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The IMF option sailed with the Lisbon treaty

Read more about: Economy, Lisbon Treaty, Referenda     Print This Post

It’s an interesting day on the Irish Times opinion page as Vincent Browne and Terence McDonough set out the anti-Yes position on the fiscal treaty, specifically regarding whether Ireland will still have recourse to the IMF outside the European Stability Mechanism. It’s clear that technically, as an IMF member country, it will. But leave aside for a second the question of whether IMF policies will leave it enough room to cater for a rogue Eurozone state like Ireland in that eventuality. What about our existing obligations under EU treaties, as codified in the Treaty on the Functioning of the European Union (“Lisbon Treaty’):

CHAPTER 4 – PROVISIONS SPECIFIC TO MEMBER STATESWHOSE CURRENCY IS THE EURO
Article 136
1.In order to ensure the proper functioning of economic and monetary union, and in accordance with the relevant provisions of the Treaties, the Council shall, in accordance with the relevant procedure from among those referred to in Articles 121 and 126, with the exception of the procedure set out in Article 126(14), adopt measures specific to those Member States whose currency is the euro:
(a)to strengthen the coordination and surveillance of their budgetary discipline;
(b)to set out economic policy guidelines for them, while ensuring that they are compatible with those adopted for the whole of the Union and are kept under surveillance.
2.For those measures set out in paragraph 1, only members of the Council representing Member States whose currency is the euro shall take part in the vote.
A qualified majority of the said members shall be defined in accordance with Article 238(3)(a).
Article 137
Arrangements for meetings between ministers of those Member States whose currency is the euro are laid down by the Protocol on the Euro Group.
Article 138
(ex Article 111(4), TEC)
1.In order to secure the euro’s place in the international monetary system, the Council, on a proposal from the Commission, shall adopt a decision establishing common positions on matters of particular interest for economic and monetary union within the competent international financial institutions and conferences. The Council shall act after consulting the European Central Bank.
2.The Council, on a proposal from the Commission, may adopt appropriate measures to ensure unified representation within the international financial institutions and conferences. The Council shall act after consulting the European Central Bank.
3.For the measures referred to in paragraphs 1 and 2, only members of the Council representing Member States whose currency is the euro shall take part in the vote.
A qualified majority of the said members shall be defined in accordance with Article 238(3)(a).

[]
In other words, we have already agreed to be outvoted in the Eurogroup regarding budgets, economic policy, and common positions at international institutions like, er, the IMF! If we do a solo run to the IMF without the approval of a qualified majority of the Eurozone countries, we’ve broken the Lisbon treaty.

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7 Responses to “The IMF option sailed with the Lisbon treaty”

  1. # Comment by Veronica May 2nd, 2012 09:05

    P,

    I think this whole issue is a bit of a red herring. The IMF has made clear that in relation to eurozone countries, it acts in concert with the EU institutions. Several weeks ago, in a Sunday Independent article, economist Colm Mc Carthy suggested that the IMF might have difficulties coming to Ireland’s assistance because of the interrelationship with the EU – i.e. if the EU refused to provide loans to Ireland, then the IMF could do nothing to help either. Finally, in the TV3 debate on the Treaty last night, Simon Coveney stated that even if the IMF responded to an Irish request for loan assistance, their terms and conditions would be far more onerous than what Ireland would receive under the ESM arrangemnt or an extension of the existing financing arrangements.

    I confess I find this issue confusing, because, I suspect, many of those trenchantly making claims about what would happen are confused as well and are not at all sure what would happen. In that context, the ‘Yes’ side argument that there is at least certainty about where Ireland can access funds at a reasonable cost in the event that we can’t return to the markets after 2013 has that much going for it.

    It would help if there was a bit less rhetoric and a lot more honesty in both sides representation of the arguments for ‘Yes’ and ‘No’ votes. Michael Noonan is being thumped all over the place this morning for stating the obvious, namely that (1) a ‘No’ vote will like make framing the 2013 budget more difficult because one of the immediate effects of a ‘No’ result would be a spike in market rates for lending to Ireland. (The real question, though, is whether this effect would be short lived – as was the case in respect of collapse of the Dutch government – or sufficiently prolonged to impair the possibility of Ireland’s return to the market in 2013); and (2) further ‘austerity’ is inevitable because ‘Yes’ or ‘No’, there’s still that 18bn euro budget deficit gap to be filled.

