We now have a full copy of the conclusions reached by the European heads of government. Not many surprises in there, but I thought I’d post an annotated version below for those interested in EU arcana.
1. The European Council welcomed the report presented by its President following up on its conclusions of 28 and 29 October 2010. It agreed that the Treaty should be amended in order for a permanent mechanism to be established by the Member States of the euro are to safeguard the financial stability of the euro area as a whole (European Stability Mechanism). This mechanism will replace the European Financial Stability Facility (EFSF) and the European Financial Stabilisaton Mechanism (EFSM), which will remain in force until June 2013. As this mechanism is designed to safeguard the financial stability of the euro area as a whole, the European Council agrees that article 122(2) will not be used for such purposes.
The interesting thing here is the last sentence. This is the language David Cameron, the UK prime minister, was seeking to ensure non-euro countries do not get sucked into another bail-out when the new rescue system goes into effect in 2013.
The article 122 that is mentioned is the portion of the treaty that allows the EU to act in cases of natural disasters and other calamities. It was used during the Greek debt crisis to create the current bail-out system, which forces all 27 EU members participate in a portion of any rescues. With this language, the UK believes it has shut off that avenue in the future.
2. The European Council agreed to the text of the draft decision amending the TFEU set out in annex I. It decided to immediately launch the simplified revision procedure provided for in Article 48(6) TEU. The consultation of the institutions concerned should be concluded on time to allow the formal adoption of the decision in March 2011, completion on national approval procedures by the end of 2012, and entry into force on 1 January 2013.
This paragraph is little more than the nuts and bolts of how the treaty change will go forward. Nothing new, unexpected or particularly interesting here.
3. The European Council also called for Finance Ministers of the euro area and the Commission to finalise work on the intergovernmental arrangement setting up the future mechanism by March 2011, integrating the general features set out in the Eurogroup statement of 28 November 2010 (annex II). The mechanism will be activated by mutual agreement of the euro area Member States in case of risk to the stability of the euro area as a whole.
This paragraph is pretty important. It lays down the schedule for the most controversial work yet to be done: actually coming up with the size and scope of the new bail-out fund. This could prove controversial, and officials have been very tight lipped thus far on what it will look like.
The one thing that is not a mystery, however, is how the new bail-out mechanism will affect private investors, the issue that sent the bond market into a panic last month. Originally, the German government had said they wanted future bail-outs to lean heavily on private bondholders to bear more of the cost of a rescue. The Nov. 28 statement referred to here was a decision made at the same time as the Irish bail-out for only mild measures against bondholders.
4. Member States whose currency is not the euro will, if they so wish, be involved in this work. They may decide to participate in operations conducted by the mechanism on an ad hoc basis.
This conclusion is pretty self-explanatory. In both the Greek and Irish bail-outs, non-euro members like the UK and Sweden voluntarily helped out. This opens the door for such future magnanimity.
Across the globe: Gideon Rachman and his FT colleagues debate international affairs on