German judges may hold Europe’s fate in their hands

KARLSRUHE, Germany — In their eye-catching red robes and caps specifically designed to evoke Renaissance Italy, Germany’s supreme court justices have long demonstrated a flair for the theatrical.

But even they would probably never have cast themselves as leading actors in a nail-biting drama whose highly anticipated denouement could seal the fate of Europe’s — and possibly the world’s — economy.

In a hushed courtroom Wednesday, the judges are expected to deliver a landmark ruling on whether Germany’s participation in a permanent European bailout fund is in line with the country’s constitution.

Thumbs up, and Europe’s game plan for keeping countries like Spain and Greece afloat amid the region’s long-running debt crisis can go ahead. Say no, and the plan would be gutted of its most vital elements, sending European leaders into shock, markets into turmoil and the global economy into fearful uncertainty over the very survival of the euro.

As Russell Miller, an expert on the German high court, bluntly described the question facing the panel: “Are the eight of us going to plunge the world economy into doom?”

Many analysts think not, arguing that the court knows the weight on its shoulders and will swallow any misgivings to produce at least a qualified ruling affirming Berlin’s decision to contribute to the $640-billion European rescue fund. The justices are examining whether handing over money, in essence, to ailing nations infringes on the German Parliament’s constitutional right to control how federal funds are spent.

But no one is willing to bet on the court’s ruling, which has Chancellor Angela Merkel’s government on edge. Public opposition to the bailout fund is strong; hundreds of protesters turned out over the weekend for a rally here in Karlsruhe to urge the court to strike down Germany’s participation in the program.

Such a judgment would rob the rescue fund of its biggest financer and knock Europe’s leaders back to square one in their attempts to resolve the debt crisis. As one of the chief authors of the European Stability Mechanism, or ESM, Merkel would also find her credibility seriously undermined.

Whichever way the justices rule Wednesday, the debate over the ESM has put Germany’s high court under almost unprecedented scrutiny and pressure, not just from within the country but from outside as well. Few of its decisions have had international observers holding their breath like this.

The court is here in Karlsruhe, a quiet university town along the Rhine not known for much else. After Germany’s disastrous experience with strong centralized governments in the first half of the 20th century, postwar officials dispersed power among different parts of the country, with lawmakers based in Berlin (or Bonn, during the Cold War), the central bank in Frankfurt and the Federal Constitutional Court in this southern city.

The court is roughly analogous to the U.S. Supreme Court but in some ways much more powerful, in part because it is so active, issuing hundreds of judgments a year. Key rulings include its support of deployment of German troops for more than simply defensive operations and its invalidation of a law allowing the military to shoot down hijacked planes.

The court is unquestionably the most important national high court in Europe and among the most important in the world, whose jurisprudence, like that of the U.S. Supreme Court, is studied in countries as far away as Africa and South America.

There are 16 justices, eight of whom normally sit on a case. Unlike their American counterparts, who enjoy lifetime tenure, the Germans serve a maximum of 12 years and must retire at age 68.

Because they earn appointment by a two-thirds majority vote in either house of Parliament, the jurists tend to be more centrist, which might mean greater harmony on the bench but which can make their decisions harder to predict, in contrast with the sharp political divisions on the U.S. Supreme Court. The German panel’s tradition of mostly unanimous rulings also makes it difficult to guess which way any one justice leans.

“You don’t have the same tea leaves we have, like signed previous opinions that might be predictive of future decision patterns,” said Miller, a law professor at Washington and Lee University in Virginia, who worked at the German high court in the early part of the last decade.

But the lack of a clear ideological slant also boosts the court’s reputation and the level of trust it inspires among ordinary Germans.

“It is the most revered public institution above all,” Miller said. “It beats the churches, it beats the universities, it beats the Bundestag for public regard.”

That’s particularly important for an issue as vexed and emotive as the bailout fund.

Many Germans are fed up with their tax money being used to prop up what they see as their profligate, irresponsible neighbors, which is why more than 35,000 people joined the complaint against the rescue fund originally filed by a constitutional law professor and a former justice minister at the high court.

Backers of the fund warn that without such a lifeline, major Eurozone nations such as Spain and Italy could go under from impossibly high borrowing costs, which would then drag Germany into the vortex. Last week’s ambitious pledge by the European Central Bank to buy government bonds of distressed countries is also conditioned on a fully functional stability fund.

Many court watchers believe that the justices’ natural caution will lead them down the same path as previous rulings on Europe, which upheld the government’s moves toward greater European integration but imposed caveats, such as requiring greater consultation of Parliament.

“This ambivalence has been the case for 20 years: ‘We don’t strike it down, but on the other hand, there are limits,’ ” said Christoph Moellers, a law professor at Humboldt University in Berlin, who helped present the case for the bailout fund before the court in daylong oral arguments in July.

Such hearings are relatively rare, reserved for cases of extreme importance. The one in July lasted late into the evening, also an unusual occurrence.

Though the court prizes its independence and impartiality, it will not be blind to the fact that a negative judgment could blow a crater into German politics, Europe’s collective effort to combat the debt crisis and the larger cause of European unity, Moellers said.

“It would be a major crisis in European integration,” he said. “It [would] make politicians think, what are we doing? These are eight guys sitting there calling for a revolutionary act, calling for the end of the euro?”

Government officials have pledged to respect whatever decision is handed down Wednesday.

“If you look at German history, we should do everything that’s possible to keep democracy in Germany, which means we have to accept our constitution,” said Michael Meister, a member of Merkel’s caucus in Parliament. “But we believe we are in line with it.”

[email protected]