Friday, May 22, 2020

The E.U. Says No to Hungarian Asylum Detention Camps: A Test for E.U. Federalism

On May 11, 2020, the European Court of Justice (ECJ), the E.U.’s highest court, ruled against the state of Hungary on its detention camp near the Serbian border. The state had denied the asylum requests because the immigrants had come through Serbia, and the latter refused to allow them to reverse course. The immigrants were thus stuck, essentially detained in “prison-like conditions.”[1] The high court ruled that the “conditions prevailing in the Roszke transit zone amount to a deprivation of liberty.”[2] ECJ Advocate General Priit Pikamae had argued that the “unlawful detention” was due to the “high degree of restriction of the freedom of movement.”[3] The state of Hungary had argued that the immigrants could have stayed in Servia, as it was a safe-country of transit, and thus were not eligible for asylum in Hungary. Unlike Hungary, Serbia was not an E.U. state, which may be why the asylum-seekers did not want to remain in Serbia. Hence being a border state added to Hungary’s woes. Therefore, the E.U. had some responsibility to alleviate the pressure on Hungary. Yet the Union did not do so, showing its weakness, and yet the state government bowed to the ECJ’s ruling. To the extent that the E.U. relies on such self-subordination in the want of federal help, the E.U. could be said to be on borrowed time during which basic adjustments to the federal system could be made.

As a border-state of the E.U., Hungary doubtless felt that it could be overwhelmed by asylum-seekers from the Middle East. This set the state’s particular interest at odds with the common interest of the Union because Hungary and other border states would bear the disproportionate weight of the waves of asylum-seekers in the late 2010s. Even though the state’s prime minister, Viktor Orban, was a Euroskeptic, or state rights proponent, and thus especially oriented to his state’s interests, he bowed to the federal court’s ruling, and thus authority. “The Hungarian government disagrees with the ruling, we consider it a risk with regard to European security, but as an EU member state, we will adhere to all court rulings,” Gergely Gulyas, a government spokesman, said at the time.[4]  Even though the E.U. had not come in to solve the intractable problem of the camps, the Euroskeptic state would act according to the ruling of the federal supreme court. This may mean that the E.U.’s federal system had strength at the state level in spite of weakness in united action for the whole—that is, more strength than the Union deserved.

Generally speaking, a federal system is internally vulnerable, and thus weak, to the extent that it must rely on the voluntary subordination of the state governments who must nevertheless suffer from insufficient federal power to redress Union-related state problems. To be sure, a federal system is weak if the states recognize federal authority only when it suits them. Hence the U.S. federal government acted against the state of South Carolina in 1832 after it passed a law invalidating any federal law in the state that goes against the state’s interest. Yet if state governments suffer enough adverse federal judicial decisions without federal help with problems that are acute at the state level (especially if acute because the state is in the federal system), then at some point secessions may result in the dissolution of the federal system.

In the E.U., the federal level was at the time still too hamstrung by overarching state power to be able to act sufficiently even to help particular states on problems stemming from the states’ respective roles or situs in the Union. For example, any state government could veto the proposed law to help the most economically distressed states financially in the midst of the coronavirus pandemic. The power of the states generally is made worse by the strangle-hold that the most powerful states had over the federal level (think Germany and France). Money would not be allocated for the E.U. to deal with the asylum-seekers in Hungary’s detention camps if the most dominant state governments did not agree that the common interest in doing so was worth it to those states. To the extent that the most powerful states could effectively use federal institutions in line those states’ own interests even at the expense of common problems, other states, such as Hungary, would naturally be Euroskeptic. For such a state to recognize an ECJ ruling averse to the state’s interests anyway is surely laudable, even if it buys the Union added time to redress the problem of the imbalance of power between the federal and state levels.


[1] Deutsche Welle, “Hungary Illegally Held Asylum-Seekers, ECJ Rules,” DW.com, May 14, 2020 (accessed May 22, 2020).
[2] Ibid.
[3] Ibid.
[4] Deutsche Welle, “Hungary to Close Transit Zone Camps for Asylum-Seekers,” DW.com, May 21, 2020 (accessed May 22, 2020).

