required in Art. 23 para. 1 sentence 2 GG to transfer sovereign powers to the European Union, the Basic Law also approved the granting of primacy in favor of European Union law. The integration legislature can not only institutions, bodies and agencies of the European Union in the exercise in Germany public authorities, exempting them from a comprehensive commitment to the warranties of the Basic Law, but also German bodies performing the powers of the European Union.

However, the primacy extends only as far as the Constitution and the Act Approving allow or provide for the transfer of sovereignty. Limits for opening German law therefore arise from the by Article 79 para.. 3 GG protected constitutional identity of the Basic Law and enshrined in the Act Approving the integration program that only gives the Union legal for Germany the necessary democratic legitimacy.

b) The principle of democracy (Art. 20 para. 1 and 2 GG) belongs in its principles to that for change (Art. 79 para. 3 GG) and integration (Art. 23 para. 1, sentence 3 in conjunction with Art. 79 para. 3 GG) declared constitutional identity of the basic law. The caused by the election of legitimacy of state power must therefore not be emptied by the transfer of functions and powers to the European level. An exercise of official authority by institutions, agencies and other bodies of the European Union, which does not have sufficient democratic legitimacy through the laid down in the Act Approving the integration program, therefore (2 sentence Art. 20 para. 1 GG) infringed the principle of popular sovereignty.

c) As part of the Identity Control the Federal Constitutional Court reviews whether inviolable principles as declared by Art. 79 para. 3 GG have been damaged in the transfer of sovereignty by the German legislator or by an action of the institutions, bodies and agencies of the European Union are affected. This concerns the safeguarding of human dignity core of fundamental rights (Art. 1 GG) as well as the principles that characterize democracy, law, social and federal principle within the meaning of Art. 20 GG.

In reviewing ultra vires the Federal Constitutional Court reviewed measures of institutions, bodies and agencies of the European Union (only) to see if they are covered by the Integration Program (Art. 23 para. 1 sentence 2 GG) and fall under the primacy of Union law. The conclusion of an ultra vires act is - regardless of the affected property area - requires that an action falls obviously outside the European Union's transferred powers.

d) The responsibility for integration requires constitutional bodies - the basic legal protection obligations not dissimilar -.... to protect and promote the rights of individuals protected by Article 38 paragraph 1 sentence 1 in conjunction with Article 20 paragraph 2 sentence 1 GG who can not care for their own rights. The obligation of the constitutional bodies to exercise their control over integration corresponds that the rights of citizens anchored in Art. 38 para. 1 sentence 1 GG are not further limited than required by the existing transfer of sovereign powers to the European Union.

A violation of protective duties only exists if institutions take no precautions, or the conventions adopted and measures are obviously unsuitable or completely inadequate, or because they remain considerably behind the protection objective. For the responsibility for integration, this means that the constitutional institutions in the case to work actively manifest and structurally significant expertise overruns and other violations of constitutional identity by the European Union institutions, bodies and agencies to ensure compliance with the integration program. They are optionally committed to working within its remit through legal or political means on the lifting of unmet by integration program measures and - while continuing effect of the measures - to take appropriate steps to ensure that the national impact of the measures will be limited as far as possible. As the fundamental rights protection obligations as well as the responsibility for integration in certain legal and factual conditions may, however, be condensed into a concrete action required.

3. According to these standards and in compliance with the provisos mentioned below into the inaction of the federal government and the Bundestag injured no one in respect to the basic decision of the European Central Bank of 6 September 2012, the complainants their right under Art. 38, para., Sentence 1, Art. 20 para. 1 and para. 2 in conjunction with Art. 79 para. 3 GG. The existing obligations of the German Bundestag within the framework of European integration rights , including its budgetary overall responsibility will not be affected.

a) The Federal Constitutional Court bases its examination on the interpretation of the OMT decision that was made in its judgment of 16 June 2015, the European Court of Justice. The opinion of the Court, the decision of principle on the OMT program is that it falls under the competence of the ECB and not contrary to the prohibition of monetary financing of the budget, nor (1 Art. 19 para. 2 sentence TEU) moves within the the Court issued mandate.

