The European Stability Mechanism (ESM) Treaty, which was signed by all Euro Area Member States on 2 February, subject to ratification, provides "that the granting of financial assistance in the framework of new programmes under the ESM will be conditional, as of 1 March 2013, on the ratification of the TSCG by the ESM Member concerned" and on implementation of the balanced budget rule as specified in the Treaty on Stability, Coordination and Governance in the Economic and Monetary Union within the agreed timeline (one year after entry into force of the latter). This reflects the outcome of discussions in which Ireland participated actively and constructively. In this context, I would point out that the existence of the ESM as a safety net is in Europe's interest and in Ireland's interest. We do not expect to need recourse to ESM assistance — our programme is working and we are on course to return to market funding as envisaged by the end of the programme period in 2013. However, the existence of the ESM is important in supporting market confidence.
The linkage between the ESM and the ratification of the Treaty on Stability, Coordination and Governance in the Economic and Monetary was accepted in the context of the acceleration into force of the ESM by July 2012. It was of particular importance to a number of partners. It is entirely logical and reasonable that a country receiving the support of its partners under the ESM should be prepared to run sensible budgetary policies as required under the new Treaty.
I have clarified that the linkage of both the ESM Treaty and the Intergovernmental Treaty refers to new applications for assistance under the ESM and will not affect the transfer to the ESM of undisbursed amounts under the European Financial Stability Facility (EFSF) for Ireland and other programme countries. The funding approved under the existing Programme of Financial Support for Ireland is not therefore conditional on Ireland ratifying the fiscal compact but, as is currently the case, on Ireland successfully implementing our programme. Primary legislation will be required to enable Ireland to ratify the ESM Treaty and implement it.
