THE COALITION has dismissed as without foundation a contention by the Socialist Party that the Government agreed to a secret clause that would deny access to the permanent bailout fund, the European Stability Mechanism (ESM), if the proposed fiscal treaty was not ratified.
Socialist Party MEP Paul Murphy yesterday claimed that the treaty setting up the ESM last summer was quietly revised last month to link it to the fiscal treaty.
However, the Government last night rejected that anything had been done in secrecy. It also argued that there was always complete agreement that access to the stability mechanism was contingent on a commitment to fiscal responsibility.
“The original ESM treaty signed on 11 July 2011 did not contain the relevant clause. Then on 2 February 2012, a revised ESM treaty was signed which included the key clause,” said Mr Murphy.
The clause states: It is acknowledged and agreed that the granting of financial assistance in the framework of new programmes under the ESM will be conditional, as of 1 March 2013, on the ratification of the [fiscal treaty].”
Mr Murphy said the Government had signed the clause with no public debate about its implications and accused it of secretly conniving with the EU establishment.
The result, he said, was a “blackmail clause blocking funds to any member state not ratifying the fiscal treaty”. He also argued that the Government could have blocked the addition of the clause, as such an amendment would have required unanimous agreement from 27 EU member states.
“The Government must answer why it agreed to the insertion of this clause? Was it precisely in order to make a weapon to be used to try to deliver a Yes vote on the austerity treaty? I am calling on the Taoiseach to make a statement as a matter of urgency on this issue,” said Mr Murphy.
However, the Government spokesman denied there was anything secretive or underhand about the change to the stability mechanism treaty.
“A very strong and logical consensus was reached that access to the rescue funds [through the ESM facility] was contingent on a commitment to fiscal responsibility,” said the spokesman.
He said that the signing of the additional clause to the treaty in February was “a matter of public record”.
A reliable source in Brussels said the underlying rationale of the stability mechanism was that those who became party to it also had to exercise strict fiscal responsibility.
“The link has never been contested,” said the source, who added that a package of changes had been announced to the ESM facility in December, including the removal of private sector involvement in the fund, and the agreement to bring its operation date forward to July of this year.
The EU permanent bailout fund had been first agreed last summer as a more permanent stability fund to replace the temporary European Financial Stability Fund.
There has also been a debate about the fund’s “firepower”. Ireland has been one of a number of states who have argued for it to be increased to over €1 billion.
At present, it stands at about €500 million, which some states believe is not a sufficient amount to protect from future contagion.
