Germany

VIII - ESM Treaty

The European Stability Mechanism (ESM) Treaty was signed on July 11 2011. It was later renegotiated and a new ESM Treaty was signed on February 2, 2012. The Treaty provides a permanent emergency fund that is intended to succeed the temporary emergency funds. It entered into force on September 27, 2012 for 16 contracting parties (Estonia completed ratification on October 3). The 17 contracting parties are the member states of the Eurozone, but the ESM Treaty is concluded outside EU law.               
(http://www.european-council.europa.eu/eurozone-governance/esm-treaty-signature?lang=it and http://www.esm.europa.eu/pdf/FAQ%20ESM%2008102012.pdf)

Negotiation
VIII.1
What political/legal difficulties
did Germany encounter in the negotiation of the ESM Treaty, in particular in relation to the implications of the treaty for (budgetary) sovereignty, constitutional law, socio-economic fundamental rights, and the budgetary process.

See question V.1 and IX.1.

Ratification
VIII.2
How has the ESM Treaty been ratified in Germany and on what legal basis/argumentation?

As outlined in question V.3, the Bundestag adopted the ESM Treaty through three federal laws on 29 June 2012. The first law, the ESM-Ratification Law only required a simple majority but the Federal Government aimed for a 2/3 majority in order to prevent possible constitutional problems. Finally, the ESM-Ratification Law was adopted on the basis of Article 59 (2), sentence 1 GG. Pursuant to Article 105 (3) GG the consent of the Bundesrat was also necessary as revenues were concerned that are usually entitled for the Länder according to Article 106 (2), (3) and (6) GG.[1]

 

In order to authorize the payment of capital to the ESM, the ‘Act on Financial Participation in the European Stability Mechanism’[2] (ESMFinG) was adopted on 29 June 2012 as well. As a federal law it only required a simple majority. This law was based on Article 115 (1) GG according to which “[t]he borrowing of funds and the assumption of surety obligations, guarantees, or other commitments that may lead to expenditures in future fiscal years shall require authorisation by a federal law.“ (see also question VIII.5)

 

Ratification difficulties       
VIII.3
What political/legal difficulties
did Germany encounter during the ratification of the ESM Treaty?

See question V.3 above.

 

Case law           
VIII.4
Is there a (constitutional) court judgment on the ESM Treaty?

See question V.4 above.

Capital payment
VIII.5
What is the role of Parliament in the payment of the (first instalment of) paid-in capital required by the ESM Treaty (article 36 ESM Treaty)? What relevant debates have arisen in relation to this payment?

In order to authorize the payment of capital to the ESM, the ‘Act on Financial Participation in the European Stability Mechanism’[3] (ESMFinG) was adopted on 29 June 2012. The ESMFinG, the law that authorizes the German share of paid-in and callable capital to the ESM Fund, underwent most modifications. During the Budget Committee negotiations, four paragraphs on the involvement of the Bundestag were added, which were in total longer than the bill itself. The amendments were either introduced together by the Christian Democrats (CDU/CSU) and the Liberals (FDP) from the government as well as from the Social Democrats (SPD) and the Greens (Bündnis 90/Die Grünen) or separately by the parliamentary groups.[4] These amendments were consented to by all parliamentary groups (except the parliamentary group of the Left (Die Linke and some members of the Social Democrats).[5]

On 14 June 2012 the Bundestag adopted the ‘Supplementary Budget Law for 2012’ (hereinafter NHG 2012), through which the acquisition of new debt (necessary for the German shares of the ESM Fund) was allowed (see also question V.3).

 

Application & Parliament    
VIII.6
What is the role of Parliament in the application of the ESM Treaty, for example with regard to decisions to grant financial assistance and the disbursement of tranches, which both require unanimous adoption by the Board of Governors composed of the national Finance Ministers?

See also question V.3.

 

§ 4 of the ESMFinG guarantees that ESM-decisions affecting the budgetary responsibility of the Bundestag always require the approval by the Bundestag in its plenary composition. Three major fields are identified in which ESM matters touch upon the budgetary responsibility of the Bundestag: first, the issuance of rescue measures pursuant to Article 13(2) TESM; second, matters and agreement about the EFSF; third, changes of the guarantee volume of the ESM-Treaty.[6] In the report of the Budget Committee, this amendment was justified by reference to the Bundesverfassungsgericht’s judgment from 28 February 2012, in which the Court highlighted the specific position of the plenum (see also question IV.5).[7]

 