Wednesday, May 20, 2020

An E.U. Economic Recovery Fund: A Federal Problem

On May 18, 2020, with the E.U. Commission having been no match for the states’ own interests in their own health and economic crises, the governors of France and Germany announced that they would support a recovery fund to help the states most in need. The €500 billion fund of grants (not loans) would be raised on the capital markets and guaranteed by the state governments. It would be part of the federal budget.[1] I submit that the imbalance in that federal system is evident; here again, the power of the state governments relative to the federal Commission shows the weakness of the latter.

Not coincidentally, the governors’ joint announcement fit nicely with the proposal yet to be unveiled by the European Commission. Because the fund would be part of the federal budget, a federal institution (i.e., the Commission) should arguably have made its announcement prior to that of the two state executives. That the state-level took the lead on a federal program suggests that the federal level was itself relatively weak. It is telling that had the Commission gone first, the state governments would likely have ignored the proposal.

Yet to rely on the largest states to act de facto as the federal level makes the Union vulnerable to the common interests being subject to the particular interests of the most powerful states. It is no accident that the Commission would use “the argument that the fund is an exercise in common self-interest.”[2] The other states would rightly have been suspicious had France and Germany used that argument. So we have the pertinent argument to be made by the Commission only in retrospect. This in itself may point to how important the common interest actually has been in a Union whose legitimacy is based precisely on common interest.

To be viable in the long-term, a federal system must maintain a balance of power between the federal and state levels. Too much federal power and the system consolidates; too much state power and the risk is dissolution of the federal system. Short of dissolution, a state-heavy federal system pays too much heed to the particular interests of states and can even be dominated by the most powerful state (or states). Throughout its entire history as of 2020, the E.U. suffered from this imbalance. The want of federal power to provide a check on excessive state power over federal institutions and the Union itself was evident, for example, as rich Northern states were able to thwart federal efforts to mitigate the austerity of heavily indebted states such as Greece and Spain after the financial crisis of 2008.

Efforts to minimize redistribution within a federal system, moreover, reflect a minimal notion of the common interest. While such a view is consistent with a confederation in which all of the sovereignty resides with the states, the minimal approach can stifle a federal government’s use of its portion (or competencies) of sovereignty, which in turn should match the common interests with which the federation is tasked. Having a federal currency, for instance, implies the need for monetary and even fiscal policy for stabilization purposes. Hence the Commission was set to argue that the Eurozone itself could be destabilized if an uneven economic recovery were to occur after the coronavirus pandemic. Hence the need for the redistributive recovery fund. To have established the common currency and yet insist on a minimal notion of common interest is self-contradictory because having such a currency expands the common interest. In other words, to give federal governmental institutions competencies geared to protecting or furthering the common interest and then narrowing it to bind the federal use of the competencies essentially ties the federal level in knots. While this strategy may be in the immediate interests of the states (especially the most powerful) in holding back any possible federal encroachment, the federal system itself suffers from the want of federal power, given its competencies.


[1] Katya Adler, “Politics and PR: Behind the Scenes of Franco-German Recovery Fund,” BBC.com, May 18, 2020.
[2] Ibid.

Sunday, May 10, 2020

The European Union at Risk: The German High Court Undercut the European Court of Justice on the Role of the European Central Bank

If a dispute between an E.U. state and the European Central Bank (ECB) on one of its programmes could come to challenge the European Court of Justice (ECJ) itself and the very sustainability of the E.U.’s federal system, then that system itself could be said to be severely impaired, and thus facing a high risk of being destroyed.  Yet in the Judgment of the Second Senate of May 5, 2020, the constitutional court of Germany did exactly that in throwing out an earlier ruling of the E.U.’s supreme court (ECJ) on the legality under E.U. law of an ECB programme.[1]

The primary objective of the  European System of Central Banks, which includes the European Central Bank and those of the States using the euro currency, to be the maintenance of price stability. In 2015, the ESCB “adopted a programme for the purchase of government bonds on secondary markets . . . , with the aim of returning inflation rates to levels below, but close to, 2%.”[2] According to the European Court of Justice, the E.U.’s supreme court within the federal judiciary (CJEU), the ECB’s rationale was that the large-scale purchase of government bonds—90% of which by the state banks—would facilitate “access to the financing that is conducive to boosting economic activity, by promoting a reduction in real interest rates and encouraging commercial banks to provide more credit.”[3] With the supply of goods and services fixed in the short-term, the increased lending by banks due to the lower interest rates would mean more euros relative to the E.U. goods and services, and thus an increase in inflation. However, the ECB’s stated purpose for the program was primarily to boost economic activity by means of lowering interest rates. Yet price stability was the ECB’s objective, hence not to be a byproduct of the pursuit of another objective.

