IV - Early Emergency Funding

Prior to 2010, loan assistance to States was made primarily via bilateral agreements (to Latvia, Hungary, Romania, 1st round of Greek loan assistance).  
The European Financial Stabilisation Mechanism (EFSM) and the European Financial Stability Facility (EFSF) are two temporary emergency funds, both resulting from the turbulent political weekend of 7-9 May 2010. On May 9, a Decision of the Representatives of the Governments of the Euro Area Member States was adopted expressing agreement on both funds.      
The EFSM is based on a ‘Council regulation establishing a European financial stabilisation mechanism’ of May 11, 2010 adopted on the basis of article 122(2) TFEU and therefore binding on all 27 member states of the EU.     
The EFSF is a special purpose vehicle created under Luxembourgish private law by the 17 member states of the Eurozone. The EFSF Framework Agreement was signed on June 7, 2010. On June 24, 2011, the Heads of State or Government of the Eurozone agreed to increase the EFSF’s scope of activity and increase its guarantee commitments.
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What political/legal difficulties
did Austria encounter in the negotiation of the EFSF and the EFSM, in particular in relation to (budgetary) sovereignty, constitutional law, socio-economic fundamental rights, and the budgetary process?

Austria already had a legal basis for granting international financial assistance to countries with which it is economically connected, which is called Payment Balance Stabilization Law (ZahlungsbilanzstabilisierungsG, BGBl I Nr. 52/2009)[1] that was written with the Euro-crisis in mind. The first Eurozone-crisis measures, notably the Art. 126 TFEU-based 1st round of Greek assistance[2] and the necessary procedures for the Art. 122 (2) TFEU-based EFSM-regulation were discussed in the plenary of the National Council[3] on May 19, 2010.[4] They were discussed because the Payment Balance Stabilization Law needed to be amended as a consequence of these first Euro-crisis measures. The amendment basically foresees that the Minister of Finance can commit future budget resources to such international financial assistance (up to 2 billion in the 2009 version and up to 2.3 billion in the 2010 version of the law). The amendment further creates a basis for the issue of guarantees in the framework of the EFSF up to 15 billion.[5]  (Nota bene that this is a little confusing since the extraordinary ECOFIN meeting where commitment to the EFSF was first made[6] took place on May 9 and 10, 2010, the plenary session of the National Council on May 19 and the signature of the EFSF framework only on June 9, 2010 – more on this in question IV.2).

The Federal Chancellor Fayman (Social Democrat Party) opened the National Council’s plenary session from May 19, 2010 with “explanations” about the lessons from the Greek crisis and measures to stabilize the common European currency. He talked about it in terms of necessary budget consolidation within the Eurozone. Budget consolidation was in his opinion necessary in order not to be dependent of debt and interests and in order to discipline speculators. Hedge funds should be brought under control and a financial transaction tax should be introduced. Better coordination of economic and fiscal policy was necessary and tools should be in place to intervene if member states deviated too much from common goals.

The subsequent debate in the plenary remained rather general on European integration, the questions discussed were whether the EMU was a “neoliberal project” per se, the need for more political integration within the Eurozone, the need for fiscal discipline of all members, whether the crisis measures are actually in Austria’s own interest and how much are solidarity gestures.

Overall, the main position of the 2008 to 2013 government that was constituted by a coalition of the Social-democrat Party (Sozialdemokratische Partei Österreichs, SPÖ) and the Austrian People’s Party (Österreichische Volkspartei, ÖVP) (conservative center-right party) under an SPÖ chancellor, Werner Faymann, was in favor of the proposed amendment to the Payment Balance Stabilization Law and of the crisis measures in general. From the opposition parties, the Greens were divided and voted partially for and partially against the amendment, whereas the far-right parties, the Free People’s Party (Freiheitliche Partei Österreich, FPÖ) and the small Coalition for the Future of Austria (Bündnis Zukunft Österreich, BZÖ) were strongly opposing it and voted against.

Entry into force      
Article 1(1) EFSF Framework Agreement provides that it will enter into force if sufficient Eurozone member states have concluded all procedures necessary under their respective national laws to ensure that their obligations shall come into immediate force and effect and provided written confirmation of this. What does this procedure look like in Austria and in what way does it involve Parliament?

