Gerry Adams (Louth, Sinn Fein)
Link to this: Individually | In context

Question 74: To ask the Minister for Finance if the establishment of the European stabilisation mechanism will lead to further centralised EU control over national budgetary and economic policies; the level of contribution that will be required from Ireland to the fund; if the establishment of the permanent ESM requires amendments to the EU treaties and will the establishment of the permanent ESM require ratification by referendum in Ireland. [16217/11]

Michael Noonan (Limerick City, Fine Gael)
Link to this: Individually | In context

The European Stability Mechanism will replace the temporary mechanisms of the European Financial Stability Facility (EFSF) and the European Financial Stabilisation Mechanism (EFSM). The purpose of the ESM will be to arrange funding and provide financial assistance, under strict economic policy conditionality, to the benefit of such ESM Members as may be either experiencing, or threatened by, severe financing problems, if seen as indispensable to safeguarding the financial stability of the euro area as a whole. The establishment of the ESM does not of itself change the role of the EU in relation to national economic and budgetary policies. Access to ESM financial assistance will be provided on the basis of strict fiscal and economic policy conditionality for the duration of the support programme. This will be accompanied by a rigorous analysis of public-debt sustainability, which will be conducted by the EU Commission together with the IMF and in liaison with the ECB. The objective of such support programmes is to return the country involved to the financial markets as soon as possible. Strict budgetary and economic policy conditionality is already a condition of the funding provided to any Member State under the EFSM, EFSF and indeed funding from the International Monetary Fund.

Under the proposed ESM Treaty, the capital structure of the ESM will have a total subscribed capital of €700 billion. Of this amount, €80 billion will be in the form of paid-in capital by the Euro Area Member States, paid in five equal annual instalments from July 2013. The balance of €620bn will be callable capital. The contribution key for each Member State is based on the ECB capital contribution key. For Ireland the key is 1.592% of the total paid and committed capital. Thus, Ireland's share of €80 billion will be just above €1.27 billion, to be paid in five equal instalments starting in July 2013. Ireland's share of the €620bn callable capital will amount to €9.87 billion.

On 25 March 2011, the European Council adopted Decision 2011/199/EU 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 adding the following paragraph to Article 136: "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".

Primary legislation will be required to enable Ireland to ratify the ESM Treaty and implement its decisions. Based on the existing text, the Attorney General's Office has confirmed a referendum will not be required for the adoption of the ESM Treaty.