LAST SUMMER it was impossible to discuss the EU without someone mentioning Alexander Hamilton. The decision to issue €750bn ($895bn) in collective debt sent wonks scurrying to history books (or the musical). A lively debate followed over whether this indeed amounted to a Hamiltonian moment, as in 1790 when the young American founding father persuaded the new country to assume the debts of its states. Time might have been better spent boning up on another figure from the republic’s early history, John C. Calhoun. At first glance, an antebellum vice-president and supporter of slavery has few lessons for the EU. But he was also the main advocate of nullification: the right for states to strike down federal laws they deemed unconstitutional. This fight over legal supremacy began with a refusal to enforce tariffs in South Carolina in the 1830s and ended three decades later in civil war.
Two centuries on, a similar debate is throwing the EU’s legal order into question. Last month, Germany’s constitutional court paused ratification of the debt plan until the court had examined it. The decision could just be legal housekeeping, but some fear it may be more. Last year, the German court declared that the European Court of Justice in Luxembourg had overstepped its mandate in the way it allowed a quantitative easing programme by the European Central Bank. Poland’s top court has taken to ignoring the ECJ’s rulings. In France, officials discuss ways of circumventing an ECJ decision that struck down a data-retention law, claiming that it clashes with the country’s constitution. However much Europeans may resist the idea, they face a “Calhounian moment”.
Disagreements over who has the final say in any legal order are manageable, if handled carefully by judges. In any quasi-federal system, conflict between the centre (ECJ judges) and periphery (their German counterparts) is inevitable, argues Holger Hestermeyer of King’s College London. The key is for judges to be able to disagree without wrecking the whole system. In British politics, “Good Chap theory” still holds sway: there may not be many checks in the British system, but it does not matter so long as the actors do not overstep the invisible mark. In the EU, this becomes Good Judge theory. Despite their caricature as frothing federalists, ECJ judges are not lunatics bent on bulldozing the constitutional arrangements of EU countries willy-nilly.
Likewise, it does not matter if German judges play chicken with their counterparts in Luxembourg, so long as they swerve out of the way at the last moment. Another option is to slow down to the point where any collision is a gentle bump. Last year, when the German court accused the ECJ of going too far, it carefully offered an easy way for the disagreement to be solved: central bankers had to explain their decision more clearly. In principle, it was a big deal; in practice, it was easily fixed.
Yet problems lurk in this approach. A flaw of Good Judge theory is that not all judges within the EU are good. Poland’s constitutional court has been stacked, with regime-curbing members removed and replaced by cronies. The outgoing president of the German court dismissed the top Polish court as a “puppet”. Yet Polish jurists are keen to cite German legal thinking on constitutional pluralism, in which the authority of courts overlaps. “Constitutional pluralism is a bit like nuclear power. It has beneficial peacetime uses, but it is inherently dangerous and can easily be weaponised in times of war,” write Laurent Pech of Middlesex University and R. Daniel Kelemen of Rutgers University. If Poland elects to ignore judgments of the EU’s top court then it amounts to de facto “Polexit”. The country would be in the bloc but unbound by its rules.
Such a situation would leave the EU in a tough spot. It has no military power to enforce its will, nor enough spare cash to bribe naysayers into compliance. All it has is its legal order. If that is undermined, then so is the project. That the ECJ’s rulings are final and binding on all national courts is what makes the EU unique, explains Mr Kelemen. Strip this out and the EU becomes like any other weak international organisation—an OECD with a flag and an affection for the “Ode To Joy”. There is a good reason why the “caveats” sections of analysts’ reports often mention the possibility that a German judge might upend the euro zone.
As the EU tiptoes in a Hamiltonian direction, it will have to deal with the Calhounian tendency. There are two main theories as to how to do this. Some think the problem will solve itself over time. Though the EU has been around in some form since the 1950s, the thorniest topics, such as monetary union, were only placed on the European level in the 1990s. In this view, these are teething issues that can be settled via judicial dialogue rather than conflict. For others, only overhauling the EU’s treaties, and spelling out directly who has the final say, can fix the problem.
Both approaches are right. Treaty change would clarify the boundaries of EU law, making life easier for judges. Big breakthroughs such as issuing hundreds of billions in collective debt fly in the face of rules that, at first glance, forbid the EU from borrowing to finance its spending. That such measures can be justified with complicated legal gymnastics does little to solve the impression that the rules are being bent. At the same time, a legal system can only prosper with good-faith actors. TheEU must rein in countries that stack their courts, such as Poland, while relying on independent courts, such as Germany’s, not to overstep the new mark.
Rather than bury fundamental disagreements, treaty change would dig them up. But politics is supposed to be difficult. In recent years, Europe’s politicians have developed an unhealthy habit of ducking problems and hoping that the unelected parts of the system, such as central bankers and judges, will work out how to fix them. That is not sustainable. But at least this problem, unlike America’s at the time of Calhoun, can be solved without a war. Europe has had enough of those. ■
This article appeared in the Europe section of the print edition under the headline “A Calhounian moment”