The EFSF Framework agreement was signed by the Austrian Minister of Finance on June, 9, 2010 and since the agreement was about setting up a society under private (Luxembourgish) law, it was considered as part the government’s capacities to engage in private law transactions (Art. 17 B-VG[7]). Therefore, an approval of the agreement by the parliament was not necessary for the signature of the agreement. A legal basis for Austria’s guarantee commitments had already been decided by the National Council on May 19, 2010, when they agreed on an amendment of the Payment Balance Stabilization Law (ZahlungsbilanzstabilisierungsG (ZaBiStaG), BGBl I Nr. 52/2009)[8] (as mentioned in question IV.1). The amendment stipulates that the Minister of Finance can commit the Federal Republic according to the conclusions of the ECOFIN Council from May 9, 2010 (§ 2a ZaBiStaG). In other words, the amendments of May 19th, 2010 already enable the Finance Minister to promise guarantees under the yet to be signed EFSF framework agreement. The amendment further stipulates that for all loans and guarantees made under that Payment Balance Stabilization Law, the Minister of Finance needs to agree with the Federal Chancellor first (§ 3 ZaBiStaG). The Minister of Finance also has to deliver a report to the main committee (of the National Council) at the latest one month after the end of the quarter in which he or she explains all measures taken on the basis of the Payment Balance Stabilization Law (§ 4a ZaBiStaG). The amendment entered into force a day after its publication in the Federal Law Gazette[9], on June 12, 2010.

Member states are obliged to issue Guarantees under the EFSF. What procedure was used for this in Austria? What debates have arisen during this procedure, in particular in relation to the implications of the guarantees for (budgetary) sovereignty, constitutional law
, socio-economic fundamental rights, and the budgetary process?

See questions IV.1 and IV.2.

Activation problems      
What political/legal difficulties
did Austria encounter during the national procedures related to the entry into force of the EFSF Framework Agreement and/or the issuance and increase of guarantees?

Increasing the commitments under the EFSF as agreed by the Heads of State and Government on March 11, 2011 was a major issue discussed in the National Council. The reason for that was that the Payment Balance Stabilization Law had to be amended again in order to raise the possible guarantees to which the Minister of Finance is entitled to commit (§ 2a ZaBiStaG) from 15 billion to 21.629 billion.[10] The SPÖ, the ÖVP and the Greens voted for the amendment that entered into force on October 8, 2011, a day after its publication in the Federal Law Gazette.[11]

The office of the Chancellor, several provinces, the Court of Auditors, the chamber of labour, and the chamber of commerce all gave written opinions in a pre-parliamentary proceeding and sent them to the National Council.[12] The Financial Committee of the National Council recommended the adoption of the amendment[13] and the Committee’s report was discussed in parliament at length.[14] The head of the far-right party FPÖ, Strache, wanted to initiate a referendum about the proposed amendment but the proposal did not get the necessary majority (51 yes-votes against 116 no-votes).[15] Otherwise, the government’s position was again that strengthening the “rescue umbrella” is fundamental for the Euro to survive. Then Finance Minister Fekter (ÖVP) specified that the entire European strategy of combating the crisis through the EFSF has also helped Austria fighting the banking crisis. The fact that Austria had managed the crisis pretty well until then was further due to the fact that a common, European solution had been found and Austria would have never gotten away so well alone. In particular, she refers to EU efforts that have helped Austrian banks that were exposed in many of these countries a lot.[16] The rest of the Austrian People’s Party joined in this tone. They stressed that Austria was not only helping Greece but first of all helping itself by helping to stabilize and save the Euro. The Social Democrat party stressed some social aspects of the crisis measures and the problems of austerity. Loosening austerity would be a sign of solidarity. The Greens are in favour of the crisis measures but stress that their democratic legitimacy of the loan facilities must be better safeguarded.

Finally, the SPÖ, ÖVP and Greens vote for the amendment whereas the FPÖ and BZÖ vote against it, which means that it was adopted with a majority of 117 against 53 votes.

Case law     
Is there a (constitutional) court judgment about the EFSM or EFSF in Austria?


What is the role of Parliament in the application of the EFSF, for example with regard to decisions on aid packages (Loan Facility Agreement and Memorandum of Understanding) and the disbursement of tranches, both of which need unanimous approval by the so-called Guarantors, i.e. the Eurozone member states?

