*GREECE’S VAROUFAKIS SAYS WILL NOT ASK FOR BAILOUT EXTENSION
*VAROUFAKIS SAYS WILL NOT ACCEPT SELF-PERPETUATING CRISIS
*VAROUFAKIS SAYS DISCUSSED EURO AREA, NEW DEAL FOR GREECE
*DIJSSELBLOEM SAYS UNILATERAL STEPS IS NOT THE WAY FORWARD
*DIJSSELBLOEM SAYS GREECE SHOULD CLARIFY ITS POSITION (we think they did!)
*GREECE’S VAROUFAKIS SAYS WILL CONVINCE EU PEERS ON NEW DEAL
As Eurogroup chief Jeroen Dijsselbloem (of “template” foot in mouth infamy) heads to Athens for talks today, Bloomberg reports the new Greek Finance Minister Yanis Varoufakis has a clear message for his European overlords of the past: “We don’t want the 7 billion euros…We want to sit down and rethink the whole program.” While this exposes the nation’s banking system to further runs, yesterday’s revelation that Russia could step in with financing should they need it, leaves Dijsselbloem and Shulz with less and less leverage even as Spain’s chief economic advisor warns, if Greece doesn’t play along, “there will be problems on all fronts.”
“Will Greece antagonize the European union? If they don’t there won’t be any problems,” Alvaro Nadal, chief economic adviser to the Spanish prime minister, said in a radio interview in Madrid on Friday. “If they do, there will be, on all fronts.”
Finance Minister Yanis Varoufakis said he’s not interested in persuading Greece’s official creditors to release the final 7 billion euros ($8 billion) of bailout funds as Eurogroup Chief Jeroen Dijsselbloem headed to Athens for talks on Friday.
Greece wants to agree a new plan shifting from spending cuts to combating corruption and boosting public investment. The proposal hinges on the euro area and the European Central Bank agreeing to write down Greece’s public debt, a suggestion that has been met with skepticism by officials across the rest of Europe.
“We don’t want the 7 billion euros,” Varoufakis said in an interview with the New York Times published late on Thursday. “We want to sit down and rethink the whole program.”
“In all honesty, if you sum up all their promises then the Greek budget will very quickly be out of balance and then further debt relief won’t help anyway,” Dijsselbloem said in Amsterdam on the eve of his trip. “We want to keep Greece in the euro zone, in the European Union, but that also requires the Greeks to meet their commitments.”
Things are not going well…
European Parliament Martin Schulz confirmed the divide between Tsipras and the rest of Europe after two hours of talks with the Greek leader in Athens on Thursday.
European Central Bank president Mario Draghi has raised concerns about the health of Irish banks, urging “decisive” action on issues revealed by a recent balance-sheet assessments before European stress tests next year.
Addressing the European Parliament, Mr Draghi said while the balance-sheet assessments of the Irish banks had identified no capital shortfall, there were needs for adjustments for provisions and risk-weighted assets.
“This should be addressed before the SSM assessment,” he said in a response to a question from Irish MEP Gay Mitchell.
Under the original terms of Ireland’s EU-IMF rescue, Ireland was obliged to undergo a full health check of its banks before the end of the programme. Stress tests However, this was downgraded to a “balance-sheet assessment” after Dublin argued it should not be treated differently from other countries in next year’s Europe-wide stress tests.
Mr Draghi emphasised yesterday that the balance-sheet assessments by the Irish Central Bank were “not forward-looking” and fall short of the “stringent” stress tests that would be required next year.
Ireland’s three main banks – Bank of Ireland, AIB and Permanent TSB – informed the market last month the Central Bank tests had been completed and that no capital requirements had been required.
However, the full results of the tests were not published. Commercial loans Bank of Ireland revealed that the Central Bank had concluded that it should take an additional €1.3 billion in provisioning against its mortgage and commercial loans, while Permanent TSB chief executive Jeremy Masding told The Irish Times that the bank would be taking extra provisions for bad loans following the reviews. AIB has yet to comment on whether provisions are needed.
Mr Draghi also said the ECB had “a more cautious assessment” of Ireland’s budget for 2014 even if targets were likely to be met. However, he noted that the deficit-to-GDP ratio, which has been credibly set at 4.8 per cent, overperforms relative to the requirement of 5.1 per cent set out in the European Commission’s excessive deficit procedure.
The hidden and off the books derivatives losses by the Irish banks are now becoming so large that even Draghi and his associates are heading for cover ! Once the Irish banks are forced to acknowledge these losses we can expect a cascade effect throughout Europe and all this will land at the door of Deutsche Bank with its $72.8 Trillion derivatives exposures. Still Draghi knows with 156 billion on deposit in Irish banks they can plunder at least 35% of this FREE Cash from the Gullible Irish depositors!
Tip of the Day Get you money out now from AIB and Bank of Ireland!
Berlin – MEPs dealing with economic affairs are to launch an inquiry into the “non-transparent” work of EU Commission, European Central Bank and International Monetary Fund officials overseeing spending cuts in bailout countries.The European Parliament wants to scrutinise the work of bailout troikas (Photo: europarl.europa.eu)
After more than three years since the first ‘troikas’ were sent to Greece and Ireland to “advise” the governments and oversee implementation of promised budget cuts, the European Parliament is seeking to shed some light on the work of these non-elected officials.
The coordinators of the main groups in the European Parliament’s economics committee on Monday (28 October) agreed to launch an inquiry into the work of the troika in Greece, Portugal, Ireland and Cyprus.
“The troikas of ECB, EU commission and IMF are playing a key role in the eurocrisis. Their work continues to be non-transparent to a large extent,” said German Green MEP Sven Giegold, the main force behind the initiative.
He explained that the inquiry would consist of hearings of troika officials as well as independent economic studies challenging the assumptions of the troika – assumptions that were proved to be wrong in all bailed-out countries.
The European Parliament has delayed an important vote on the euro zone banking union that will see the most important financial institutions placed under the supervisory of the European Central Bank. Members of parliament want greater ECB accountability.
A dispute over Europe’s planned banking union — a key European Union financial reform in response to the 2007 financial crisis — has broken out between the European Parliament and the European Central Bank (ECB), and an important vote on the issue was delayed from Tuesday to Thursday. In response, the International Monetary Fund (IMF) is calling on the European Union to move more quickly to implement the measures, with criticism coming directly from IMF chief Christine Lagarde herself.The argument centers on whether members of the European Parliament should be provided with detailed minutes of the proceedings of the new banking supervision board, a provision parliament considers to be a vital accountability measure. The ECB has so far rejected these requests. Reuters reported Tuesday that the ECB is instead offering to provide “summaries.”
On Monday, the European Voice newspaper cited an ECB official stating there were “formal restrictions” on what the bank could disclose about its decision-making process. The Economist-owned Brussels paper cited an official at the bank stating that the proceedings were sensitive and there was a fear “we might be jeopardizing the survival of banks” if information were shared with members of parliament.
In the speech, Mr Rehn commits gross omissions and conjures gross over-exaggerations.
Nowhere in his speech does Mr Rehn acknowledge that Cypriot banks were made insolvent overnight by the EU (including EU Commission, where Mr Rehn is in charge of Economic and Monetary affairs) mishandling of PSI in Greek government bonds.
Nowhere in his speech does Mr Rehn acknowledge that Cypriot banks were massively over-invested in ‘core tier 1 capital’ in the form of zero risk-weighted sovereign bonds (Greek bonds…………………….
My office has just finished a leaflet detailing various funding opportunities which I will be handing out in my constituency soon. A digital version can also be found in “Focus on Funding“, on my website and, of course, in this newsletter.
Regarding my work in the Parliament, I am particularly pleased with the success of the Financial Transaction Tax earlier this week, which I have been advocating for a number of months.
Another issue I have been working on for a while, this month we aim to spread the word about the “European City Guide” scam. Too many Irish business owners have been scammed by the ECG already. If you know a business owner or manager, please, share my article on the ECG with them and let’s stop the scammers for once and for all.
“My purpose is to consider if, in political society, there can be any legitimate and sure principle of government, taking men as they were and laws as they might be. In this inquiry I shall try always to bring together what right permits with what interest prescribes so that justice and utility are in no way divided.
I start without seeking to prove the importance of my subject. I may ask whether I am a prince or a legislator that I should be writing about politics. I answer no: and indeed that that is my reason for doing so. If I were a prince or a legislator I should not waste my time saying what ought to be done; I should do it or keep silent.
Born as I was the citizen of a free state and a member of its sovereign body, the very right to vote imposes on me the duty to instruct myself in public affairs, however little influence my voice may have in them. And whenever I reflect upon governments, I am happy to find that my studies always give me fresh reasons for admiring that of my country……
Man was born free, and is everywhere in chains. Those who think themselves the masters of others are indeed greater slaves than they think. How did this transformation come about? I do not know. How can it be made Legitimate? That question I believe I can answer.
If I were to consider only force and the effects of force, I should say: “So long as a people is constrained to obey, and obeys, it does well; but as soon as it can shake off the yoke, and shakes it off, it does better; for since it regains its freedom by the same right as that which removed it, a people is either justified in taking back its freedom, or there is no justifying those who took it away.” But the social order is a sacred right which serves as a basis for all other rights. And it is not a natural right, it must be found on covenants.”
“The Social Contract” quoted above was written in 1762. It is probably one of the most important books ever written. The precepts contained therein completely altered the mind of humanity and out of its pages was born the concept of social democracy which led to the French Revolution (1789-1799) and inspired a group of American settlers to conceive a document called the Declaration of Independence (1776).
The essence of the social contract is moral social order. Thus when a government can no longer hold such order it loses its right to govern. This situation has been reached today in Europe (December 2011). Why is this so? Basically, as shown with Greece, the European Commission is quite content to see a society crumble in order to save prime banking elites. The failure to regulate these elite was a failure of European government, not the Greek people. Yet the lives of these very people are being destroyed by unelected banking boards in the name of “economic orthodoxy”. The chaos in Greece will spread to Ireland, Portugal, Spain and Italy as “austerity measures” dictated by the ECB, take hold. Let us be under no illusion the ECB knows exactly what it is doing. The European Commission knows exactly what it is doing. Yet the members of both of these institutions are content to stand by and see societies crumble as long as their own privileges and those of their backers remain intact. Due to its inability to protect the social rights of its citizens from these elites the European Parliament has also lost the right to govern. For acting in collusion with this monetary tyranny the European Commission should be broken up and European citizens must retake their sovereignty for the sake of their families, their community and Western posterity.
The vision of the European Union was originally built on the concepts of human rights and fairness arising from the ashes of German aggression. Europeans must wake up from their slumber, realise that this vision has been corrupted, and now rebuild a new political structure based on justice and dignity not financial aggression. This process should commence with Greece, Portugal, Ireland, Spain and Italy seceding from the Euro and using their freed-up sovereign power to radically alter the manner in which the European Commission does business. David Cameron, by using Britain’s veto two weeks ago, showed the way. Let us now keep this momentum towards change moving in the right direction. If the crisis is not solved by moral political leadership a solution will be applied through people power. History has shown that when such show of force becomes necessary the march of destiny is with the people, though it may take far longer than originally anticipated. This is the social contract (or Zeitgeist to use Hegel’s terminology) being made manifest. Woe betide the politician who does not understand this truth. The tipping point is being reached; the time to act is now. The New Year resolution for true Europeans should be the cry of old of Rousseau: “Liberty, Fraternity, Equality.” Democracy is dead, long live democracy.
This was sent in to us to-day ,you might need to take it in, in small doses
Dr. Gavin Barrett
The Treaty of Lisbon
entered into force on 1
December 2009. Less than one year later, to the surprise of many,
the member states agreed on the need for a limited if significant Treaty change
concerning economic governance. At the European Council meeting on 28 – 29
October 2010, the heads of state and government agreed on the need for Member
States to establish a permanent crisis mechanism to safeguard the financial
stability of the euro area as
a whole and invited the
President of the European Council to undertake consultations with the members
of the European Council on a limited treaty change required to that effect.
