Monitoring Euro Stability 'Offenders and Watchdogs Are Identical'
Former German Constitutional Court Justice Paul Kirchhof discusses the design flaws of the European Monetary Union, the Greek debt crisis and the prospects for renewed legal challenges in Germany against the euro in light of recent events.
SPIEGEL: Professor Kirchhof, many German citizens still keep deutsche marks at home because they don't trust the euro. Do you?
Kirchhof: I have a one deutsche mark coin in the drawer of my desk -- not because I have any doubts about the euro, but as a memento of a successful currency. Besides, it reminds me of the euro decisions at the Federal Constitutional Court, in which I participated.
SPIEGEL: In 1998 you, as a member of the Constitutional Court, dismissed a suit against the euro by four professors, thereby setting aside the last hurdle prior to introduction of the new currency. Have you ever regretted that decision?
Kirchhof: No. The euro has been proven to be a blessing, particularly during the financial crisis. Imagine after the Lehman bankruptcy if we had had individual currencies in each country, as we did in the past. What would the consequences have been? Waves of speculation, severe distortions of exchange rates and an appreciation of the deutsche mark that would have harmed the German export economy.
SPIEGEL: Meanwhile, however, the euro is experiencing a serious crisis, and Greece is on the verge of bankruptcy. The four critics of the euro in Germany who unsuccessfully fought its introduction through the Federal Constitutional Court in 1998 have threatened to file a new complaint with the German high court if Europe decides to approve billions in aid for Athens. Would they stand a chance of succeeding this time?
Kirchhof: As a former Constitutional Court judge, I would rather not state my opinion about this. I can say this, though: It was the intention of both the Constitutional Court and the federal government to make the euro as secure as possible. That was why the Stability Pact was concluded and the so-called convergence criteria were approved, which were intended to impose verifiable limits on government debt. The question was: Can the introduction of a monetary union succeed before we have an economic union among the participating countries?
SPIEGEL: If we consider the example of Greece, the answer is no.
Kirchhof: The euro also offers opportunities for everyone today. Besides, the justices on the Constitutional Court are not the ones who should be ruling on this issue. This is a political matter. If our elected representatives say that we are going to take this risk because it is an opportunity for Europe, then we have a guideline that commits us -- particularly as government promptly agreed to rules and conditions to keep the euro as stable as possible.
SPIEGEL: Except that they were never obeyed. The rules on government borrowing have been violated many times since 1997, and more than two-thirds of all euro countries are currently exceeding the absolute upper debt limit of 60 percent of their gross domestic product. Doesn't this have legal consequences?
Kirchhof: The parties to the treaty and the constitutional courts of various member states have repeatedly and emphatically pointed out that these standards are binding.
SPIEGEL: Emphatically, but ineffectually.
Kirchhof: Looking at the past doesn't get us anywhere today. But a design flaw of the treaties should be corrected in the future. Until now, criteria from the Stability and Growth Pact has been monitored by the European finance ministers. In other words, the offenders and the watchdogs are identical. This double mandate hasn't been proven to be effective.
SPIEGEL: To make matters worse, Greece massively forged its budget figures, even when it joined the monetary union. What is your view of this?
Kirchhof: If this is true, then we have a significant legal statement of facts. Under these conditions, at least one country should not have been allowed to become a member of the monetary union. It was allowed to happen, either because no one was paying close enough attention or facts were applied that were untrue. This is an inherent structural defect that casts a shadow on the membership of such a country, which still exists today.
SPIEGEL: Were the treaties violated as a result?
Kirchhof: If the suspicion proves to be correct: yes, clearly.
SPIEGEL: The European governments have made it clear that they would approve financial assistance for Greece if the country's solvency were jeopardized. The Maastricht Treaty precludes such assistance. Would this be a reason to file a suit against the euro before the Constitutional Court?
Kirchhof: I do not assume that European governments will agree to contravene established law.
SPIEGEL: And if they do, will the Constitutional Court be able to step in?
Kirchhof: Assistance doesn't always have to be financial. It can also consist of mutual reinforcement in terms of budgetary discipline. This is where the parliaments come in. They are the supreme custodians of the European treaties and can demand accountability from the governments and the European Council (editor's note: the EU body comprised of member state leaders and ministers). Besides ... if parliaments or their members feel that their rights have been violated, they can appeal to the Constitutional Court.
SPIEGEL: Can citizens file suits to prevent their tax money from going to Greece?
Kirchhof: There is a clever rule in German tax law, namely that taxpayers have no authority to decide how their tax money is used. This is a matter for the parliament, which is elected for precisely this reason. If freely elected representatives are to make their decisions based on democratic principles, even the most devoted pacifist has to accept that some of his tax money will become part of the defense minister's budget.
SPIEGEL: Because the Greek crisis is considered from a legal standpoint, there are pressing political issues to be addressed. How should Europe behave?
Kirchhof: It would be fundamentally wrong to say: We are taking on your debt, so you can just carry on. Greece is not just a member of the European Monetary Union, but also of the European Union. The EU is an economic and legal community of members that have pledged mutual assistance to each other. But this should not be used as a way to promote further economic folly, but rather as an effective tool for self-help.
- Part 1: 'Offenders and Watchdogs Are Identical'
- Part 2: 'No Country Should Be Able to Spend More than It Takes In'