Open the debate on the European Stability Mechanism: an emergency in the hands of citizens

20 January 2012 by S. Berwez

The following letter and initiative have been approved by CADTM Belgium. With this initiative CADTM wants to invite citizens to question the members of the Belgian parliament.

Now the debt crisis and its consequences are no longer affecting the Southern countries alone, the European Union has decided to establish the European Stability Mechanism in order to enable crisis management within the Euro area and permanently replace the temporary European Financial Stability Facility (EFSF) and the European Financial Stabilization Mechanism (EFSM) from 2013. The signing of the treaty establishing this mechanism occurred during the summer of 2011 (a holiday period during which citizens’ vigilance was weakened) but its content has been virtually passed over in silence in the media and by our leaders.

Since the fall of 2011, a short video presenting the ESM ESM
European Stability Mechanism
The European Stability Mechanism is a European entity for managing the financial crisis in the Eurozone. In 2012, it replaced the European Financial Stability Facility and the European Financial Stabilisation Mechanism, which had been implemented in response to the public-debt crisis in the Eurozone. It concerns only EU member States that are part of the Eurozone. If there is a threat to the stability of the Eurozone, this European financial institution is supposed to grant financial ‘assistance’ (loans) to a country or countries in difficulty. There are strict conditions to this assistance.
, subtitled in many different languages, was passed around on the web through the initiative of a German group of journalists called Abgeordneten-check. Its first viewing leaves you stunned as the extracts of the treaty quoted seem totally undemocratic and excessive. Reading through the complete text of this treaty confirms the content of the video. Many articles[1] appear on the Internet to denounce the fact that the ESM scorns the basic principles of democracy: it evades any democratic control (of the European Parliament, the national parliaments and the European Court of Auditors) and enjoys total judicial immunity,[2] though the state coffers are at its disposal. This seizure of power directly infringes on the prerogatives of national parliaments elected by the people looks just like a coup.

In its third article, the treaty explains its purpose: to “mobilize funding and provide financial assistance, under strict economic policy conditionality, to the benefit of ESM Members which are experiencing or are threatened by severe financing problems, if indispensable to safeguard the financial stability of the Euro area as a whole”. These conditions[3] are reminiscent of those of the IMF IMF
International Monetary Fund
Along with the World Bank, the IMF was founded on the day the Bretton Woods Agreements were signed. Its first mission was to support the new system of standard exchange rates.

When the Bretton Wood fixed rates system came to an end in 1971, the main function of the IMF became that of being both policeman and fireman for global capital: it acts as policeman when it enforces its Structural Adjustment Policies and as fireman when it steps in to help out governments in risk of defaulting on debt repayments.

As for the World Bank, a weighted voting system operates: depending on the amount paid as contribution by each member state. 85% of the votes is required to modify the IMF Charter (which means that the USA with 17,68% % of the votes has a de facto veto on any change).

The institution is dominated by five countries: the United States (16,74%), Japan (6,23%), Germany (5,81%), France (4,29%) and the UK (4,29%).
The other 183 member countries are divided into groups led by one country. The most important one (6,57% of the votes) is led by Belgium. The least important group of countries (1,55% of the votes) is led by Gabon and brings together African countries.
(privatizations, structural adjustment Structural Adjustment Economic policies imposed by the IMF in exchange of new loans or the rescheduling of old loans.

Structural Adjustments policies were enforced in the early 1980 to qualify countries for new loans or for debt rescheduling by the IMF and the World Bank. The requested kind of adjustment aims at ensuring that the country can again service its external debt. Structural adjustment usually combines the following elements : devaluation of the national currency (in order to bring down the prices of exported goods and attract strong currencies), rise in interest rates (in order to attract international capital), reduction of public expenditure (’streamlining’ of public services staff, reduction of budgets devoted to education and the health sector, etc.), massive privatisations, reduction of public subsidies to some companies or products, freezing of salaries (to avoid inflation as a consequence of deflation). These SAPs have not only substantially contributed to higher and higher levels of indebtedness in the affected countries ; they have simultaneously led to higher prices (because of a high VAT rate and of the free market prices) and to a dramatic fall in the income of local populations (as a consequence of rising unemployment and of the dismantling of public services, among other factors).

programs, etc.) of which we already know the adverse effects on populations only too well. From the outset[4], the treaty lays its cards on the table by declaring that “the ESM will cooperate very closely with the International Monetary Fund (IMF) in providing financial assistance” and adding that “[a] Euro area Member State requesting financial assistance from the ESM is expected to address a similar request to the IMF”. Later, the text is just as clear when it gives the IMF and the European Commission the power to assess the financial situation of the country facing difficulties and to propose a “macro-economic adjustment program”[5]. Moreover, the ESM will enjoy “preferred creditor status”[6] in a similar fashion to the IMF and after the latter. It is useful to mention that this treaty will have supremacy over national laws if it is ratified.

In the face of such a breach of peoples’ sovereignty, we have no other choice than to react. Time is short because the treaty was already approved in 2011 at the European level, and now national parliaments must quickly ratify it. The ratification originally planned by December 31st 2012 would already be brought forward to the first half of 2012. It is urgent to open a democratic debate on this issue. The CADTM wants to invite citizens to question the members of the Belgian parliament by asking them to take a clear stand in favor for or against ratifying the treaty to establish the European Stability Mechanism (

As Belgium’s contribution only represents 3,48%[7] of the ESM capital, blocking the text in the Belgian parliament won’t be enough. This citizen’s action must spread throughout the whole of Europe, and in particular in Germany (27,15%), France (20,39%), Italy (17,91%) and Spain (11,90%).

This Belgian action is a call to all people of Europe to together show to our leaders that we have a say in these matters.

[1] sources used to write the present article

[2] European treaty establishing the European Stability Mechanism, Article 27 (immunity of ESM) et 30 (immunities of persons), Council of Europe

[3] Article 12

[4] Preamble, Whereas, 6)

[5] Article 13

[6] Preamble, Whereas, 10)

[7] Percentages from the contribution key, Annex 1




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