(Source: Trading Economics)

To be sure, the central bank’s mission was an inflation rate to levels below, but close to 2 percent, and the inflation rate in the “euro area” was .24% in 2015, with a period of deflation.[4] By 2019, the inflation rate stood at 1.76 percent, which was within the ECB’s objective. The programme had worked. Whether it should of worked—whether money supply should be increased to increase inflation—is debatable, for deflation and inflation should arguably be determined by relationship of GDP to the money supply. Otherwise, a pro-inflation mandate would mean that prices would continue to increase rather than reflect the market relationship of money and GDP. After a sustained period of inflation, balance would dictate a corrective period of deflation.

Answering questions submitted by the state of Germany’s top court, the European Court of Justice issued a press release in 2018 stating that the “purpose of the PSPP programme is to encourage a return of inflation rates to levels below, but close to, 2% over the medium term.”[5] Yet, as stated above, the ECB’s own stated reason for its programme was to boost economic activity (by decreasing interest rates). The ECJ states that “a monetary policy [i.e., decreasing interest rates to increase inflation] cannot be treated as equivalent to an economic [i.e., fiscal] policy [e.g. for boosting economic activity] for the sole reason that it may have indirect effects that can also be sought in the context of economic policy.”[6] In plain English, increasing or decreasing money supply is not an equivalent option to fiscal policy in boosting economic activity just because this is an indirect effect of the monetary policy. Therefore, even if boosting economic activity were an indirect effect, or byproduct, of the ECB’s primary intent to increase inflation, the ECB could not justify its programme on the basis of its indirect fiscal effect. Yet the ECB’s stated objective of the programme was to boost economic activity! The E.U. should have used a fiscal rather than a monetary policy if the primary aim, as the ECB stated, was to boost economic activity. The groups in Germany that had instigated the German court’s questions to the ECJ had a good argument that the ECB had been acting beyond its mandate in this narrow sense. However, that the ECB had achieved its inflation target by means of the programme suggests that the central bank could be viewed as having acted within its mandate. The question is perhaps whether the ECB pursued its program even after the inflation target had been achieved. That the rate in 2018 was still below 2% suggests that this was not the case. The problem, therefore, was that the ECB stated boosting economic activity as its primary objective, with lower interest rates serving only as a means.

Unfortunately, the constitutional court of the state of Germany took its objection too far. Even though groups that had brought constitutional objections to the Bundesverfassungsgericht (the German constitutional court) had claimed that because the PSPP programme exceeded the ECB’s mandate, the E.U. failed “to observe the division of competencies” between the E.U. and its states, the German court violated the supremacy of the ECJ, the federal supreme court of the E.U., over the state courts by directing the state’s central bank not to comply with the ECB’s programme by buying back German bonds. Such a long sentence, by the way, is in keeping with German, though my words do not reach such a length.

The Nullification Crisis in U.S. history can provide us with a context. In November, 1832, the South Carolina Government passed a law declaring the U.S. tariffs laws of 1828 and 1832 null and void in South Carolina. The underlying problem was “the constitutional theory that upheld the right of states to nullify federal acts within their boundaries.”[7] Had the member states still been sovereign, as they had been from 1776 to 1789 (including under the Articles of Confederation), the doctrine would have had a solid basis (i.e., the full sovereignty of the new republics within the U.S.). However, once the U.S. itself (i.e., the federal level) had been delegated some governmental sovereignty, the doctrine would have eviscerated that sovereignty. States would have been able to pick which federal law to recognize, hence any federal law could easily have been vitiated or compromised. The states would have been able to trample on the federal sovereignty with impunity and the federal system itself would have lost coherence, and thus the ability to function viably.

