EU: Financial Assistance

Lord Willoughby de Broke Excerpts

Wednesday 15th December 2010 Lords Chamber

Asked by

[Lord Willoughby de Broke]

To ask Her Majesty’s Government whether the United Kingdom’s participation in the European Union stability mechanism, and the proposed loan to the Republic of Ireland, are in breach of the “no bailout” clauses enshrined in the Maastricht treaty.

[The Commercial Secretary to the Treasury (Lord Sassoon)]

My Lords, Article 125 of the treaty, on the so-called “no bailout” clause, states that a member state,

“shall not be liable for or assume the commitments”,

of another member state. Article 125 does not preclude member states from providing loans to one another. The European financial stability mechanism was established under Article 122.2, which allows the Union to lend to a member state that is in difficulties or,

“seriously threatened with severe difficulties … or exceptional occurrences beyond its control”.

[Lord Willoughby de Broke]

My Lords, I am grateful to the Minister for that slightly evasive Answer. The phrase about matters “beyond its control” simply cannot be the answer to the difficulties encountered by Greece, Ireland or other potential bailout candidates. Beyond that, could the Minister say whether it is right, when British taxpayers are facing cuts in services and higher taxes, that £7,000 million should be poured into the eurozone black hole in their name?

[Lord Sassoon]

My Lords, I did not intend to be evasive but to give a factually correct Answer in respect of Articles 125 and 122. I was not asked whether we thought it was proper to use Article 122 in this way. As to whether it is proper to extend loans, to answer a question that the noble Lord did ask, we have decided, in the exceptional case of Ireland, which is our fifth largest trading partner, that it is in the interests of the UK economy to extend a bilateral loan to it. That does not mean that we will participate in any other permanent arrangements that may be put in place for the eurozone.