The Fiscal Compact (Treaty on Stability, Coordination and Governance in the Economic and Monetary Union) was signed on March 2, 2012. Negotiations on this Treaty began between 26 member states of the EU (all but the UK) after the 8/9 December 2011 European Council. 25 contracting parties eventually decided to sign the Treaty (not the Czech Republic).
After ratification by the twelfth Eurozone member state (Finland) in December 2012, the Fiscal Compact entered into force on 1 January 2013. For several contracting parties the ratification is still on-going.
What political/legal difficulties did Spain encounter in the negotiation of the Fiscal Compact, in particular in relation to the implications of the treaty for (budgetary) sovereignty, constitutional law and the budgetary process.
The negotiations on the Fiscal Compact started in the European Council meeting of 9 December 2011. From this date to the 2nd of March 2012 (when the Treaty was signed in Brussels) the plenary session of the Congreso debated on the Instrument in two occasions: on 8 and on 14 February 2012. As for the same debate in the Senado, no relevant interventions have been found.
On 8 February 2012 in plenary session of the Congreso, there were some interesting references to the Fiscal Compact. For instance, the President of the Government, Mariano Rajoy Brey, appeared in the Congreso to explain the conclusions of the 30th of January 2012 European Council meeting. In this sense, since one of the issues debated in this meeting was the Fiscal Compact, he referred to it in his intervention. In particular, Rajoy stressed that the Treaty included elements, which were considered essential by the Spanish Government in order to set a strong basis for the eurozone, and to foster a healthy economic growth. Moreover, he expressed his satisfaction with the fact that the Fiscal Compact imposed on the MS the obligation to introduce the balanced budget rule in the national legal order, which Spain had already done in the summer of 2011. Besides, Alfredo Pérez Rubalcaba, Head of the Partido Socialista Obrero Español, criticised the fact that, despite its title, the Treaty on the Fiscal Compact was only about “stability”. In this sense, he asked for other measures to foster economic growth. Moreover, the MP stressed that, from reading the Fiscal Compact, one could easily understand that MS do not trust each other (e.g. MS can take other MS before the ECJ). Finally, Uxue Barkos Berruezo, member of Nafarroa Bai, highlighted that the balanced budget rule is not the “panacea” and that, on the contrary, the last months had shown that it is far from being the solution.
Besides, on 14 February 2012 in the plenary session of the Congreso, Pedro Saura García, member of the Partido Socialista Obrero Español, and Álvaro Anchuelo Crego, member of Unión Progreso y Democracia defended the need to adapt the implementing legislation of the Constitutional reform of Article 135 to the Fiscal Compact, since Spain was adopting more restrictive measures than those that the EU was actually imposing on MS.
How has the Fiscal Compact been ratified in Spain and on what legal basis/argumentation?
On 2 March 2012 the President of the Spanish Government (Mariano Rajoy Brey) signed the Fiscal Compact in Brussels. Later, on 21 May, the Government presented a proposal to the Congreso de los Diputados in order to ratify the Treaty through the procedure of Article 93 of the Spanish Constitution and with urgency. In the proposal, the Comisión de Asuntos Exteriores(External Affairs Commission) was asked to prepare a Report on the Treaty and a deadline was established for tabling amendments. Following the urgent procedure, the Ley Orgánica adopting the Treaty was debated (including the five amendments presented) and voted in the Congreso on 21 June. The outcome of the voting was: 311 votes in favour and 19 votes against (out of 350 potential votes). No amendments were added. As for the Senado, on 29 June the Board of the House expounded that the law adopting the Fiscal Compact would be processed through an urgent procedure, and established a deadline for tabling amendments. On 18 July the Senado debated and voted the Fiscal Compact (and the amendments presented) and adopted the Ley Orgánica on the Treaty. The outcome of the voting was: 240 votes in favour, 4 votes against and 1 abstention (out of 265 potential votes). No amendments were added.
