Ratification of ESM Treaty Moves One Step Closer

On Wednesday 1 August 2012, the Irish Government began the final stage of ratifying the Treaty establishing the European Stability Mechanism (ESM).

The ESM treaty is a stand alone treaty, which establishes the ESM. The ESM will provide financial assistance to members of the Eurozone and replaces existing temporary funding programmes the European Financial Stability Facility (EFSF) and the European Financial Stabilisation Mechanism (EFSM). Along with the Treaty on Stability, Coordination and Governance (TSCG), the ESM treaty was signed earlier this year.

The ESM treaty had already been passed by the Dáil (20 June 2012), the Seanad (27 June 2012) and had been given Presidential Assent (3 July 2012). However, due to a challenge brought to the Supreme Court of Ireland by Thomas Pringle, an independent TD for Donegal South-West, the Government did not complete the process of ratification. On Tuesday 31 July, the Supreme Court rejected Mr Pringle’s claim that the ESM Treaty is unconstitutional and cannot be ratified without a referendum. The Government then lodged the documents required to complete the ratification process with the General Secretariat of the Council of the EU. Once the General Secretariat of the Council has processed these documents, the treaty will have been ratified by Ireland.

The Treaty enters into force as soon as it is ratified by signatories whose initial subscriptions collectively represent 90% of the total subscriptions. Therefore, the treaty cannot be ratified until all countries whose initial subscriptions are greater than 10% of the total ratify it. Ireland’s initial subscription is only 1.592% of the total. In Italy, whose initial subscription to the ESM is 17.914%, the Treaty was given Presidential Assent on 23 July 2012, leaving only the final step of the General Secretariat of the Council of the EU receiving and processing the documents to complete Italy’s ratification process. Consequently, Germany is the last remaining country whose ratification is required for the Treaty to enter into force. Germany’s initial subsription is 27.146% of the total. The German Bundesrat and Bundestag passed the Treaty on 29 June 2012 but due to a constitutional challenge Germany’s ratification has been deferred until after a decision by Germany’s constitutional court on 12 September 2012.

Estonia has also not completed its ratification process, however, as Estonia’ s contributions amount to 0.186% of the initial subscriptions, the Treaty can enter into force without Estonia.

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Further details about the initial contributions to the ESM and the progress of its ratification can be seen in the above infographic.