Brussels, 30/09/2015 (Agence Europe) - The European Commission cannot put a proposal to the European legislator that the principle according to which the public debt of a member state may be cancelled if that member state finds itself in a state of necessity.
That was the conclusion of the General Court of the EU (case T-450/12) on Wednesday 30 September in finding against a Greek citizen who launched the European citizens' initiative “One million signatures for 'a Europe of solidarity'”. This initiative, which the Commission refused to register on the grounds that it fell manifestly outside the framework of its powers, seeking as it did to have enshrined in EU law “the Principle of the 'state of necessity' [whereby] [w]hen the financial and the political existence of a State is in danger because of the serving of the abhorrent debt the refusal of its payment is necessary and justifiable”.
The Court found that the Commission had been correct to respond as it had. There is nothing in that part of the treaties devoted to economic and monetary policy (Articles 119 to 144 of the TFEU), cited by the initiative proposal, to suggest that any such principle can be established.
While the Council of the EU can adopt measures appropriate to the situation of a country, by virtue of the spirit of solidarity contained within Article 122, that cannot justify the enshrinement in EU law of the principle of the state of necessity, the Court said. Nor can this provision enable a member state to decide unilaterally not to repay all or part of its debt, as it provides only for assistance between the member states.
Though this same Article allows the Council to grant EU financial assistance to a member state experiencing difficulties as a result of natural disaster or exceptional occurrences beyond its control, this may entail only ad hoc assistance. In the view of the Court, it is certainly not an open door to a general and permanent debt cancellation mechanism. Furthermore, any such mechanism would apply to the debts incurred by that state towards other public or private legal or natural persons, which falls outside the said Article.
Lastly, Article 136, which relates to the power of the Council to adopt measures to strengthen the coordination and surveillance of the budgetary discipline of euro area member states and to set out economic policy guidelines for those states, cannot either be used to justify the principle of the state of necessity. There is nothing, indeed, to suggest that the aim of the adoption of the principle of a state of necessity would be to strengthen the coordination of budgetary discipline. Any such principle is in conflict with the Article which enshrines the freedom of the contracting parties. This is irreconcilable with allowing a member state unilaterally to write off its public debt, the Court concludes. (Original version in French by Jan Kordys)