As we in the UK hover on the outskirts of the Euro dithering indecisively about our future, it is worth having a quick look at the strait-jacket that the Eurozone members are fitting themselves with in the form of the European Stability Mechanism (ESM).
The ESM is due to start a phased takeover from the ESFS from June 2013 and will over the first five years gather €700 billion from the member states on a pro rata basis to be used to bolster up any country that gets into difficulty.
May sound reasonable but look at how the ESM is set up according to the ESM treaty.
Apart from its Board of Governors consisting of member state finance ministers, there appears to be absolutely no accountability to the system at all. And check out the voting powers, it only needs a quorum of 2/3 who between them have 2/3 of voting powers. That is to say that not all Governors are equal in that they have different voting weights based on country/population size.
Under Article 8 the starting point in capital terms is €700 billion. But, under Article 10 this can be increased as the board sees fit with it seems no cap.
Then under Article 7 member states have just seven days to stump up with the cash required. But look at the wording used here:
ESM Members hereby irrevocably and unconditionally undertake to pay on demand any capital call made on them by the Managing Director pursuant to this paragraph, such demand to be paid within seven days of receipt.
How can a democratic government of a member state ‘irrevocably and unconditionally undertake’ anything? What if the next government wants to change its mind? It attempts to bind future parliaments and make them subservient to the ESM in matters of national debt!
Now we get to the really interesting part. The ESM will be a legal body in its own right able to partake in contracts, acquire and dispose of property, and be a party to legal proceedings. Sound reasonable? Well actually it’s all one sided.
Under Article 27 it is immune from legal proceedings and inspection:
3. ‘The ESM its property, funding and assets, wherever located and by whomsoever held, shall enjoy immunity from every form of judicial process except to the extent that the ESM expressly waives its immunity for the purpose of any proceedings or by the terms of any contract, including the documentation of the funding instruments’.
4. The property, funding and assets of the ESM shall, wherever located and by whomsoever held, be immune from search, requisition, confiscation, expropriation or any other form of seizure, taking or foreclosure by executive, judicial, administrative or legislative action.
And under sections 5 and 6 the archives and premises of the ESM and all documents belonging to the ESM or held by it, shall both be inviolable.
This immunity is also extended to those that work for the ESM under Article 30, with some interesting exemptions from national income tax for them in Article 31.
This highly unaccountable body is also given the power to deal directly with the IMF.
There is also no laid out reporting structure, well after all there’s no-one for them to report to is there.
Any disputes concerning ‘interpretation and application’ between ESM members will be resolved by the Court of Justice of the European Union.
Does this look and sound like the proper addition of a new authority into what is claimed to be a democratic society? Some of the powers and protections the ESM will enjoy appear more suited to police state.