July 12 (Bloomberg) -- Estonia’s Supreme Court ruled the founding treaty of the European Stability Mechanism is in line with the Baltic nation’s constitution, allowing Parliament to ratify joining the euro area’s permanent rescue fund.
Justice Chancellor Indrek Teder said in March that a clause in the treaty allowing decisions on financial assistance to be made with an 85 percent qualified majority violates the constitution and asked the Supreme Court to reject it.
The treaty was “deemed constitutional,” the Tartu, Estonia-based court said today in an e-mailed statement. “The Supreme Court is of the position that although the contested article restricts the financial competence of the Estonian parliament, the principle of rule of law and the sovereignty of Estonia, the restriction is justified.”
Europe’s permanent bailout fund will succeed the temporary European Financial Stability Facility, or EFSF, which was used to provide emergency loans to Ireland and Portugal and a second round of aid to Greece. The newest euro member’s contribution to the ESM would be 0.186 percent of the total, compared with guarantees of 2 billion euros ($2.4 billion), or 0.27 percent, of the EFSF.
The ESM would provide Estonia with long-term credit guarantees to ensure the functioning of the state in the event of a crisis, according to the Finance Ministry. Estonia lacks a veto at the International Monetary Fund, the World Bank, the European Bank for Reconstruction and Development and other international financial organizations that also use qualified-majority voting, it has said.
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