6 Treaty change |
|Commission Opinion on the 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
|Department||Foreign and Commonwealth Office
|Basis of consideration||EM of 9 March 2011
|Previous Committee Report||None
|To be discussed in European Council
||24-25 March 2011|
|Committee's assessment||Politically important
6.1 In May 2010 the Council adopted a Regulation, under Article
122(2) TFEU, to establish a European Financial Stabilisation Mechanism
(EFSM), for giving financial assistance to a Member State in the
form of loans or credit lines raised from capital markets or financial
institutions guaranteed by the EU Budget. The need for the EFSM
is to be reviewed every six months and is to be discontinued once
the exceptional circumstances cited as justification for it no
longer exist. At the same time, and additionally, a voluntary
intergovernmental Special Purpose Vehicle, the European Financial
Stabilisation Facility (EFSF), was established by and for eurozone
Member States. The EFSF can issue bonds or other debt instruments
on the market to raise funds needed to provide loans to eurozone
Member States. The EFSF is to expire in June 2013.
6.2 The European Council of 28-29 October 2010 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. At the
16-17 December 2010 European Council Member States agreed to amend,
in accordance with the simplified revision procedure under Article
48(6) TEU, Article 136 TFEU in order to allow eurozone Member
States to establish the proposed permanent crisis mechanism
a European Stability Mechanism (ESM).
The ESM would obviate the need for both the EFSM and the EFSF
after June 2013. The European Council Conclusions proposed language
for this Treaty amendment.
A draft Decision to formalise the European Council agreement is
due to be adopted the European Council meeting of 24-25 March
2011. Article 1 would add a new paragraph to Article 136 TFEU:
"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."
6.3 When we considered the draft Decision, in January
2011, we recommended it for debate on the Floor of the House and
said we presumed that debate would be held on the basis of a motion
under Section 6 of the European Union (Amendment) Act 2008. Some
further comments we made were followed up when we considered the
matter again later in January 2011.
6.4 Before adopting the draft Decision the European
Council is required, in accordance with the simplified revision
procedure under Article 48(6) TEU, to consult the Commission.
This Opinion is the Commission's formal response to that consultation.
In it the Commission considers the draft Decision in the light
of the conditions on the use of the simplified revision procedure
and sets out its position on the substance of the proposed amendment.
In summary the Commission delivers a favourable Opinion, the key
elements of which are:
- the new paragraph proposed
will be one of the Treaty provisions specific to Member States
whose currency is the euro;
- the Commission agrees that the conditions for
using the simplified revision procedure are met;
- the proposed Treaty change does not affect the
competences conferred on the EU in the TEU and TFEU;
- it does not involve creating a new legal base
which would allow the EU to take action that was not possible
before the change; and
- the proposed change does not reduce the competences
conferred on the EUin particular, it does not affect either
the solidarity mechanisms provided for in Articles 122 and 143
TFEU in the event that a Member State is in difficulties or is
seriously threatened with difficulties or the EU's competences
in terms of coordination and surveillance of the economic and
financial policies of the Member States in general and of the
Member States whose currency is the euro in particular.
6.5 The European Council is not required to take
any action in response to the Opinion, so it is in effect advisory.
The Government's view
6.6 The Minister for Europe at the Foreign and Commonwealth
Office (Mr David Lidington) says that the Commission's Opinion
is in line with the Government's policy on the Treaty change proposal
as outlined to us in connection with the draft Decision, namely
- the change is to one of the
provisions, Article 136 TFEU, that applies only to Member States
whose currency is the euro and that it does not apply to non-eurozone
Member Statessince the UK will not be part of the new stability
mechanism there can be no transfer of power away from the UK;
- the change does not affect the competences conferred
on the EU in the Treaties and thus does not involve any transfer
of competence from the UK to the EU; and
- once the ESM is established to safeguard the
financial stability of the euro area as a whole, Article 122(2)
TFEU will no longer be needed for such purposes, and the European
Council has agreed that it should not be used for such purposes.
6.7 If receipt of this document and the Explanatory
Memorandum on it had been timelier we would have recommended that
the Opinion be debated with the draft Directive to which it refers.
As it is the draft Directive is being debated later today, so
we clear this document from scrutiny. Nevertheless Members may
wish to refer in the debate to comments about the draft Directive
in both the Opinion and the Explanatory Memorandum, which are
already public documents.
32 (31611) 9606/10: see HC 428-i (2010-11), chapter
7 (8 September 2010). Back
para 2. Back
paras 1-2. Back
Annex I. Back
(32366) EUCO 33/10: see HC 428-xii (2010-11), chapter 2 (12 January
2011) and HC 428-xiv (2010-11), chapter 1 (26 January 2011). Back