Actions rapidly followed these early words, and by the time of the European
Council meeting of 4 February 2011, the heads of state and government were able
to confirm that the next European Council – to be held in March – would adopt
the final decision on this treaty change, setting up what will be called ‘the
European Stability Mechanism.’2
Such is the pace of change
in the rules of economic governance at European Union level that – somewhat
extraordinarily – it is quite possible that the main focus at the March
European Union Council will now not even be on this Treaty change. The February
European Council meeting also saw the surprise unveiling of a highly
contentious Franco-German Competitiveness Pact,3 which
is now also to be discussed at the March European Council – which moreover has
the task of setting out the member states’ general approach to the Commission’s
extensive September 2010 package of draft legislative proposals on economic
governance.4 (The stated idea in this latter respect is to ensure full implementation
of the recommendations of the October
2010 Von Rompuy Task Force – whose Report the Commission September 2010
proposals anticipated and to some extent pre-empted).5 Above and beyond all this, priorities for structural reforms and fiscal
consolidation for the next round of stability and convergence are also to be identified at the March European Council,
with member states expected to submit national reform programmes and stability
or convergence programmes in April.6 The context for this is formed
by the newly-introduced ‘European semester’ – which, in effect, is the
application of the so-called open method of
coordination in relation to
the preparation of national budgets7 and the Commission’s Annual
Growth Survey – the first edition of which was published on 12 January of this
year.8 There is therefore no shortage of highly
significant developments occurring at the present time insofar as concerns
economic governance. However, amendments to the constituent Treaties are always
particularly significant affairs. The purpose of this paper is to examine the
currently proposed alteration to the constituent Treaties concerning the
European Stability Mechanism, to put it in its historical and legal context,
and in brief to shine light on a legal change which, in less turbulent
circumstances, might well feature more prominently in the public consciousness
than it does.
This is not, it should be
said, the first alteration to have been sought to be made to the Treaty
framework that emerged from the Lisbon intergovernmental conference. On 23 June
2010 – a mere six months after the Lisbon Treaty entered into force – an
intergovernmental conference was convened in Brussels by the then Spanish
Presidency of the Council for the purpose of determining by common accord an amendment
to the Treaties.9 (The aim of that particular
amendment was to create a
transitional arrangement lasting until the end of the 2009-2014 parliamentary
term, whereby twelve member states who between them would have obtained 18 additional
seats in the European Parliament if the Lisbon Treaty had – as originally
intended – entered into force before the June 2009 European Parliament
elections, would not now be made to wait until the next (2014) elections to get
them by reason of the delay on the part of several countries in ratifying that
Treaty.10) That proposed amendment – which had
(and, at the time of writing,
still has) to be ratified by all member states in accordance with their
respective constitutional requirements11 – however is being made not to the actual Treaties themselves but rather to
Protocol (No. 36) on Transitional Provisions which was annexed to the
constitutive Treaties at Lisbon.12
The difference is somewhat
technical rather than substantial. A Protocol, after all, may fairly be described
as being to a Treaty what a codicil is to a will – in other words, equal in
legal status. Moreover, in European Union law, Protocols to the Treaties have
been specifically deemed to form an integral part thereof.13 That much said, it is true to say that the amendment to the Treaties under
discussion in this paper concerning the European Stability Mechanism will, if
and when it comes into force, nonetheless be the first amendment to the actual text of either of the two
constitutive Treaties of the European Union14 since the Treaty of Lisbon itself entered into force on 1 December 2009.
The Means Sought to be Used to
Amend the Treaty 15
Before getting into the
genesis and content of the proposed European Stability Mechanism amendment, the
means being used to effect the amendment merit some examination. The Treaty of
Lisbon introduced altered procedures for amending the constitutive Treaties of
the European Union.
Prior to these changes, there
was only one procedure by which Treaty amendments – other, that is, than those
associated with the accession of new member states16 – normally came about.17 Briefly, any member state
government or the Commission was entitled to submit proposals to the Council
for the amendment of the Treaties on which the Union was founded. If the
Council, after consulting the European Parliament and, where appropriate, the
Commission,18 then delivered an opinion in favour of calling an
intergovernmental conference19 such a conference would then
be convened by the President of the Council for the purpose of determining by
common accord the amendments to be made
to those Treaties. The
amendments then entered into force after being ratified by all the Member
States in accordance with their respective constitutional requirements. This
procedure did not actually differ enormously from what international law would
have required for treaty amendment in any case.20 In practice, implementing its requirements was a slow and difficult
process. It required too much diplomatic and political effort to be used every
time a technical provision in the treaties needed to be amended. It also lacked
both transparency and (arguably) sufficient susceptibility to democratic input
and control. Art. 1(56) of the Treaty of Lisbon therefore substituted the
entire text of the relevant provision (the former Article 48 of the pre-Lisbon Treaty on European Union) and provided for a new set of methods (rather than
one single method) for amending the Treaties in the future.
The new amendment procedures
replaced the old single-lane road for Treaty change with a four-lane motorway
for treaty amendment. In the first place (constituting, it might be said, the
slow lane) there is now the so-called “ordinary revision procedure”21 – the ‘main’ or ‘solemn’ procedure for amending the
Treaty. The new ‘ordinary’ procedure is the same as the old Article 48
procedure – but with some additions tacked on in order to address concerns
about the opaqueness and lack of transparency in the earlier procedure. Hence
(a) the European Parliament gained the right to submit proposals for the
amendment of the Treaties;22 (b) the proposals are now
submitted to the European Council by the Council; (c) national parliaments have
to be notified of them;23
and (d) a requirement – albeit
not an absolute one24
– has been included to convene
a Convention25 composed of representatives of the national
Parliaments, the Heads of State or Government of the Member States, of the
Parliament and of the
Commission26 in order to examine the proposals for amendments
and to adopt by consensus a recommendation to an intergovernmental conference.
This ‘ordinary method’ was used for the first post-Lisbon amendment discussed
in the text above – the amendment concerning the composition of the European
Parliament effected to Lisbon Protocol (No. 36) on Transitional Provisions in
the wake of the 23 June 2010 Brussels intergovernmental conference. The
rapidity of the amendment process which took place on this occasion may perhaps
be regarded as belying the description of the ordinary amendment procedure as
the ‘slow lane’ for Treaty change. In some respects, however, this would be a
false conclusion to reach as, in the first place, the normal ‘Convention’ part
of the process was skipped.27 Secondly, the uncontroversial
nature of the legal change involved clearly also played a role in the rapidity
of the initial stages of this amendment’s execution. Thirdly and most
importantly, the amendment has not yet entered into force at the time of
writing in early 2011 – providing early evidence that this method of Treaty
amendment (and perhaps another
amendment procedure which it
is now proposed to look at) will not be quite as rapid as might have been hoped
by the member states in constructing them.
The European Stability
Mechanism amendment, for its part, will involve the use a new kind of amendment
procedure, not used for what we may call the European Parliament amendment. For
there are now three separate so-called “simplified revision procedures”.28 These constitute the fast lanes for Treaty
revision, to use our motorway analogy. We may refer to these for the sake of
convenience in this paper, as the first simplified revision procedure and the
(less extensive) second and third simplified revision procedures.
Each of these “simplified revision
procedures” constitutes an effort to provide an accelerated procedure compared
to the rather lumbering ‘ordinary’ amendment process – which is regarded as too
cumbersome for technical amendments, and if anything, has become even more
cumbersome since the Treaty of Lisbon entered into force. Each simplified
procedure is of interest from a theoretical standpoint in that it confers a
form of Kompetenz Kompetenz on the European Union by
empowering an institution of the Union itself – viz., the European Council29 – to amend the Treaties.30 However, this theoretical change masks the continued practical reality of
the retention by the member states of a careful grip on the amendment of the
Treaties, since the institution chosen by the member
states to be most concerned in
the amendment process, the European Council is an institutional forum for the promotion of each
member states’ own interests.31
Furthermore, all of the simplified revision procedures involves the
cautious maintenance of the power to veto Treaty amendments enjoyed prior to
the coming into force of the Lisbon Treaty by each member state and by its
national parliament as well (and thus enhance efficiency largely only by
eliminating the previous need for an intergovernmental conference, and by avoiding
the addition of the requirement of a Convention).
The second and third
simplified revision procedures32 need not detain us since the
European Stability Mechanism amendment will not involve using them.33 But a few words can be offered on the first simplified
revision procedure that we need to look at, since this is the procedure which
is being used to amend the Treaties. Article 48(6) of the Treaty on European
Union provides for the first simplified revision procedure. Like the provisions
on the second and third simplified revision procedures, Article 48(6) may be
understood as carving out from the category of Treaty provisions which are
significant enough to merit requiring the full ‘convention plus
intergovernmental conference’ treatment another category of Treaty provisions
concerning issues more technical than
constitutional in nature and
on which a speedier process should be capable of being deployed.34 Article 48(6) thus assumes an implicit
categorisation of Treaty provisions as measures of two different levels of
importance. Its precise approach requires some explanation. Since the coming
into force of Treaty of
Lisbon,35 the text of the Treaty on the Functioning of the European Union has been
divided into seven Parts. Part One is entitled ‘Principles’. Part Two is
entitled ‘Non-discrimination and citizenship of the union’, Part Three entitled
‘Union policies and internal actions’, Part Four ‘Association of the overseas
countries and territories’. Part Five is styled ‘External action by the Union’,
Part Six deals with ‘Institutional and financial provisions’, while Part Seven36 is entitled ‘General and final provisions’.
Amendments of six of the seven Parts of the Treaty on the Functioning of the
European Union require the deployment of the ordinary revision procedure,
outlined above.37 It is the provisions of Part Three alone which are
capable of being subjected to the first simplified
revision procedure. Part Three
accounts for a fair proportion of the text of the Treaty. In the Official
Journal version,38 it accounts for 78 pages out of 282 pages of
Treaties and Protocol text.39 Balancing this, it must be
said that much of it consists of material which, however important it might be,
is of a kind which would be unlikely to find its way into any national
constitution. The European Union policies dealt with under Part Three consist
of a broad range of areas some of which are highly integrated,40 others of which are less so,41 and others
which are hardly integrated at
all and in which the Union plays a relatively minor support role.42 So-called ‘Titles’ of varying length covering the
following subject areas are to be found in Part Three: the internal market,43 free movement of goods,44 agriculture and fisheries45; free movement of persons,
services and capital46; the area of freedom,
security and justice47; transport48; common rules on competition, taxation and
approximation of laws49; economic and monetary policy50; employment51; social policy52; the European Social Fund53; education,
vocational training, youth and
sport54; culture55; public health56; consumer protection57; trans-European networks58; industry59; economic, social and territorial cohesion60; research, technological development and space61; the environment62; energy63; tourism64; civil protection65; and administrative
cooperation66. All of the foregoing have thus been capable of
being amended via the deployment of the first simplified revision
procedure since the Treaty of Lisbon entered into force.