On May 5, 2020, the constitutional court of the state of Germany ruled against the legality of the ECB’s programme within the state, much as South Carolina’s legislature had voted against the legality of the tariff laws. It was a direct challenge to the E.U.’s central bank and supreme court (ECJ). Were the ECJ to let the state court’s ruling stand, other states would surely follow in opting out of whatever federal laws they do not like. The Government of Germany had been against the bond buy-backs in the euro area because of the shared losses. In short, the powerful northern state didn’t want to pay for the losses of poorer southern states through the programme. Likewise, the matter of shared state debt had been a hot topic during the Washington administration in the 1790s in the United States. There too, the state governments who had incurred less debt in fighting the Revolutionary War did not want the higher debts of other states to be pooled through the federal government.

The resistance in Germany since the European debt crisis during and after the financial crisis of 2008 to covering the massive debts of Greece, Spain, and Italy found a footing in the German court even though the ruling meant the possible vitiation (i.e. end) of the E.U’s competencies (i.e., governmental sovereignty), and thus of the federal system itself.  “Given the influence Germany wields as the largest [State in the euro area of the E.U.], the [ECB] can’t afford to ignore the [German] court’s decision, in part because it would be all but impossible for” the programme to continue without the participation of Germany’s central bank.[8] Moreover, other state governments (and courts), such as in Poland and the Czech Republic, would likely follow in challenging the E.U. unilaterally.

The German chancellorin (prime minister), Angela Merkel, had been urging a stronger E.U. after the secession of euro-skeptic (anti-federalist) Britain, yet her state’s interest in staving off shared debt through the ECB resulted in her state’s high court throwing an arrow directly at the core of the E.U.’s federal system (of dual or divided sovereignty). “At a time of growing tension in the EU over German reluctance to embrace ambitious plans to resuscitate southern European economies hit hardest by the coronavirus by issuing mutualized debt, known colloquially as corona bonds,” the German court’s ruling added fuel to the argument that the E.U. itself was being compromised by the power of its largest state in pursuing its own interests at the expense of the common good, or general welfare, in the Union as a whole.[9] Abstractly stated, no part should have sufficient power over the whole that the latter’s power is eviscerated because it is a mere reflection of  the interests of the part operating at the expense of the whole.

(Source: Politico)

As for the ruling of the Bundesverfassungsgericht (the German constitutional court), Justice Andreas Vosskuhle said that the ECJ had approved the programme that “was obviously not covered” by the ECB’s mandate.”[10] The ruling did not apply to the corona bonds during the pandemic in 2020. Nor was the ECB’s purchasing of state debt (i.e. quantitative easing) during the financial crisis. Even though the court did not find enough evidence to rule that the programme amounted to monetary financing (i.e., the ECB funding state budgets), the court did decide that the ECB had overstepped its inflation-objective mission.[11] The German government had been against pooling money through the ECB to fund the government budgets by pooling the debt of the more indebted states going back to the financial crisis of 2008. Regarding the programme at issue here, the German court’s claim that the ECB had overstepped its mandate does not succeed because the programme did not push inflation above 2% in trying to boost economic activity. In other words, the ECB had not over-shot its inflation target, even if the bank erroneously was primarily oriented to increase GNP. Inflation was so low in 2015 that an inflation rationale was justified. 
 
The impact of the Bundesverfassungsgericht’s ruling went beyond the ECB itself. The viability of the ECJ and the federal system itself was suddenly under threat. Dismissing a 2018 ECJ decision to allow bond buy-backs, the state court “ordered the ECB to provide Germany with adequate justification for the program within the next three months. Should it fail to do so, the Bundesbank [the state’s central bank] would no longer be permitted to participate in the program.”[12] The ECB was at the time “an independent EU institution [that] does not have to take orders from the German court, and the government in Berlin.”[13] In reply, the ECB told the German court that the ECJ had already determined the legality of [the programme]. In dismissing the ECJ’s earlier conclusions, the German court, by a 7-1 majority, declared the reasoning by the ECJ to be “not comprehensible” and “objectively arbitrary” and the decision itself to be untra vires (i.e., beyond the court’s authority).[14] Yet the German court presumed itself to have the authority to overrule the federal supreme court!

