Are Conservative Backbenchers Going To Go After Cameron Over ESM?

John Redwood believes that Conservative backbenchers are up for a fight with the Coalition leadership.  But how big a fight will that be?  Cameron is threatening any individuals that undermine him with loss of their seat in the constituency reduction programme, and non selection into any other constituency.  That must surely deter any rebels.  But not if they all stand shoulder to shoulder.
The ESM, the European Stabilisation Mechanism, requires a mere two sentence alteration to the Lisbon Treaty, and yet that should trigger referenda in some countries, such as Ireland and Britain.  The ESM would set up the option for the EU to issue European bonds, rather than each nation issuing its own debt.

This would be hugely unpopular in Germany, but should be liked by the peripheral countries as their debts would be carried by others.  Yet would Ireland continue willingly with the process of being sublimated into the EU after current experiences?  Cameron used to talk of referendums in Britain, but is now using the coalition as his excuse for ignoring his earlier promises.

This is where the Conservative backbenchers come in.  If they refuse to support the ESM Treaty change without a referendum, as John Redwood says ( see http://www.johnredwoodsdiary.com/2010/12/09/the-mood-of-parliament/), politics could start to get interesting again.

Why should British taxpayers get involved with rescuing eurozone countries, as we are doing in Ireland, is the question?  The pressures to get involved in the Euro are growing, and Cameron is, if anything, encouraging them.

If the backbenchers are going to pick an issue to stand their ground, this is surely it.

http://www.johnredwoodsdiary.com/2010/12/12/why-i-had-doubts-about-the-irish-loan/

WSJ summary –  The overall growth figures conceal not only the weakness of the periphery countries, but the fact that the euro zone’s engine of economic growth, Germany, is losing steam. Meanwhile, starting early in 2011 several euro-zone governments will be trying to persuade investors to buy their bonds just when banks in these countries will need to refinance €1 trillion ($1.3 trillion)of debt by selling long-term bonds.
Moreover, there will undoubtedly be elections in most of the periphery countries, and current indications are that the governments of Ireland, Spain, Portugal and (possibly) Italy will fall, making those countries’ continued acceptance of the current bailout deals less than certain.
The heavy demands on the bond markets, combined with the political uncertainty in peripheral countries, should keep the bond vigilantes on their toes. As should the possibility that a reopening of the Lisbon Treaty, even if only to incorporate the two sentences the finance ministers claim are all that is needed to establish the ESM, may force some governments to hold referenda on the revised document.
The David Cameron of old —pre-coalition with Lib Dem europhiles, pre-the seeker-after applause from Paris and Berlin who agreed to an increase in the EU budget—might have been tempted to do just that. And a new Irish government, unhappy with the takeover of its finances by the Eurocracy, might just succumb to a similar temptation. Not likely, but possible. Which is all nervous investors need to accelerate their flight from peripheral euroland.


See – http://the-tap.blogspot.com/2010/12/all-euro-eyes-are-on-germany.html


Irish Times – shows the kind of discussions going on, and the hope that all governments will agree to EMS without the need for referendums.

Draft “conclusions” for the summit, seen by The Irish Times , say the permanent mechanism to be established by member states will be created by way of an inter-governmental arrangement.
As such, the mechanism will operate outside the ambit of the European institutions, leaving the leaders free to deploy a “simplified” treaty revision procedure reserved for changes which do not increase the competences of the European Union.
This is significant because the Government is bound by the Crotty Supreme Court ruling, which holds that any significant transfer of powers to the EU from Ireland must be referred to the people.
Given the rejection of the first Lisbon Treaty and Nice Treaty referendums, the Government entered talks on the proposed change with the specific intention of avoiding any requirement for another referendum. If there is no referendum, the change would be made by way of legislation.
The draft conclusions, signed off late last week by senior European diplomats, say the amendment will be inserted into article 136 of the treaty, which governs the operations of the single currency.
There are two sentences in the proposed amendment: “The member states whose currency is the euro may establish a stability mechanism to safeguard the stability of the euro area as a whole. The granting of financial assistance under the mechanism will be made subject to strict conditionality.”
While most countries opposed revising the treaty, Dr Merkel has been pressing for change because she fears her country’s constitutional court will take issue with the €750 billion fund which is being used in the €85 billion rescue of Ireland by the EU and the International Monetary Fund.
At the summit, the leaders will agree to “immediately launch” the simplified revision procedure set out in article 48.6 of the Lisbon pact.
In so doing they must consult the European Commission, the European Central Bank (ECB) and the European Parliament.
“The consultation of the institutions concerned should be concluded on time to allow the formal adoption of the decision in March 2011, completion of national approval procedures by the end of 2012 and entry into force on” January 1st, 2013, say the draft conclusions.
“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,” they add.
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