Lithuania

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.esm.europa.eu/about/legal-documents/index.htm and http://www.esm.europa.eu/pdf/FAQ%20ESM%2008102012.pdf)

Negotiation
VIII.1
What political/legal difficulties did Lithuania 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.

Lithuania did not take part in the negotiations of the ESM Treaty as it was not a member of the eurozone at the relevant time. It was the second non-eurozone Member State after Latvia to accede to the ESM, on 14 January 2015 and become a member on 3 February 2015.

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

The ESM Treaty was ratified by the Seimas adopting a Law on 18 December 2014.[1] 82 voted in favour, 1 against and one abstended from voting.

The main arguments for ratifying the Treaty remained the same as those behind ratification of the amendment of Art. 136 TFEU. The explanatory memorandum of the Ministry of Finance described the functions of the ESM, noted that support of the ESM entails a strict requirement to adjust the macroeconomic policy, and emphasised that in case Lithuania would find itself in need it would also be able to request assistance from the ESM.[2] In addition, the Ministry argued that Lithuania‘s ESM membership would contribute to regional and interregional cooperation, development of multilateral relationships, strengthen political and economic ties with other States and Lithuania‘s role in the global arena.[3]

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

No political or legal difficulties were encountered during the process of ratification.

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

No.

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?
      

Under Art. 2. of the Law ratifying the ESM Treaty, the Seimas’ prior consent is required in two situations:

  1. If a decision needs to be taken under Art. 10 (1) of the ESM Treaty to change the maximum lending volume and the adequacy of the authorized capital stock of the ESM.
  2. If the decision is taken to change the contribution key under Art. 11 of the ESM Treaty, if this would result in a higher contribution key for Lithuania.

The Law was adopted with a broad consensus, ie this document did not raise any discussions at the adoption stage.

The Law does not provide for any role for the Seimas with respect to the payment of the first installment to the ESM. However, the payment was planned in Art. 12 (10) (1) of the Law on the Fiscal Indicators of the State and Municipal Budgets, which was approved by the Seimas. Consequently, the decision to make the payment was taken by the Government specifically referring to the Law on the Fiscal Indicators of the State and Municipal Budgets.[4]

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.

The rules governing the taking of the decisions to grant financial assistance and the disbursement of tranches are found in a decision adopted by the Government.[5] The decision requires the Minister of Finance to obtain an approval of the Government on these issues. However, the Parliament is not directly involved in taking these decisions. Under part 7 of the said decision the Government informs the Seimas (its committee on European Affairs) about the positions no later than within 5 days after their adoption.[6] The decisions to grant financial assistance and the disbursement of tranches require consent of the Government in corpore.[7]

A consent of the Government in corpore is necessary for the following decisions:

  1. establishment, cancellation, administration and usage of reserve and other funds under ESM Arts. 4(4) and 24;
  2. issuing of new shares other than at par under ESM Art. 8(2);
  3. payment of an authorized unpaid capital under ESM Art. 9(1);
  4. granting of financial assistance to a member of ESM, setting of conditions of economic policy, choice of measures and financial conditions under ESM Arts. 12, 13, 14, 15, 16, 17 and (or) 18;
  5. review of the instruments of financial assistance under ESM Art. 19;
  6. pricing policy under ESM Art. 20;
  7. decisions seeking to ensure that overdue amounts are settled, under ESM Arts. 25(2) and (3).

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

So far no legal or serious political difficulties have arisen. However, in July 2015 the new leader of the Labour Party Valentinas Mazuronis, who is also a member of the European Parliament, expressed his concern that the plan to provide financial assistance to Greece from the ESM involved too much risk and therefore the Labour Party did not approve of it.[8] As a member of the ruling coalition, the Party initiated a discussion on this issue at the State’s political council.[9] This did not lead to any significant development, as the Government approved its position to issue financial support to Greece nevertheless.[10]

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?

No changes were made so far.

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

No further information.

 

[1] Lietuvos Respublikos įstatymas dėl Belgijos Karalystės, Vokietijos Federacinės Respublikos, Estijos Respublikos, Airijos, Graikijos Respublikos, Ispanijos Karalystės, Prancūzijos Respublikos, Italijos Respublikos, Kipro Respublikos, Latvijos Respublikos, Lietuvos Respublikos, Liuksemburgo Didžiosios Hercogystės, Vengrijos, Maltos, Nyderlandų Karalystės, Austrijos Respublikos, Portugalijos Respublikos, Slovėnijos Respublikos, Slovakijos Respublikos ir Suomijos Respublikos Europos stabilumo mechanizmo steigimo sutarties ir su ja susijusių dokumentų ratifikavimo, [Law on ratification of the Treaty Establishing the European Stability Mechanism and Relating Documents] Nr. XII-1493, TAR, 2014-01-01, Nr. 21152.

[2] Lietuvos Respublikos Finansų Ministerija, Lietuvos Respublikos įstatymo Dėl Belgijos Karalystės, Vokietijos Federacinės Respublikos, Estijos Respublikos, Airijos, Graikijos Respublikos, Ispanijos Karalystės, Prancūzijos Respublikos, Italijos Respublikos, Kipro Respublikos, Latvijos Respublikos, Liuksemburgo Didžiosios Hercogystės, Maltos, Nyderlandų Karalystės, Austrijos Respublikos, Portugalijos Respublikos, Slovėnijos Respublikos, Slovakijos Respublikos ir Suomijos Respublikos Europos Stabilumo Mechanizmo steigimo sutarties ratifikavimo projekto XIIP-2559 aiškinamasis raštas, [Explanatory Memorandum on the Draft Law on Ratification of the Treaty Establishing the European Stability Mechanism No. XIP-2559] 2014-11-26.

[3] Ibid.

[4] Lietuvos Respublikos Vyriausybės nutarimas Dėl Lietuvos Respublikos įmokėtojo kapitalo dalies Europos stabilumo mechanizme sumokėjimo [Decision of the Government of Lithuania on payment of the contribution key to the European Stability Mechanism] TAR, 2015-01812.

[5] Lietuvos Respublikos Vyriausybės nutarimas Dėl LR dalyvavimo Europos Stabilumo Mechanizmo valdytojų taryboje ir direktorių valdyboje. Lietuvos Respublikos dalyvavimo Europos stabilumo mechanizme tvarkos aprašas [Decision of the Government of Lithuania on Lithuania’s participation at the European Stability Mechanism Board of Governors and the Board of Directors], 2015-01-01, TAR Nr. 2902 [act adopted on 18 February 2015].

[6] Ibid, part 7.

[7] Ibid.

[8] ELTA, Valentinas Mazuronis: Graikijos gelbėjimo projektas yra per daug rizikingas.  [Valentinas Mazuronis: Greece‘s rescue package involves too much risk] 2015-07-17 www.ve.lt

[9] The political council of the ruling coalition is an informal political body, composed of the leaders of the parties participating at the ruling coalition. The council does not have a legal status, however, it is often gathered to discuss the most topical political issues, most importantly – the formation of the ruling coalition and other significant topics that require a common position of the coalition. In January 2015 it has been gathered to discuss the prospect of maintaining the ruling coalition as the president of honour of the Labour Party V. Uspaskich encouraged the members of the party to vote against the draft budget of 2015. Most recently in September 2015 it discussed the adoption of the Social Model, which seeks to liberalize labour relationships in the country.

[10] BNS, Vyriausybė pritarė EK deryboms dėl paramos Graikijai [The Government approved European Commission‘s negotiations on Support to Greece], www.lzinios.lt, 2015-07-16.