The first simplified revision
procedure under Article 48(6) operates by means of a series of steps. In the
first place, the Government of any Member State, the European Parliament or the
Commission submit to the European Council proposals for revising all or part of
the provisions of Part Three. The European Council – acting by unanimity after consulting the European Parliament,
the Commission, and the European Central Bank in the case of institutional
changes in the monetary area67 – may then adopt a decision
amending all or part of the provisions of Part Three of the Treaty on the
Functioning of the European Union. This decision, however, is not to enter into
force until it is approved by the Member States in accordance with their
respective constitutional requirements.68
This new ‘simplified’ Article
48(6) procedure is less onerous in its requirements than those of its
predecessor provision, the old pre-Lisbon Article 48, since both the need to
convene an intergovernmental conference and the technical requirements of a
formal ratification process are dispensed with. It is also less demanding than
the replacement ‘ordinary revision procedure’ (with its additional requirement
of a convention) provided for in the new version of Article 48.69 However, Article 48(6) should nonetheless not be
taken too lightly in terms of
the obstacle it constitutes to
amendment of the Treaties, wherever it applies. In the first place (and as
already noted above), the member states retained the requirement of unanimity for Treaty changes here,70 thus giving each one of the currently-27 member
states an effective veto over any change. Secondly, the fact that the coming
into force of the decision has also been made dependent on securing the
approval of the decision by member states in accordance with their
constitutional requirements means that the deployment of the first simplified
revision procedure will involve at the very least parliamentary ratification in
states and in Ireland would
involve a referendum in an appropriate case.71 Thirdly, the member states also cautiously provided that an amending
decision under Article 48(6) is not to increase the competences conferred on
the Union in the Treaties.72
This last point appears to be
why the European Commission, in the Opinion which it offered on 16 February
2011 on the proposed European Stability Mechanism amendment, specifically
endorsed the apparent view of the member states in the European Council (in
deciding to have recourse to Art. 48(6) of the Treaty on European Union for
this amendment) that “the amendment does not affect the competences conferred
on the Union and its institutions in the Treaties. It does not involve creating
a new legal base which would allow the Union to take action that was not
possible before this Treaty amendment…” 73
The implication of this is
that the European Stability Mechanism amendment is about iron cladding existing
competences rather than about creating new competences.74 Put another way, it is about replacing an already extant but contested
legal basis for rescue action with an uncontested one clearly allowing for a
permanent rescue mechanism. It will be seen in the text below that in the
process of agreeing the final version of the amendment, Germany successfully
sought to have its wording made extremely restrictive (requiring, for example,
that the Mechanism only be
capable of being activated “if indispensible” 75). Such restrictive wording assists the case to be made that the proposed
Treaty amendment does not create new competences for the European Union.76 On the other hand, it also carries the disadvantage
that it fetters the use of the mechanism in future rescues.
Whether the view that the
proposed European Stability Mechanism does not create new competences is shared
by the German Constitutional Court, the Bundesverfassungsgericht – currently seised in litigation
challenging the legality under existing Treaty law of the financial rescues
which have already been effected,77 is something which will reveal
itself only when that court delivers its ruling. Any finding by the Bundesverfassungsgericht that existing Treaty law is
not wide enough to support such bailouts would seem in turn to carry with it
the necessary implication that – at least in that Court’s view – the
Treaty amendment would involve an enlargement of the
European Union’s competences, which would not be permissible under Article
48(6). However, any such ruling of the Bundesverfassungsgericht would bind no-one outside
Germany. It would, however, foreseeably have negative implications for German
ratification of the proposed European Stability Mechanism amendment, and thus
for its prospects of coming into force.78
What Lies Beneath: the
Proposed European Stability Mechanism Amendment Examined
In order to understand the
present proposal to amend the Treaty on the Functioning of the European Union,
it is necessary to trace briefly back through its history. That history is
situated in the perhaps slightly unlikely context of the struggle on the part
of eurozone member states – enhanced by the difficult experience of recent
events – to establish an appropriate level of budgetary discipline as between
themselves. It was always foreseen that economic and monetary union would
require budgetary discipline on the part of participating
member states.79 However, the original budgetary discipline code for
the Eurozone – the so called Stability and Growth Pact80 – collapsed in all but name in the years leading up to 2005 over the
unwillingness of the Schröder and Chirac administrations in Germany and France,
respectively, to allow sanctions to be applied to their respective countries.81 More recently, with the multi-billion euro bailout
of Greece in April 2010 followed with a commitment in May to a rescue mechanism
several times the value of the Greek bailout to quell market turbulence, the
issue of economic governance in the Eurozone returned ineluctably to the
agenda.82 By 29 September 2010, the Commission had already
proposed a package of six separate legislative measures in the field of
followed on 21 October, by the
much-anticipated Final Report of the high-level Von Rompuy Task Force,
concerning fiscal discipline, surveillance mechanisms, deeper coordination,
crisis management and stronger institutions.84 Treaty reform featured nowhere on the agenda in all this, however, until
the meeting between German chancellor Angela Merkel and French President
Nicolas Sarkozy at the French seaside resort of Deauville on 18 October 2010
produced – much to the surprise of their peers in other member states – a
declaration specifically calling for, inter alia, Treaty changes in order to set up a crisis
mechanism (in effect, a bailout fund) for the euro.85 The relevant portion of the declaration stated that “France and Germany
consider that an amendment of the Treaties is needed and that the
President of the European
Council should be asked to present, in close contact with the Members of the
European Council, concrete options allowing the establishment of a robust
crisis resolution framework before its meeting in March 2011. The amendment of
the Treaties will be restricted to the following issues: The establishment of a permanent and robust framework to ensure orderly
management in the future,
providing the necessary arrangements for an adequate participation of private
creditors and allowing Member States to take appropriate coordinated measures
to safeguard financial stability of the Euro area as a whole. In case of a serious violation of basic principles of Economic and Monetary
Union, and following appropriate procedures, suspension of the voting rights of
the Member State concerned.
The necessary amendment to the
Treaties should be adopted and ratified by Member States in accordance with
their respective constitutional requirements in due time before 2013.”86
It should be explained that up
until now, the possibility of the grant of financial assistance where needed to
safeguard the stability of the euro as a whole has been governed by Article
125(1) of the Treaty on the Functioning of the European Union with its
provision that “the Union shall not be liable for or assume the
commitments of central governments, regional, local or other public
authorities, other bodies governed by public law, or public undertakings of any
Member State, without prejudice to mutual financial guarantees for the joint
execution of a specific project. A Member State shall not be liable for or
assume the commitments of central governments, regional, local or other public
authorities, other bodies governed by public law, or public undertakings of
another Member State, without prejudice to mutual financial guarantees for the
joint execution of a specific project.”
This long-standing so-called
‘no bailout’ clause – regarded by many in Germany in particular as constituting
a guarantee against economic and monetary union turning into a ‘transfer union’
shifting resources to less fiscally-responsible member states87 – has until now been balanced in the Treaty for the
most part only by the provision in Article 122(2) TFEU that “…where a
Member State is in difficulties or is seriously threatened with severe
difficulties caused by natural disasters or exceptional occurrences beyond its
control, the Council, on a proposal from the Commission, may grant, under
certain conditions, Union financial assistance to the Member State concerned.
The President of the Council shall inform the European Parliament of the
notwithstanding some opposition in German public opinion to the idea of a
transfer union, the impetus at Deauville for Treaty change expanding on – or at
the very least reinforcing – the possibilities offered by Article 122(2) TFEU
came from Germany – and remarkably, the German desire to obtain this Treaty
amendment was strong enough to induce it to abandon its previously cherished
goal of automaticity, or at the very least quasi-automaticity, of the sanctions
for budgetary misbehaviour.89 Thus at Deauville, in a
successful, if controversial, bid to win French agreement to the proposed
Treaty change, Chancellor Merkel abandoned demands for the quasi-automatic
sanctioning of budgetary misbehaviour.
The explanation for this
curious-seeming move by Germany was straightforward enough: concern regarding
the potential for an adverse ruling by the German Federal Constitutional Court,
the Bundesverfassungsgericht, was effectively forcing the
hand of Chancellor Merkel.90 In May 2010, a number of
German economists had commenced litigation before the Court in which they
argued that the assistance to Greece and the euro rescue fund violated the ‘no
bailout’ clause found in Article 125 of the Treaty, and, further that Article
122 – which had been used to justify both initiatives – provided no legal
justification for them.91
The considerable risk that the
Karlsruhe Court could well rule both measures illegal – and implicitly, any
future such initiatives – thenceforth constituted a considerable incentive for
pre-emptive political action.92 In particular, it was feared
that the scheduled expiry of the existing rescue package in June 2013 without a
legally secure replacement could lead to market pandemonium.93
Although the proposal for
Treaty change initially encountered some hostility,94 the other states gradually came aboard,95 after much canvassing and a hardhitting ‘all or nothing’ speech by
Chancellor Merkel to the lower House of the German Parliament, the Bundestag, indicating that Treaty
change was essential to any German agreement to any economic governance regime.96 In the event, the October 2010 Brussels European
Council conceded in all but name that Treaty change should happen – but only in
respect of the first of the two elements of Treaty change which had been
proposed in the Deauville initiative.97 Hence the controversial and deeply democratically objectionable call in the
Deauville declaration for the possibility of the suspension of the voting
rights of Member States in the event of a serious violation of basic principles
of economic and monetary union was rapidly (and, it is submitted, entirely
The rapid evolution of the
proposed amendment can thenceforth best be traced through the conclusions of
European Councils and meetings of Eurozone finance ministers. Beginning with
the Brussels European Council of 28 – 29 October 2010 itself, what the heads of
state and government agreed on here was the need for Member States to establish
a “permanent crisis mechanism”, the stated aim of which was “to safeguard the
financial stability of the euro area as a whole”. European Council President Herman
Van Rompuy was invited to
undertake consultations with
the members of the European Council on “a limited treaty change required to
that effect” with any change to be capable of being ratified at the latest by
By 28 November, Euro-area
finance ministers had reached agreement both on a future European Stability
Mechanism to replace the existing European Financial Stability Facility (EFSF)
as of mid-2013 – and on this agreement’s being reflected in a Treaty amendment
proposal that Council President Herman Van Rompuy was to submit to the European
Council in December 2010.99 The idea of this new Mechanism
(as its name would suggest) was that it would safeguard financial stability and
complement a new framework for reinforced economic surveillance in the European
Union. More specifically, the conclusions of the so-called ‘Eurogroup’ noted
that “The [European Stability Mechanism] will complement the new framework of
reinforced economic governance, aiming at an effective and rigorous economic
surveillance, which will focus on prevention and will substantially reduce the
probability of a crisis arising in the future.
Rules will be adapted to
provide for a case by case participation of private sector
creditors, fully consistent
with [International Monetary Fund] policies. In all cases, in order to protect
taxpayers’ money, and to send a clear signal to private creditors that their
claims are subordinated to those of the official sector, a [European Stability
Mechanism] loan will enjoy preferred creditor status, junior only to the
[International Monetary Fund] loan.
Assistance provided to a euro
area Member State will be based on a stringent
programme of economic and
fiscal adjustment and on a rigorous debt sustainability analysis conducted by
the European Commission and the [International Monetary Fund], in liaison with
A series of policy choices are
to be seen in these short paragraphs: (a) a reluctance (undoubtedly motivated
by the need to win electoral support in potential donor states) to make
recourse to financial assistance too easy, with a preference for
“effective and rigorous economic surveillance” playing the primary
role instead and the intention to make any assistance conditional on “a
stringent programme of economic and fiscal adjustment”; (b) the repetition
of the oft-stated desire on the part of potential donor states to involve
private sector creditors in the pain of any rescue101; (c) the facilitation of the involvement of the
International Monetary Fund in
future rescue packages – undoubtedly also at the behest of potential donor
The President of the European
Council Herman Van Rompuy indicated that his proposal to the European Council
on Treaty change at its next meeting would reflect the Eurogroup’s decision.103
This meeting took place less
than a month later: the next major step in the process of Treaty amendment was
the European Council meeting of 16 – 17 December 2010, which saw the agreement
of the heads of state and government on the precise content of the proposed
amendment, as well as a number of other significant issues pertaining to it.104 More specifically, it was this meeting of the
European Council which, first, reached the actual agreement that the Treaty
should be amended to provide for a European Stability Mechanism (which it
described as “a permanent mechanism to be established by the Member States
of the euro area to safeguard the financial stability of the euro area as
whole”105). Secondly, this
meeting of the European
Council stipulated a date for the coming into force of the mechanism, and its
relationship in this regard to existing rescue mechanisms, observing that:
“this mechanism will replace the European Financial Stability Facility
(EFSF) and the European Financial Stabilisation Mechanism (EFSM), which will
remain in force until June 2013. As this mechanism is designed to safeguard the
financial stability of the euro area as a whole, the European Council agreed
that Article 122(2) TFEU will no longer be needed for such purposes. Heads of
State or Government therefore agreed
that it should not be used for
Thirdly, a series of key
decisions relating to the mechanics of the proposed Treaty change were made.107 Thus the December 2010 European Council agreed on
the text of the draft Decision amending the Treaty on the Functioning of the
European Union.108 The key provision of this Draft European Council
Decision amending Article 136 of the Treaty on the Functioning of the European
Union with regard to a stability mechanism for Member States whose currency is
the euro is Article 1.