Even were the ECJ to deliver a bad ruling, or one injurious to a particular state’s policy, the ECJ would be protected by the precedent of its superiority over state supreme courts. The ECJ had ruled in Costa v ENEL (1964) that the states had transferred sovereign rights to the ECJ on E.U. law and furthermore that such law could not be overridden by state law. The ECB being a federal institution, the matter of whether the programme breached the central bank’s mandate was within the purview of the federal supreme court, the ECJ, rather than any state court. In stating that the gravity of the question at hand merited going up against the ECJ ruling and the ECJ itself, the German court had, I contend, lost perspective. Buying back bonds through a federal program, unlike something infringing on basic human rights, for example, does not have sufficient weight to justify imperiling the federal system itself. It is ironic that just months after the state of Britain seceded in part out of dislike for the extant governmental sovereignty of the E.U. in relation to that of the state governments, the German state court threw a bomb from within.



1. BVerfG, Judgment of the Second Senate of 05 May 2020 – 2 BvR 859/15-, paras. (1-237).
2. Court of Justice of the European Union, Press Release No 192/18, December 11, 2018.
3. Ibid.
4. Statistica.com (accessed May 10, 2020).
5. Court of Justice of the European Union, Press Release No 192/18.
6. Ibid.
7.  The Nullification Crisis, Britannica.com (accessed May 10, 2020).
8. Matthew Karnitschnig, “German Court Lays Down Law in Defiance of European Union,” Politico, May 5, 2020 (accessed May 10, 2020).
9. Ibid.
10. Ibid.
11. Ibid.
12. Ibid.
13. Ibid.
14. Ibid.

Saturday, May 2, 2020

An Aggressive Culture Applied to a Pandemic

If a local culture does not value education, such that the public education system is weak, and furthermore engages in and enables aggressive behavior, even self-protective statements and efforts can provoke aggressive responses based on ignorance. In such a culture, authorities may be particularly unlikely to stem such aggression, and they may even be inclined to engage in active or passive aggression against victims rather than enforce laws and rules. For existence, police called on a noise complaint at an apartment complex may willfully or unwittingly turn on the complainer not due to lack of noise, but, rather, out of ignorance as to what constitutes a residential disturbance, fear of confronting people who are disturbing others, a desire to inhibit future calls or simply due the aggressor’s bidding by blaming the victim for complaining. Besides indicating a corrupt, sordid police culture, that of the locality itself would likely be compromised. During a pandemic, such pathology might be especially transparent because it is clear when people and authorities are not only not enforcing laws and organizational policies geared to protecting both employees and customers, but also acting against public health by turning on the victims. The case of Arizona and, more particularly, the Phoenix police department, is particularly revealing.
On March 30, 2020, the chief executive of Arizona issued an executive order in response to the coronavirus pandemic. With enumerated exceptions, people in Arizona were to stay in their places of domicile. Essential activities constitute the first exception in the order. Obtaining food (i.e., groceries) is first on the list of such activities. Interestingly, outside exercise, including walking, and “constitutionally protected activities such as speech and religion” are also listed.[1] The order requires that when “individuals ar using shared or outdoor spaces when outside their residence or property for Essential Activities, they shall to the extent possible maintain physical distancing of at least six feet from any other person, consistent with guidance from the CDC.”[2] The word shall here means must. The executive order is stronger than mere guidance. Even so, even local police in Phoenix took physical distancing to be nothing stronger than CDC guidelines. Even though the executive order states that “(n)o person shall be required to provide documentation or proof of their activities to justify their activities under this order,” the order was enforceable against infractions. Even so, the police in Phoenix were not necessarily grasping this point.

  
For example, while I was shopping at an Albertsons (Safeway) grocery store in Phoenix on May 1, 2020, when the executive order was still in full effect, a man approached me very closely from behind while I was at the front of a one-way aisle. Even though the “cash register has emerged as the most dangerous place” in a grocery store, “according to public health and worker safety experts,” the most dangerous place for customers may be the aisles when confronted with a customer who not only refuses to keep a distance, but also becomes physically and verbally abusive as a result.[3]
The customer who I encountered was confrontational and aggressive from the outset. He refused to step back, causing me to back up past the product I had been selecting. I asked him to step back so I could get the product, but he told me I would have to go down the aisle and come around again. We were at logger-heads. The aisle was too narrow for him to pass me. Indeed, passing me so closely would have violated the store requirement that six feet be maintained where possible (e.g., excepting the cashier area). While I was calling for a store employee or manager to come (none did), the other customer rammed into my cart, causing it to block the narrow aisle. Both he and his wife (far behind him) were hurling insults to me even though he had violated the store requirement. Even as I was walking to the store manager’s office, the customer’s wife felt the need to insult me. It is such aggression on top of fault that I submit is particularly toxic, as well as prevalent in the local culture there.

