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 Italy 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?

The EFSF and EFSM were not discussed in the Parliament before their announcement in May of 2010.

Given also their peculiar genealogy, there are no details available regarding the Italian Government’s negotiation in relation to the Regulation or the Framework Agreement. For a long time, there has been no evidence of particular political/legal difficulties encountered in the negotiation. In the context of the new European elections campaign of 2014, however, the former Minister of Economy and Finance Giulio Tremonti has repeatedly spoken of a first opposition, by the Italian government, to the position of France and Germany for “banks-centered” interventions[1] already in 2010, and therefore referring already to the EFSF and EFSM terms, and not only to the ESM.

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 Italy and in what way does it involve Parliament?

 The Framework Agreement was implemented in the Italian legal order with Article 17 of Decree-Law (“decreto-legge”) n. 78/2010 (containing «Urgent measures on financial stability and economic competitiveness»), and therefore, at least initially, through a governmental decree which directly entered into force on 31 May 2010.

The first paragraph of Article 17 was the explicit authorization to the Minister of Economy and Finance to ensure the participation of the Italian Republic in the capital of the company formed with the other Member states of the Euro area, in accordance with the conclusions Council of the European Union of 9 and 10 May 2010.

Decree-laws are legislative acts of a temporary nature having the force of law, adopted in «extraordinary cases of  need and urgency» by the Government, pursuant to art. 77 of the Constitution of the Italian Republic. They need then to be converted into law by the Parliament within 60 days from the publication: Decree 78/2010 was in fact converted (with amendments) by Law n. 122, 30 July 2010.

Member states are obliged to issue Guarantees under the EFSF. What procedure was used for this in Italy? 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?

The second paragraph of the aforementioned Article 17, Decree 78/2010, converted  by Law n. 122, 30 July 2010, was an authorization to the Minister of Economy and Finance to grant State guarantees on the liabilities of the company formed with the other Member states of the Euro area, «in order to form the financial funding to make loans (or other forms of financial assistance) to the Member States of the euro in accordance with the conclusions Council of the European Union of 9 and 10 May 2010 and other consequent decisions that will be passed by unanimous vote of the Member States of the euro area».

Through a renvoi to Article 2, paragraph 2 of the decree-law of 10 May 2010, no. 67, it was also provided that the necessary resources were to be obtained «by means of the emission of government bonds in the medium-long term»,  as extraordinary measures not to be calculated in the limits or levels provided by the Italian law.

The conversion into law was discussed in the Parliament between 1 June and 15 July, at the Senato della Repubblica,[2] and between 20 and 29 July, at the Camera dei deputati.[3] Given the wide and various array of topics included in the original Decree n. 78, the implications of the EFSF guarantees were not specifically debated.

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

 There have been no known significant difficulties encountered.

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

No. This may be considered not surprising in Italy, in general, for this kind of measures, given the restricted possible modalities of access to the Italian Constitutional Court. These are limited (briefly said) to appeals lodged by individuals before an ordinary judge – and therefore pertaining to legislative norms relevant and directly applicable in ordinary trials – then sent to the Constitutional Court after the suspension of the trial; and ex post direct appeals lodged by Regions and other powers of the State in case of invasion of constitutional attributions and «spheres of competences». Therefore, in Italy there is not the possibility of an ex ante review prior to the ratification of international agreements.

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?

 As noted, Art. 17 of the governmental Decree 78/2010, converted by the Parliament with Law July 30, 2010, n. 122, amounts to an ex-ante parliamentary delegation to the Minister of Economy and Finance to grant disbursements «in accordance with the conclusions Council of the European Union of 9 and 10 May 2010 and other consequent decisions that will be passed by unanimous vote of the Member States of the euro area».

The second part of its paragraph 2 provides then for the inclusion of these disbursements in a special attachment to the “Stato di previsione” complied by the same Minister and submitted to the Parliament, according to Law n. 196/2009 on Public accounting and Finance (see Questions VII:8 and II.4), for a subsequent control by the Chambers.

