Germany warned of legal action over court row

European Commission President Ursula von der Leyen holds a news conference in Brussels. (Reuters)
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Updated 11 May 2020

Germany warned of legal action over court row

BERLIN: European Commission chief Ursula von der Leyen has raised the spectre of legal action against Germany after the country’s highest court issued harsh criticism of the bloc’s top court.
The unprecedented spat threatens to undermine the authority of the European Court of Justice, giving ammunition to countries like Poland and Hungary in their battle with EU institutions.
“I take this matter very seriously,” von der Leyen said in a written response to a question from Greens MEP Sven Giegold, which he shared on Twitter on Sunday.
“The Commission is now in the process of analizing in detail the more than 100-page judgment of the German Constitutional Court,” von der Leyen wrote.
“On the basis of these findings, we are considering possible next steps, including infringement proceedings.”
In a bombshell ruling on Tuesday, Germany’s Constitutional Court questioned the ECB’s bond-buying scheme, which has been credited with powering eurozone growth after the financial crisis.
The judges in Karlsruhe gave the ECB three months to justify the stimulus and show that the benefits of mass government debt purchases outweigh the side effects.
Otherwise, the judges said they will ban Germany’s powerful Bundesbank central bank from participating in the two-trillion-euro scheme.
The court also slammed the Luxembourg-based ECJ for rubber-stamping the asset purchases in an earlier ruling, and said Germany was not bound by the ECJ decision.

BACKGROUND

The judges in Karlsruhe gave the ECB three months to justify the stimulus and show that the benefits of mass government debt purchases outweigh the side effects. Otherwise, the judges said they will ban Germany’s Bundesbank central bank from participating in the two-trillion-euro scheme.

Observers said the German sidelining of the ECJ could be a boost for nations like Hungary and Poland, whose reforms to the political and judicial systems have drawn allegations they are eroding democracy.
“EU law takes precedence over national law, and of course the rulings of the European Court of Justice are binding for all national courts,” von der Leyen said in the letter, written in German.
The ECJ also hit back at Germany, saying in a statement on Friday that it alone had legal authority over the ECB.
But Polish Prime Minister Mateusz Morawiecki welcomed the German ruling as “one of the most important rulings in the history of the European Union.”
For the first time judges have clearly stated that the member states decide “where the lines are for EU institutions,” he said in a guest article for the Frankfurter Allgemeine newspaper on Sunday.


Oil surges on hopes of new deal on output cuts

Updated 02 June 2020

Oil surges on hopes of new deal on output cuts

  • Brent price has doubled in five weeks
  • OPEC talks may be brought forward

DUBAI: Oil prices surged toward $40 a barrel on Monday as hopes rose for an early agreement to extend the big production cuts agreed by Saudi Arabia and Russia under the OPEC+ alliance.

Brent, the global benchmark, jumped by more 9 percent to nearly $39, continuing the surge that has doubled the price in five weeks — the best performance in its history. It recovered after record supply cuts agreed between the 23 countries of the OPEC+ partnership, and enforced cuts in US shale oil.

DME Oman crude, the regional benchmark in which a lot of Saudi Aramco exports are priced, rose above $40 a barrel for the first time since early March.

Market sentiment was buoyed by the possibility that the Organization of Petroleum Exporting Countries would agree with non-OPEC members to extend the cuts for a longer period than was agreed in April.

Oil analysts expect OPEC to fast track a “virtual” meeting to formally agree to maintaining cuts at the record 9.7 million barrels a day level. The meeting was scheduled for June 9, but bringing it forward would allow producers more time to set pricing levels.

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An official with one OPEC delegation told Arab News there was consensus among the 23 OPEC+ members for the new date, which could be as early as June 4. The meeting will also consider how long the current level of cuts would be maintained. Some OPEC members want it to run to the end of the year, other producers would prefer a two-month extension.

Omar Najia, global head of derivatives with trader BB Energy, told a forum run by Gulf Intelligence consultancy: “I’d be amazed if OPEC did not extend the higher level of cuts. As long as Saudi Arabia and Russia continue saying nice things to each other I’d expect the rally to continue.”

A Moscow source close to the oil industry said energy officials there had come to the conclusion that “the deal is working” and it was important to keep prices at an “acceptable” level.

Sentiment was also affected by a comparatively high level of compliance with the new cuts, running at about 75 percent among OPEC+ members, with only Iraq and Nigeria noticeable under-compliers.

Robin Mills, chief executive of Qamar Energy, said: “That’s where I’d expect it to be after two months in such a fluid situation. It will be even better in June.”