Deputy Thomas Pringle’s Constitutional Challenge in Ireland to the ESM Treaty

Friday 15  June 2012

“We need more Europe, not just a currency union but also a so-called fiscal union – in the area of budget policy. Above all else we need a political union. That means that step-by-step in the future we have to give up more powers to Europe and grant Europe more oversight responsibilities. . .   We cannot stand still because one or other [member state] does not want to.

-  German Chancellor Angela Merkel, ARD TV, EUobserver, Open Europe, 7 June 2012
* * *

The most effective way for Ireland to get relief on its Stat and banking debts is for the Supreme Court to concede the validity of Deputy Thomas Pringle’s claim that a referendum is constitutionally necessary on the ESM Treaty which sets up a permanent bailout fund for the Eurozone and  on the Article 136 TFEU amendment to the EU Treaties which authorises that.

If the Government wishes to obtain real bargaining power vis-à-vis the Eurozone, Ministers should be secretly praying for the success of Deputy Pringle’s constitutional challenge, which  opens in the High Court on Tuesday 19 June… Even if it is impossible for Ministers to indicate any such desire publicly for fear of annoying  the German, French and other Eurozone Governments.

Ireland has a veto on the Article 136 TFEU amendment  to the EU Treaties under which the 27 EU Member States authorize the 17 Eurozone States to establish a “Stability Mechanism”  if that is needed to safeguard the stability of the euro area  as a whole.

The Government is afraid to use that veto however and is anxious that the media and general public are not aware of its timidity.

By his public-spirited and patriotic action Deputy Pringle and his legal team are inviting the Courts to order that this veto be used  and that a referendum be held on the ESM Treaty and the Article 136 authorisation  before Ireland can permit a permanent Eurozone bailout fund to be set up lawfully under the EU Treaties and  to be constitutionally permissible under Bunreacht na hEireann.

By his action  moreover Deputy Pringle and his legal team are seeking to defend the integrity of EU law and the EU Treaties in face of the manifest attempt by Germany, supported by France, to use the ESM Treaty to make the Eurozone captive to Franco-German State interests and to carve out a legal-political way  to what French President Nicolas Sarkozy called for last November: ”A Federation for the Eurozone and a Confederation for the rest of the EU”.

The Irish Government has been pushing three hugely important matters through the Dail and Seanad in June, with minimal attention by RTE, the news media  or print media, taken up as they are with the fortunes and misfortunes of  Deputy Mick Wallace and the Irish soccer team in Poland.

These three matters, which are being pushed through the the Oireachtas by means of guillotined debates with  virtually no local media coverage are:

(a) Ireland’s approval of the Article 136 TFEU amendment to the EU Treaties authorising the establishment of a Stability Mechanism for the Eurozone;

(b) Ireland’s ratification of the ESM Treaty setting up a permanent bailout fund for the Eurozone  as this Stability Mechanism, to which the State must contribute €1.3 billion down-payment in five tranches over the next 18 months and €9 billion in callable capital thereafter;  and (c)  The ESM Bill 2012  which bring the provisions of the ESM Treaty into domestic law so that taxpayers can be made finance Ireland’s future contributions to the ESM over the years and decades ahead.

For those interested,  the Tale of Two Treaties by Cork solicitors Joe Noonan and Mary Linehan [taleoftwotreaties.tumblr.com]  describes accurately and objectively the relation between the ESM Treaty,  the Fiscal Stability Treaty on which we voted in the recent referendum, and the Article 136 TFEU amendment to the EU Treaties which authorizes the ESM Treaty and on which Ireland has a constitutional veto because all changes to the EU Treaties  must be by unanimity.

Below is an outline of the principal constitutional  and legal reasons why ratification of  the ESM Treaty and the Article 136 TFEU amendment require a referendum in Ireland.

_____

WHY RATIFICATION  OF THE ESM TREATY AND THE ARTICLE 136 TFEU AMENDMENT WHICH AUTHORISES THAT TREATY UNDER EU LAW  REQUIRE A REFERENDUM IN IRELAND

1.)   Article 3 TFEU of the EU Treaties, which have been constitutionally agreed by all 27 EU Member States,  provides that monetary policy for the countries using the euro is a matter of “exclusive competence” of the EU as a whole.

It is not therefore open to the 17 Member States of the Eurozone to attempt effectively to diminish the competence of the Union by establishing among themselves a Stability Mechanism entailing a net €500-billion permanent bailout fund to lend to Eurozone governments as envisaged in the ESM Treaty.    This ESM fund, to which Ireland would have to make heavy contributions for the indefinite future, would trench significantly on monetary policy for the euro area.