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

There have been no known significant difficulties encountered in the application of the EFSF.

Bilateral support   
In case Italy 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?

Italy participated in the bilateral support part of the first aid package for Greece in 2010.

Italy’s contribution quota was determined on the basis of the percentage of the stake in the total capital of the European Central Bank, and therefore amounted to 18.42 per cent of the total Euro area contribution of €80 billion.

The participation was debated both in the upper house (Senato della Repubblica, between 11 and 25 May 2010, and in the lower house (Camera dei Deputati, between 3 and 15 June 2010, for the «conversion into Law» of the Decree n. 67/2010 «Urgent measures to safeguard the financial stability of the Euro», and the «order of execution» of the international agreement named as “Intercreditor Agreement” and of the agreement designated as “Loan Facility Agreement” («both signed on May 8th 2010»).

The Decree n. 67 made direct reference to the three-year program of financial support by means of bilateral loans to Greece defined in the Declaration of the Heads of State and Government and in the resulting decisions of the “Eurogroup”. It provided for the granting of loans in favor of Greece by decree of the Minister of Economy and Finances, in accordance with the conditions laid down with the decisions taken at the European level, and then for the communication of these decrees to the Parliament and to the Court of Auditors.

From a constitutional point of view, it was underlined by some scholars how the ratification was accomplished by unusual means.[4] In fact, a particular problem arose in relation to the legal nature of the original European agreements, and to the legal instrument to correctly implement them in the Italian legal order. The agreements at the European level, in fact, have been concluded after the approval by the Italian Council of Ministers of the Decree n. 67, and this latter, therefore, simply referred to the original Declaration of the Heads of State and Government and any consequent act. At the time of “conversion into Law” of the Decree, therefore, it was considered appropriate to make specific reference to legally binding agreements entered into force in the meantime: thus, these were annexed to the text of the Law of conversion, which now also contains the relative order of execution. Doubts were raised,[5] however, whether the agreements reached among the European partners were pure international agreements, which, pursuant to Art. 80 of the Italian Constitution, shall be subject to ratification, or, on the contrary, they were sui generis Community acts, therefore not subject to specific approval process (but with no specific legal grounds in the Treaties or in secondary European legislation). In the first case, in fact, one would see in such an approval an atypical order of execution, with no specific authorization for the ratification, and with the further anomaly of an execution order contained in a Law of conversion of a Decree, against the provisions of Art. 15 of the Law n. 400/1988 on the possible contents of Decree-laws in the Italian legal order.

As for the merits, in both the Chambers of Parliament, as usual for bills related to European affairs, there was a broad convergence of views between the centre-right party of the Popolo della Libertà (at that time, in charge of supporting the executive) and the centre-left party of the Partito Democratico.

Upper House

In terms of «relevant Parliamentary debates», it is firstly important to highlight that at the Senate (Senato), the MP rapporteur at the plenary discussion (Tancredi, center-right PdL) stressed the point of the need of a European intervention for the Greek situation, and described the conditions posed for the loan assistance, and the amount of the quota referred to Italy. He then clearly stated that the conversion into Law of the Decree n. 67/2010 «authorizes the government to carry out the operations of financial support for Greece agreed at international level», explaining how the “Intercreditor Agreement” and the “Loan Facility Agreement” were to be considered as a first stage of the European set of interventions for the financial crisis, leading to a strengthening of the preventive surveillance of public finances and of European «governance».[6] Interestingly, he also explicitly placed the new measures in the context of a «challenging» reform of the modern «welfare system», for a better and more rigorous use of the collective resources.[7]

