John Ward – ESM & Fiscal Union : German President Refers Merkel Plans To Karlsruhe Court – 22 June 2012

Major victory for Germany’s financial opposition

A furious exchange allegedly took place by telephone last night between Kanzler Merkel and the Bundespräsident, her former fellow Osti Joachim Gauck. Gauck announced yesterday that he would not ratify the EU’s second-generation rescue fund, known as the European Stability Mechanism (ESM), until legal challenges to the fund had been cleared. The German Constitutional Court had asked earlier in the day that the President grant the Karslruhe judges time to examine a probable legal challenge from the Left party.

I understand that this was a pre-arranged ‘staged’ exchange between Karlsruhe and Gauck. Both hold deep suspicions about Angela Merkel’s commitment to democracy and the Rule of Law.

The Slog has been on the case between these two for some time. As I posted last February when Gauck was fist appointed, ‘Chancellor Angela Merkel did not want Gauck at any price – this despite the fact that opinion polls show he is a popular choice. Frau Merkel has a track record of trying to keep Gauck out of office. In 2010, Gauck had been the Opposition’s candidate: but the now disgraced Christian Wulff took three ballots back then (and a lot of Merkelite arm-twisting) to get the Presidency from which he was forced to resign last week…’

There are two reasons why she didn’t want Joachim in the Presidential office. The first is that he knew her father (they were both pastors in the DDR) and after reunification Gauck was for a time in charge of reading Stasi files to finger those who had secretly worked for that most pernicious of security agencies. There seems little doubt that Gauck knows the full degree of cooperation between both the Merkels and the Communist regime.

The second is that Joachim Gauck has long suspected totalitarian instincts inside the dictatorial mind of the Chancellor – and she knows this. Although technically his role is largely ceremonial, he does have the power to refer Bundestag (or Executive) actions to the Karlruhe Court if he thinks them unconstitutional. In practice, I am told by one source that the Left Party was prodded with a large wink to make the complaint to the Constitutional Court.

Several hours before Gauck’s announcement, Bundestag legislators announced they had agreed a deal to guarantee the required two-thirds majority on the ESM and the fiscal pact. The need for a two-thirds majority meant the ruling coalition would not have been able to push the measures through without broader support…but now they had it. This was the trigger for President Gauck to make his move.

Bundestag members were furious last night (this now means Fiskalpakt cannot become law throughout the eurozone on July 1st as planned) but of course Frankfurt’s private banking community were happy last night – as The Slog’s longstanding Bankfurt Mole was able to confirm.

“We have seen in recent months how most of our worst fears have become realities,” he began, “and I for one would rather she was stopped before we end up with the bill for everything. You can also be certain that the Bundesbank has been liaising with the President for some time.”

Merkel’s dash for Fiscal Union, some inside German politics believe, is seen by the group around her as far from being an obstacle: on the contrary, one middle-weight FPD member writes to tell me, “The danger to the eurozone you should see as Merkel’s Reichstag Fire. It has forced a sense of imminent collapse, and overridden opposition that would otherwise have been far more sceptical about fiscal union.”

The reference is to the use by the Nazis of a fire ‘started by Communists’ in the Reichstag during late 1933 as the pretext for introducing sweeping emergency legislation. But that is a niche minority view: the majority of Germans are worried about the responsibility Germany is taking on, but also proud of Merkel’s determined stance.

Gauck can only delay the ESM decision. In theory, the Karlsruhe Court could rule it unconstitutional. But then, that hasn’t held Angela Merkel and her Sprout allies back before.

Nevertheless, what we can see here is an influential opposition in Germany that is implacably opposed to Merkel’s desire for several responsibility when it comes to eurozone debt. I have been banging on about this for months, although generally speaking the pieces have attracted scorn from Europe-based MSM folks. The anti-FU tendency may yet prove to be all bark and no bite, but perhaps the last word on this should go to our resident Fifth Columnist eurocrat in Brussels:

“Merkel’s Fiscal Union strategy is really an open book for anyone paying attention. She has a limited window of time during which the idea is credible. But with every week that goes by the entire scheme looks increasingly flawed. Already the Union is bound to contain at least four countries in serious financial straits. If Greece defaults (and that is seen as a strong possibility still here) and French banks get into trouble, the whole edifice could crumble within days. With no Fiscal Union there could be no EU dominated by Merkel and Schäuble. What Gauck did yesterday was an important act of sabotage.”

We may all one day be very grateful to the German President. Stay tuned. link to original article


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