Friday, 11 June 2010

How much money are we handing over?

On Tuesday of this week, June 8, Lord Pearson asked a Starred Question:
To ask Her Majesty's Government whether Article 122.2 of the Treaty on the Functioning of the European Union has been or could be used to require the United Kingdom to underwrite £9.6 billion of other European Union member states' debts.
The subject has been raised before. Then it was Lord Myners who was replying, now it is Lord De Mauley and matters have moved on.
My Lords, EU finance Ministers agreed on 9 May that up to €60 billion of emergency finance can be provided to any member state in accordance with Article 122.2. Only where there are defaults on loan repayments would there be a cost to the EU budget. Member states would be liable for a share. Based on the United Kingdom's contribution to the 2010 EU budget, the UK's share would be approximately 13.6 per cent, or up to a maximum of around €8 billion. Euro-area finance Ministers have also agreed a €440 billion package of assistance to be provided through a special purpose vehicle. The United Kingdom has chosen not to participate in this, and there is therefore no question of any liability arising to the United Kingdom.
So, it seems that in certain circumstances, like defaults on loan repayments, the UK will be liable for a share of the emergency finance to the tune of €8 billion, not a sum to be sneezed at.

As has been mentioned before, Article 122.2 contradicts Article 125 as Lord Pearson pointed out in his follow-up:
My Lords, I thank the Minister for that Answer, and I welcome him to his new position. However, I have to point out that this article can only be used legally to help with natural disasters, such as earthquakes and so on. Is he aware that the Eurocrats are also violating Article 125, which prohibits financial bailouts of any kind? If so, can he tell us what the sum of all this illegality is going to cost us?
Indeed, it is illegal, as Lord De Mauley more or less admitted but there is a way round that:
I shall first answer the noble Lord's question about Article 125-the so-called bailout clause-which states:

"The Union shall not be liable for or assume the commitments of ... governments ... A Member State shall not be liable for or assume the commitments of ... governments ... of another Member State".

That does not rule out member states lending each other money.
Indeed, it does not.

1 comment:

  1. MrYoungIndependence18 June 2010 at 22:19

    We're handing over way too much money to the European Union. As much as I sympathise with the people of Greece, Spain and all the other countries in the Eurozone, I do not believe that it is our responsibility. You can't bail out debt with more debt.