This provides that the
following paragraph shall be added to Article 136 of the Treaty on the
Functioning of the European Union. “The Member States whose currency is
the euro may establish a stability mechanism to be activated if indispensable
to safeguard the stability of the euro area as a whole. The granting of any
required financial assistance under the mechanism will be made subject
The words “if
indispensible” in the first sentence of this proposed amendment and the
word “any” in the second sentence were added at the request of
Germany at the European Council itself to the provisionally-agreed penultimate
draft of the amendment proposal.109
In order to effect this
proposed amendment, the European Council decided to launch
“immediately” the simplified revision procedure provided for in
Article 48(6) of the Treaty on European Union, and set out an ambitious
proposed timeline for the coming into force of the amendment, noting that
“the consultation of the institutions concerned should be concluded in
time to allow the formal adoption of the Decision in March 2011, completion of
national approval procedures by the end of 2012, and entry into force on 1
The institutions which it was
stipulated be consulted at the outset of this procedure are the European
Parliament, the European Commission and the European Central Bank.111 As regards the conclusion of the procedure, and
more specifically, the completion of national approval procedures, Article 2 of
the Draft Decision provides that “Member States shall notify the
Secretary-General of the Council without delay of the completion of the
procedures for the approval of this Decision in accordance with their
respective constitutional requirements.
This Decision shall enter into
force on 1 January 2013, provided that all the
notifications referred to in
the first paragraph have been received, or, failing that, on the first day of
the month following receipt of the last of the notifications referred to in the
The fourth contribution of the
December 2010 European Council meeting was to anticipate the content of the
mechanism – for the Treaty amendment itself, of course, merely facilitates the
setting up of a Stability Mechanism rather than designing the mechanism).112 In this regard, however, the European Council in
essence simply relied on the Eurogroup agreement examined above. It called on
Finance Ministers of the euro area and the Commission “to finalise work on
the intergovernmental arrangement setting up the future mechanism by March
2011, integrating the general features set out in the Eurogroup statement of 28
November 2010”, and the
European Council both expressly endorsed that statement and included as an Annex
to their own conclusions.113 Subsequently, it has been
agreed by the eurozone finance ministers that the proposed Stability Mechanism
will have a lending capacity of at least €500 billion, considerably more than
the present lending capacity of the (temporary) European Financial Stability
Two final observations may be
made about the foregoing. The first is that this is yet another occasion when a
group of European Union member states engaged in enhanced cooperation at
European level115 have found themselves stimulated, by virtue of this
enhanced relationship, to engage in deeper cooperation.116 It is also of interest in this context to note the extent to which the
European Stability Mechanism process is driven by the states engaged in such
cooperation themselves. As has just been seen, these states have exercised key
influence in the design of the Mechanism. The December 2010 European Council
conclusions further expressly noted that the mechanism will be “activated by mutual agreement
of the euro area Member States in the case of risk to the stability of the euro area as a whole.”117 This is not to say that non-Eurozone member states
of the European Union are entirely excluded. Indeed the European Council’s
conclusions specifically noted that member states “whose currency is not
the euro will, if they so wish, be involved in” work on the arrangements
setting up the Mechanism and that “they may decide to participate in
operations conducted by the mechanism on an ad hoc basis.”118 Nonetheless, input to the construction of the
Mechanism clearly derives primarily from the Eurogroup of states, the timing of
its future deployment will be decided upon by them, and non-euro EU member
states which choose to enter the eurozone at some future date will find
themselves entering a system the fundamental features of which have already
been designed by the ‘insider’ states, (which, it is important to note in this
context, include Ireland).
A second point of interest in
this regard is the express stipulation in the December European Council
conclusions that the arrangement setting up the European Stability Mechanism
should be “intergovernmental”.119 This is one aspect of a clear and worrying more general drift away from the
tried-and-tested ‘Community’ method. In particular, it reflects apparent German
disenchantment with this system, a phenomenon which has to give rise to some
concern for the future, not only for small member states whose input is better
the ‘Community’ system, but
for the Union as a whole, which has tended to work more efficiently and
transparently in areas integrated using the Community method than in areas
using more intergovernmental processes.120
Does Ireland Need a Referendum
on the European Stability Mechanism? The Crotty Case Revisited 121
Any thought of Treaty
amendment in Ireland now brings with it the almost reflexive reflection that a
referendum may be needed to facilitate it. Almost a quarter century after it
was decided, Ireland’s constitutional relationship with the European Union is
still transfixed by the Medusa-like regard of the Supreme Court ruling in Crotty v. An Taoiseach122. The Crotty judgment – which involved, inter alia, a
successful appeal against the High Court refusal of an injunction restraining
the Government from ratifying the Single European Act123 – remains the leading authority on whether a referendum is needed in order
to facilitate the
incorporation into national law of a modification of the constitutive Treaties.
The Crotty Test
The test established in Crotty focuses largely on the
question of whether Treaty change alters the essential scope or objectives of
the existing Treaties. If it does, then, under Crotty, the existing constitutional
authorisations to join the Union now found in Articles 29.4.3° and 5° of the
Irish Constitution do not extend to or provide any constitutional protection
for the ratification of the relevant Treaty should such ratification otherwise
involve any unconstitutionality. A constitutional amendment will therefore need
to be effected – and thus a referendum take place – whenever the Government
wishes the State to ratify a Treaty (which includes a Treaty amendment) in such
Finlay CJ enunciated the test
in the following terms:
“it is the opinion of the
Court that the first sentence in Article 29, s. 4, sub-s. 3 of the Constitution
124 must be construed as an authorisation given to the
State not only to join the Communities as they stood in 1973, but also to join
in amendments of the Treaties so long as such amendments do not alter the essential
scope or objectives of the Communities. To hold that the first sentence of Article 29, s.
4, sub-s. 3 does not authorise any form of amendment to the Treaties after 1973
without a further amendment of the Constitution would be too narrow a
construction; to construe it as an open-ended authority to agree, without
further amendment of the Constitution, to any amendment of the Treaties would
be too broad.” 125
A Reign of Uncertainty
In practice, since Crotty was decided, every Irish
Government ratifying a major European Union constitutive or amending Treaty has
somewhat uniquely126 found itself under immense pressure to hold a
referendum (giving rise in turn to an expectation on the part of many, not
until now reflected in the Irish or in other legal systems, that every major European treaty should
automatically be accompanied by a referendum). Some of this pressure is political
in nature. Crotty led to a political expectation
that major European Treaties would be
accompanied by a referendum in
Ireland. Some of the pressure for referendums is also legal in nature, however. Crotty ushered in something of an era
of legal uncertainty and gave rise to a situation where having a referendum on
a European Treaty became the legally safe option in ratifying. For it can at
times be almost impossible to anticipate whether or not an amending Treaty will
be regarded as going beyond the essential scope or objectives of the existing
The uncertainty is to some
extent by the vagueness of the Crotty test itself,
but it is also at least partly
due to a dearth of subsequent elaborating case-law. To date, Crotty itself has been the only case
in which the Supreme Court’s own test in that case has been applied. Further,
the strict approach of the various Supreme Court judges, in the second part of
the Crotty judgment at least,127 concerning the question of the scope of the
Treaties may have constituted some encouragement to successive Governments to
opt for a referendum in the case of any major amending Treaty even when there
existed no more than a reasonable probability of its contents going beyond the
essential scope/objectives of existing constitutive Treaties – (thereby
avoiding the accusation of running from the judgment of the electorate.).
As regards major amending
Treaties, absolute certainty of the legality of their ratification by
parliamentary means alone can only be provided by (a) a reference by the Irish
President to the Supreme Court under Article 26 of the Bunreacht of any legislative Bill
purporting to incorporate the terms of the Treaty into Irish law for an opinion
on its Constitutionality,128 or else by (b) a challenge by
a private party to the constitutionality of incorporating legislation and/or to
any attempt by the Government to ratify the Treaty or any part thereof without
The result has been that since Crotty, seven referendums have been
held in Ireland to date on five separate European amending treaties.129
Application of the Crotty Test It is worthwhile for present
purposes reflecting on how the Crotty test was applied in the Crotty case itself. It may be recalled that the ruling of the Supreme Court came in
In the first part of its
judgment in Crotty (which related to Crotty’s
challenge to the
legislation designed to incorporate many of the provisions of the Single
European Act into Irish law130), the Supreme Court, as constitutionally
required,131 delivered a single judgment.132 In the second part (Crotty’s claim for an injunction restraining the
Government from ratifying the Single European Act and associated declarations)
each of the five Supreme Court judges delivered separate judgments.133 Both parts provide some guidance in determining
whether the essential scope or objectives of the Treaties will be regarded as
having been exceeded, however more explicitly so in the case of the first part.
In that part, the Supreme Court
adopted what in many respects was a quite broad approach to the question of the
essential scope or objectives of the Treaty.
Finlay CJ, speaking of various
reforms introduced by the Single European Act, pointed out on behalf of the
Court that “neither the proposed changes from unanimity
to qualified majority, nor the identification of topics which while now
separately stated, are within the original aims and objectives of the EEC, bring these proposed amendments outside the
scope of the authorisation contained in Article 29, s. 4, sub-s. 3 of the
A significant institutional
change – viz., the Single European Act’s
empowerment of the Council to attach a Court of First Instance to the European
Court of Justice, was similarly held to be authorised since it did “not affect
in any material way the extent to which the judicial power has already been
ceded to the European Court.” Further, a voting change, the Single European
Act’s empowerment of the Council to adopt health and safety measures by
qualified majority vote was also to be regarded as authorised “since the
contains various provisions
dealing with the approximation of laws in general, with freedom for the
provision of services in the Member States, with working conditions and with
the prevention of occupational accidents and diseases.”135
In the second part of its
ruling, however (largely concerned with matters of no particular interest for
present purposes), the Court unanimously
held the view that existing Constitutional immunities in respect of Community
Treaties did not apply in relation to Title III
of the SEA (which provided for
cooperation in the field of foreign policy). This was because Title III did not amend or constitute an addition to the
existing Treaties, and further was not necessitated by them. Rather, it was
outside their scope and in effect, a new treaty agreement. (This new treaty
agreement was then held by the Supreme Court majority to infringe the
Constitution because of its supposed implications for the sovereignty of the
State.) This part of the
ruling evinces a narrow approach to the provisions of Article 29.4.3° which
stands in disappointing contradistinction to the Court’s attitude in the first
part of its ruling.
As this writer has observed
elsewhere, “the entire Court, not just the majority, appeared to take an
approach not dissimilar to that which one would expect to see used in the
interpretation of a commercial contract.
Thus for Finlay C.J., the
simple fact that “the relevant provisions do not purport to
constitute amendments of or
additions to any of the Treaties establishing the
Communities” was sufficient
alone to take them outside the scope of Article 29.4.3°.
Along similar lines, Henchy J.