The Court bases its view on the intent of the European Central Bank's OMT program to affect economic policy only indrectly. It bases its judgement not only the basic decision on the technical specifications from September 6, 2012, but in particular from the principle of proportionality from other conditions that set mandatory limits on a possible implementation of the OMT program. Moreover, the Court confirms that the actions of the European Central Bank's judicial control, particularly with regard to compliance with the principles of conferral and proportionality.

b) The judgment of June 16, 2015 and the manner of judicial law concretisation is seen by the Senate as posing nevertheless weighty objections with a view to collecting the facts, the principle of conferral and judicial review of the European Central Bank in determining their mandate ,

This applies first of the fact that the Court accepts the claim of a monetary policy objective of the OMT program, without questioning the underlying assumptions of fact or at least understand in detail and to deal with the evidence in relation without these assumptions, the obvious against a monetary policy speak character.

It is equally material that the Court for the competence proper assignment of OMT program on monetary policy despite the assumed by himself intersections of economic and monetary policy substantially to the objectives of the action and the use specified by being monitored organ in the provided for in Art. 18 Statute instrument of the purchase of government bonds turns off.

No response finally remains to the Court submitted by the Senate problem that the European Central Bank granted independence leads to a noticeable reduction in the level of democratic legitimacy of its actions and therefore would give rise to a restrictive interpretation and particularly strict judicial review of their mandate. This applies even more, if the principle of democracy and the principle of popular sovereignty, the constitutional identity of a Member State is concerned, to the importance of respecting the European Union is committed.

c) Despite these concerns, the decision in principle on the OMT program in the interpretation adopted by the Court, however, does not move "obviously" out of the European Central Bank powers vested in terms of ultra vires control reservation. Unlike the Senate, the Court stated objectives not scrutinized and judged the evidence that speak from the perspective of the Senate against the alleged objective, each isolated, rather than to evaluate in its entirety. However, this can be accepted, because the Court has made the held by the Senate in its order of 14 January 2014 possible restrictive interpretation by a resolution of the case at the level of the exercise of competence.

The Court distinguishes between the basic decision of 6 September 2012 and the implementation of the program. Looking to the proportionality of the OMT program and the fulfillment of the obligations to state reasons he names over those announced in the basic decision framework, further restrictions, which an implementation of the OMT program is subject to mandatory. Against this background, it can be assumed that the Court considers the issues highlighted by him terms than legally binding criteria. With the procedural containment through the judicial review of compliance with the principle of proportionality, the Court addresses the problem of the almost unlimited potential of Decision of 6 September 2012 Design. While eliminating the extent developed by the Court limiting parameters the overarching economic policy character of the OMT program is not complete. Together with the conditions established in Decision of 6 September 2012 conditions - in particular the participation of the Member States to adapt programs, their access to the bond market and focusing on bonds with low (remaining) term - let the adoption of any case in focusing monetary policy character of the OMT but -Programms seem justifiable.

d) In the interpretation adopted by the Court of Justice decision in principle on the technical parameters of the OMT program and its possible implementation in breach not obviously contrary to the prohibition of monetary financing of the budget. While the Court considers that the decision in principle even without further specification admissible whose conduct detailed conditions must meet, if not to violate the purchase program of European Union law. In this interpretation, the OMT program complies with the requirements formulated in the order of 14 January 2014, the Senate with evaluative overall consideration.

e) As the OMT program only not showing this in mind as ultra vires act if the particular by the Court framework is respected, the German Bundesbank may only participate in the implementation of the program, if and to the extent that the Court established provisos are satisfied, that is, when

· Purchases are not announced,

· The volume of purchases in advance is limited,

· A pre-determined minimum period between the issuance of a debt security and its acquisition by the ESCB, which prevents the emission conditions are distorted,

· Only debt of Member States to buy that have a financing enabling access to the bond market,

· be acquired debt securities held to maturity and only exceptionally

· Be limited or terminated, buying and acquired debt securities are returned to the market if a continuation of the intervention is not necessary.

f) Your responsibility for integration obliged Federal Government and the Bundestag not to act in view of the budgetary overall responsibility of the Bundestag against the OMT program. In the interpretation given by the Court of the OMT program poses no constitutionally relevant risk to the Budget Law of the Bundestag. To this extent, a threat to the budgetary overall responsibility by the possible implementation of the OMT program currently can not be determined.

g) Federal Government and the Bundestag, however, are due to their responsibilities responsibility for integration are required to monitor the possible implementation of the OMT program permanently. This observation duty is not only to ascertain whether the formulated above provisos are met, but also whether arises especially from the volume and the risk characteristics of the acquired bonds, which may change even after its acquisition, a concrete risk for the federal budget.