There is only a small explicit role for the parliament foreseen in the Payment Balance Stabilization Law, although the Minister of Finance can issue guarantees only as authorized by such a Law that goes through the parliament, therefore, in a way the Minister remains ‘bound’ by the parliament. As explained in question IV.2, according to § 3 ZaBiStaG the Minister of Finance has to agree with the Chancellor on guarantee issues. According to § 4a ZaBiStaG (introduced in the 2010 amendment, left untouched in 2011 and then amended again in 2012[17]), the Minister of Finance has to report to the main committee of the National Council. There, these reports are “acknowledged” by vote in the main committee. The disbursement of tranches could be discussed in the same way – on the basis of the Finance Minister’s Reports to the main committee. Main committees’ meetings are not documented like the National Council meetings through stenographic protocols, which means that only press releases give an insight into the content of the debates.

However, § 2a ZaBiStaG that was introduced in the 2010 amendment and in its again amended version from 2011, as explained in question IV.4, contain both a numerical limit up to which the Minister of Finance is allowed to issue guarantees (up to 15 billion under the original EFSF Framework Agreement and 21.629 billion under the Amended EFSF Agreement for Austria). Due to the particular set-up of the EFSF, a Member State that becomes a borrower steps out as a guarantor which means that the guarantee commitments for all other Member States raise (because they need to step in order to maintain the overall upper ceiling). Therefore, the decision on a new aid package automatically raises the overall guarantee limit for which an amendment of the Payment Balance Stabilization Law (and therefore the involvement of the parliament) would have been necessary. This, however, did not happen (as opposed to Germany). It did not happen because the Payment Balance Stabilization Law from 2010 authorized the issue of guarantees up to 15 billion, which is a bit more than the maximum amount Austria was committed to under the original EFSF agreement (12.24 billion). Therefore, the fact that Ireland and Portugal became step-out-guarantors did not exceed the authorized 15 billion guarantee commitment. In the 2011 amendment of the Payment Balance Stabilization Law however, only precisely the amount Austria was committed to under the amended EFSF agreement was authorized (21.629 billion) which means that new bailout packages would have necessarily lead to an amendment of the Payment Balance Stabilization Law. The only new bailout package after the entry into force of the 2011 amendment of the EFSF agreement was the second package for Greece. Greece, however, had been a step-out guarantor from the very beginning of the EFSF (Art. 8 (2) EFSF Agreement) which means that the shares of the other countries had been calculated accordingly. Therefore, no amendment of the Payment Balance Stabilization Law was necessary. The case of Spain is complicated (see also question VIII.7) because the bailout happened in the middle of the ratification process of the ESM – when the capital and setting of the ESM were already agreed (and at that time in Austria had already passed through parliament, see question VIII:2) it was already clear that EFSF-commitments would be taken over by the ESM.

Implementing problems 
What political/legal difficulties
did Austria encounter in the application of the EFSF?

As explained in the first part of question IV.6, the Minister of Finance has to report the measures he or she takes to the main committee of the National Council. In the case of the package for Ireland, the FPÖ and the BZÖ criticized the respective reports of the Minister of Finance at the main committee meeting of November 25, 2011.[18] Their major criticism was that aid packages were never-ending and that it was yet another bank-bailout in disguise. The ÖVP and SPÖ acknowledged that this situation was not ideal but that there were no other options at present. With a little cynicism, the Greens pointed out that the BZÖ and FPÖ had not objected to the (federal) bailout of the provincial Hypo-Alpe-Adria bank (see question I.1 for details on this). Nevertheless, the reports were approved by the majority.

No press release exists on a discussion of the package for Portugal.

The last press release about the main committees’ discussion of specific bailout measures before the 2012 reform of the National Council’s participation in the bailout measures (see Footnote 25 and question VIII.6) exists on the second package for Greece.[19] The Minister of Finance pointed out that a Greek default would be too costly and the risk of Greek insolvency had to be reduced. She further pointed out that PSI is discussed on the European level but that default is out of question because of the lacking procedure for that. The then Vice-Chancellor Spindlegger (ÖVP) added to that that the private sector should be involved in a smart and creative way. The chancellor Faymann (SPÖ) specified that he is much more in favour of a financial transaction tax than of a bank tax because the latter would not oblige the entire financial sector to contribute. Former chancellor and MP Schüssel (ÖVP) said the expectations from a financial transaction tax are exaggerated and that a bank tax would only be passed on to the clients. The Greens criticized that the government was not taking an explicit position on the PSI. The BZÖ suggests a separation of a core Eurozone and a light Eurozone but remains alone with this idea.