    Instead of emoting about his ‘scaremongering’, ‘insulting the electorate’ etc. etc. (which he may have been doing, but which is quite irrelevant even if he was) the great and the good might better engage with the underlying point he is making. That would include a demand that he set out in black and white figures exactly what he believes the extra cost of a ‘No’ vote will be for December’s Budget, in terms of captial expenditure cuts, new taxes, resiling from Croke Park to decrease public service costs, how many schools and hospital beds will be closed and what cuts he envisages will be required in basic social welfare rates.

  2. # Comment by EddieL May 2nd, 2012 11:05

    Obviously treaties these days are not worth the papaer they are written on. It surprises me that anyone reads them. So thanks anyway for telling us what has already been catered for.
    From what I hear in the debate so far absolutely no one is interested in what is in the treaties (probably because they are meaningless). The debate seems to be about how much more debt we can accumulate and who will be delighted to lend when all our national assets are already earmarked.
    To me the only sensible debate that is going on at the moment is how much the government is going to antgonise people more by preventing them from enjoying a smoke unless they go out to sea preferably as far as Canada or Australia.

  3. # Comment by Denis Cooper May 2nd, 2012 20:05

    Firstly, all the EU governments have already been guilty of massive breaches of the Lisbon Treaty, as Christine Lagarde openly admitted in December 2010:

    http://online.wsj.com/article/SB10001424052748704034804576025681087342502.html

    “We violated all the rules because we wanted to close ranks and really rescue the euro zone.”

    “The Greek and Irish rescues – €110 billion and €67.5 billion, respectively – and the creation of the bailout fund were, Ms. Lagarde said, “major transgressions” of the Lisbon Treaty that is the European Union’s governing document. “The Treaty of Lisbon,” she says, “was very straightforward. No bailing out.”"

    Secondly, an agreement that the eurozone countries will normally adopt a common position for discussions within the IMF can’t prevent Ireland or any other eurozone country applying for IMF assistance in its own right, in fact it would have to do so as the eurozone states are individually IMF member states but the eurozone is not an IMF member state.

    Thirdly, what fine friends they would be, who even attempted to use a vote in the eurogroup to prevent one of their number applying for IMF assistance, and what would be the likely consequences for the stability of the eurozone?

  4. # Comment by Veronica May 3rd, 2012 08:05

    Dennis,

    Indeed, yes. The first two countries to breach the old Stability and Growth Pact, of which the Fiscal Treaty is the successor, were..eh…Germany and France.

    On your third point, a decision by Ireland to unilaterally apply to the IMF for assistance wouldn’t necessarily come to a Council vote, as far as I know. The EU Commission polices the treaties and where a member state is in breach, it issues a reasoned opinion and the matter may be pursued in the European Court of Justice in due course. But, as I understand it, it’s not about what Ireland can or can’t do; it’s about how the IMF would respond and that’s where the uncertainty lies: the IMF might take the view that it doesn’t wish to entertain such a request outside the context of its relationships with the EU institutions for eurozone member states or its conditions for any programme assistance might be much worse than what’s on offer under the ESM.

  5. # Comment by EddieL May 7th, 2012 20:05

    If I may I would like to set out what I consider this treaty is about as simply as I can put it. The stated aim of this treaty is to insist that we pay or debts including what the bankers say we owe them (couched in a requirement that we balance our books).
    As debts are normally a legal matter why put it into the Constitution in this instance? The reason is simple. The payments to the bankers are retrospective payments i.e. The legal contract was signed reptrospectively. If this happened in an Third World country with billions of €uro being handed out retrospectively think of the hue and cry there would be about corruption.
    If these payments are now covered by the constitution then they they will become legal through the will of the people. Q.E.D.

  6. # Comment by sweeterjan May 26th, 2012 06:05

    about corruption.
    If these payments are http://www.vendreshox.com/femme-nike-shox-c-15.html now covered by the constitution then they they will become legal through the will of the people. Q.E.D.

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