Dutch Values and Ukraine's Association Agreement with the EU

We Dutch know something about living next to a large, dangerous neighbour that tries to manipulate, conquer or control us. We know something about the importance of being able to trade with the neighbours and the broader world to maintain our independence and standard of living. And we also know something, luckily a little more than most, about the importance of the rule of law, of democracy, of freedom and of human rights. We can rightly be proud of what we've accomplished in our own country and what we stand for. We can be even more proud when others copy us and ask us coach them. There is nothing pie-eyed about this. The Dutch are a sober and realistic bunch. When they set their minds to it, they can accomplish great things. Others can do the same by emulating them. 

The European Union was created to prevent war, promote prosperity, and advance the human condition. It largely does that by copying much of what the Netherlands has already achieved for itself and demands it from its members. The formula resonates so strongly with the human drive for freedom that other countries use it as well. It goes without saying that the EU demands this of its members. But it also seizes opportunities to help neighbouring countries that want to bring themselves up to European levels of democracy, justice and human rights without becoming members. 

This is in the Netherlands' own interest. There has never been a war between democracies. There has never been a civil war in countries where basic human, legal and political rights are respected. The EU has no army and relies primarily on promoting a ring of democracies around it. In rare cases where the neighbouring country wants to really change itself, Association Agreements can be used to help that change along.

Association Agreements like the one that the EU has with Ukraine are like 12 step programs for recovering addicts. They are hard work. They have to admit their problems, they have to make amends to those they have harmed, they must put the ways of the past behind them, and they must live the rest of their lives with courage and integrity. They need help to keep on the right path and to break with the people that would drag them down into the abyss once again. Being a role model and a coach for an addict doesn't mean the addict comes to live with you. Keep that in mind.

The Post-Soviet world--countries like Ukraine that were once part of the Soviet Union and the Russian Empire before it--now have a young generation that has not grown up under Russian rule, does not learn Russian in school, learns English instead, travels west on vacation and looks toward Dutch and European values and standards as what they want for their own futures. A little older than them are the ones who fought the revolutions that brought them their formal independence, and the chance to live in freedom. But political revolution did not put an end to the old politics of economic and political corruption. The Association Agreement is designed to make that corruption a thing of the past. In return for accepting the cost and pain of rooting that corruption--the links to the people that feed the addiction-- we accept each other as trading partners. That is initially painful for Ukraine because our companies are so competitive. Dutch engineers, manufacturers and investors will earn more than they lose from the free trade agreement. But this can only work for them if they can operate in a Ukraine where a contract is a contract, a judge is honest, where politicians don't give jobs to their friends and informal masters, lurking in the shadows, and where judges, bureaucrats and politicians can't be bought.

 All of that is easier said than done. Just like the junkies trying to claw back one their own who has decided to go clean, Russia has reached out with various means to prevent Ukraine from building a new future for itself. The Agreement was negotiated by  a government with a democratic mandate for change--the change initiated by the Orange Revolution. It was halted when Russian president Vladimir Putin bribed the new Ukrainian President to reject the deal and join the Eurasian Union instead. People went to the streets in Maidan Square, and we saw what it meant to fall back into the crack house of Russian influence. Obedience or death instead of democracy and free speech, and a return to corruption instead of an honest chance for  young Ukrainians to build an economy and society that reflects who they are and want to be. I was there in the European Parliament as the first shots fell and the first Ukrainians started dying at the hands of government forces. I listened to leaders from Parliament, Commission and the Council of member states confer directly and join in support of those protesting. In the face of those horrible actions, I felt a sense of hope, as I think many did, that if Europe continued to do the right thing, that Ukraine could overthrow that government and resume its path to reform.

It did, and thankfully the EU and its member states supported that effort with the Association Agreement. As we know, that was not the end of Russia's efforts to reincorporate Ukraine into it's 'rightful sphere of influence' (imagine if Germany did the same thing to the Netherlands today). It invaded and annexed Crimea, it invaded and installed a puppet regime in Luhansk and Donbas, murdered and displaced civilians living there, kidnapped and sentenced the Ukrainian pilot Savchenko to 22 years on bogus charges, and as the Netherlands is all too aware, shot down a civilian airliner with 182 Dutch nationals and others on board to show you they could, and to make it clear whose property the Ukraine was. Nevertheless, Ukraine, with the EU's help, has stayed the course to reforms.

