Stephen asked the Minister for Finance:

if it is the case that Ireland has an effective veto over the ESM due to the fact that Ireland has to ratify the amendment to Article 136 of the treaty on the functioning of the European Union in order for the ESM to be established;

if he has considered invoking this veto in order to have recital five of the ESM treaty removed or amended, and what the outcome of that consideration was;

if he agrees that recital five is not in our national interest and that its removal or amendment, therefore, would be in our national interest;

and if he has not considered invoking the veto over the ESM by refusing to ratify the amendment to Article 136, if he will explain why not.

Ref No: 22013/12

Minister for Finance ( Mr Noonan) :

On 25 March 2011, the European Council agreed to amend Article 136 of the Treaty on the Functioning of the European Union to insert the following text:

‘3. The Member States whose currency is the euro may establish a stability mechanism to be activated if indispensable to safeguard the stability of the euro area as a whole. The granting of any required financial assistance under the mechanism will be made subject to strict conditionality.’.

Separately, a Treaty to establish the European Stability Mechanism has been agreed among euro area countries. This is an intergovernmental treaty that stands outside the EU Treaty framework.

Both instruments are separate and contain their own requirements for entry into force.

The amendment to Article 136 will enter into force when approved by all Member States of the EU, including Ireland, according to their national requirements. The target date for this to be done is 1 January 2013.

The ESM Treaty, will enter into force when ratified by signatories whose subscriptions represent 90% of the total initial subscriptions. The target date for this is 1 July 2012.

The Government considers that it is strongly in Ireland’s best interests for both instruments to enter into force as soon as possible.

Not  approving the amendment of Article 136 will not prevent the ESM Treaty from entering into force once the necessary conditions are met.