On Sovereign Debt Crisis and Sovereignty:
A Constitutional law perspective
Nikos Skoutaris
European Institute
London School of Economics
EUDO Conference, 22 November 2012
The ‘sovereignty’ debate
‘When is it appropriate for one country, or group of countries, to intervene in
another country’s affairs, as the European Union is doing now in Greece and
Hungary? If you think Greece and Hungary should be left alone, how do you feel
about Libya’s late Muammar Qaddafi?’ (Bloomberg Businessweek, 13 February
2012)
‘Greece must default if it wants democracy’ (Financial Times, 19 February 2012)
Introduction
I. Understanding ‘Popular Sovereignty’
II. Financial assistance packages and popular sovereignty
III. The doctrine of necessity
IV. The ‘Fiscal Compact’ and Constitutional steering
I. Understanding
‘Popular Sovereignty’
•
National/state/external sovereignty, is usually
understood as a state’s power to act
independently from an external or higher
authority.
•
Internal sovereignty is usually understood as “the
ultimate source of authority within a state”
•
•
Parliamentary sovereignty
Popular sovereignty
•
The main idea underlying the concept of popular
sovereignty is that people represent the ultimate
source of political and legal authority within a state
territory.
•
This concept rests on the idea that ‘all political and
legal power ought to rest on the will and consent
of those among and over whom power is
exercised’
•
This conception belong to the theory of
democracy as a basis for ideal constitution-making.
Greek Constitution, Article 1
1. The form of government of Greece is that of a
parliamentary republic.
2. Popular sovereignty is the foundation of government.
3. All powers derive from the People and exist for the
People and the Nation; they shall be exercised as
specified by the Constitution.
Greek Constitution, Article 120(4)
Observance of the constitution is entrusted to the
patriotism of the Greeks who shall have the right and
the duty to resist by all possible means against anyone
who attempts the violent abolition of the Constitution.
II. Financial assistance
packages and popular
sovereignty
•
Memorandum of Understanding (MoU):
Memorandum of Economic and Financial Policies
(MEFP) and the Memorandum of Understanding
on Specific Economic Policy Conditionality of 3
May 2010 (3845/2010), Technical Memorandum of
Understanding.
•
Stand by Agreement with IMF (30 billion euros) (9
May 2010)
•
Loan Facility Agreement 8 May 2010 (80 billion
euros)
Greek Constitution, Article 28
1. The generally recognised rules of international law, as well as
international conventions as of the time they are sanctioned by statute
and become operative according to their respective conditions, shall be
an integral part of domestic Greek law and shall prevail over any
contrary provision of the law. The rules of international law and of
international conventions shall be applicable to aliens only under the
condition of reciprocity.
2. Authorities provided by the Constitution may by treaty or agreement
be vested in agencies of international organizations, when this serves an
important national interest and promotes cooperation with other
States. A majority of three-fifths of the total number of Members of
Parliament shall be necessary to vote the law sanctioning the treaty or
agreement.
3. Greece shall freely proceed by law passed by an absolute majority of
the total number of Members of Parliament to limit the exercise of
national sovereignty, insofar as this is dictated by an important national
interest, does not infringe upon the rights of man and the foundations
of democratic government and is effected on the basis of the principles
of equality and under the condition of reciprocity.
Greek Constitution, Article 36
2. Conventions on trade, taxation, economic
cooperation and participation in international
organizations or unions and all others containing
concessions for which, according to other provisions of
this Constitution, no provision can be made without a
statute, or which may burden the Greeks individually,
shall not be operative without ratification by a statute
voted by the Parliament.
•
MoU was adopted on 3 May 2010 as an annex to
Law 3845/2010
•
Article 1(4) of this law provides for the authorization to the Finance
Minister to represent the Greek State and to sign every
memorandum of cooperation, agreement or loan convention,
bilateral or multilateral with the European Commission, the MSs of
the Euro area the IMF and the ECB in order the financial support
mechanism envisaged by the MoU to be realized. The memoranda,
agreements and conventions should be brought to the Parliament for
ratification.
•
•
StE: MoU was not an international agreement
•
But: 2 recent decisions of European Committee of Social Rights and
last week’s decision of the Greek Court of Audit.
StE: No violation of Art 1 of Protocol No 1 ECHR but Art 4(5)
should be respected
•
Stand by Arrangement with IMF (30 billion euros)
(9 May 2010)
•
•
IMF: ‘Soft Law’
Judge-Rapporteur of StE: not an int’l
agreement (Similar case law in other
countries e.g. Thailand)
•
Loan Facility Agreement 8 May 2010 (80 billion
euros)
•
•
Not yet ratified
StE held that int’l law obligations may stem
from the Loan Facility Agreement but beyond
the scope of the case
•
On 6 May 2010 the Greek Parliament adopts Law 3845/2010.
Article 1(4) of this law provides for the authorization to the
Finance Minister to represent the Greek State and to sign every
memorandum of cooperation, agreement or loan convention,
bilateral or multilateral with the European Commission, the MSs
of the Euro area the IMF and the ECB in order the financial
support mechanism envisaged by the MoU to be realized. The
memoranda, agreements and conventions should be brought to
the Parliament for ratification.
•
On 11 May 2010 Law 3847/2010 was adopted.
Article 9 provided that those agreements will only be brought for
discussion and not ratification.
