Eurozone stability mechanism should be part of the EU, says Constitutional Affairs Committee

A limited EU Treaty change to allow a permanent bailout fund for the eurozone was backed by Constitutional Affairs Committee on Monday. However, MEPs were concerned that the mechanism is an intergovernmental choice, rather than an EU one, and urged Member States to bring it within the EU system.

The Treaty change proposed by the European Council in December 2010 to allow the creation of a permanent European Stability Mechanism (ESM), was approved by the Constitutional Affairs Committee on Monday 7 March, with 17 votes in favour and 4 against.

Conditions to be met

MEPs consider that the ESM should be "brought into the European Union framework". They therefore call on the European Council to fulfil two conditions when establishing the stability mechanism. The first condition calls for a redrafting of the European Council proposal, suggesting that the stability mechanism be incorporated into the European Union framework.

Alternatively, MEPs ask for a clear commitment from the European Council to ensuring that the EU institutions are involved in ESM operations. This would mean basing ESM decisions on proposals from the Commission. The Commission would also be responsible for implementation and monitoring, evaluating the use of the ESM together with the European Central Bank, and reporting back to Parliament. 

Furthermore, MEPs adopted an amendment saying that "as a complement to the stability mechanism, the Union should promote a consolidated Eurobonds market".

Negotiations with Member States

Co-rapporteurs Elmar Brok (EPP, DE) and Roberto Gualtieri (S&D, IT) briefed the committee on negotiations under way with the Member States, with Mr Brok noting that "some movement is taking place there". He acknowledged the need to deal urgently with the issue so as "to avoid misunderstandings in the money markets".

Background

The leaders of the EU Member States decided at their 16–17 December 2010 summit on a limited Treaty change to allow the establishment of a permanent mechanism to safeguard the stability of the eurozone. This "revision of article 136" of the Treaty requires consultation of Parliament, Commission and the European Central Bank.

Parliament is expected to vote on the Treaty change at the next plenary session on 24 March. The Member States hope to adopt the change formally at the European Council meeting on 24–25 March.

Thereafter, the change still needs to be ratified by all 27 Member States. The target date for the entry into force of the European Stability Mechanism is 1 January 2013.

In the chair: Zita Gurmai (S&D, HU)