Later, on 25 July, the Head of State/King (Juan Carlos I) sanctioned the Ley Orgánica adopting the Fiscal Compact, and on 9 August he presented the Instrumento de Ratificación(Ratification Instrument) of the Treaty. Consequently, the Fiscal Compact came into force in Spain on 1 January 2013, as it did in the other 15 States that had ratified the Treaty before this date.
What political/legal difficulties did Spain encounter during the ratification of the Fiscal Compact?
As for the debate during the ratification of the Fiscal Compact in the Congreso de los Diputados, it is essential to start by explaining the content of the most relevant amendments presented to the Ley Orgánica adopting the Treaty:
1. Amendment no 1, to the entire proposal, presented by the Grupo Mixto. There are mainly three reasons why this Grupo was against the Fiscal Compact: (1) it is an expression of the balanced budget rule, which is an impossible commitment for Spain; (2) it is the exact opposite direction of what should be done because, since the balanced budget rule is in the Spanish Constitution, there has only been more and more unemployment and recession; (3) it is an example of the democratic deficit of the EU, since it will enter into force without the unanimity of the MS.
2. Amendment no 2, to the entire proposal, presented by the Izquierda Plural. There are mainly three reasons why this Grupo was against the Fiscal Compact: (1) its adoption as an international treaty (besides EU law) is a mere trick to avoid the unanimity rule; (2) it is an instrument that has been created to “germanise” Europe and it is the exact opposite of what should be done, since it will destroy the European social model; (3) in the Fiscal Compact, the expression “economic growth” is merely political rhetoric.
3. Amendment no 4, presented by the Grupo Socialista. The amendment proposed to add to the Ley Orgánica an additional provision regarding the action of the Spanish Government in the EU in order to foster a European policy on economic growth and the creation of employment.
4. Amendment no 5, presented by the Grupo Socialista, proposed to add a paragraph in the Statement of reasons of the Ley Orgánica, which should (mainly) highlight that, in order to overcome the Eurocrisis, together with fiscal stability, it is essential to foster a European policy on economic growth and the creation of employment.
Besides, on 21 of June 2012 the amendments presented and the entire Ley Orgánica on the Fiscal Compact were debated and voted in the Congreso. In this sense, the following interventions were the most remarkable:
1. José Manuel García-Margallo y Marfil, Minister of External Affairs and Development Cooperation, stressed the need to keep on walking towards a real political Union, and mentioned that the Fiscal Compact should be incorporated as soon as possible as a EU law instrument.
2. Carlos Salvador Armendáriz, member of Unión del Pueblo Navarro, highlighted the fact that, if Spain had acted adequately in the past, it would not be necessary to adopt the Fiscal Compact. However, given that it did not, voting negatively was not an option.
3. Joan Valdoví Roda, member of Coalició Compromís, explained the reasons why his Grupo would vote against the Fiscal Compact: (1) it is a measure that goes in the opposite direction of what should be actually done; (2) it was not subject to a referendum, despite the fact that it entails a cession of sovereignty.
4. Rafael Larreina Valderrama, member of Amaiur, stressed that the Fiscal Compact is a step in the wrong direction, and that the roots of the crisis are in an EU that has failed to develop a productive and social European economy.
5. José Luís Centella Gómez, member of Izquierda Plural, expressed that the Fiscal Compact was not an answer to the interests of citizens but to those of the banking sector. Therefore, he stressed the need for a referendum on the Instrument. Besides, he criticised the Government for its lack of a real will to reach agreements with the rest of political parties, and for using its absolute majority to adopt measures without real parliamentary debates.
6. Josu Iñaki Erkoreka Gervasio, member of Partido Nacionalista Vasco, expressed that, given the history of the European integration process; no one should be surprised with the Fiscal Compact. However, he stressed that the fiscal austerity should be complemented with economic growth policies. Moreover, he highlighted the fact that some European leaders had already realised that austerity alone was no solution, and that so would eventually happen with Chancellor Merkel. He concluded by stating that it would be stupid to vote against the Fiscal Compact, given that its essential element (the balanced budget rule) had already been implemented in Spain.