– although he quoted the first words of the Preamble to the Single European Act
in which the member states declared themselves “moved by the will to continue
the work undertaken on the basis of the Treaties establishing the European
Communities” – nonetheless felt the fact that Title III
of the Single European Act dealt, as he put it, “with matters which are outside
the scope of the existing treaties” excluded the application of Article
29.4.3°.136 Walsh J. and Griffin J. also felt that Title III brought into terra nova.137″ 138
One could quibble with the appropriateness
of such an approach in relation to an organisation such as the European Union
of which it may be said that growth and evolution are part of its very
Applied in this manner, the Crotty test sets a test rather too easily
failed, and a test better designed for application to a static unchanging
entity rather than to the evolving political entity which the European Union
Applying the Crotty test to
the European Stability Mechanism Amendment
It will be recalled from the
text above that the proposed amendment presently being proposed is a brief one:
it involves one paragraph being added to Article 136 of the Treaty on the
Functioning of the European Union, which will provide:
“3. The Member States
whose currency is the euro may establish a stability mechanism to be activated
if indispensable to safeguard the stability of the euro area as a whole. The
granting of any required financial assistance under the mechanism will be made
subject to strict conditionality.”140
Applying the Crotty test, does such an amendment
go beyond the ‘essential scope or objectives’ of the existing Treaties so as to
require a Constitutional amendment to facilitate its ratification? It has
already been seen in the text above that in its opinion on the proposed
amendment, the European Commission gave its view that “the amendment does not
affect the competences conferred on the Union and its institutions in the
Treaties. It does not involve creating a new legal base which would allow the Union
to take action that was not possible before this Treaty amendment…”141 This opinion appears to be strongly shared by the
member states, given that (a) the European Council decided to have recourse to
Art. 48(6) of the Treaty on European Union for this
amendment and, according to
that provision itself, decisions under Art. 48(6) “shall not increase the
competences conferred on the Union in the Treaties”; and (b) that the member
states have all already participated in the setting up of a (temporary) European
Financial Stability Facility (which the European Stability Mechanism is
supposed to replace) under the existing Treaty rules.
If this view is correct and
the provision does not increase the competences of the Union then it is
difficult to see how the amendment could possibly go beyond the ‘essential
scope or objectives’ of the existing Treaties so as to to trigger Treaty
It should be added that even a
Treaty change which increased competences would not necessarily create a
problem under the Crotty test.142 The ruling of the Supreme Court in the first part of the Crotty case indicated that it would
take the conferral of new powers of a kind “which alter the essential
character” of what is now the Union in order to give rise to difficulties.143 Even the ruling in the second part of the Crotty ruling, in which a far less
constitutionally tolerant approach to Treaty change appeared to be adopted by
the various Supreme Court judges than in the first part (with the mere fact
that Title III of the Single
European Act did not amend to or add to existing Treaty rules being regarded as
taking it outside the scope of protection of Article 29. 4 of the Constitution144) would not seem to create difficulties in this
instance, since what involved here is an amendment of an existing article of
the Treaty on the Functioning of the European Union. Of note too was the
statement in the first part of the Court’s ruling (delivered by Finlay CJ) that
what is now the European Union was “a developing organism with diverse and
changing methods for making decisions and an inbuilt and clearly expressed
objective of expansion and progress, both in terms of the number of its Member
States and in terms of the mechanics
to be used in the achievement of its agreed objectives.”145
In this regard, it should be
noted that the goal of the establishment of an economic and monetary union was
explicitly agreed by the member states in the provisions setting out the tasks
and activities of the then European Community as long ago as 1993, when the
Treaty of Maastricht came into force.146 Very large parts of that Treaty contained provisions to give effect to this
Ultimately, of course,
absolute certainty regarding how the Crotty test will be deployed can only be provided if (a) a
citizen chooses to litigate the matter147 or (b) if Irish legislation purporting to incorporate the Treaty change
into domestic Irish law is referred to the Supreme Court by the President under
Article 26 of the Constitution). On balance, however, the arguments in favour
of the proposed European Stability Mechanism amendment falling within the
essential scope or objectives of the existing Treaties appear far more
compelling than the contrary arguments.
This view was clearly shared
by the pre-February-2011-election Government. Hence in the course of Dáil
Questions on 15 December, 2010 when questioned as to the need for a referendum
in relation to the proposed Treaty change, the following response was elicited
from the then Taoiseach Brian Cowen:
“…the whole question as
to how we might proceed by way of a very limited amendment has become clear
from President Van Rompuy’s consultations. These indicate widespread support
for a very limited amendment that should be given effect through the simplified
revision procedure, which in turn implies no change of competence.
Based on the form of wording
currently being considered, I am hopeful that no
referendum will be necessary,
but, of course, we cannot be definitive in that regard until there is a final
The Taoiseach further
“…the Attorney General
is, of course, involved in all these matters…However, based on what we have
seen thus far, we believe the limited procedure that is being used for this
purpose implies no change in competence. We will finalise our formal decisions
and report to the Dáil in the normal way on the outcome of the European Council
when we return and we are able to confirm the situation.”148
In a press briefing after the
December European Council, the Taoiseach confirmed both that “the Government
will take its decisions based on what the constitutional requirements dictate”
– indicating therefore that no referendum would take place unless legally
required by the Constitution – and that it was “highly unlikely a referendum would
be required” for a Treaty changes as limited as that envisaged here.149
Although a new Taoiseach will
be in place when the amendment is finally decided upon by the European Council
in March, there is no indication that a different approach will be adopted by
the new Government which will be in office by then. It is thus clear that –
absent a completely unexpected change in policy –
Ireland’s ratification of the
proposed European Stability Mechanism amendment will be effected by
parliamentary means alone.
1 Oireachtas Fellow, Senior Lecturer, Director of
Doctoral Studies, School
of Law, University College
are expressed to Gina Hanrahan and Jill Donohue for their assistance in the
research for this paper. The responsibility for any errors remains my own.
2 See para. 30 of the conclusions available online
at the time of writing at
See also A. Beesley, “French and German Plan
Meets Resistance”, 5 February 2011. With Ireland engaged in a general
election campaign, with voting to take place on 25 February, the initiative
could scarcely have come at a more politically inopportune moment for this
4 See para. 27 of the 4 February 2011Council conclusions. Note that
on 29 September 2010,
the Commission made six legislative proposals in the field of economic
governance. Four of these proposals focused on fiscal issues (including a major
reform of the failed Stability and Growth Pact. A further two were targeted at
“detecting and addressing effectively emerging macroeconomic imbalances
within the EU and the euro area.”
More specifically, the
Commission proposed (1) a regulation amending the legislative underpinning of
the preventive part of the Stability and Growth Pact (Regulation 1466/97); (2)
a regulation amending the legislative underpinning of the corrective part of the Stability and
Growth Pact (Regulation 1467/97); (3) a regulation on the effective enforcement
of budgetary surveillance in the euro area; (4) a new directive on requirements
for the budgetary framework of the member states; (5) a regulation on the
prevention and correction of macroeconomic imbalances; and (6) a regulation on
enforcement measures to correct excessive macroeconomic imbalances in the euro
area. The texts of these proposals are available online at the time of writing
5 Strengthening Economic
Governance in the EU, Report of the Task Force to the European Council, Brussels, 21 October
2010. Final agreement with the European Parliament on the Commission proposals
will be sought by the Council by the end of June, the overall goal here having
been described as no less than the implementation of a “new macroeconomic
framework”. (Para. 27 of the Council conclusions.)
6 Para. 29 of the Council conclusions.
7 Although the “European semester” has been
described by the Council as an initiative which had its provenance in the Van
Rompuy task force (see in this regard
it was endorsed by the member states at the Brussels Economic and Financial
Affairs Council of 7 September 2010 – over a month before the Van Rompuy Report
was actually issued (The Report acknowledged at para. 3 thereof that the matter
had already been decided upon). The European semester seems to have been first
envisaged in European Commission proposals dated May and June 2010 (See
European Commission, European semester: a new architecture for the new EU
governance (MEMO/11/14, 12 January 2011
and available online at the time of writing at
The semester involves a significant
increase in economic policy coordination from 2011. According to the
Commission, “the European semester means the EU and the euro zone will
coordinate ex ante their budgetary and economic policies, in line with both the
Stability and Growth Pact and the Europe 2020 strategy. The EU Semester starts
with the Annual Growth Survey, in which the Commission provides a solid
analysis on the basis of the progress on Europe 2020 targets, a macro-economic
report and the joint employment report, and sets out an integrated approach to
recovery and growth, concentrating on key measures. This
applies to the EU as a whole
and will then be translated into country-specific recommendations.
This will allow ex ante
economic coordination at EU level while national budgets are still under
preparation.” (Ibid.) Thus what will be involved will be a six-month
cycle each year, beginning each March. During this time, the member states’
budgetary and structural policies will be reviewed “to detect any
inconsistencies and emerging imbalances.”
The anticipated process has
been described in the following terms:
“The new six-month cycle
will start each year in March when, on the basis of a report from the
Commission, the European
Council will identify the main economic challenges and give strategic advice on
policies. Taking this advice into account, in April the member states will
review their medium-term budgetary strategies and at the same time draw up
national reform programmes setting out the action they will undertake in areas
such as employment and social inclusion. In June and July, the European Council
and the Council will provide policy advice before the member states finalise
their budgets for the following year.”
(See Press Release after
Economic and Financial Affairs (Ecofin) Council meeting, Brussels, 7 September
2010 at p. 6 thereof, available online at the time of writing at
Following the European
Commission’s proposal of 10 May 2010 and political agreement being reached in
the Ecofin Council of 7 September the Commission, on 29 September, tabled its
amending Proposal for a Regulation of the European Parliament and of the
Council amending Regulation (EC) No 1466/97 on the strengthening of the
surveillance of budgetary positions and the surveillance and coordination of
economic policies (Brussels, 29.9.2010 COM(2010)
526 final 2010/0280 (COD)). Scheduled
to be implemented as of 1st January 2011, in practice, the
Ecofin Council of 18 January
2011 initiated the 2011 European Semester, “examining the Commission’s annual
growth survey and drawing lessons from an assessment of the member states’
draft national reform programmes.” (See press release for Brussels Ecofin
Council, 18 January 2011 (5287/11 PRESSE 3 PR CO 1).)
(See further the report
published on Euractiv on 6 October 2010, The European Semester: What
does it Mean?
8 Annual Growth Survey:
advancing the EU’s comprehensive response to the crisis COM(2011) 11 final, Brussels,
12 January 2010 (Communication from the Commission to the European Parliament,
the Council, the European Economic and Social Committee and the Committee of
the Regions) available online at the time of writing at
9 In fact the IGC
merely rubberstamped the text of an agreement agreed by a decision of the
European Council in a meeting held on the same day (the European Commission and
the European Parliament having delivered their opinions on 28 April and 6 May
2010 respectively, the European Parliament having additionally consented at the
same time to not convening a Convention and, national parliaments having been
notified, all as provided for in Article 48, Paragraphs (2) to (4) of the
Treaty on European Union (henceforth ‘TEU’). Note that this
amendment took place under the
so-called ordinary revision procedure, which is governed as a whole by Article
48, Paragraphs (2) to (5), and which corresponds to the traditional pre-Lisbon
Article 48 method of amending the constitutive treaties, although improved in
The text of the amendment is
included as a Annex to the decision of the European Council, European Council Decision of
17 June 2010 on the examination by a conference of representatives of the
governments of theMember States of the amendments to the Treaties proposed by the Spanish
Government concerning the composition of the European Parliament and not to
convene a Convention (published in OJ L 160/5 (26 June 2010) and available online at the time of
10 The twelve affected states were Bulgaria (1 seat),
Spain (4 seats), France (2 seats), Italy (1 seat), Latvia (1 seat), Malta (1
seat), theNetherlands (1 seat), Austria (2 seats), Poland (1 seat), Slovenia(1
seat), Sweden (2 seats) and the United Kingdom (1 seat). The ratification of
the Lisbon Treaty was of course delayed in Ireland because of the outcome of
the 12 June
2008 referendum but it was
also delayed in Poland, Germany and the Czech Republic.
