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Following the May constitutional court ruling on the ECB’s public sector purchase program (PSPP), the deadline for the required proportionality assessment runs out on 5 August. However, the constitutional court will not issue any formal “assessment of the assessment” on Wednesday. As any constitutional court ruling is automatically binding for all authorities and courts in Germany anyway, the judges in Karlsruhe usually do not follow up on their own rulings – unless a plaintiff argues that the relevant institutions do not comply with the ruling, thus requesting a so-called enforcement order.
Such a request is, then, the key signpost to watch this coming week. Peter Gauweiler, a former conservative politician, campaigner, and one of the plaintiffs in the initial PSPP case, has signaled that he might demand an enforcement order. He has requested access to the documents related to the ECB’s new proportionality assessment but so far seems to have been provided with only some of these.
If Gauweiler were to request an enforcement order, and if the judges do not reject it immediately, it seems unlikely that the constitutional court would ban the Bundesbank from participating in PSPP immediately, as of 6 August. This is because any enforcement order would be built on the claim that the proportionality assessment provided in the meantime was insufficient. This statement would itself require careful analysis of the relevant documents and how the German authorities have handled them. The latter had, after all, been the key addressees of the May verdict: Bundesbank, Bundestag, and the government.
The worst-case scenario might thus be a prolongation of the matter, with the court signaling that it will further examine a request for an enforcement order. In such a scenario, the main risk outlined immediately after the May verdict returns to the forefront: the somewhat nonchalant way in which not only the ECB but especially the German authorities have reacted to the court’s PSPP-related requests.
Back in May, the judges had demanded that the German institutions “work towards” a new ECB “decision,” providing the missing proportionality assessment. The bank’s governing council reacted with a discussion of some of the potential risks associated with its bond purchases, and the respective official documents were within days (and sometimes hours) endorsed by the government and a broad Bundestag majority. The Bundesbank is yet to weigh in with a statement, but it might already be argued that the German authorities have formally complied with their obligations under the May verdict: they have gotten the ECB to consider PSPP’s proportionality once more.
At the same time, the ECB has hardly hidden its disregard for Karlsruhe, while the German institutions, with their swift endorsements, have demonstrated their limited interest in any thorough assessment. Instead, the political “deal” between Berlin and Frankfurt has, once more, become obvious: to shore up the euro, the central bankers do exactly the heavy lifting which the politicians – at least until the decision on the pandemic recovery fund – have not dared to engage in, for fear of electoral backlashes. The result is precisely the democratic vacuum that is regularly the trigger for Karlsruhe court cases. This structural standoff is likely to continue in eventual court cases against PEPP, the pandemic version of PSPP.