Estonia’s high court approves ESM participation

TALLINN - Estonia’s Supreme Court has taken the position that the treaty founding the European Stability Mechanism (ESM) is not in conflict with the Constitution, reports National Broadcasting. The Supreme Court’s ruling means that Estonia will be able to take part in the ESM.
The highest court in Estonia noted that the contested article in the ESM Treaty “limits the financial mandate of Riigikogu, the principle of a democratic country with the Rule of Law and infringes upon Estonia’s sovereignty, but the limitations are justified.”

The  court added in its ruling that instability in the euro area would also threaten the economic stability in Estonia. “Stability is necessary for the Estonian state to be able to meet its Constitutional obligations, including guaranteeing individuals’ fundamental rights,” emphasized the Supreme Court.

The ESM is a permanent bailout fund that will have a maximum lending capacity of 500 billion euros. It is designed to replace the European Financial Stability Facility, which has backed bailouts for Greece, Portugal and Ireland, reports cnn.com. The ESM is central to plans European Union leaders announced in late June to break the “vicious circle” between banks and governments, which threatens the region’s largest economies.
But there appears to be some disagreement over exactly what the ESM will be able to do, particularly when it comes to buying government bonds and bailing out banks. It is also unclear whether the ESM has enough money to achieve all of its goals.

The constitutionality of the ESM was weighed by 19 judges in the Supreme Court. A total of five dissenting opinions from ten judges were submitted with the ruling.
Supreme Court Justices Henn Joks, Eerik Kergandberg, Lea Kiivit, Ants Kull and Lea Laarmaa were of the opinion that the request of the Chancellor of Justice Indrek Teder ought to have been granted and the relevant ESM Treaty provision ought to have been declared unconstitutional.

Minister of Finance Jurgen Ligi has said that although bailing out countries suffering from the debt crisis is an unpopular option, it is necessary to act in a responsible manner and support troubled countries, reports Postimees. In his interview to the daily, Ligi noted that debates over European bail-out programs are beyond the public’s grasp as well as beyond the abilities of Riigikogu.

“One cannot say that there is much room for irresponsible approaches in Europe; rather, the problem is that we cannot overlook public opinion in certain matters. The public opinion is against austerity measures and aid programs,” said the minister.

“Demands that every single person needs to understand everything and that every single person be polled are, in my mind, pornographic,” asserted Ligi, explaining that popularity is not the objective of international relations as not all national interests can be translated to the level of individuals.
When asked whether Estonia has considered leaving the euro area, the minister noted that Estonia was, in a manner of speaking, the first euro area country, founding the area by pegging its currency to the German mark.