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NUMERO 21 - 12/11/2014

 Constitutional courts in the age of crisis. A look at the European Mediterranean area

Trying to assess the impact of the so-called Eurozone crisis on the constitutional structures of a chosen set of Countries is first of all a matter of selecting a specific approach to the issue, in order to identify the themes and tools that may help in disentangling the incredible vastness of topics involved in such a constantly changing landscape. In this contribution, the new constitutional challenges triggered by the economic crisis are explored with a specific focus on the attitude adopted by the Italian, Portuguese and Spanish Constitutional Courts in dealing with anti-crisis measures, in the attempt to investigate their current relationship with other constitutional actors and sketch a map of open problems from their most recent case law. As it can be easily seen, first of all, a legal-geographical criterion has been followed, based on the common belonging of these three Countries to both the Southern European area and the centralized model of judicial review of legislation, as they feature traditionally strong specialised tribunals playing a key role in the protection of fundamental rights. Among these, a detailed list of social rights or commitments, ultimately related to the principle of substantive equality, can be emphasised as one of the distinctive feature of the three Constitutions. Aside of the significant differences in the constitutional protection of social rights and entitlements and notwithstanding the absence from the Portuguese and Italian Constitutions of a Sozialstaat clause which in turn can be found in the Spanish Constitution, Italy, Spain and Portugal also share the common feature of a well developed welfare machinery, though suffering from structural weaknesses and contradictions in some sectors and characterised by the persisting discrepancy between high expenditures and wide areas of inefficiency. Together with the low revenue raising capacity and the bureaucratic complexity, the growing amount of public money required to maintain such welfare state apparatus in place and working has always s been pointed out as one of the main causes of the seemingly unstoppable growth of Southern European States’ public debt and deficit. It is no surprise then that these very two economic fundamentals have been one of the main fields of supranational pressure on these Countries’ economic policies for years, and the main common cause for the economic crisis currently striking Italy, Spain and Portugal. Quite differently from what happened to Northern European Countries such as Ireland and Iceland, the Southern European crisis has been only indirectly triggered by the paralysis of the interbank market due to the bursting of the US subprime mortgages bubble. In these three Mediterranean Countries, when the “credit crunch” unfolded, deeper structural problems came to the surface, ultimately highlighting decline in productivity as a common denominator. The two Iberian Countries had long benefited from the process of European economic and monetary integration which boosted the Spanish economy for more than fifteen years and increased its fiscal stability, and favoured the Portuguese governments’ public expenditure policies and domestic demand. However, when the  crisis started in 2008, Portugal was already trying to cope with a domestic recession due to the significant indebtedness of both private and public sectors and a budgetary adjustment process closely linked with the need to meet the fiscal and economic Eurozone parameters. On the Spanish side, the focus centres on the banking sector crisis, which has mainly internal causes. Prior to 2008, as the housing sector was spectacularly expanding supported by a generous credit system, households were enjoying an unprecedented rise in salaries and consequently fuelling internal demand, while companies were intensifying their relationships with external markets. The housing market collapse due to internal saturation triggered a “domino effect” that forced the government to face the growing level of domestic and foreign indebtedness, the latter mainly due to the need of rescuing national and regional banks. In Italy, no banking sector crisis occurred, but the extremely slow growth characterizing the Italian economy in the past twenty years, the contraction of exports due to the general recession and the enormous amount of public debt structurally affecting the Italian budget since the 1960s caused distrust on the solvency of the Italian State. As internal demand started contracting, the dramatic rise of the spread between the ten-year yield of the Italian and German bonds in the summer of 2011 and the ghost of “contagion” between Italy and Spain did the rest. In all the three examined contexts, as the GDP growth was rapidly inverting its trend and the revenues decreasing, for different causes the governments had to keep on issuing bonds, with continuously increasing interest rates, thus propelling the constant growth of public debt and contributing in making the markets confidence more and more feeble. Pressures from supranational actors to comply with the EU growth and stability pact, the need of sound guarantees to preserve the Eurozone from a destabilising contagion effect and the internal demand for a solution to domestic recession paved the way for a season of urgent structural adjustments. After several negotiation rounds with the European Commission, the European Central Bank and the International Monetary Fund, Portugal requested financial assistance from the EU and the IMF, agreeing on a € 78-billion “bailout” and committing to undertake aggressive measures to boost internal growth, create jobs, consolidate the fiscal strategy and strengthen the financial sector. In June 2012, Spain obtained a substantive help from the European Financial Stability Facility (now the European Stability Mechanism) in order to restructure its banking institutions, successfully completing the process in January 2014. On 5 August 2011, the Italian government was informally addressed a letter by the ECB, strongly inviting to adopt a set of economic measures that could be no longer postponed. A look at the main sets of anti-crisis measures adopted by Portugal, Spain and Italy shows that the governments have mainly focussed on cutting public expenditures, increasing tax revenues, restructuring the job market and the pension systems and, where necessary, securing the banking system. Both Spain and Italy hastily introduced the balanced budget principle in their Constitutions, while in Portugal the Centre-Right Government has recently proposed a similar constitutional amendment. In the next sections, the most recent case law from the three constitutional courts of Italy, Portugal and Spain will be tested against this backdrop. Due attention will be paid to the differences existing between the three judicial review systems and institutional frameworks, highlighting their distinctive features and leaving to the last section a concluding commentary... (segue)


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