11 See Article 48(4) TEU, the provisions of which are
reiterated in Article 2 of the new Protocol.
12 More precisely to the Treaty on European Union, to
the Treaty on the Functioning of the European Union and to the Treaty
establishing the European Atomic Energy Community. The amendment was effected
by the adoption of an additional new Protocol, styled the ‘Protocol amending
the Protocol on transitional provisions annexed to the Treaty on European
Union, to the Treaty on the Functioning of the European Union and to the Treaty
establishing the European Atomic Energy Community’. Article 1 of this new
Protocol amended the original Protocol (No. 36) on Transitional Provisions
(added at Lisbon) by substituting a new Article 2 thereof.
On its own terms, the new
Protocol was to enter into force enter into force if possible on 1 December
2010, provided that all the instruments of ratification have been deposited,
that, on the first day of the
month following the deposit of the instrument of ratification by the last
signatory State to take this step. A concise account of the pre-ratification
history of this amendment is found in P. Kaczyński And P. Ó Broin, From Lisbon To Deauville:
Practicalities Of The Lisbon Treaty Revision(s),CEPS Policy Brief No. 216 (October 2010) at 2. Note
further that the next Treaty of Accession to the European Union – probably that
of Croatia in 2012 – will
see the guarantees given to
Ireland in the context of the Lisbon referendum plus the guarantee given to the
Czech Republic concerning the Charter of Fundamental Rights of the European
Union enshrined in Protocols to be attached to the Treaty on European Union and
the Treaty on the Functioning of the European Union. (See respectively,
Paragraph 5 of the Presidency Conclusions of the European Council held at
Brussels on 18-19 June, 2009 (11225/2/09 REV
2, Brussels, 10 July 2009) and Paragraph 2 of the Presidency Conclusions of the
European Council held at Brussels on 29-30 October, 2009 (15265/1/09REV 1 CONCL 3, Brussels, 1 December 2009).)
13 Article 51 TEU.
14 The Treaty on European Union and the Treaty on the
Functioning of the European Union.
15 For more detail on the themes discussed in this
section see generally, G. Barrett, Creation’s Final Laws: The Impact of the Treaty of
Lisbon on the ‘Final Provisions’ of Earlier Treaties (2008) 27 Yearbook of European Law 3 at 7 to 27.
16 Accession treaties for new member states can also
amend the constituent Treaties and have frequently done so, the most recent
instance of this happening being with the 2005 treaty of accession of Romania
and Bulgaria to the European Union, which entered into force on 1 January,
2007. In relation to the pre-Lisbon procedure for altering Treaties, see
Article 48 of the pre-Lisbon Treaty on European Union.
17 See however T. Hartley, The Foundations of European
Union Law (seventh edition, Oxford
University Press, Oxford, 2010) at pp. 90-91, in which he discusses the
possibility of the member states amending the constitutive treaties without
adhering to the procedures stipulated in Article 48 TEU. The question is not
entirely theoretical, since, as Hartley points out, the now-defunct European
Coal and Steel Community Treaty was amended without the amendment procedures it
stipulated having been adhered to, both by the Saar Treaty of 27 October, 1956
and by the Convention on Certain Institutions Common to the European
Communities of 25 March, 1957.
(Hartley, op. cit., at 92.) Cf. however the view expressed by the Court of Justice
in its ruling in Case 43/75 Defrenne v Sabena  ECR 455 at paragraph 58 thereof that the
amendment procedure had to be adhered to.
18 The European Central Bank was also required to be
consulted in the case of institutional changes in the monetary area.
19 I.e. a conference of representatives of the governments
of the member states,
20 In international law, a treaty between states is
amended by the agreement of a subsequent contrary Treaty. The pre-Lisbon
Article 48 imposed additional requirements in this regard. One difference was
the role – albeit merely a consultative one – for the European Parliament, as
well as the consultative role (where appropriate) for the Commission and (in
the case of institutional changes in the monetary area) the European Central
Bank. See generally in relation to the pre-Lisbon Treaty amendment procedure in
this regard, T. Hartley, The Foundations of European Community Law (sixth edition, Oxford
University Press, Oxford, 2007) at 88.
21 Art. 48(1) of the post-Lisbon Treaty on European
Union, which was inserted by Article 1(56) of the Treaty of Lisbon.
22 Such submissions are made to the Council. See
Article 48(2) TEU.
23 Article 48(2) TEU. Neither European Council nor
national parliaments had any explicit role under the original version of
Article 48 even if the members of the European Council probably always kept a
close eye on the process of Treaty reform, and even if national parliaments
would always have been involved later in the process of ratification, without
being entitled under European law to be made aware of initial proposals. See for a general
study of national parliaments and the European Union, G. Barrett (ed.), National Parliaments and the
European Union: The
Constitutional Challenge for the Oireachtas and Other Member State Legislatures (2008, Clarus Press, Dublin).
24 The second indent of Article 48(3) TEU provides
that “the European Council may decide by a simple majority, after
obtaining the consent of the European Parliament, not to convene a Convention
should this not be justified by the extent of the proposed amendments. In the
latter case, the European Council shall define the terms of reference for a
conference of representatives of the governments of the Member States.”
25 This obligation is imposed on the President of the
European Council. See generally Article 48(3) TEU.
26 Under Article 48(3) TEU, the European Central Bank
is also to be consulted in the case of institutional changes in the monetary
27 Under Art. 48(3), the European Council may decide
by a simple majority – and after obtaining the consent of the European
Parliament – not to convene a convention “should this not be justified by the
extent of the proposed amendments.” This is what happened in June 2010. In such
an event, the European Council is required to define the terms of reference for
an intergovernmental conference, which as has already been seen, was also done
on this occasion.
28 See Article 48(6) and (7).
29 For analyses of the evolving role of the European
Council, see. J.-P. Jacqué, “Article I-21” and “Article I-22” in Burgorgue-Larsen, Levade and Picod (eds.), Traité établissant une
Constitution pour l’Europe – Tome I (Bruylant, Brussels, 2007) at 298 and 306.
30 See in this regard e.g., L. Grard, “Article IV-443” in L. Burgorgue-Larsen, A.
Levade and F. Picod, op. cit., at n. 29, 796 at 809 thereof.
31 See generally, Barrett, loc. cit. at n. 15, at 15 et seq..
32 Governed by Article 48(7) TEU.
33 In passing, it may be observed that they are
sometimes referred to as general passerelle clauses. Passerelle clauses are procedural passages along which the rules
concerning European Union decision-making procedures can be changed in an
accelerated fashion (i.e., compared to the ordinary procedure for amendment of the Treaties.) In other
words, they are legal routes for decision-making procedures stipulated in the
Treaties (viz., unanimity or a special
legislative procedure) can be transformed to a less heavy or cumbersome process
(viz., qualified majority vote, or
the ordinary legislative procedure) without going through the ordinary process
of Treaty amendment. Historically, passerelle clauses have tended to be the result of
unsuccessful attempts in previous intergovernmental conferences to switch from unanimity to qualified majority voting. In effect,
they are a consolation prize to those who had pleaded in favour of qualified
majority voting – but who did not win this debate because the introduction of
some form of majority voting into the area in question was regarded as too much
of a trespass on national sovereignty at the time of the intergovernmental
conference in question. (See J.-C. Piris, The Constitution for Europe –
A Legal Analysis (Cambridge
University Press, Cambridge, 2006) at 125.)
34 The first simplified revision procedure originated
in the 2004 intergovernmental conference which agreed the Constitutional Treaty
and has much in common with a proposal made by the Irish Presidency during the
negotiations. (See concerning the history of this provision Grard, loc. cit., at n. 30, at 815-817.)
35 For the pre-Lisbon situation, see Barrett, loc. cit., at n. 15 at 17.
36 See Article 2(279) of the Treaty of Lisbon.
37 The second and third simplified revision procedures
can also be used where applicable, although their use is very limited. See n.
39 Consisting of 186 pages of Treaty text and 134
pages of Protocol text. In the unofficial consolidated version of the Treaties
published by the United Kingdom Foreign and Commonwealth Office, showing them
as they will look in the wake of the coming into force of the Treaty of Lisbon,
(and available at http://www.fco.gov.uk/Files/kfile/FCO_PDF_CM7310_ConsolidatedTreaties.pdf) Part
Three occupies a roughly corresponding proportion of 84 pages of 326 pages of
Treaties and Protocol text.
40 Such as the rules concerning the free movement of
41 Such as the rules on asylum and immigration.
42 Such as the rules on education, public health and
43 Part III,
Title I of the Treaty on the Functioning of the European Union (henceforth
44 Part III,
Title II TFEU, incorporating chapters dealing with the customs union (Chapter
1), customs cooperation (Chapter 2) and a prohibition of quantitative
restrictions between Member States (Chapter 3).
45 Part III,
46 Part III,
Title IV TFEU, incorporating chapters dealing with workers (Chapter 1), the
right of establishment (Chapter 2), services (Chapter 3) and capital and
payments (Chapter 4).
47 Part III,
Title V TFEU, incorporating chapters dealing with general provisions (Chapter
1), policies on border checks, asylum and immigration (Chapter 2), judicial
cooperation in civil matters (Chapter 3), judicial cooperation in criminal
matters (Chapter 4) and police cooperation (Chapter 5).
48 Part III,
49 Part III,
TFEU, incorporating chapters dealing with rules on competition (Chapter
1)(covering both rules applying to undertakings (dealt with in Section 1) and
aids granted by States (dealt with in Section 2)), tax provisions (Chapter 2)
and approximation of laws (Chapter 3).
50 Part III,
Title VIII TFEU, incorporating
chapters dealing with economic policy (Chapter 1), monetary policy (Chapter 2),
institutional provisions (Chapter 3), provisions specific to Member States
whose currency is the euro (Chapter 4) and transitional provisions (Chapter 5).
51 Part III,
Title IX TFEU.
Title X TFEU.
53 Part III,
Title XI TFEU.
Title XII TFEU.
55 Part III,
Title XIII TFEU.
56 Part III,
Title XIV TFEU.
Title XV TFEU.
58 Part III,
Title XVI TFEU.
59 Part III,
Title XVII TFEU.
60 Part III,
Title XVIII TFEU.
61 Part III,
Title XIX TFEU.
62 Part III,
Title XX TFEU.
63 Part III,
Title XXI TFEU.
64 Part III,
Title XXII TFEU.
65 Part III,
Title XXIII TFEU.
66 Part III,
Title XXIV TFEU.
67 As will be seen in the text below, it was agreed by
the member states that the European Central Bank be consulted in relation to
the proposed European Stability Mechanism amendment.
68 See generally Article 48(6) TEU.
69 More specifically, in Article 48(2) to Article
70 Notwithstanding proposals to dispense with it made
in the course of the 2004 intergovernmental conference which led to the defunct
Constitutional Treaty. The rejection of such a majoritarian approach endured
through the Lisbon Intergovernmental conference.
71 See in this regard the Supreme Court decision in Crotty v An Taoiseach  IR 713,  ILRM
400. This possibility is discussed in the text below.
72 Article 48(6) third sub-paragraph.
73 Paragraph 11 of the Preamble to Commission Opinion
on the draft European Council Decision amending Article 136 TFEU with regard to
a stability mechanism for Member States whose currency is the euro. COM (2011)
70/3, Brussels, 16 February 2011.
74 It is certainly true that both existing law and
under the amendment, the circumstances in which financial assistance is
facilitated are intended to be limited in nature.
