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 19 contracting parties are the member states of the Eurozone, but the ESM Treaty is concluded outside EU law.    
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What political/legal difficulties
did Slovenia 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.

According to the media, the Committee on Foreign Policy[1] of the National Assembly discussed the stipulation of the ESM during the session that took place on June 2, 2011. The transcript of the session in not available. During this meeting the National Assembly conferred to the Minister of Finance the right to sign the treaty on July 11, 2011.

The Committee on Foreign Policy of the National Assembly discussed the issue again on October 12, 2011, evaluated again the initiative for the conclusion of the agreement and decided to approve it. The transcript is however not available.[2]

How has the ESM Treaty been ratified in Slovenia and on what legal basis/argumentation?

The ESM was ratified through the Act ratifying the Treaty Establishing the European Stability Mechanism, adopted in April 2012,[3] a regular parliamentary act. The act was amended in February 2013, with the Act amending the act ratifying the Treaty establishing the European Stability Mechanism.

16 and 18 members of respectively the Committee on Finance and Monetary Policy and the Committee on Foreign Policy voted in favour of the act. The Act ratifying the Treaty Establishing the European Stability Mechanism was finally adopted on April 19, 2012. The Act was later amended two times. The Act amending the act ratifying the Treaty establishing the European Stability Mechanism was adopted in February 2013, with 86 votes in favour and none against. Further, in November 2013, the Act ratifying the adaptation to be made to the Treaty establishing the European Stability Mechanism was adopted.

Ratification difficulties 
What political/legal difficulties
did Slovenia encounter during the ratification of the ESM Treaty?

The proposed Act ratifying the Treaty Establishing the European Stability Mechanism was discussed by the Committee for Foreign Affairs on April 11, 2012. During the session Joze Horvat (NSi) asked whether there will be some implications for the sovereignty of Slovenia in designing its economic policy. Alenka Bratusek (PS) asked why such agreement would be good for Slovenia. Joze Jerovsek (SDS) questioned how such institution could be monitored. Marija Pelvack (DeSus) asked what implications the treaty would have for the budget of Slovenia. Ultimately, the Committee of Foreign Policy supported the act. [4]

The vote for the act took place on April 19, 2012. The leading coalition supported the ratification. Also some parties in the opposition supported the ratification. Pozitivna Slovenia, for instance maintained that being a member of the Eurozone mitigates the negative impact of the crisis for Slovenia, and emphasized that the destiny of Slovenia is strictly related to the destiny of the Euro. It thus concluded that it is in the interest of Slovenia to safeguard the Euro. At the time of the voting, 74 deputies out of a total of 90 voted in favour of the ratification, none voted against.[5]

Dejan Krušec, the State Secretary at the Ministry of Finance, explained that ratification of the ESM will not have a direct impact on the sovereign decisions of Slovenia in its monetary policy. He maintained that the ESM financial assistance will help the euro area, which was facing severe difficulties.[6] Mitja Mavko for the Ministry of Finance explained that the government believed that the law was necessary to bring financial stability in the euro area. He emphasized that the developments in global financial markets are increasingly uncertain, and the establishment of such a permanent mechanism will provide a better defense to the euro area.[7] Political parties member of the opposition supported the ratification process.

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

Not applicable.

Capital payment   
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?

Given that the payment of the first instalment is provided in the annual budget, its approval probably followed the general procedure for the approval of the budget. In other words, the government suggested the payment of the first instalment as part of the annual budget, and the National Assembly had to confirm it.

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.

The ESM Treaty was ratified through an act which does not clarify the role of the parliament in granting financial assistance. Article 4 of the Act Regulating the Guarantees of the Republic of Slovenia for Ensuring Financial Stability in the Euro Area however provides that the Government should inform the National Assembly about the decisions to grant any guaranty. In the adoption of each funding program the government and the National Assembly shall cooperate in accordance with the Act on Cooperation between the National Assembly and the Government in EU Affairs. It seems that this approach has been adopted also for financial aid granted through the ESM mechanism. This was for instance the case when financial aid was granted to Spain.[8]

Application difficulties    
What political/legal difficulties
did Slovenia encounter in the application of the ESM Treaty?

On July 19, 2012, the Committee on EU Affairs discussed the proposal to confirm the financial assistance to Spain. Several members questioned how such aid would affect Slovenia’s own financial stability. For example, Saša Kos (PS) asked whether it would be possible to freeze Slovenia’s obligation, until the financial position of Slovenia becomes more stable. Roman Jakič (PS) asked whether Slovenia would have to actually pay money, or, for the time, it was only offering a guarantee. He also questioned whether Slovenia would have the actual ability to pay such guarantee, if such obligation arises. The Committee ultimately supported the proposal with 9 votes in favour (15 in total), and none against.[9]

See also answer to question 46.


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

No reference has been found to this.

What other information is relevant with regard to Slovenia and the ESM Treaty?

Not applicable.