§5 of the ESMFinG determines that all other ESM-measures that concern the Bundestag and in which the consent of the plenary is not intended according to § 4 of the ESMFinG have to be adopted in consent with the Budget Committee of the Bundestag. This relates to issues such as changes in how capital can be retrieved from the ESM or the acceptance of changes in the guidelines for the implementation conditions of financial rescue measures.[8]

 

One of the most important (and in the media controversially discussed)[9] amendments of the ESMFinG concerned the establishment of the so-called special-body (‘Sondergremium’). Different from the Committee of Nine (“Neuner-Gremium”) in the StabMechÄndG (see Question, II.4) the ESMFinG dedicated a separate paragraph to this special body and explained its role in detail. Paragraph 6 specified that in cases of special confidentiality, such as the purchase of government securities on the secondary market pursuant to Article 18 TESM, the ‘Sondergremium’ is supposed to take a decision instead of the Bundestag in its plenary composition.[10] In the report of the Budget Committee the establishment of the ‘Sondergremium’ was explained by reference to the judgment of the Bundesverfassungsgericht from 28 February 2012. In this judgment, the Court had declared the Committee of Nine to be unconstitutional, except for instances in which the Bundestag has to consent to confidential matters such as the ESM-purchase of government securities.[11] (see also question VI.5) 

 

§ 7 of the ESMFinG strengthened the information requirements of the Federal Government towards the Bundesrat and the Bundestag which has been of specific interest of the Greens (Bündnis 90/Die Grünen) and of the Social Democrats (SPD).[12] The amendment explicitly obliges the Federal Government to inform the Bundestag about ESM-matters at “the earliest possible point in time.”[13]

 

Application difficulties  
VIII.7
What political/legal difficulties
did Germany encounter in the application of the ESM Treaty?

See question V.3.

 

Implementation
VIII.8
Have there been any relevant changes in national legislation in order to implement or to comply with requirements set by the ESM-Treaty?

See question V.3.

 

Miscellaneous
VIII.9
What other information is relevant with regard to Germany and the ESM Treaty?

No relevant information.

 

[1] See Deutscher Bundestag. Gesetzesentwurf der Fraktionen der CDU/CSU und FDP. Entwurf eines Gesetzes zu dem Vertrag vom 2.Februar 2012 zur Einrichtung des Europäischen Stabilitätsmechanismus. Drucksache 17/9045. 20.03.2012, p.4.

[2] The German title of the law is: ‘Gesetzes zur finanziellen Beteiligung am Europäischen Stabilitätsmechanismus (ESM-Finanzierungsgesetz – ESMFinG)’

[3] The German title of the law is: ‘Gesetzes zur finanziellen Beteiligung am Europäischen Stabilitätsmechanismus (ESM-Finanzierungsgesetz – ESMFinG)’

[4] 17(8)4442 was introduced by BÜNDNIS 90/DIE GRÜNEN, 17(8)4410 by CDU/CSU and FDP and 17(8)4549 by the coalition parties and the SPD

[5] See Deutscher Bundestag. Bericht des Haushaltsausschusses (8. Ausschuss). Drucksache 17/10172. 27.06.2012, p. 9.

[6] See Law of May, 13 1012, Bundesgesetzblatt Teil I, 2012, Nr. 43, 18.09.2012 S. 1918.

[7] Deutscher Bundestag. Bericht des Haushaltsausschusses (8. Ausschuss). Drucksache 17/10172. 27.06.2012, p. 11.

[8] See Law of May, 13 1012, Bundesgesetzblatt Teil I, 2012, Nr. 43, 18.09.2012 S. 1918.

[9] See e.g. Heribert Prantl, ‘Neun Hansel sind nicht das Parlament’, in: Süddeutsche.de, 28.10.2011. http://www.sueddeutsche.de/politik/euro-rettungsschirm-neun-hansel-sind-nicht-das-parlament-1.1175819.

[10] See Law of May, 13 1012, Bundesgesetzblatt Teil I, 2012, Nr. 43, 18.09.2012 S. 1918.

[11] See Deutscher Bundestag. Bericht des Haushaltsausschusses (8. Ausschuss). Drucksache 17/10172. 27.06.2012, p. 13.

[12] See Deutscher Bundestag. Bericht des Haushaltsausschusses (8. Ausschuss). Drucksache 17/10172. 27.06.2012, p. 6-8.

[13] Deutscher Bundestag. Bericht des Haushaltsausschusses (8. Ausschuss). Drucksache 17/10172. 27.06.2012, p. 13.