Estonia under threat of forced aid to Greece

Photo: SCANPIX

Though approved by Riigikogu's European Union Affairs Affairs Committee last Friday, financial aid for Greece within European Stability Mechanism (ESM) could just as well be forced upon us, say experts - and that in volumes prescribed by other members.

Turns out, ESM founding treaty says assistance to an ailing eurozone member may come with 85 percent «yes» vote should consensus prove elusive at the mechanism’s governing council. As every member state’s vote is according to size of investments into the stability mechanism, the required majority is doable when adding the votes of Germany (27 percent of investments into ESM), France (20%), Italy (18%), Spain (12%), Holland (5.7 %) and Belgium (3.5%).

Thus, Estonia essentially lacks a veto right in the decision making process and six ESM members may take decisions within the credit volume prescribed at establishment of ESM, without a need for yes-votes by the remaining 11 member-states. «We are indeed able to sit at the table as decisions are being taken, but Estonia’s percentage is too small to hinder anything,» said Professor Jaan Ginter of public law institute, University of Tartu.

«Regarding specific cases, we are not even able to affect the size of our input in any way,» confirmed law office Sorainen partner and University of Tartu EU docent Carri Ginter. «All proportions have already been set in stone by the ESM foundation agreement signed three years ago. At the moment, for us the only issue is whether or not the council decides to finance Greece’s loans or not,» he added.

The ESM aid for crisis-stricken states is limited to €700bn, of which Estonia guarantees €1.79bn. Carri Ginter says no-one may demand a bigger input than that without enraging the overall ESM volume. Currently, however, a €7bn short-term loan is being planned for Greece and Estonian input fits within the agreed limits.

«There is no way Estonia can hinder help towards other states. The ESM base agreement has been sighed and should ESM run out of money, Estonia must transfer money,» said Carri Ginter.

The docent went on to explain that unlike Germany, Estonia has submitted part of its right to decide to the European Union. «The German [constitutional – edit] court only declared ESM as constitutional because their parliament provides ESM with nearly a quarter of its volume and is therefore able to affect decisions,» he said. «Our parliament does not have the option.» Estonia having domestically involved its parliament in the decision making process does have a mitigating effect, said Mr Ginter, but unlike Germany Estonia could not justify nonparticipation in ESM citing resistance in our parliament.

As aid takes 85 percent of ESM governing council votes, only states with input of 15 percent or more are able to veto decisions.

Professor Jaan Ginter said ESM credit volumes might indeed be boosted, but without consent of people Estonia could not be deprived of more of its right to decide. «Increasing of volumes would only amount to consensus-bases changing of ESM base documents, and by that the EU will not be delegated new powers,» he explained. «Supreme Court has found that participation in ESM is acceptable, but any further steps would require asking the opinion of highest carrier of state authority,» added the professor.

As also underlined by Carri Ginter, participation in ESM is where the line must be drawn when it comes to yielding sovereignty. «It seems this is nothing but rescuing the euro right now, but if, in addition to fiscal policy, they will also be intruding into coordination of economic policy of member states, then that would be the place to start asking for the opinion of the people,» he said.

Mr Ginter said a need for referendum may also arise if Estonia would yield independence to the degree of Greece. Also, it is unconstitutional to move towards a common federal budget. «A situation where someone outside of the national parliament will guide a state’s decisions is rather rough. To give up competencies like the Greek are, opinion of the people should be sought,» said Carri Ginter.