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Is Germany heading towards a referendum?

The question of the compatibility of the German constitution (officially known as the Basic Law), with further European integration is at the origin of current debates in Germany.  The Federal Constitutional Court (FCC) will decide in September on whether the European Stability Mechanism (ESM) exceeds the limits of the Basic Law. Meanwhile, a debate on holding a referendum in Germany on the future of the EU and new EU treaties emerges. This column summarizes the discussion.

By: Date: October 10, 2012 Topic: European Macroeconomics & Governance

The question of the compatibility of the German constitution (officially known as the Basic Law), with further European integration is at the origin of current debates in Germany. The Federal Constitutional Court (FCC) will decide in September on whether the European Stability Mechanism (ESM) exceeds the limits of the Basic Law. Meanwhile, a debate on holding a referendum in Germany on the future of the EU and new EU treaties emerges. This column summarizes the discussion.

First, there is a debate about the constitutionality of the ESM. The FCC will decide on 12 September 2012 on whether the ESM may exceed the limits of the Basic Law. This is notably due to the organisational structure of the ESM: its Board of Governors comprised of the euro area’s finance ministers would take all major decisions (except of changing the authorised capital stock of the ESM according to Article 10 ESM treaty). In urgent cases, according to Article 4 (4) ESM treaty, decisions can be taken using an emergency voting procedure that requires a qualified majority representing 85% of the ESM’s capital shares (instead of an unanimous vote of the members participating in the vote). The Board’s decisions would have an impact on the German budget, which could subsequently undermine sovereign rights of the Bundestag. German law professor Franz Mayer explains that “in the context of democracy, it is in particular the budgetary rights of the German parliament that they consider to be infringed upon. […]The mere size of the entire endeavour is endangering the leeway of the German parliaments and its budgetary freedom.”

German Law Professor Stefan Homburg, who advises the plaintiffs against the ESM, writes in the FAZ on constitutional doubts regarding the ESM treaty. According to his analysis, Articles 34 and 35 ESM treaty about professional secrecy and immunities of persons risk to remove democratic accountability from the governors. Thus, in conjunction with Article 32 ESM treaty that prevents control by inter alia (Article 32 (5)) declaring “the archives of the ESM and all documents belonging to the ESM or held by it” inviolable, Homburg sees very significant risks undermining basic democratic structures.

Decisions of the ESM Board could only be democratically legitimated if they would need the approval of national parliaments. The German law accompanying the ESM treaty, the “ESM-Finanzierungsgesetz”, aims at ensuring the democratic basis by obliging German members of the Board to refuse decisions with impact on the German budget and that have not been accredited by the Bundestag. However, according to Professor Dietrich Murswiek, this is legally not enforceable. 

Such a judgment of the FCC could necessitate a constitutional change, either by referendum or by Article 23 Basic Law in conjunction with Article 79 (2) and (3) Basic Law.
The possibility of holding a referendum is explicitly foreseen for the reorganisation of federal territory (e.g. the referendum to merge Berlin and Brandenburg proposed in 1995) or for a replacement of the Basic Law. The second case is regulated by Article 146 GG, which stipulates that the current Basic Law “shall cease to apply on the day on which a Basic Law freely adopted by the German people takes effect.”

A second debate goes beyond the constitutionality of the ESM and focuses on general limits of the Basic Law in the context of further European integration.  Article 110 Basic Law generally states that all revenues and expenditures must be included in the national budget. However, Article 23 Basic Law implies the possibility of transferring sovereign rights to EU level provided that the Federal government enacts a law. For such a law, Article 23 Basic Law refers to Article 79 (2) and (3) Basic Law, which require that this law must be approved with majority of 2/3 of all votes in both Bundestag and Bundesrat.

