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The settlement of 2017

The borrowing, the default, the assistance of the Bloc and the joint committee

Between 2008 and 2016 the offices of the State contracted debts abroad which the Federal Assembly had not authorised. Default followed in 2017. Between that year and 2021 the member states of the Democratic Socialist Bloc furnished goods, labour and technique, and the Federal Assembly adopted Amendment XII on 30 June 2021. This page states what happened, what the Constitution now provides, and what remains in force.

What the name means

The period is known in this country as the eurocrisis. The name was taken from the sovereign debt crises of the euro area, which were reported here at the time, and the Republic has at no time used the euro or belonged to a monetary union. What the two situations had in common was the position of a state that had borrowed abroad and could no longer pay. What they did not have in common was the outcome.

The borrowing

The text then in force allowed a foreign loan to be contracted on the authorisation of the Council of Ministers, which reported it to the Assembly within ninety days. The Assembly could withhold approval, and withholding it did not affect an obligation already contracted.

Additionally, until 2021 the opening of an investigation into a holder of federal office required the prior consent of the chamber or of the organ which had elected that holder. The two provisions together meant that a loan could be contracted without authorisation and that the conduct of the officers who contracted it could not be investigated without a vote of the body to which they belonged.

The sums were used for current expenditure and for works that were not completed. Aid offered by the member states of the Bloc during these years was declined. The Court of Accounts has published the schedule required by Article 210(1), which states for each obligation the lender, the sum, the charge, the purpose declared and the officers who contracted it.

The default and the assistance

In 2017, Iosmein could not pay the debts it incurred outside the Democratic Socialist Bloc. For several months the supply of imported medicines and of fuel was interrupted. The member states of the Bloc furnished goods, labour and technique from that year, and the assistance was recorded in physical units through the external account, as all Bloc exchange is.

The assistance had no condition touching the internal affairs of the Republic, the form of its government, its ownership settlement or its provision. Article 20(4) now states that rule in the text, and Article 115(2) applies it to solidarity the Republic itself furnishes.

What Amendment XII changed

Borrowing

A loan, credit, guarantee or other obligation from a lender outside the Bloc requires a law adopted by two thirds of the members of each chamber and confirmed by referendum. The law states the sum, the lender, the term, the charge, the purpose and the schedule of repayment, and a loan differing from those particulars is void.

An obligation contracted in breach of the Article creates no debt of any public body, and the officers who contracted it are personally liable.

Prosecution

The Anti-Corruption Prosecution has its own investigators, its own experts in accounting and its own chapter of the federal budget. Cases are assigned within it by lot, and withdrawing a case from the prosecutor assigned requires a reasoned decision of the Director published within seven days.

No immunity, procedural authorisation or prior consent is required to open an investigation into any holder of public function.

Integrity

The Public Integrity Office verifies the declarations of every holder of public function, finds conflicts of interest, removes holders by reasoned decision, and states the wealth which declared income and declared acquisitions do not explain. Forfeiture of such wealth requires a judgment of a court in which the holder is heard.

The register of assets is public. Any person consults it without charge, without registration and without stating a reason.

Title XII

The budgets of the states are checked before adoption, public borrowing requires the prior authorisation of the Federal Ministry of Finance, the federal plan prevails over the plans of the states, and the Public Integrity Office reaches the office holders of the states, the districts and the communes.

The Title limits the competences of the states for its own duration and to the extent it states.

The joint committee

The committee supervises the execution of Title XII. It consists of one member designated by each of the other member states of the Bloc and two members elected by the Federal Assembly in joint sitting by a majority of two thirds. It sits in public in the Republic, publishes its minutes and its findings, and reports to the Federal Assembly and to the organs of the Bloc every three months.

Article 211(5) states what the committee cannot do. It makes no law, annuls no act of an organ of the Republic, removes no holder of public function and gives no instruction to a court. Where an organ departs from an opinion of the committee, the organ publishes its reasons within fifteen days, and the departure is lawful.

The committee designates one deputy of the Director of the Public Integrity Office. That deputy holds the powers of investigation which Article 195(5) confers and holds no power to remove a holder of public function. The post exists for as long as Title XII remains in force.

The removal of an office holder is a decision of the Public Integrity Office, which is an organ of the Republic. It is contested before the Supreme Court, and the state concerned may contest it before the Constitutional Court. No organ of another state and no organ of the Bloc takes part in that decision or in that appeal.

How the Title ends

Title XII remains in force until the obligations identified in Article 210 are discharged. The Court of Accounts certifies the discharge and examines the certification each year, and its report is debated in public. The Constitutional Court then declares the Title spent by a decision published in the Federal Gazette, and on that day Articles 211 to 213 cease to have effect.

A competence limited by the Title returns to the state on that day without any further act. The Title dissolves no state assembly, postpones no election in a state, alters no boundary of a state and suspends no right declared in Title II. The Federal Assembly reviews its operation at each planning period, hears the state assemblies and the committee, and publishes its conclusions.

What has not been settled

Corruption in public office has fallen since 2021 by the measures the Public Integrity Office publishes, but it has not ended. The Office publishes each year the number of holders removed, by state and by office, and those figures remain higher in the states than in the federal organs.

Two gaps are present in the text itself. Article 98(4) allows a federal law to fix a ceiling on support to enterprises and a maximum period for it, and no such law has been adopted. Article 96 allows the responsible ministry to appoint the director of a listed enterprise from the ranking made by the workers' council, and requires published reasons only where the ministry passes over the candidate ranked first.