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)
What political/legal difficulties did Italy 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.
The ESM Treaty was not formally discussed in the Parliament before its announcement.
In any case, as already said also for the Treaty amendment of Article 136 (under Question V.1), a common feature of the Italian politics in relation to what one can call, again and in general terms, «European affairs» (also including the regular international treaties concluded in the Euro zone crisis, namely the Fiscal Compact and the ESM Treaty) is a certain (until now) stable bi-partisan favorable approach, by main center-left and center-right parties, in the approval of the related measures. The two major parties of the center-right and center-left coalitions (Popolo della Libertà e Partito Democratico, respectively) have been both strong pro-European movements, with really few, and scarcely relevant, exceptions among their members. This can be considered now as a traditional element of the Italian party system, probably one of the few rooted elements in a period of possible changes like the present.
This has historically had an impact also on the quantity and quality of the Italian debate on European issues: the related bills are normally adopted in the Parliament jointly by these two parties (and a large part of the satellite-parties), with relatively scarce, and normally apologetic, debate, and again relatively scarce echo in the general public debate.
In addition one can notice that, at the time of the negotiation of the Treaty, Italy was already experiencing clear problems in its budgetary situation. Therefore, the position of the government and the negotiation were influenced by this factor, fostering the typical bi-partisan support: note that the Treaty was signed in 2011 by the Berlusconi IV government, and re-signed in 2012 by the Monti government.
And again, in both the parliamentary Chambers, and in their Committees in charge of the first review, the procedure in question was joined with the other procedures related to the Fiscal Compact and the European Stability Mechanism (ESM), as it is clear from the attached documents (http://leg16.senato.it/japp/bgt/showdoc/frame.jsp?tipodoc=Resaula&leg=16&id=667367, http://documenti.camera.it/leg16/resoconti/assemblea/html/sed0669/stenografico.pdf, so called «joint discussion», «discussione congiunta»; see also http://www.europarl.europa.eu/webnp/webdav/site/myjahiasite/users/fboschi/public/esm%20tscg/art.%20136%20ESM%20fiscal%20compact%20ratprocess.pdf).
In any case, see under Question IV.1 about the late emergence, after years and in the context of the new European elections campaign of 2014, of critical positions even by the direct negotiators for Italy.
How has the ESM Treaty been ratified in Italy and on what legal basis/argumentation?
It is probably relevant to highlight that, in both the Chambers, and for both the initial part in front of the competent Parliamentary Committees and the discussion in the Chamber, the procedure of authorization by law of the ESM was joined with the other procedures related to the Treaty amendment article 136(3) TFEU and the Fiscal Compact.
The ratification process through which the ESM Treaty has been ratified in Italy was the typical process dictated by articles 80 and 87(8) of the Constitution.
According to art. 80, the two Chambers of the Parliament (Camera dei Deputati and Senato della Repubblica) «authorize by law the ratification of international treaties which are of a political nature, or which call for arbitration or legal settlements, or which entail changes to the national territory or financial burdens or changes to legislation». So, having no doubts about the «political nature» of the Treaty and the «financial burdens» entailed, both Chambers of Parliament had to authorize its ratification, through the regular legislative procedure (since art. 72, last paragraph, Constitution dictates that «The regular procedure for consideration and direct approval by the House is always followed in the case of bills on constitutional and electoral matters, enabling legislation, the ratification of international treaties and the approval of budgets and accounts»).
Art. 87(8) Const. reads: «The President shall: authorize the introduction to the Houses of bills initiated by the Government, promulgate the laws and issue decrees having the force of law as well as regulations, call popular referenda in the cases provided for by the Constitution, appoint State officials in the cases provided for by law, accredit and receive diplomatic representatives, and ratify international treaties which have, where required, been authorized by the Houses». So the final step of the ratification procedure – and, formally speaking, the ratification itself – is an act of the President of the Republic. In any case, it is important to highlight that this is a typical act that, in the categorization of the President’s acts, it is normally qualified as “formally but not substantially” presidential: this means that the act involves the formal role of the President as the highest representative of the Republic, especially in international relations, but this does not imply his substantive role, nor his liability, for the related political choices, which are in the sphere of the Government in terms of negotiation, and of the Parliament for the authorization, as already seen.
