Thursday, 2 October 2008

EU: No-bailout rule III

We look at the ‘no-bailout’ clause in the context of economic and monetary union (EMU). What, if anything, did the Constitutional Treaty contribute?

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In the Treaty establishing a Constitution for Europe the provisions on economic policy were located in Part III ‘The policies and functioning of the Union’, Title III ‘Internal policies and action’, Chapter II ‘Economic and monetary policy’, Section 1 ‘Economic policy’.

The ‘no-bailout’ clause is found in Article III-183, OJ 16.12.2004 C 310/78:

Article III-183 Constitution

1. The Union shall not be liable for or assume the commitments of central governments, regional, local or other public authorities, other bodies governed by public law, or public undertakings of any Member State, without prejudice to mutual financial guarantees for the joint execution of a specific project. A Member State shall not be liable for or assume the commitments of central governments, regional, local or other public authorities, other bodies governed by public law, or public undertakings of another Member State, without prejudice to mutual financial guarantees for the joint execution of a specific project.

2. The Council, on a proposal from the Commission, may adopt European regulations or decisions specifying definitions for the application of the prohibitions laid down in Articles III-181 and III-182 and in this Article. It shall act after consulting the European Parliament.

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Does the Constitution differ from the draft? In the Constitutional Treaty ‘The Council of Ministers’ became ‘The Council’. Paragraph 2 became the legal base for three Articles, III-181, III-182 and III-183.

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Let us see if the ‘no-bailout’ rule has led to any comments in our reference materials.

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The Swedish government memorandum ‘Fördraget om upprättande av en konstitution för Europa’ (Utrikesdepartemetet, Departementsserien (Ds) 2004:52, december 2004) described the signed Constitutional Treaty, but I found no comment on Article III-183.

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No reference was found in the Swedish draft ratification bill ‘Lagrådsremiss ─ Fördraget om upprättande av en konstitution för Europa’ (2 June 2005).

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The government of Finland laid out the Constitutional Treaty in its ratification bill ‘Hallituksen esitys Eduskunnalle Euroopan perustuslaista tehdyn sopimuksen hyväksymisestä ja laiksi sen lainsäädännön alaan kuuluvien määräysten voimaansaattamisesta’ (HE 67/2006 vp). On page 183 the government remarked that in Article III-183, as in Article 103 TEC, the union was not responsible for debts or commitments of member states [but it did not mention that the same lack of liability applies among member states]. It then remarked that the legal base for decisions specifying definitions had been expanded to cover Article III-182:

”III-183 artikla, jonka mukaan unioni ei ole vastuussa jäsenvaltioiden veloista tai niiden muista antamista taloudellisista sitoumuksista, vastaa asiasisällöltään SEY 103 artiklaa.

Artiklan 2 kohtaa on laajennettu niin, että sen perusteella voidaan antaa myös III-182 artiklan soveltamista varten tarvittavat tarkemmat määräykset.”

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The same remark appears in Swedish in ’Regeringens proposition till Riksdagen med förslag om godkännande av Fördraget om upprättande av en konstitution för Europa och till lag om sättande i kraft av de bestämmelser i fördraget som hör till området för lagstiftningen (RP 67/2006 rd), page 187:

”Innehållet i artikel III-183, enligt vilken unionen inte skall ansvara för medlemsstaternas skulder eller andra ekonomiska förpliktelser, motsvarar i sak artikel 103 i EG-fördraget.

Artikel III-183.2 har utvidgats så att med stöd av den får antas även närmare bestämmelser som behövs för tillämpningen av artikel III-182.”

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Klemens H. Fischer in ‘Der Europäische Verfassungsvertrag‘ (Nomos, Stämpfli & Manz, 2005), pages 310─311, makes the observations that „Artikel III-183 EUVV korrespondiert mit Artikel 103 EGV“ and „Artikel III-183 EUVV korrespondiert mit Artikel III-75 VVE“ [but he makes no remarks on the changes concerning paragraph 2],


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The next instalment turns to the IGC 2007 and the Lisbon Treaty.



Ralf Grahn