Euro rescue fund respects treaties: court
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LUXEMBOURG, Nov 27 AFP
November 27 2012, 9:28PM
The EU's highest court has ruled that the European Stability Mechanism, the permanent euro rescue fund created to try to prevent repeats of the Greek debt crisis, does not breach EU treaties.
In a ruling read out on Tuesday to cameras at the European Court of Justice, a challenge brought by Irish lawmaker Kevin Pringle to the 500 billion-euro ($A625 billion) fund was deemed invalid.
The Irish Supreme Court referred the case, which argued whether a simplified ratification procedure adopted by national leaders went beyond European Union legal scope.
But the European Court of Justice judges said there was "nothing capable of affecting the validity" of the treaty setting up the ESM.
"EU law does not preclude the conclusion and ratification of the treaty," they said in a written judgment.
The October launch of the $650-billion ESM - immediately given a top-grade 'AAA' rating - "marks an historic milestone in shaping the future of monetary union," Luxembourg Prime Minister and fund chairman Jean-Claude Juncker said at the time.
It was initially due to enter force on July 1, but was delayed by a challenge in Germany. Germany's Constitutional Court gave the ESM the go-ahead in September.
The ESM's board is made up of the finance ministers of the 17 countries that share the currency.
The Irish government has lobbied to be able to use the financial firewall to help its indebted banks, but has been told that this would require a bailout program with new terms to replace the existing aid package due to expire at the end of next year.
Pringle challenged the treaty on a number of specific grounds, in particular the competence of the EU Council of its 27 member-state governments to grant EU financial assistance to adherents in difficulty.
But the Court said that the ESM does not "circumvent" EU law preventing the European Central Bank and member central banks from extending "overdraft" or other types of credit facility to public authorities, or buying directly debt issues.