75 See text below at n. 109.
76 Note N. Busse, “Ein Brüsseler Gipfel für
die Karlsruher Richter”, Frankfurther Allgemeine Zeitung, 17 December 2010, in which it is reported
that the view was held by some at the key December 2010 European Council that
the creation of a permanent European Stability Mechanism would be possible
under the currently extant Treaty provisions. The view was also reportedly held
by the Irish Minister for European Affairs. (See A. Beesley, “Roche Opposes German
Push for EU Treaty Changes”, Irish Times, 26 October 2010.)
77 The Second Senate of the Court has already refused
an interim injunction against German participation in a euro rescue package
which included the setting up of the European Financial Stability Fund. See Bundesverfassungsgericht, Decision of 9 June 2010, 2
BVR 1099/10 and see further the Court’s press release “Application for a temporary
injunction to prevent the euro rescue package unsuccessful”, Press Release No. 38/2010 of
10 June 2010 (available online at the time of writing at http://www.bundesverfassungsgericht.de/pressemitteilungen/bvg10-038en.html).
78 There has been a degree of political controversy
(particularly in Germany) associated with the use up to now of Article 122(2)
TFEU as the legal basis for rescue moves designed to secure the financial
stability of the euro. Some evidence of this can perhaps be seen in the
conclusions of the European Council of 16-17 December 2010 where it was noted
that “as [the proposed European Stability Mechanism] is designed to
safeguard the financial stability of the euro area as a whole, the European
Council agreed that Article 122(2) TFEU will no longer be needed for such
purposes. Heads of State or Government therefore agreed that it should not be
used for such
79 See for a brief introduction to the rules that
governed the commencement of the third and final stage of economic and monetary
union, G. Barrett, EMU – The Third Stage. An Examination of the Treaty and non- Treaty Basis
of Economic and Monetary Union (Institute of European Affairs, Dublin, 1997) available online at the time
of writing at http://papers.ssrn.com/sol3/papers.cfm?abstract_id=1267647
80 See generally Resolution of the European Council on
the Stability and Growth Pact, Amsterdam, 17 June 1997; Declaration by the
Council (Ecofin) and the ministers meeting in that Council issued on 1 May
1998; Presidency conclusions of the European Council Brussels, 22 and 23 March,
2005; Council Regulation (EC) No. 3605/93 of 22 November 1993 on the
application of the Protocol on the excessive deficit procedure annexed to the
Treaty establishing the European Community; Council Regulation (EC) No 1466/97
of 7 July 1997 on the strengthening of the surveillance of budgetary positions
and the surveillance and coordination of economic policies; Council Regulation
(EC) No 1467/97 of 7 July 1997 on speeding up and clarifying the implementation
of the excessive deficit procedure. All of the foregoing are to be found in the
invaluable collection by the General Secretariat of the Council of the European
Union and the European Commission, Economic and Monetary Union -Legal and Political
Texts (June 2007) available online
at the time of writing at http://ec.europa.eu/economy_finance/legal_texts/pdf/compendium_en.pdf . A brief
online introduction to Stability and Growth Pact is also to be found on the
European Commission website at http://ec.europa.eu/economy_finance/sgp/index_en.htm
81 See e.g., in this regard, I. Begg and W. Schelkle, “The Pact Is Dead: Long Live
The Pact” (2004) 189 National Institute
Economic Review 86; P. Leblond, “The Political Stability and Growth Pact is Dead: Long
Live the Economic Stability and Growth Pact” (2006) 44 JCMS 969; B. Clift, “The New Political Economy of
Dirigisme:French Macroeconomic Policy, Unrepentant Sinning and the Stability
and Growth Pact”,
(2006) 8 British Journal of Politics and International Relations 388;
and D. Hodson and I. Maher, “Soft Law and Sanctions:
Economic Policy Co-ordination and Reform of the Stability and Growth Pact” (2004) 11 Journal of European
Public Policy 798. Note also the decision of the (full) European Court of
Justice in Case C-27/04 Commission v. Council  ECR I-6649 annulling Council conclusions in
respect of France and Germany, inter alia, insofar as they contained a decision to hold the
excessive deficit procedure in abeyance.
82 See generally on this topic, J.-V. Louis,” Guest Editorial: The
No-Bailout Clause And Rescue Packages”, (2010) 47 Common Market Law Review 971
83 See n. 4 above.
84 See n. 5 above.
85 See Franco-German Declaration: Statement for the
France-Germany-Russia Summit, Deauville, 18 October, 2010, available online at the time of writing at http://www.elysee.fr/president/root/bank_objects/Francogerman_ declaration.pdf reported
upon in Anon., “Merkel, Sarkozy agree on EU Treaty change to handle crises” EurActiv, 19 October 2010.
86 Paragraph 2 of the Declaration.
87 See H. Stelzner, “Von der Währungs- in die
Transferunion”, Frankfurther Allgemeine Zeitung, 30 October 2010. See also the interesting
discussion by W. Münchau, “A misguided German narrative of the crisis”, Financial Times, 20 February,
88 Also to be noted, although far less significant, is
Article 143 which provides that
“where a Member State with a
derogation is in difficulties or is seriously threatened with difficulties as
regards its balance of payments either as a result of an overall disequilibrium
in its balance of payments, or as a result of the type of currency at its
disposal, and where such difficulties are liable in particular to jeopardise
the functioning of the internal market or the implementation of the common
commercial policy, the Commission shall immediately investigate the position of
the State in question and the action which, making use of all the means at its
disposal, that State has taken or may take in accordance with the provisions of
the Treaties. The Commission shall state what measures it recommends the State
concerned to take.”
89 Hence Paragraph 1 of the Declaration stated that “a
wider range of sanctions should be applied progressively in both the preventive
and corrective arm of the Pact. These sanctions should be more automatic, while respecting the role of
the different institutions and the institutional balance. In enforcing the
preventive arm of the Pact, the Council should be empowered to decide, acting by QMV to impose progressively
sanctions in the form of interest-bearing deposits on any Member State whose
fiscal consolidation path deviates particularly significantly from the
adjustment path foreseen in the Stability and Growth Pact.” (Emphasis added.
The italicised words represented a concession for Germany, a diplomatic victory
for France and a major blow to the potential effectiveness of any sanctions
system designed to enforce appropriate budgetary behaviour.
90 See in this connection e.g., Anon., “Der Rettungsunion bleibt
Allgemeine Zeitung, 30 October 2010; N. Busse, “Ein Brüsseler Gipfel für
die Karlsruher Richter”, Frankfurther Allgemeine Zeitung, 17 December 2010; and G. Rachman, “How Germany Could Kill
the Euro”, Financial
Times, 23 November 2010.
91 See in relation to this litigation, n. 77 above.
92 See for contemporary accounts Charlemagne, “A Grim Tale of Judges
and Politicians”, The Economist, 6 November 2010; and by the same writer, “The Treat of
Economist, 23 October 2010.
93 Immediately before, it may be noted in passing, the
next German elections.
94 The Deauville declaration was castigated by
Commissioner Viviane Reding as both an unwelcome reopening of Treaty debate and
an attempt by France and Germany to dictate to other states. (See, both in this
regard and generally for contemporary accounts of negative reactions to the
Deauville declaration, S. Bolzen, “EU wirft Deutschland Verantwortungslosigkeit
Welt, 26 October 2010; Anon., “Treaty Change Debate
Divides EU Foreign Ministers”, EurActiv, 26 October 2010; Anon., “France, Germany Face EU
Revolt over Treaty Change”, EurActiv, 28 October 2010; Anon., “Hungary Resists Push for
EU Treaty Change”, EurActiv, 27 October 2010; L. Phillips, “Battle Over Treaty
Change Divides Europe Ahead of Summit”, EU Observer, 28
October 2010; “Eurogruppenchef Juncker verärgert
über Merkels Stil”,
Die Welt, 27 October 2010; and Anon., “The Iron Lady Makes Her Mark”, Financial Times, 30 October,
95 For contemporary accounts, see e.g., Anon., “Finland Backs
Franco-German Plan”, EU Observer, 28 October 2010; Anon., “Poland in Favour of EU
Treaty Change”, EU Observer, 28 October 2010; and A. Beesley, “Chancellor Gains Some
Support for Permanent Rescue Fund”, Irish Times, 29 October 2010.
96 See for contemporary accounts,
P. Spiegel and Q. Peel, “Merkel Call to Reopen EU Treaties” and “Treaty Change Forced on
to EU’s Agenda”, both in the Financial Times, 28 October 2010; Anon., “Merkel: Reform des
Stabilitätspakt und Vertragsänderung sind ein Paket”, Frankfurther Allgemeine
Zeitung, 28 October 2010; and D. Scally, “Merkel Ready to Flex
Muscle in Sanctions Showdown”, Irish Times, 28 October 2010. See also A. Beesley, “Berlin Bids to Secure
Support of Cowen and EU Leaders”, Irish Times, 28 October 2010.
97 For contemporary accounts, see C. Gammeln, “Merkel und Sarkozy feiern
ihren Gipfel-Erfolg” and “Das Marathon-Mahl” both in Süddeutsche Zeitung,
30-31 October, 2010; Anon., “Der Lissabon-Vertrag wird geändert”, Frankfurther Allgemeine
Zeitung, 30 October 2010; and A. Beesley, “EU Leaders Set to Revise
Treaties Over Eurozone Rescue Plan”, Irish Times, 29 October 2010.
99 See for more detail, the Statement by the
Eurogroup, 28 November 2010 available online at the time of writing at
100 Ibid. The Eurogroup expressly
envisaged the overall effectiveness of this framework being evaluated in 2016
by the Commission, in liaison with the European Central Bank.
101 Although given the market unrest which had been
triggered by previous statements by German Chancellor Angela Merkel expressing
a similar desire (for a brief introduction to which, see by the author, Angela’s Ashes .. . Or How to
Trigger a Bailout Without Really Trying, Sunday Business Post, 28 November 2010 (available
online at http://www.sbpost.ie/newsfeatures/angelas-ashes—-or-how-to-trigger-a-bailout-without-really-trying– 53114.html)), the
Eurogroup’s conclusions were careful to include the observation on this
occasion that “we restate that any private sector involvement based on
these terms and conditions would not be effective before mid-2013.”
102 The idea of an International Monetary Fund role in
eurozone rescues had initially encountered opposition from the President of the
European Central Bank, Jean-Claude Trichet, R.Atkins, J.Thornhill and B. Hall, “IMF finance role
embarrassing for ECB”, Financial Times, March 26 2010 (available at the time of writing at http://cachef.ft.com/cms/s/0/bab67356-3905-11df-8970-00144feabdc0.html#axzz1EU9B0Gof),
although this opposition was later withdrawn. (See e.g., interview of Jean-Claude Trichet on 9 April 2010
by Beda Romano for Italian newspaper Il Sole 24 Ore, , reproduced in the
‘Speeches and Interviews’ section of the website of European Central Bank at http://www.ecb.int/press/key/date/2010/html/sp100409_1.en.html).
103 See Statement of the Eurogroup, loc. cit. at n. 99.
104 See European Council 16-17 December 2010
Conclusions (EUCO 30/1/10 REV 1
EN, Brussels, 25 January 2011)(available online at the time of writing at
107 See generally Para. 2 of the European Council
108 The draft Decision is set out in full in Annex I to
the conclusions of the December European Council.
109 See e.g., N. Busse, “Ein Brüsseler Gipfel für
die Karlsruher Richter”, Frankfurther Allgemeine Zeitung, 17 December 2010 and see A. Beesley and H.
Magee, “EU Leaders Agree Narrow
Revision of Lisbon Treaty”, Irish Times, 17 December 2010.
111 See Paragraph 5 of the Preamble of the Draft
Decision. This was in compliance with Article 48(6), second indent TEU, which
stipulates that “the European Council shall act by unanimity
after consulting the European Parliament and the Commission, and the European
Central Bank in the case of institutional changes in the monetary area.”
