French Minister: EU Bailout Violates No-Bailout Clause

May 29, (LPAC)—None other than a top government official of France has announced that the Eur 440 billion European Union bailout is a violation of the Lisbon Treaty. Pierre Lellouche, the French government's State Secretary for Europe, said that the eurozone's Eur 440 billion debt guarantee scheme is a clear violation of the no-bailout clause of the Lisbon Treaty, and he compares it to a NATO-style mutual defense clause.

"It is an enormous change," Lellouche told the London Financial Times, which runs it as its lead front-page article in yesterday's issue under the banner headline, "Eurozone Bailout 'Alters EU Treaty.'" It explains some of the reticence. It is expressly forbidden in the treaties by the famous no-bailout clause. "De facto, we have changed the treaty," he added.

The Financial Times dryly observes that these "comments could go down badly in Germany."

The French daily Les Echos reported that the European Commission's spokesman for monetary affairs, Amadeu Altafaj, immediately contested Lellouche's statement, trying to deny that it is illegal.

Lellouche said German Chancellor Angela Merkel "was right" to say the EU could not be a "transfer zone" where rich members subsidized poorer ones.

The Eur 440 billion mechanism is nothing less than the importation of Nato's Article 5 mutual defense clause applied to the eurozone. "When one member is under attack, the others are obliged to come to its defense."

Rejecting claims that the Franco-Germany relationship was in trouble, he said: "The Franco-German relationship doesn't work all by itself. Going back to the Schuman declaration, that was an extremely ambitious initiative. That was only five years after the war, after the occupation, after Oradour-sur-Glane [site of a Nazi atrocity in France], after Auschwitz.

"To hold out our hands and offer a partnership of equals with Germany required a lot of vision. That's a bit what it is like today. Twenty years after reunification, there is a new generation; there is globalization, there is demographic pressure, you have a Germany that like everyone claims its national interests. I understand that totally ... Since when did we expect Germany to act as cash cow indefinitely?"

While it is not clear what the French are up to, what is clear, is that this statement will make interesting reading in the German Constitutional Court when it deliberates on the case brought before it by the five professors challenging the bailout scheme as a violation of the Lisbon Treaty.