Bilateral support    
In case Austria participated in providing funding on a bilateral basis to other EU Member States during the crisis, what relevant Parliamentary debates or legal issues have arisen?

Austria participated in the bilateral loan package for Greece, referred to as “First round of loans to Greece” or “Greek loan facility”. For the debate on this, see question IV.1.  

What other information is relevant with regard to Austria and the EFSM/EFSF?

No other relevant information.

[1]              Payment Balance Stabilization Law (ZahlungsbilanzstabilisierungsG, BGBl I 52/2009), original version from June 17, 2009, the original version at, pp. 32-33.

[2] The first round of loans to Greece (pooled bilateral loans) was based on Council Decision 2010/320/EU, notably consideration (8). The Decision is based on Art. 126 (9) and 136 TFEU. The conditions for the loan (besides the Memoranda with the Commission and the IMF) were based on the excessive deficit procedure of Art. 126. This is why these bilateral loan package is called here Art. 126-based measure; as opposed to the 122 (2)-based second round (EFSM). The distinction is important because the entire Austrian and German debate on rule of law vs state of necessity/self-caused crisis/circumstance beyond control was referring to Art. 122 (2) vs 125 TFEU and not to the first round.

[3]              The National Council is the bigger and more important one of the two chambers of the parliament and is directly elected. The second chamber, the Federal Council, consists of representatives of the nine provinces (Länder). Both together form the Austrian parliament.

[4]              Stenographic Protocol of National Council Session No. 66, XXIV Legislative Period, May 19, 2010, at

[5]              First amendments to the Payment Balance Stabilization Law (BGBl I 31/2010) at

[6]              Ecofin, Extraordinary Council Meeting, May 9/10, 2010, Press release at

[7]              Bundes-Verfassungsgesetz (Federal Constitutional Statute = the constitution), available in its current version at:; and available in English at (the English version is from 2010 and does not contain the latest amendments yet). 

[8]              Supra note 1 of this section.

[9]              Idem.

[10]             Explanation of the government for the proposed amendment of the Payment Balance Stabilisation Law at: Such an „explanation“ (Vorblatt/Erläuterungen) is given by the government for any proposed legislation to the National Council.

[11]             Second amendment of the Payment Balance Stabilization Law (BGBl 90 I/2011) at:

[12]             Opinion of the Audit Court (Rechnungshof) on the Second Amendment of the Payment Balance Stabilization Law, August 18, 2011, at

[13]             Report of the Financial Committee (of the National Council) the Second Amendment of the Payment Balance Stabilization Law, September 27, 2011, at

[14]             Stenographic Protocol of National Council Session No. 120, XXIV Legislative Period, September 30, 2011, at, pp. 10-74.

[15]             Idem, p. 78.

[16]             Background: Art. 143 TFEU based Balance of Payment assistance to Hungary, Latvia and Romania were crucial for Austria because of the exposure of its banks in these countries – Austria’s banks are invested with EUR 300 billion in Eastern Europe. Austria profited from BoPs indirectly and the government was conscious of that in the further handling of the crisis measures, especially the first ones. 

[17]             The third amendment of the Payment Balance Stabilization law (BGBl I 65/2012) passed as accompanying law of the TESM approval that will be discussed in the section on the TESM. The 2012 version of §4 ZaBiStaG says that the Minister of Finance has to report at the latest one month after the end of a quarter to the committee dealing with financial issues (in the 2010 version it had been the main committee) of the National Council. However, in the accompanying legislative package to the TESM there is an entirely new role of the National Council introduced through constitutional amendment that will be discussed in question VIII.6.

[18]             Press Release on the meeting of the Main Committee of the National Council from November 25, 2011, at

[19]             Press Release on the meeting of the Main Committee of the National Council from July 17, 2011, regarding the Second Package for Greece available at