A first representative of the centre-left PD, at the time in the opposition (Nicola Rossi), already during the examination in the V Committee on 20 May 2010,[8] noted that the Decree in object and the future economic measures announced by the Government are the basic steps for the future «material constitution of the European Union». Therefore he stated that it would be a serious mistake to limit the examination of the international economic crisis to the mere issue related to the Greek economic crisis and therefore called for a broader view in relation to the Italian economic situation, in broad relation to the European one. He stressed the point of the somehow comparable situation that Italy, Spain and Portugal would enjoy with the worsening of the crisis, and he called for a broad and powerful European intervention in this respect. He envisioned two possible models of reference. The first represents the evolution towards a political union that would require, as mentioned by the European Commission, a stage of preliminary analysis on the financial statements of each State by all the other Member States. A multilateral surveillance no longer a posteriori but also ex ante and that does not concern only the profiles of the deficit and debt but also the data structure of the economy of each country. He described this solution as much more flexible than the other viable alternative, modelled after the U.S. system: in that context, the individual states «would not be able to be in deficit if not for investments and would not be able to exceed stringent limits on the deficit».[9]

In addition, in the same venue, a second intervention by a PD representative (Morando) stressed the point of the need for structural reforms in Italy, and said that the situation in Greece was also determined by the poor efficiency of public financial control, the lack of transparency and credibility of financial institutions. He pleaded – with clear reference to the internal situation – for the establishment of an independent authority on public finances, as an institutional factor that (especially in the context of the Parliament) would greatly affect the credibility of a country in respect of the financial markets.[10]

A general support was based on the need to show solidarity with Greece but also because it was in Italy’s interest as vulnerable economy with similar problems of high public debt.[11]

Lower House

In the lower house (Camera dei Deputati), some weeks later (14 June 2010), the debate started with the discussion of the rapporteur (MP Marinello, PdL) on some of the aforementioned critical legal technical points, such as 1) the atypical nature of the Decree in question, «which, in essence, cannot be amended, as it includes and incorporates a commitment between states»[12] , and 2) the question raised by the specialized Committee on the Quality of Legislation that this kind of agreements reached between the European partners are (quite obviously) «sui generis Community acts, not submitted to a specific approval process»,[13] and often approved in other European states by «ordinary rules, without using the instrument of ratification of international agreements».

But the points raised no particular practical obstacles, and the political discussion followed more or less the same ideas already expressed at the Senate (Senato), with the PD representative (Gozi) even talking of «false economic sovereignty»[14] of the States with the intention to criticize their resistance to common European strong measures, given the common need of economic growth.

Only the representatives of relatively small groups, such as the center-left Italia dei Valori party (MP Cambursano) raised some general critical remarks on the economic sustainability, for both Greece and Italy, of the European plans, but without touching upon particular technical aspects.[15]

It is interesting to note that, at this stage, also the Lega Nord group (a federalist and regionalist political party rooted in the Northern part of Italy) voted in favor of the European measures, with the idea that that would strengthen their “fiscal federalism“ projects; and that also representatives of the main center-left PD party (MP Vannucci) highlighted the point of the need of a reform of the corrupt and inefficient Italian welfare/socio-economic rights system, also following a European common «harmonisation».

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

Not other relevant information.

[1]               See for instance, most recently, the interview by V. Zincone to G. Tremonti, “Quel che oggi temo di più è un asse Mosca-Berlino”, in Corriere della Sera – Sette, 1 maggio 2014 – numero 18, pp- 36-38.



[4]               See G. Napolitano, L’assistenza finanziaria europea e lo Stato ‘‘co-assicuratore’’, in Giornale di diritto amministrativo n. 10/2010.

[5]               Ivi.

[6]               «(…) an opportunity to relaunch the process of European cohesion, giving rise to the awareness of shared responsibility and the need to improve the tools to protect the European financial stability and to strengthen the coordination of budgetary policies»:

[7]               Ibidem.


[9]               Ibidem.


[11]              For instance, see MP Giarretta (PD) intervention in the plenary session of the 25th May 2010,

[12]     , p. 3.

[13]              Ivi.

[14]              Ibidem, p. 9.

[15]              Ibidem, pp. 22-25.