As a result of Ukrainian and European determination, domestic support for reforms has remained strong and Russia's attempt to establish NovoRussia out of a larger invasion of Ukraine was stopped. It will remain a dream rather than a reality as long as Ukraine has the chance to build its own future. Those within Ukraine who want to turn the clock back, with corruption and with arms will not get their chance. That is what the Orange Revolution was about. That is what the Agreement is about. We can be proud that Dutch and European values are what they aspire too. But that will only survive if we vote on April 6th to stand by them as they do that.

Vote on April 6th. And vote Yes

Nederland, de EU en Oekraïne

Nederlanders waarderen zeer de rechtsstaat, de democratie, de vrijheid, de mensenrechten en de gelijkheid. We kunnen met recht trots zijn op dat wat we hebben bereikt in ons eigen land en waar we voor staan. We kunnen nog trotser zijn omdat de EU deze normen en waarden vertegenwoordigd in overeenkomsten met buurlanden zoals Oekraïne.

Associatieovereenkomsten kunnen verandering op weg helpen. Net als 12 stap programma's voor verslaafden, eisen ze hard werk. Landen moeten hun problemen toegeven, zich verbeteren en daarna met moed en integriteit leven. Overeenkomsten helpen landen op het rechte pad te blijven en te breken met degenen die verandering niet willen. De rol van de EU als coach in deze relatie vergt ook afstand. Een associatieovereenkomst heeft dus niets met lidmaatschap te maken.

De overeenkomst eist het aanvaarden van Europese wetgeving en waarden naast de vrije handel, om corruptie te bestrijden en een level playing field te creëren. Dat zal Oekraïne in het begin ook veel kosten, omdat Nederlandse ingenieurs, fabrikanten, en beleggers sterker zijn in vergelijking. Maar we hebben er alleen baat bij als we zaken kunnen doen in een Oekraïne waar de politici geen vriendjespolitiek plegen, en waar de rechters, bureaucraten en politici niet kunnen worden gekocht.

In de post-Sovjet-wereld is een jonge generatie opgegroeid die Russisch bewind niet kent, die Engels op school in plaats van Russisch leert, die het westen op in vakantie reist en die naar Nederlandse en Europese waarden en normen kijkt als model voor hun eigen toekomst.

Maar Rusland heeft geprobeerd met verschillende middelen om te voorkomen dat Oekraïne erbij succes heeft. De overeenkomst werd onderhandeld door een regering met een democratisch mandaat voor verandering - geïnitieerd door de Oranje Revolutie. Poetin kocht Oekraïense president Janukowitsch om op het laatste moment om de deal te torpederen. Mensen gingen de straat op in Maidan Square, en we zagen wat het betekende om terug onder Russische invloed te vallen. Een terugkeer naar geweld en corruptie in plaats van een eerlijke kans voor jonge Oekraïners om een ​moderne, Europese ​economie en samenleving op te bouwen. Ik was er in het Europees Parlement toen de eerste schoten vielen en de eerste Oekraïners begonnen te sterven. De leiders van het Parlement, de Commissie en de Raad besloten direct ondersteuning te geven aan de betogers. Ik had een gevoel van hoop, omdat Europese leiders besloten het juiste te doen—aan Nederlandse en Europese waarden te houden.

Gelukkig konden de democraten uiteindelijk uit de crisis de overhand winnen. De EU heeft hun inspanning ondersteund met de associatieovereenkomst. Zoals we weten, viel Rusland Oekraïne in de Krim, Luhansk en Donbas binnen om uit Oekraïne een NovoRossia te maken. Dat is hun dankzij Europese ondersteuning niet gelukt. Hoewel Rusland verder probeert, Oekraïne weer in haar 'rechtmatige invloedssfeer' te halen. Het misachten van de Minskovereekomsten, en het neerschieten van MH-17 met 182 Nederlandse slachtoffers aan boord om duidelijk te maken wiens eigendom de Oekraïne was, een hoe ver ze ervoor wilden gaan, laten dat zien.

Als gevolg van de Oekraïense en Europese vastberadenheid, is de binnenlandse steun voor hervormingen sterk gebleven. Degenen in Oekraïne en Rusland die met corruptie en wapens de hervorming van Oekraïne willen terugdraaien, zullen hun kans niet krijgen als we vol houden. Dat is wat de Oranje Revolutie heeft begonnen. Dat is wat de overeenkomst ondersteund. We kunnen er trots op zijn dat ze streven naar Nederlandse en Europese normen en waarden. Maar dat zal alleen lukken als we ze op 6 april een hart onder de riem steken en vóór de associatieovereenkomst stemmen.