112 See generally Para. 3 of the European Council
113 Annex II to the European Council conclusions.
114 See A. Beesley, “Permanent Euro Zone
Bailout Fund Will Have €500bn Capacity”, Irish Times, 15 February, 2011.)
115 In this case, the eurozone member states.
116 Other examples of this phenomenon have included the
1985 Schengen Agreement, and the the 1993 Social Policy Agreement, both of
which episodes of enhanced cooperation led to considerably deepened subsequent
integration in the relevant policy spheres.
117 Ibid. Emphasis added.
118 See generally Para. 4 of the European Council
119 See Para. 3 of the European Council conclusions.
120 For a significant account of current German
thinking in this regard, see the speech given by Federal Chancellor Angela
Merkel at the opening ceremony of the 61st academic year of the College of
Europe in Bruges on 2 November 2010, available online at the time of writing at
121 For more detail on some of the themes discussed in
this section see generally by the author, Building a Swiss Chalet in an
Irish Legal Landscape? Referendums on European Union Treaties in Ireland and
the Impact of Supreme Court Jurisprudence (2009) 5 European Constitutional Law Review 32
122  IR 713,  ILRM 400.
123 Together with associated declarations. Note that Crotty also involved an unsuccessful
appeal against the High Court rejection of a claim that the European
Communities (Amendment) Act, 1986 – which incorporated much of the Single
European Act (a Treaty which amended the founding treaties of what is now the
European Union) into domestic Irish law – was constitutionally invalid. On the
issue of the constitutional validity of this Act, the Supreme Court, as
required by Article 34.4.5° of the Irish Constitution delivered a single
judgment. In it, it found no unconstitutionality to have been involved in the
enactment of the 1986 Act because, inter alia, the
amendments effected by the
Single European Act did not go beyond the essential scope or objectives of the
original treaties. See  IR 713 at 766 to 770.
124 Note that the contents of Article 29.4 of the Irish
Constitution have changed somewhat since the ruling in Crotty was delivered. The first
sentence in Article 29, s. 4, sub-s. 3 of the Constitution contained at the
time of the Crotty ruling an earlier form of what
is now contained in Articles 29.4.3° and 5.° In its then form, the first
sentence of Article 29.4.3° provided that “the State may become a member
of the European Coal and Steel Community (established by Treaty signed at Paris
on the 18th day of April, 1951), the European Economic Community (established
by Treaty signed at Rome on the 25th day of March, 1957) and the European
Atomic Energy Community (established by Treaty signed at Rome on the 25th day
of March, 1957).”
125  I.R. 713 at 767. Emphasis added. The closing
paragraphs of the single judgment of the Court delivered by Finlay C.J.
elaborated slightly on this test by indicating that particular proposals
contained in the Single European Act did not go beyond the existing
constitutional authorisation in that they had not been shown to “alter the
essential character of the Communities. Nor has it
been shown that they create a threat to fundamental constitutional rights.” ( I.R. 713 at 770.
Emphasis added.) The clear implication was that if they had, then the Article
29.4.3° licence to join the Communities would not have extended to them.
126 See however now in the United Kingdom, the European
Union Bill 2010-11 at the time of writing going through Committee Stage in the
House of Commons. (See furtherhttp://services.parliament.uk/bills/2010-
127 Although, not, as we shall see, the first part, of
the Court’s ruling.
128 Such references can be made under Article 26 of the
Constitution, and although the President is obliged to consult the Council of
State before taking such action, the question of whether to make a reference
is, ultimately, entirely a matter for his or her discretion, and thus outside
the control of the Government.
129 Viz., the Single European Act (the
Treaty at issue in Crotty itself), the Treaty on
European Union, the Treaty of Amsterdam, the Treaty of Nice and the Treaty of
130 Viz., the European Communities
(Amendment) Act, 1986
131 See Article 34.4.5° of the Irish Constitution.
132 Rejecting this part of Crotty’s appeal
133 Walsh J, Henchy J and Hederman J upholding this
part of Crotty’s appeal, Finlay CJ and Griffin J dissenting.
134  I.R. 713 at 770.
135  I.R. 770.
136  IR 713 at 784.
137 Hence Walsh J. observed that “Title IIIof the Single European Act…in reality is itself
a separate treaty although not so in form.” (See  IR 713 at 776).
Similarly Griffin J. opined that “Title III,
although included in the Single European Act (SEA),
and set out in Article 30 in that Act, is effectively a separate treaty between
the twelve countries who are the Member States of the European Communities”
(See  IR 713 at 789).
138 Barrett, loc. cit., at n. 121 at 41.
139 Hence, for example, the reference in the Preamble
to the Treaty on European Union to the fact of the member states being resolved
“to continue the process of creating an ever closer union among the
peoples of Europe”
140 See Article 1 of the Draft Decision found in Annex
I to the conclusions of the European Council 16-17 December 2010 Conclusions
(EUCO 30/1/10 REV 1 EN, Brussels,
25 January 2011)(available online at the time of writing at
141 Paragraph 11 of the Preamble to Commission Opinion
on the draft European Council Decision amending Article 136 TFEU with regard to
a stability mechanism for Member States whose currency is the euro. COM (2011)
70/3, Brussels, 16 February 2011.
142 Although using Article 48(6) to achieve their end
would be legally problematic.
143 See  IR 713 at 770.
144 See in particular the rulings of Finlay CJ (
IR 713 at 771), (Henchy J ( IR 713 at 784), Walsh J (  IR 713 at
776) and Griffin J ( IR 713 at 789).
145  IR 713 at 770. Emphasis added.
146 Article 2 of the Treaty Establishing the European
Community as substituted by Article G(2) of the Treaty of Maastricht and
Article 3a of the Treaty Establishing the European Community as substituted by
Article G(4) of the Treaty of Maastricht.
147 Joe Higgins MEP has been reported to have stated
that he would mount a legal challenge to Irish ratification of the Treaty
change discussed in this paper, were it sought to be effected without a
referendum. (See A. Beesley, “Treaty changes are ‘compatible with Constitution’” Irish Times, 18 December,
149 See A. Beesley “Referendum on Lisbon Change
‘Highly Unlikely’”, Irish Times, 17 December, 2010. See further on the Taoiseach’s Press
Conference the next day, A. Beesley, “Treaty changes are ‘compatible with Constitution’” Irish Times, 18 December,
Bloomberg News filed a lawsuit against the European Central Bank, seeking the disclosure of documents showing how Greece used derivatives to hide its fiscal deficit and helped trigger the region’s sovereign debt crisis.
The lawsuit asks the European Union’s General Court in Luxembourg to overturn a decision by the ECB not to disclose two internal documents drafted for the central bank’s six-member executive board in Frankfurt this year. The notes show how Greece used swaps to hide its borrowings, according to a March 3 cover page attached to the papers obtained by Bloomberg News.
ECB President Jean-Claude Trichet withheld the documents after the EU and International Monetary Fund led a 110 billion- euro bailout ($144 billion) for Greece. The dossier should be disclosed to stop governments from employing the derivatives in a similar way again and to show how EU authorities acted on information they had on the swaps, according to the suit, filed by Bloomberg Finance LP, the parent of Bloomberg News.
The EU is dependent “on member states taking an open and transparent approach in relation to their levels of debt,” Bloomberg said in its suit. “If Greece has failed to take such an approach in the past, there is a compelling public interest in relevant information being disclosed.”
An ECB spokeswoman declined to comment on the lawsuit, which is based on the EU’s freedom of information rules.
Freedom of Information
The ECB case follows a 2008 lawsuit by Bloomberg LP seeking disclosure of the U.S. Federal Reserve’s records on emergency lending under the Freedom of Information Act. A group of banks is appealing to the Supreme Court over lower-court decisions ordering the Fed to identify loan recipients.
“Bloomberg is committed to transparent markets all over the world,” said Matthew Winkler, editor-in-chief of Bloomberg News. “Decisions made behind closed doors helped contribute to the global economic havoc of the last few years. Money flees secrecy and unanswered questions undermine the financial system and give some participants an unfair advantage. Confidence in markets grows with information,” he said. “Bloomberg wants the ECB, as well as the Federal Reserve and other financial institutions around the world, to end this damaging opacity.”
The Greek government didn’t originally disclose the swaps, designed to help it comply with the deficit and debt rules it agreed to meet when it joined the euro in 2001. Eurostat, the EU’s statistics agency, said last month the swaps added 5.3 billion euros to the country’s debt, without giving details. Repeated revisions of Greece’s national accounts, beginning last year, spurred a surge in borrowing costs that pushed the country to the brink of default and triggered a region-wide debt crisis.
The ECB must consider demands for access to public documents under a March 2004 EU directive. Individuals and companies can then appeal to the European Ombudsman, which reports to the European Parliament, and the European Court of Justice.
“The information contained in the two documents would undermine the public confidence as regards the effective conduct of economic policy,” Trichet wrote in an Oct. 21 letter, turning down Bloomberg’s request for the documents. Disclosure “bears, in the current very vulnerable market environment, the substantial and acute risk of adding to volatility and instability.”
ECB officials first spotted “a swap operation in unusual terms” in April 2009, seven months before the Greek crisis erupted, according to the March 3 cover note.
“It is wholly unclear what (if anything) the ECB did at that time to investigate further,” Bloomberg’s suit says.
‘Need to Know’
“Disclosure would help prevent these situations repeating themselves,” said Michael Spence, winner of the Nobel Prize for Economics in 2001 for his research on asymmetric information in markets. “It’s a tough call. Not everything can be disclosed, but markets need to know.”
Greece entered into a “large” number of private, off- market swaps from 2001 through 2007, Luxembourg-based Eurostat said in a report on Nov. 15. The agreements, which led to higher debt, were analyzed “in detail,” Eurostat said. A follow-up report on Greek data including swaps is due in weeks, a spokesman said at the time.
“We entered the European Union with great effort,” George Petalotis, a Greek government spokesman, told reporters in Athens today. “We don’t tolerate anyone doubting that. Whoever possesses different evidence can bring it out.”
With each passing day, I believe more and more that this is NOT a democracy in which we live.
This was confirmed on Wednesday when the Ceann Comhairle voted with the Government to further delay the people of Donegal South West their third representative.
When the Ceann Comhairle uses his casting vote, the belief is that he votes to retain the status quo, so in this case he voted against it.
As Ceann Comhairle he has a special position to be fair and uphold democracy. The fact that he chose to stop the people of this county voting is another nail in the coffin of democracy in this country.
Donegal was left behind during the Celtic Tiger years. There is no railway link, poor broadband service, inadequate public transport, local and regional roads are in a state of disrepair and it is not connected to the national gas grid.
Taking these various issues into account, there is a clear indication that, now more than ever, Donegal needs full representation. It was June 2009 when Pat “The Cope” Gallagher was elected to the European Parliament and resigned his Dáil seat as required. The Government is obliged to provide for his departure by planning a by-election within a reasonable timeframe. Almost a year has passed and there is no indication that the Government intends to restore full representation to the people of Donegal South-West.
It was also interesting to note that while the vote was tied at 76 – 76, had our two neighbouring TD’s in Donegal North East, namely Deputies McDaid and Blaney showed up for the vote then things may have been different or maybe not as it appears that we do not even have the support of our other South West representative…The Tanaiste.
Mr Cowley you can huff and puff all you like these gangsters in the government will not allow local election when they know that they will lose the elections the current political system allows for this democratic deficiency
The biggest disappointment in this sorry saga in the betrayal of the people by the greens
Who voted with the government to stop the people from exercising their constitutional right!
This is not their first time they did this they also allowed their own party members to vote on NAMA but would not allow the general public the same right,
So you only get to have your say if you are a green party member!