7. Álvaro Anchuelo Crego, member of Unión Progreso y Democracia, highlighted that a measure such as the Fiscal Compact should have long before been adopted by the Spanish Parliament. Moreover, he added that, given that Spain is part of a “European club”, its deficit affects the rest of MS, and therefore it is only logic that the club wants to set some rules in this regard. However, he stressed that his Grupo was not satisfied with the procedure through which the Fiscal Compact had been adopted, since it should have been a EU law instrument from the beginning.
8. Jordi Xuclà I Costa, member of Convergència I Unió, criticised the President of the Government for not having appeared before the Congreso to expound the Ley Orgánica on the Fiscal Compact, instead of delegating this task to the Minister of External Affairs and Development Cooperation. Moreover, he also criticised the political parties that had pointed out the loss of sovereignty deriving from the Fiscal Compact, and he asked for a Federal Europe.
Regarding the same debate in the Senado, only two amendments were presented to the Ley Orgánica on the Fiscal Compact, and they shared their content:
1. Amendment no 1, to the entire proposal, presented by the Grupo Mixto.
2. Amendment no 2, to the entire proposal, presented by the Grupo Parlamentario Entesa pel Progrés de Catalunya.
These two Grupos were against the Fiscal Compact mainly because: (1) it is an instrument to “germanise” Europe; (2) in it the expression “economic growth” is merely a rhetoric concept; (3) it is a step in the wrong direction, since it makes it impossible to preserve the European social model.
Besides, on 18 July 2012, the amendments presented and the entire Ley Orgánica on the Fiscal Compact were debated and voted in the Senado. However, the debate was very close to a repetition of what had been discussed earlier in the Congreso. In this sense, the following interventions were the most remarkable:
1. Juan Manuel Mariscal Cifuentes, member of Izquierda Unida, stressed that, in order to safeguard the Spanish democracy, it was necessary to vote against the Fiscal Compact, since it entailed giving away Spain’s sovereignty to the interests of “merchants”.
2. Iñaki Anasagasti Olabeaga, member of Partido Nacionalista Vasco, criticised the fact that no member of the Government had appeared in the Senado to defend the Ley Orgánica on the Fiscal Compact.
3. Jordi Vilajoana I Rovira, member of Convergència I Unió, highlighted that the Spanish Government should avoid adopting a centralist position (i.e. not respecting the competences of the Autonomous Communities) in order to fulfil its commitments with the EU regarding fiscal stability.
Balanced Budget Rule
Article 3(2) Fiscal Compact prescribes that the Balanced Budget Rules shall take effect in national law through “provisions of binding force and permanent character, preferably constitutional, or otherwise guaranteed to be fully respected and adhered to throughout the national budgetary processes.” How is the Balanced Budget Rule (intended to be) implemented in Spain? Will there be an amendment of the constitution? If not, describe the relation between the law implementing the Balanced Budget Rule and the constitution. If the constitution already contained a Balanced Budget Rule, describe the possible changes made/required, if any.
On 26 of August 2011, following the last reform of the Stability and Growth Pact, the Partido Popular and the Partido Socialista Obrero Español presented to the Congreso de los Diputados a proposal to reform Article 135 of the Spanish Constitution. The aim of the reform was to introduce in the Constitution the “principio de estabilidad presupuestaria” (principle of balanced budget), which would be binding on every institution in the public sector and would reinforce Spain’s compromise with the EU and, at the same time, guarantee Spain’s economic sustainability. Despite the fact that 24 amendments were presented on the proposal in the Congreso and 29 in the Senado, only a small amendment from the Congreso including a grammatical correction was added to the final text. The Congreso approved the reform on September 2, and so did the Senado on September 7.
On 27 of September 2011, the King sanctioned and promulgated the constitutional reform, which was published in the Boletín Oficial del Estado (Official Sate Gazette) of the same day, although the limits on the structural deficit established in Article 135(2) will only enter into force in 2020. Lastly, the reform was not put to a referendum. This is so because, according to what is established in Article 167(3) of the Constitution, in order to celebrate a referendum on a constitutional reform, 10% of the MP in the Congreso or in the Senado must formally request it. In this sense, given that this requirement was not met, there was no referendum on the reform of Article 135 of the Spanish Constitution.