The Stability Mechanism envisaged in the ESM Treaty is effectively an attempt to find a way round the “no bailouts” provision of Article 125 TFEU, whereby it is forbidden for the EU to take on the debt of Member States or for Member States to take on the debt of other Member States.   It also breaches other EU Treaty articles.

The ESM Treaty if ratified as it stands would effectively amount to an attempt to open a legal-political path to what France’s President Nicolas Sarkozy called for last November, namely,  “A Federation for the Eurozone and a Confederation for the rest of the EU”.

The banking union, fiscal union and political union which Chancellor Angela Merkel and others have recently called for to help save the Monetary Union are envisaged as being for the 17 Eurozone countries  rather than for the 27-Member EU as a whole.

If successfully brought about, they would be erected  on the basis of or in parallel with the ESM Treaty  and the Fiscal Stability Treaty.

A radical step of the kind envisaged in the ESM Treaty, which would henceforth run the Economic and Monetary Union on the basis of quite a different set of rules from those of the current EU Treaties, may only lawfully be taken by means of the “ordinary”  EU treaty amendment procedure of Art.48.2 TEU.

It cannot lawfully be done by means of a mere “Decision” of the European Council of Prime Ministers and Presidents under the “simplified” EU treaty amendment procedure of Art.48.6 TEU.  The latter procedure is meant to deal with minor technical amendments to the EU Treaties, but it is currently being used by the governments of the 17 Eurozone countries in an attempt to alter radically the character of the EMU by ratifying the ESM Treaty as it stands.

2.)  How can it be lawful for the ESM Treaty to permit a permanent bailout fund to be established for the 17 Eurozone countries when the express terms of the Article 136 TFEU amendment, agreed by all 27 EU Governments, authorises a Stability Mechanism only if that is established unanimously by the Eurozone States, as the general provisions of EU law require, viz: “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 ” (emphasis added).

The Art.136 amendment to the EU Treaties does not say that “Member States”, meaning SOME of them, may establish a Stability Mechanism, but rather “THE Member States”, namely ALL  of them (In French “Les” Membres rather than “Des” Membres).

Yet the ESM Treaty which has been concluded among the 17 provides that the Stability Mechanism which  it seeks to establish may come into being once States contributing 90% of the capital of the proposed fund have ratified the treaty. The eight largest Eurozone States, a minority of the 17, can therefore establish this Stability Mechanism, while other Eurozone States which may badly need assistance from it are excluded.

How then can this be a Stability Mechanism “for the euro area AS A WHOLE”, as Article 136 TFEU, which still has to be constitutionally approved by all 27 EU Member States, requires?

Likewise the Fiscal Stability Treaty – the Treaty on Stability, Coordination and Governance in the EMU – on which Irish voters voted on 31 May  and which cross-refers to the ESM Treaty, provides that it can come into force when it is ratified by 12 Eurozone Members.  Does not this treaty also require unanimous ratification by all 17 Eurozone Members before it can lawfully bind them under EU law?

The “enhanced cooperation” provisions of the EU Treaties (Art.20 TEU and Arts. 326-334 TFEU) provide a means whereby a sub-group of EU States which wish to cooperate more closely among themselves in areas of non-exclusive Union competence may do this under specific rules that are laid down in these Articles. The provisions of the ESM Treaty do not accord with these rules, but purport to authorize the Eurozone States to act outside the ambit of the treaties in relation to matters that are within the exclusive competence of the Union.

3.)   How can the ESM Treaty be lawfully ratified by July 2012, as is the stated intention of the 17 Eurozone governments involved, when the Decision of the European Council to amend Article 136 TFEU of the EU Treaties  to authorise a Stability Mechanism states that it  does not have legal effect, once it has been constitutionally approved by all 27 EU Member States, until 1 January 2013?

Does not this mean that any treaty purporting to establish an ESM before 2013 is legally void?  ESM Treaty No.1 which was signed by Eurozone Finance Ministers in July 2011 but was never sent round for ratification, conformed to the 2013 time-frame set by the Art.136 TFEU authorisation, whereas ESM Treaty No. 2 which was signed by EU Ambassadors on 2 February 2012 does not.

This is further evidence of how the exigencies of a political response to the financial crisis by some Eurozone States puts them in breach of the EU Treaties law and therefore of the Irish Constitution.

4.)    EU Member States may only sign international treaties which are compatible with EU law. The EU Court of Justice has made clear that intergovernmental agreements cannot affect the allocation of responsibilities defined in the EU Treaties. The provisions of the ESM Treaty and the Fiscal Stability Treaty which involve the EU Commission and Court of Justice in the detailed implementation of the proposed ESM go well beyond what is permissible under the current EU treaties and are therefore unlawful.

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