No referendum was held on the ESM Treaty (or 136 Treaty amendment, or Fiscal Compact). In fact, art. 75(2) Constitution excludes this possibility for the ratification of international treaties as it «Referenda are not admissible in the case of tax, budget, amnesty and pardon laws, or laws authorizing the ratification of international treaties».
What political/legal difficulties did Italy encounter during the ratification of the ESM Treaty?
In terms of Parliamentary debates, as already remarked, it is relevant to highlight that, in both parliamentary Chambers, and in their Committees in charge of the first review, the procedure of authorization by law of the ESM was joined with the other procedures related to the Fiscal Compact and the 136 TFEU Treaty amendment (see Questions V.3 and IX.3).
The other important point to highlight, again, is the traditional bipartisan support, in the Italian political system, by the two major parties of the center-right and center-left coalitions (Popolo della Libertà e Partito Democratico, respectively) and a large part of the satellite-parties, for the adoption – and therefore, the ratification and authorisation – of European measures (see above, and Questions V.3 and IX.3). This has historically had an impact on the quantity and quality of the Italian debate on European issues: the related bills are normally adopted in the Parliament jointly, with relatively scarce, and normally apologetic, debate, and again relatively scarce echo in the general public debate. This has only partially changed with the Eurocrisis, and the ratification procedure of the ESM Treaty (and of the other international measures, as aforementioned) constitutes evidence of that: at the time of the discussion and the approval, Italy had the two main coalitions supporting together the new Monti government (as a kind of “große Koalition” pushed by the choices of the President of the Republic after PM Berlusconi’s resignation, linked itself to the Eurocrisis), and only some small parties as formal opposition.
The parliamentary debates were obviously influenced by the joint discussion on the three different ratification procedures.
The rapporteurs themselves emphasized the difference with the old times in which the ratification of the EU-related bills were seen as a only “technical” debate, with no political echo nor particular resistance. But the debates seem to be a general discussion of the typical, historical problems of the so called democratic deficit in the European Union, with strong arguments, from both CR and CL, for the need of a more “political” federal Union. Sometimes the discussion touches on the German “expansionist” commercial policy in Europe and in the Mediterranean countries, because of the macroeconomic and monetary dynamics helping German exports in comparison with the Italian ones.
But in general, the real technical discussion relevant here was linked to the problems of the financial inadequacy of the European stability mechanism, and the important concerns for the possible great costs for the Italian budgetary system.
The Senator rapporteur Dini (PdL), for example, summarized as follows the doubts risen during the examination by the III Committee for Foreign Affairs (http://leg16.senato.it/japp/bgt/showdoc/frame.jsp?tipodoc=SommComm&leg=16&id=657978):
– the need to clarify the amount of the authorized capital stock of the European Stability Mechanism, which, pursuant to Article 8 of the Treaty establishing amounts to 700 billion euro. In the conclusions of the Eurogroup on 30 March 2012 the mobilization for the firewall was calculated in 800 billion euro, while the ceiling of the lending capacity of the instruments consolidated EFSF – ESM was indicated as 500 billion euro, pursuant to Article 39 of the Treaty establishing the ESM.
– the need to clarify the wording of Article 12 of the Agreement, which, in the boundaries of the support that the ESM may provide to a Member State, provided that since January 1st, 2013 also collective action clauses were included in all public debt state titles of the Euro area newly issued and with maturities of over one year in a way that ensures that their legal impact was identical. This prediction was in fact directed at achieving an appropriate form of private sector participation.
