According to German government sources, German Chancellor Angela Merkel seeks further reform of the Lisbon Treaty (“Treaty”).  Just last month, Merkel convinced her fellow European heads of state to explore the possibility of further economic integration within the EU.   One possible way of accomplishing this further integration, according to Merkel, is through limited Treaty changes.  The central theme of her proposed Treaty changes is to grant the EU institutions greater control over Member State budgets.

This control would be distributed among three of the EU Institutions: the Commission, Council, and the ECJ.  The Commission’s role would be strengthened through closer monitoring of Member States under the excessive deficit procedure.  Furthermore, the Member State would submit its draft national budget to the Commission who would then forward the budge to the Council with its recommendations.  The Council would then adopt an opinion on the budget before its adoption by the Member State’s legislative body.  However under TFEU Art. 288, a Council opinion is not binding on the Member State.  Merkel has also suggested the ECJ should monitor the Stability and Growth Pact (“SGP”) obligations that lead to the excessive deficit procedure.  Under this proposal, the ECJ would have the power to review the Member  State’s budget and possibly declare it null and void.

Merkel’s suggestion to grant the ECJ power to declare Member State’s budgets null and void has not been included in her proposals at the EU Summit.  The furthest EU involvement in Member State budgets under the current proposals involves modification of the Treaty to include sanctions for SGP breaches.  This could largely be attributed to a recent ruling by the German Constitutional Court on challenges to the Euro Rescue Package.  In its September 7th ruling, the Court found the current rescue package constitutional.  Yet the Court cautioned that the German Constitution requires full budget sovereignty be maintained through approval by the German Bundestag’s Budget Committee.  It is surprising that Merkel would even suggest such EU intervention into national sovereignty because it seems to be in direct conflict with her own nation’s constitution.  However with the current European debt crisis spreading that in turn leads to more requests for contributions from Germany, she could be just voicing the rising frustration of her countrymen and women.

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