Press play to listen to this article
Bernd Lucke has got Germany to halt ratification of the EU’s €750 billion coronavirus recovery fund, sending chills through European capitals. But he insists he’s doing the European Union a favor.
“I didn’t set off any bombs,” the German economics professor and former Euroskeptic MEP said in an interview with POLITICO. “The bombshell is that the European Council developed a completely new finaencial instrument that is contrary to the European treaties.”
Late last month. Lucke spearheaded a complaint to Germany’s Constitutional Court in Karlsruhe against the debt-financed recovery fund. The court promptly issued an injunction preventing President Frank-Walter Steinmeier from signing off on legislation amounting to Berlin’s consent to set up the fund, while judges decide whether to accept the complaint for full examination.
All EU member states must pass similar legislation before the European Commission can borrow on the markets to establish the fund. A hold-up from any country is a cause for concern in Brussels and around the bloc. But the flagship fund is unthinkable without Germany — so it would be effectively dead if the court in Karlsruhe triggers a long delay or rejects its funding mechanism outright.
This is not the first time Lucke has led a charge against European economic integration. After leaving Angela Merkel’s CDU party, he co-founded the Euroskeptic Alternative for Germany (AfD) in 2013, before making an inglorious departure after it lurched to the far right.
He is also no stranger to high-profile cases at the German Constitutional Court. Last year, an alliance he leads won a big victory when the court ruled the European Central Bank’s 2015 bond-buying program would be illegal under German law unless the ECB could prove the purchases are justified.
Lucke argues EU leaders should have seen a legal challenge to the recovery fund coming and acted accordingly: “First, they should have refused to give their consent because it is against the treaties, and second, they should have remembered that in Germany lawsuits before the Constitutional Court are to be expected.”
The European Commission insists it is “convinced of the legality” of the financing mechanism for the recovery fund. A Commission spokesperson said the “EU objective remains to ensure the completion of the ratification process in all member states by the end of the second quarter of this year.”
But the future of the fund now rests with the judges in Karlsruhe, as they examine the complaint filed by Lucke and some 2,280 fellow German citizens. The first key moment will likely come within a few weeks, when the court decides whether to admit the complaint. If they decide to do so, that could delay Germany’s approval of the fund for a year or longer.
A German government spokesperson expressed cautious optimism that the court will take its decision “very swiftly,” given that the judges are “probably aware of the dimension” of the lawsuit.
‘Not a bogeyman’
At its core, the complaint is about the so-called Own Resources Decision, which raises the ceilings on the amount of money the EU can ask for from its member countries. This would effectively provide financial guarantees from EU members to allow the European Commission to borrow money on the international financial markets to establish the recovery fund.
Lucke says this means pooling the debt risk, because under the proposed system all EU countries would be jointly liable for the money that the EU spends via the fund — effectively creating so-called eurobonds and turning the EU into a debt union. As the EU is meant to present balanced budgets, such a move would be against the bloc’s treaties, he says.
“I would like to note: Mrs. Merkel was always against eurobonds. I am not a bogeyman, but I am Mrs. Merkel’s faithful Eckart,” Lucke said, referring to a fairytale character in German literature seen as an honest, incorruptible and reliable companion.
“I am watching to make sure that nothing happens that she has always considered wrong,” Lucke said. “One is not a bogeyman, I hope, if one stands up for the rule of law in the EU.”
Merkel has long opposed the idea of eurobonds but said last year the recovery fund was necessary as a one-off measure to deal with the historic challenge of the coronavirus crisis. She disputes that the funding mechanism amounts to the creation of eurobonds.
“I fear that this is yet another attempt to dupe the public by saying ‘one-off’ and ‘exceptionally,’ but actually paving the way for a permanent fiscal union,” Lucke said. “Once you’ve opened this door, you can’t close it again.”
The legal action puts Lucke in a position similar to one he was in a decade ago, when he quit the CDU in protest at Merkel’s financial rescue policies for countries like Greece.
In 2013, he founded the AfD to campaign for abolishing the EU’s common currency, the euro. Yet as one of the party’s three leaders, he was unable to stop far-right elements gaining influence. When the AfD took a decisive far-right turn amid the 2015 refugee crisis, he quit his own party.
Lucke founded a new party, the Liberal-Conservative Reformists, which is now languishing in political insignificance. He stayed on in the European Parliament, where he had been elected as an MEP for the AfD in 2014, until failing to get reelected in 2019.
That year, Lucke said he was quitting politics and returning to his job at the Hamburg university, where police intervened after protesting students interrupted one of his lectures, shouting “Nazi pig” and “get lost.”
Lucke rejects any association with the far right. “I have always, as AfD leader and in the time since, distanced myself from any form of right-wing extremism. I am an active protestant Christian, and I would never engage in xenophobic or right-wing extremist activities or tolerate them; that is out of the question,” he said.
However, when it comes to his opposition to the financial mechanism behind the recovery fund, Lucke finds himself allied with his former party: The AfD was the only party to vote against the Own Resources Decision in the Bundestag last month. (Leftist party Die Linke abstained.)
“They are not comrades-in-arms,” he said, stressing he made sure none of the 40 main complainants in his Bündnis Bürgerwille (Will of the Citizens Alliance), which launched the lawsuit, had any ties to the party. “There is no common ground, no agreements and no joint action with the AfD.”
Lucke insists he is not against the idea of an EU recovery fund per se, or even economic solidarity within the bloc.
He has proposed an alternative model, whereby each country would borrow money individually on the markets to pay into the recovery fund. Under that plan, countries could still receive more money than they had paid in — with Germany for example contributing more than Spain — but they would each be responsible for paying back their own share.
That plan would not be nearly as attractive to EU members such as southern European countries, which have been hit particularly hard economically by the pandemic and expect to receive large sums from the EU fund. They would face higher borrowing costs than the European Commission, which could borrow more cheaply thanks to the support of Germany above all.
“I would offer you a bet,” Lucke said, predicting that if the German Constitutional Court accepts the lawsuit, “the heads of state and government will get together very quickly and do exactly what I said. Right now, of course, they are trying to put pressure on the court and give the impression that the future of Europe depends on Karlsruhe rejecting our application. But that is wrong.”
Want more analysis from POLITICO? POLITICO Pro is our premium intelligence service for professionals. From financial services to trade, technology, cybersecurity and more, Pro delivers real time intelligence, deep insight and breaking scoops you need to keep one step ahead. Email [email protected] to request a complimentary trial.