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Merkel eyes political fix for court clash with EU

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Chancellor Angela Merkel. Photo: dpa-pool

Chancellor Angela Merkel. Photo: dpa-pool

Chancellor Angela Merkel. Photo: dpa-pool

AS GERMANY took its first cautious steps out of a stringent lockdown, Chancellor Angela Merkel dialled into the biweekly video conference with her party's innermost circle. The dozen or so participants had a touchy subject to broach.

A week earlier, the German constitutional court in Karlsruhe had stunned political and legal circles with a ruling that identified alleged flaws in the European Central Bank's quantitative-easing policy and called on its own executive and legislature to monitor the ECB's progress.

The verdict came with a three-month ultimatum to fix the shortcomings, causing an outcry in Brussels. The court was seen overstepping its authority by conflicting with a higher instance that had previously sanctioned the ECB's behaviour: the European Court of Justice.

The conflict has left Ms Merkel and her party leadership in a bind. In this case, she could not afford to ignore the view of her country's highest legal authority. Nor could she be seen undermining key institutions of the European Union.

Ms Merkel had quickly grasped the implications of the verdict when it hit on May 5. By yesterday, with the potential fallout widening far beyond Berlin and Brussels, Ms Merkel had grown even more concerned. The Karlsruhe ruling would have far-reaching reverberations and required a response, Ms Merkel told the closed-door meeting.

The Chancellor proposed a workaround: The ECB could offer an explanation of its asset-purchase programme via the Bundesbank, which would serve as an intermediary to the German parliament. Publicly, her spokesman, Steffen Seibert, let it be known that Berlin didn't consider the German judges questioned in principle the authority of the European Court of Justice.

The Karlsruhe court has told the government and parliament to demand the ECB performs a so-called economic proportionality review. Such a letter of request to ECB President Christine Lagarde is now being considered both by the finance ministry and lawmakers, people familiar with the talks said.

While that would make the government comply with the ruling, it complicates the ECB's premise of political independence.

Bloomberg

Irish Independent