The debate did not emerge recently. In September 2011, Andreas Voßkuhle, President of the FCC, told the FAZ that there was not a lot of margin left in the Basic Law to transfer sovereign rights to the EU. Only a new Basic Law voted by referendum could render further integration possible.  
In July 2012, Federal Minister of Finance, Wolfgang Schäuble, according to the FAZ, says that given the necessary further political European integration a new Basic Law may already be voted by referendum in a few years. Minister of Labour and Social Affairs Ursula von der Leyen, on the other hand, argues against proposals for a referendum on the Basic Law and further European integration. The Basic Law would not become obsolete in the context of further integration. There “is still a lot of margin.”

The Bavarian Minister-President Horst Seehofer wants an amendment of the Basic Law to include referendums. He told the Welt that for further integration the people must be consulted in three areas: the transfer of rights to Brussels, the adhesion of further countries to the EU and the decision on German financial aid to other EU states including debt mutualisation. “We should include such forms of plebiscites in the Basic Law; we need to involve more people”. Europe cannot remain a project of the elite. “We can overcome the crisis of legitimacy and trust towards the European institutions only with more transparency and citizen participation.” 

The third debate goes beyond the ESM and limits of the Basic law by calling for new EU treaties with much more transfer of sovereign rights to the EU. Habermas et al. denounce a democratic deficit in the current EU landscape.  They are in favour of holding a referendum in Germany in the context of new EU treaties.

“As the representative of the biggest donor country in the European Council, the Federal Republic should take the initiative and table a resolution for summoning a constitutional convention. […]It is not out of the question that the Federal Constitutional Court will seize the initiative from the political parties and announce a plebiscite to amend the constitution. […] A joint initiative backed by the SPD, CDU and Greens to set up a constitutional convention, the results of which could be voted on at the same time as the plebiscite on the constitution (but not before the end of the next parliamentary term), would not then be an unrealistic prospect. This would be the first time that Germany has conducted a public debate of this kind, in which opinions are formed and decisions taken about the different political options for Europe’s future: […]”

Their paper has been published on the official SPD website. According to the Welt, the authors formulated the paper for the discussion about the SPD electoral platform programme for 2013 and SPD leader Sigmar Gabriel, according to euractiv, declared the propositions made there to be part of the official debate on the 2013 SPD programme. The two other SPD candidates for the chancellery, Peer Steinbrück and Peter Steinmeier, are welcoming the proposals made in the paper. It seems that this disappointed the clientele of Steinbrück, as pointed out  in the Handelsblatt as there are already “enough debt politicians”.

In the meantime, a more intense debate about holding a referendum in Germany on the EU emerged. According to the Spiegel, Gabriel, proposes a constitutional change with a subsequent referendum on debt mutualisation with a common budgetary control.
Federal Minister of Justice, Sabine Leutheusser-Schnarrenberger of the Liberal Party (FDP) argues for a European constitution that re-enforces the role of the European Parliament as well as that of each EU citizen. However, she is reluctant regarding referendums: economic issues such as the fiscal pact would not be suited for referendums.
Former Federal Minister of Economy, Rainer Brüderle, said in an interview to the Hamburger Abendblatt that “We might get to a point where a referendum on Europe is necessary. We Liberals have always been for a European Constitution. The further development of the debt crisis will show how much sovereignty EU countries must transfer to EU level.” , and also Guido Westerwelle, German Minister of Foreign Affairs, is in favour of a referendum on the future design of the EU. He told the Bild am Sonntag that he hopes to have one day a “real” European constitution, based on a referendum.

Many columns and points of view point out the dangers of such a referendum, for example the Tagesspiegel, the Hamburger Abendblatt or the Frankfurter Rundschau writing that a referendum can be a “wonderful thing” for democratic self-assurance in quiet times, but that, in the midst of the crisis, this would be the wrong remedy. The Spiegel writes about the possible different possibilities of implementing a referendum in Germany. However, Jens Petermann, Pasquale Pasquino and Christoph Hönnige write on the European  that a ratification of the ESM under the Basic Law is not possible and that only the consent of the constituent power, namely the people, could change it. They say that the aim of the constitutional complaint should be to bring about a constitutional change by referendum and that a decision of the Court would be the only way to lead to it. 


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