German Court still allows EU recovery fund to pass

September 23, 2021 by No Comments

Brussels breathes a sigh of relief: the German hostage crisis of the corona recovery fund is already over. This Wednesday morning, the German Constitutional Court ruled that President Frank-Walter Steinmeier may simply put his signature to the agreements about the fund, averting feared delays.

At the end of March, the Bundesverfassungsgericht in Karlsruhe temporarily canceled the German approval of the European corona recovery fund. The ruling was in response to objections from a group of German citizens who argued that the recovery fund violates European treaties and that the debt borrowing poses undue risks to the German treasury. Pending further study, ‘Karlsruhe’ ordered the approval to be frozen.

That further study has now been completed, which means that Germany can still approve the fund. That fiat is crucial: before the European Commission can enter the capital markets to borrow the 750 billion euros for the fund, all individual member states must have officially agreed to this.

In response to the decision of the German Court, fears of delays grew in Brussels in recent weeks. Ideally, the Commission would like to complete the full ratification process before July, which will allow the first disbursements to be made this summer. In southern Europe in particular, EU funds are eagerly awaited.

Not waiting

In its judgment, the German Court has taken into account the major consequences for the whole of Europe of any delay. At the same time, the decision does not mean that the complaints of the complaining citizens have been declared unfounded. The possibility that ‘Karlsruhe’ at a later stage – after a long, extensive procedure – still judges the fund negatively remains. But the Court recognizes that Europe cannot wait for that and therefore now lets the fund pass.

The German ratification means that the recovery fund has passed a new, crucial hurdle. But it’s not out of the danger zone yet. Including Germany, 18 of the 27 member states would now have given their approval. There are still concerns about Poland, where the fund is now part of a fierce coalition struggle. The Dutch Senate must also allow the fund to pass, while waiting for the judgment of the German Court. The vote in the Senate is now expected to take place soon.