Memorandum II
According to Art 1(3) of Law 4046/2012 the Prime
Minister, the Minister of Finance and the Chairman of
the Greek Central Bank are authorised to sign all
relevant international treaties to substantiate the
Financial Aid Package.
Art 1(5) provides that the relevant treaties are deemed
ratified at the moment all contracting parties sign them.
III. The ‘doctrine of
necessity’
•
Greek Constitution, Article 48
1. In case of war or mobilization owing to external dangers or an
imminent threat against national security, as well as in case of an
armed coup aiming to overthrow the democratic regime, the
Parliament, issuing a resolution upon a proposal of the Cabinet,
puts into effect throughout the State, or in parts there of the
statute on the state of siege, establishes extraordinary courts and
suspends the force of the provisions of articles 5 paragraph 4, 6,
8, 9, 11, 12 paragraphs 1 to 4 included, 14, 19, 22 paragraph 3, 23,
96 paragraph 4, and 97, in whole or in part. The President of the
Republic publishes the resolution of Parliament.
The resolution of Parliament determines the duration of the
effect of the imposed measures, which cannot exceed fifteen
days.
• ‘The highest law is the safety of the
country’ (Evangelos Venizelos)
• ‘The default of the country will
consist of the gravest breach of the
constitution’
• ‘Salus populi suprema lex est’
Council of State Decision 2/45: ‘it could be
accepted, in case this was indispensably and
imperatively necessary and unavoidable, that such
governments were entitled to regulate, even in
deviation from the Constitution, matters related to
the primary purposes for which they were called to
govern, namely the restoration of law and order and
public security’
Mustafa Ibrahim case
I. There is an imperative and inevitable necessity or
exceptional circumstance;
II. There is no other remedy;
III. The measure taken must be proportionate to the
necessity;
IV. The measure must be of a temporary character
limited to the duration of the exceptional
circumstances.
-
Emergency situation
- Exemplary case for the application of the rule of law
IV. The ‘Fiscal Compact’
Article 3
1. The Contracting Parties shall apply the following rules, in addition and without prejudice to the obligations
derived from European Union law:
(a) The budgetary position of the general government shall be balanced or in surplus.
(b) The rule under point a) shall be deemed to be respected if the annual structural balance of the general
government is at its country-specific medium-term objective as defined in the revised Stability and Growth Pact
with a lower limit of a structural deficit of 0.5 % of the gross domestic product at market prices. The
Contracting Parties shall ensure rapid convergence towards their respective medium-term objective. The time
frame for such convergence will be proposed by the Commission taking into consideration country-specific
sustainability risks. Progress towards and respect of the medium-term objective shall be evaluated on the basis
of an overall assessment with the structural balance as a reference, including an analysis of expenditure net of
discretionary revenue measures, in line with the provisions of the revised Stability and Growth Pact.
(c) The Contracting Parties may temporarily deviate from their medium-term objective or the adjustment path
towards it only in exceptional circumstances as defined in paragraph 3.
(d) Where the ratio of government debt to gross domestic product at market prices is significantly below 60 %
and where risks in terms of long-term sustainability of public finances are low, the lower limit of the mediumterm objective specified under point b) can reach a structural deficit of at most 1.0 % of the gross domestic
product at market prices.
(e) In the event of significant observed deviations from the medium-term objective or the adjustment path
towards it, a correction mechanism shall be triggered automatically. The mechanism shall include the obligation
of the Contracting Party concerned to implement measures to correct the deviations over a defined period of
time.
2. The rules mentioned under paragraph 1 shall take effect in the national law of the
Contracting Parties at the latest one year after the entry into force of this Treaty
through provisions of binding force and permanent character, preferably
constitutional, or otherwise guaranteed to be fully respected and adhered to
throughout the national budgetary processes. The Contracting Parties shall put in
place at national level the correction mechanism mentioned in paragraph 1.(e) on
the basis of common principles to be proposed by the European Commission,
concerning in particular the nature, the size and the time-frame of the corrective
action to be undertaken, also in the case of exceptional circumstances, and the role
and independence of the institutions responsible at national level for monitoring the
observance of the rules. This mechanism shall fully respect the prerogatives of
national Parliaments.
Article 8
1. The European Commission is invited to present in due time to the Contracting
Parties a report on the provisions adopted by each of them in compliance with
Article 3(2). If the European Commission, after having given the Contracting Party
concerned the opportunity to submit its observations, concludes in its report that a
Contracting Party has failed to comply with Article 3(2), the matter will be brought
to the Court of Justice of the European Union by one or more of the Contracting
Parties. Where a Contracting Party considers, independently of the Commission's
report, that another Contracting Party has failed to comply with Article 3 (2), it may
also bring the matter to the Court of Justice. In both cases, the judgment of the
Court of Justice shall be binding on the parties in the procedure, which shall take
the necessary measures to comply with the judgment within a period to be decided
by the Court.
Eurogroup statement 21.02.2012
‘the Eurogroup in this context welcomes the intention
of the Greek authorities to introduce over the next
two months in the Greek legal framework a provision
ensuring that priority is granted to debt servicing
payments. This provision will be introduced in the
Greek constitution as soon as possible.’
Constitutional steering
• International community as a (co-)
constitution-maker (post-conflictconstitutions, BiH, Cyprus constitutions
etc.)
• Venice Commission
• EU Accession negotiations
• Fiscal compact