– the payment in five installments, in accordance with Article 41 of the Treaty ESM, of the initial capital by each member of the ESM. Pursuant to paragraph 3 of Article 41 an ESM Member may decide to accelerate the payment of its shared capital. Doubts came both on the schedule of payments of the Italian contribution, and the system of further “on call” contributions to the ESM to grant loans to member countries of the euro in financial difficulty.
– a discrepancy was also highlighted in predictions about the entry into force of the Decision 2011/199/EU amending Article 136 of the Treaty on the Functioning of the European Union with regard to the Stability Mechanism, scheduled for 1 January 2013, and the commitment made by the European Council of 9 December 2011 to operationalize the EMS from the month of July 2012.
– need for clarification of the effect on the assessment of the public debt of middle-long term emissions for the payment of the Italian contribution, in relation to the possible increased need in terms of interests estimated for 2012 at about 120 million euro.
Real strong resistance to the approval of the bill came only from relatively small parties of the new opposition under the Monti government: some of them actually tried to discuss the issue of a possible referendum on the new European measures, but it is important to highlight in this respect that no “consultative referendum” of this kind is foreseen in the Italian Constitution, and the only way to establish it would be through a special “constitutional law” (legge costituzionale), used only once in the history (but precisely on EU-related issues, in 1989) (see under Questions V.3 and IX.3).
Is there a (constitutional) court judgment on the ESM Treaty?
No. This was not surprising, given the limited possible modalities of access to the Italian Constitutional Court (see Question IV.5 above for more details).
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?
The ratification Law n. 116/2012, in its Article 3, authorises for the payments «established in Articles 9 and 41 of the Treaty», and also, in relation to those, for «the emissions of medium-long term bonds».
See above, under question VIII.3, for the critical remarks raised by the rapporteur Senator Dini, during the examination of the ratification Bill in the III Committee for Foreign Affairs, about the payment in five installments, in accordance with Article 41 of the Treaty ESM, of the initial capital by each member of the ESM. Pursuant to paragraph 3 of Article 41 an ESM Member may decide to accelerate the payment of its shared capital: and doubts came both on the schedule of payments of the Italian contribution, and the system of further “on call” contributions to the ESM to grant loans to member countries of the euro in financial difficulty.
Application & Parliament
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?
Beyond ordinary parliamentary procedures regarding executive accountability, note that art. 4 of the new law 234/2012 (the new law on the «general rules on Italy’s participation in the formation and implementation of legislation and policies of the European Union»), under the title «Information and consultation of Parliament», states, inter alia, that:
«4. The Government informs and consults the Houses of the Parliament, under the procedures identified by the law referred to in Article 81, sixth paragraph, of the Constitution, as replaced in accordance with the Constitutional Law 20 April 2012, n. 1, and in the manner provided by the respective Regulations, about the coordination of economic and budgetary policies and the functioning of the mechanisms of financial stabilization, as laid out or pursued in accordance with:
a) acts, bills and documents adopted by the institutions of the European Union;
b) the aims identified in an enhanced cooperation under Article 20 of the Treaty on the European Union;
c) agreements and hypotheses of intergovernmental agreements between Member States of the European Union».
What political/legal difficulties did Italy encounter in the application of the ESM Treaty?
Italy did not encounter specific and relevant difficulties in the application of the Treaty.
It is relevant to remark that the main debates in Italy, both in the Parliament in the aforementioned «joint discussion» on the three major Euro-crisis measures (see Questions V.3, VIII.3 and IX.3) and in a general political sense, were focused on Italy as a possible ‘target’ of the measures of financial stability, and not so much on the interventions for other countries (if not, in a somewhat typical way, to remark that Italy is spending a great amount of money for those in a period of internal crisis).
Have there been any relevant changes in national legislation in order to implement or to comply with requirements set by the ESM-Treaty?
None directly related to the ESM-Treaty.
What other information is relevant with regard to Italy and the ESM Treaty?
No other relevant information.