Besides, according to Article 135(5) of the Constitution, as amended by the reform, a Ley Orgánica shall develop the content of the article. In this sense, on the 27th of April 2012, the Ley Orgánica 2/2012, de 27 de abril, de Estabilidad Presupuestaria y Sostenibilidad Financiera was sanctioned and promulgated by the King. Finally, the Preamble of the State’s Budget Law for 2013 mentions Spain’s compromise with the EU regarding budgetary stability, and establishes that, in line with this compromise, the Budget for 2013 presents a considerable reduction in public spending.
It is important to highlight that the fact that the constitutional reform was only supported by the Partido Socialista Obrero Español (PSOE), the Partido Popular (PP) and Unión del Pueblo Navarro (UPN), and that it was debated through an urgent procedure, led to many criticisms from the rest of political parties in the Parliament, which expressed that the two major parties had not even tried to reach an agreement, and that the “proceso constituyente” (the constituent process) had been “broken”. The idea underlying these criticisms was that a constitutional reform is so important in nature that it should never be dealt with in the same way as any other law (see also the answers to the questions dealing with the Euro-Plus Pact, section VI). Instead, reaching consensus should be an essential priority. As an expression of this discontent, on 8 September 2011 Izquierda Unida presented an appeal before the Spanish Constitutional Court.
Debate Balanced Budget Rule
Describe the national debate on the implementation of the Fiscal Compact/Balanced Budget Rule, in particular in relation to the implications of the treaty for (budgetary) sovereignty, constitutional law and the budgetary process.
As explained in the answer to Question IX.4, the two fundamental dates regarding the constitutional reform that introduced the balanced budget rule in the Spanish Constitution are 2 and 7 September 2011. Indeed, these are the dates when the Congreso and the Senado debated and adopted the reform (respectively). In this regard, the most relevant interventions on this issue on 2 September 2011 in the plenary session of the Congreso can be considered to be the following:
1. Francisco Xesús Jorquera Caselas, member of Bloque Nacionalista Galego, explained the reasons why his party was against the reform: (1) it means surrendering the Spanish democracy to the interests of speculators; (2) it should have gone through in-depth parliamentary debates and a referendum; (3) it is an “attempt” against the autonomy of future Governments; (4) it makes it impossible to preserve the social model earlier enshrined in the Spanish Constitution.
2. Uxue Barkos Berruezo, member of Nafarroa Bai, stressed that the reform was one of exclusion, instead of one of consensus, and she defended the need for a referendum to adopt such constitutional innovation.
3. Rosa Díez González, member of Unión Progreso y Democracia, criticised the main political parties of the Congreso for having rejected the debate on some of the amendments presented by other parties, on the basis that they were contrary to the Constitution. The MP stressed that these parties had acted as the Constitutional Court.
4. Carlos Casimiro Salvador Armendáriz, member of Unión del Pueblo Navarro, defended the reform and added that the amendments presented concerned legitimate interests, but were not related to the content of the constitutional reform that was being debated.
5. Fernando Ríos Rull, member of Coalición Canaria, criticised the main political parties for not having tried to reach consensus with other parties represented in the Congreso, and also for not having put the reform to a referendum. The MP also stressed the fact that the reform was surrendering the interests of the citizens to those of the markets. Finally, he pointed out that the Autonomous Communities should have a say in setting their deficit and debt.
6. Joan Ridao I Martín, member of Esquerra Republicana de Catalunya, explained the reasons why his party was against the reform: (1) it is centralist; (2) it is antidemocratic; (3) it is antisocial. Moreover, he criticised the main political parties in the Parliament for having rejected the debate on an amendment presented by his party. This amendment concerned the introduction in the Constitution of a self-determination clause, the idea being that given that the Constitution was already being reformed, this other issue should also be considered.
7. Maria Núria Buenaventura Puig, member of Iniciativa per Catalunya Verds, explained why her party was against the reform: (1) it is the triumph of the financial markets’ sovereignty over people’s sovereignty, it is antisocial and it introduces in the Constitution a certain economic ideology; (2) democratically, it is a step backwards, since there is neither a political consensus, nor a referendum on it, nor has there been a chance to defend the amendments presented.
