According to a ruling by the Federal Constitutional Court, Germany is allowed to participate in the EU’s multi-billion euro Corona development fund. On Tuesday in Karlsruhe, the Second Senate rejected two constitutional complaints.
The Corona development program called “Next Generation EU” is intended to help the EU states with a volume of 750 billion euros to get back on their feet after the pandemic. For the first time, the EU Commission is taking out loans on a large scale. The countries receive part of the money as grants that do not have to be repaid, the rest as loans. By the end of 2058, the debts should be settled at the latest.
The largest sums go to particularly hard-hit countries such as Italy and Spain. Germany expected grants of almost 26 billion euros net. The money should flow into hydrogen research, climate-friendly mobility and a more digitally oriented education system. The purchase of electric cars, buses and trains is to be promoted and the charging infrastructure expanded.
Plaintiffs fear a debt pull
On the other hand, according to the Federal Audit Office, Germany is the largest net contributor with an estimated around 65 billion euros. The authority had spoken of a “watershed in the European financial architecture” and warned of risks for the federal budget.
This is exactly where the plaintiffs started: They fear that the federal budget could be affected by liability for European debts and that Germany might end up having to pay the bill alone if states should no longer meet their payment obligations. An incalculable debt pull threatens for decades. In addition, the program has no basis in the European treaties. The plaintiffs wanted Germany to withdraw from the program or end it altogether. The lawsuits were directed against the law with which the Bundestag had approved German participation.
Out of five pending constitutional complaints, the Second Senate selected two for hearing in July of this year. One of them came from an “Alliance Citizens’ Will” around the former AfD founder Bernd Lucke and was supported by almost 2,300 people. The second was submitted by entrepreneur Heinrich Weiss. Several CDU MPs in Karlsruhe had also complained about the reconstruction fund. There was also an organ lawsuit by the AfD parliamentary group.
Is joint borrowing an isolated case?
During the negotiations, experts had not assumed that Germany would be burdened excessively. They had put the annual additional expenditure at three to four billion euros. That does not upset the federal budget, said a representative of the Federal Audit Office. The experts are concerned that the program may not remain an isolated case and that the fiscal rules could be relaxed.
The federal government had defended joint borrowing for the EU’s reconstruction fund. In the situation at that time – in spring 2020, which was characterized by the lockdown – it was necessary for the member states to take decisive joint action. At the hearing, a representative of the EU Commission had given his sincere assurance that incurring debts would not become a habit.