Germany’s court decision and The European Stability Mechanism (ESM)

Monday, September 10, 12

Germany’s court decision and The European Stability Mechanism (ESM)

September 12^th, 2012, will be a constitutional test for

The European Stability Mechanism (ESM) 500 billion-euro ($639 billion) bond in Germany’s Federal Constitutional Court. The future decision of the High Court in Germany will be an important jurisprudence in the search of healthy solution to the euro zone debt crisis. The court will rule on the constitutionality to transfer national sovereignty to Brussels. The EMS bond issuance is a violation of Germany’s parliament constitutional authority over the budget of the most powerful economy in the Euro zone. Argument of the opponents to this bond is founded on this key element. This is the heart of the euro crisis; a viable monetary union cannot exist without preliminary transfer of national sovereignty to a supranational institution. The new dynamics to create a banking and fiscal union can not be achieved without transfer of national sovereignty. The decision that will be taken on September 12 will open a new chapter in this crisis: exercise of national sovereignty to help or prevent partial or total transfer of sovereignty. The decision to create a single currency was an initiative of European leaders, but the creation of banking and fiscal union cannot be effective without the approval of national parliaments. Now, the voice of the European population will be heard in this process of unification that marginalized them since the beginning. But, it is probably too late. The fabric of European unification has been torn by an exacerbation of the crisis, deep political divisions and suffering of European population. These consequences will make Mario Draghi’s “irreversibility” of the euro a pure illusion. An injection of more debt in European economy will not solve the massive private and public debt in the monetary union. The execution of austerity measures with a strategy of “cut and dry privatization” is sterile. Buying bonds will not solve the massive (22.6%) unemployment of the youth in the Euro zone where more than 18m people are unemployed. An economy with out clear and define policy to manage the future of his youth is a system in danger. Human capital is the most important capital in any society, specially the youth. When this important capital is depreciated by a series of austerity measure, debt and humiliation, the possibility of collapse of human organization became a reality. The euro crisis is structural; transformation of industrial capitalism to financial capitalism was one of the biggest mistakes of the 20^th century. Industrial capitalism is a system of wealth creation in a long process of maturation of social cohesion and solidarity, but financial capitalism created a phenomenon of human subordination by creation of massive debt and short-term profit. Healthy economic growth and human development is not possible when debt is a key driver of human organization. The euro could survive, but only if European leaders will have the courage or audacity to solve the structural problem of the Eurozone. A new bond issuance will only postpone the collapse of the monetary union and paid back private lenders.

Aboubacar Sissoko