8. Juosu Iñaki Ekoreka Gervasio, member of Partido Nacionalista Vasco, criticised the main political parties in the Parliament for not having admitted most of the amendments presented, restricting the scope of the parliamentary debate. In particular, one of the amendments presented by his political party concerned the introduction of a self-determination clause in the Constitution.
9. Josep Sánchez I Llibre, member of Convergència I Unió, also criticised the main political parties in the Parliament for not having admitted most of the amendments presented, and he defended the amendments presented by his political party. For instance, one of these amendments concerned the fact that the Autonomic Parliaments should determine the limit of the Autonomous Communities’ deficit, since doing it differently would entail encroaching upon the competences of the latter.
10. Soraya Sáenz de Santamaría Antón, member of Partido Popular, expressed that the constitutional reform was an exercise of political responsibility. In particular, she highlighted that it is an expression of Spain’s will to respect its commitments with the EU. Besides, she stressed that without fiscal stability it is impossible to preserve the Welfare State. Finally, she criticised the political parties that had presented amendments outside the scope of the constitutional reform proposed (i.e. amendments regarding a self-determination clause).
11. Jose Antonio Alonso Suárez, member of Partido Socialista Obrero Español(the party in the Government), expressed that the fiscal and economic European integration process requires setting shared criteria on the structural deficit and debt. Moreover, he stressed that the constitutional reform is essential to the credibility of Spain and also in order to preserve the Welfare State. Besides, he highlighted that it is impossible to let the Autonomous Communities set their deficit and debt limits, since this would bring about a lack of unity that would undermine Spain’s credibility.
Besides the political debate, the constitutional reform of Article 135 had a strong impact on the general public debate. In this sense see, for instance:
o “Reforma express y sin referendum”, El País, 23 August 2011:
o “Calendario de protestas contra la reforma”, El País, 31 August 2011:
o “No a la reforma de la Constitución promovida por PSOE y PP”, video on You Tube by Izquierda Unida:
Relationship BBR and MTO
What positions, if any, are taken in the national debate about the relationship between the Balanced Budget Rule of article 3(1)(b) Fiscal Compact and the Medium-term Budgetary Objective (MTO) rule in the Six-Pack (section 1A, article 2a Regulation 1466/97, on which see above question vii.10)?
In this regard, in his intervention during the plenary session of the Congreso of 8 February 2012, Mariano Rajoy Brey, the President of the Government, explained to the House the content of the Fiscal Compact. In this intervention, Rajoy stressed that the Fiscal Compact obliges to pursue the MTO, excepting a case in which a MS would implement a structural reform that would bring about an increase of the deficit in the short term, but a decrease in the medium term. In this sense, the President highlighted that this clause was reflected in Article 11(2) of proposed Ley Orgánica de Estabilidad Presupuestaria.
Is there a (constitutional) court judgment on the Fiscal Compact/implementation of the Balanced Budget Rule?
As explained in Question VII.2, the Balanced Budget Rule has caused a number of legal actions before the Spanish Constitutional Court. These have includedi) a “recurso de amparo” (action of infringement of fundamental rights) from Izquierda Unida against the amendment of Article 135 of the Spanish Constitution, (ii) an action of unconstitutionality from the Government of Canarias against the Organic Law 2/2012 of Budgetary Stability, (iii) an action of unconstitutionality from regional and local governments as well as a number of MPs against the Law 27/2013 of Rationalisation and Sustainability of the Local Administration. While the action against the amendment of the Spanish Constitution has been declared inadmissible by the Constitutional Court, the other actions have been declared admissible and their corresponding judgements are still pending (see Question VII.2 for more details).
Non-Eurozone and binding force
has Spain decided to be bound by parts of the Fiscal Compact on the basis of article 14(5) Fiscal Compact already before joining the Euro area, or has this option been debated?
What other information is relevant with regard to Spain and the Fiscal Compact?
No other relevant information.