A police supervisor claimed he couldn't tell tell from either my video or the store's who slammed into whom. Why would a police manager lie? I had called to complain about his subordinate, but the supervisor managed to dissimulate and deflect (indicative of the culture).

Adding insult to injury, when the police arrived—seven or eight of them!—after I had agreed to the manager’s suggestion that I report the aggression to them, four of the police were positionally or vocally hostile and even confrontational with me even in approaching me. Put another way, when the caller is the victim, he or she does not need three police standing in a hostile pose behind the police employee conversing with the victim. Such distrust applied to a victim is consistent with blaming the victim.
Even though the store manager told me later that she had told the police that the store requirement on physical distancing was not a suggestion, the policewoman told me that the manager had told her otherwise. I showed the police employee a large sign indicating that maintaining six feet of distance was a store requirement and told her that a store policy is not a suggestion, then she was once again antagonistic, threatening me by asking me if I understand that I could be charged with assault because my cart blocked the aisle after the other customer repeatedly slammed into the cart. 



I don't know why law enforcement would even venture an opinion on a store policy (and getting that wrong) when it is clear that law enforcement enforces laws. The police employee even got the law wrong. She erroneously claimed that the governor’s executive order only gave a guideline for physical distancing, so it was unenforceable. Strangely, she even told me that the police cannot enforce a store policy, or suggestion as she viewed a policy to be. “A store policy is not a law,” the police employee told a man with three degrees in business. Perhaps because she was irked at me for knowing more, she even told me that I had committed an assault against the customer who had rammed my cart because my cart was blocking the aisle. Incredible!
Was there no limit to the lengths that the local police would go to blame the victim? Later, when I spoke with the policewoman’s supervisor, who had also been at the store but had not bothered to speak with me, I was stunned when he claimed that he couldn’t tell from the store’s video (and presumably mine, as the police woman had shown my video to him in the store) who was slamming whose cart. After the police herd had left the store, the store manager and I examined very closely the store video, and we agreed that the other customer had rammed my cart—not vice versa. Yet later, the police supervisor claimed that nothing of the sort was on the tape (including my own!) and that the store manager had agreed with him. “It is on tape,” I told the supervisor by phone. “You’re wrong,” he said, “maybe your conduct was disorderly.” He was threatening to charge me with disorderly conduct!
In short, the local police seem to have been getting away with turning the tables on victims, especially if a police employee (or supervisor!) is annoyed when a victim tries to support his or her claim even with audio-video by returning to the matter of the actual aggression. Even when I called in a complaint against loud, heavy-bass music near my apartment, the policeman who responded felt the need to focus on me rather than the ordinance-violator. “She says that you taping her music from inside your apartment is harassment.” Even getting some evidence away from the culprit’s apartment outside would not constitute harassment. In fact, for a police department to discourage evidence and then refuse to intercede for lack of evidence (i.e, he said, she said) suggests (just a suggestion!) a dysfunctional police culture (as well as incompetent employees). For a police department to take such a counter-claim seriously and even use an accusation-tone with the victim of the disturbing loud noise may suggest (just a suggestion!) that the police employees are habituated to blaming the victim or even viewing every call as a dispute rather than a complaint.
In my conversations with the policewoman at Safeways and her supervisor later by phone, neither person wanted to talk about the aggression against me. They were both accusatory throughout. Even though I had both the store requirement and that in the governor’s executive order backing me up (as well as even my video of the incident), the strategy of the police was to undermine me at every point—too keep the focus on me—even accusing me of physical assault and disorderly conduct. The store manager had suggested that I let her call the police, and I concluded after the police herd had left that I could no longer trust the police to even focus on aggressors. Such passive aggression, moreover, is a glaring indication of a dysfunctional department culture.



[1] Executive Order 2020-18, State of Arizona, March 30, 2020.
[2] Ibid.
[3] Nathaniel Meyersohn, “This Is the Most Dangerous Place in the Grocery Store,” CNNbusiness, May 1, 2020 (accessed same day).