Tories lining up against bail-out
Tory MPs are lining up against any British contribution to the Portuguese bail-out.
Backbenchers are raising the legality of any UK contribution under the Lisbon treaty’s emergency fund, which they say was intended for natural disasters.
Last night, Portuguese caretaker prime minister José Sócrates used a televised address to request emergency financial aid from the European Union and International Monetary Fund.
The bail-out is expected to cost £70 billion, but the UK will not be providing direct financial assistance in the form of bilateral loans, like it did for Ireland.
But it is likely Britain will contribute up to £3.7 billion through its commitment to the European bail-out fund that originally helped Greece.
Former chancellor Alistair Darling agreed to UK liability for the emergency disasters fund shortly after last May’s general election, when the coalition government was in the process of being formed.
He has said he only agreed to the deal after being assured of cross-party support after a conversation with George Osborne.
The Tory leader in the European parliament, Martin Callanan today said the UK should not contribute and questioned the legality of any bail-out.
“The UK cannot and should not play a part in the EU bailout”, he said.
“The legality of bailouts under Article 122 of the EU treaties is still highly dubious. The Article was intended to cover natural disasters, not bailouts for countries who have sleepwalked into this crisis through their own socialist policies.
“British voters will not accept that at home we are making tough but fair savings only to send money to countries that should never have been allowed to join the Eurozone in the first place. “
Eurosceptic Tory MP Mark Reckless said it was ‘indefensible’ for Portugal to receive funding from the bail-out fund.
“The Treasury has failed to make clear so far today whether any UK contribution will be limited to that which may be entailed by our membership of the IMF or whether, indefensibly, it is proposed to use the EU natural disasters mechanism,” he said.
The first-term MP said Martin Callanan spoke for the party during the half-term recess and said the Portugal’s plight should be a problem for the Eurozone.
“Article 122 of the Lisbon Treaty states that other member states may be expected to help when another state experiences ‘difficulties caused by natural disasters or exceptional occurrences beyond its control’.
“The chronic issue for Portugal is that it has only been able to grow at 0.7% per year since joining the Euro and has failed to control it’s spending, so Article 122 cannot apply to this situation.
“I don’t see how we can ask the British taxpayer to prop up a supranational European currency they do not want and they did not ask for.”
Conservative MP Douglas Carswell criticised the agreement last summer that made the UK liable for further bail-outs, aiming his fire at his own party as well.
“Greece, Ireland, now Portugal …. Another bailout of the Euro dressed up as a rescue. Another high interest loan pressed upon European taxpayers, as if that might solve the problem of excessive debt,” he said.
“Over the past year, we have been struggling to save a total of £6.2 billion of public spending. So how on earth did non-Euro Britain end up being liable for Euro bailouts worth many times that amount?”
Even shadow chancellor Ed Balls told the BBC the UK did not face the same responsibilities to Portugal as it did to Ireland.
“I have to say personally I think it would be much better if it was sorted out by the euro-area countries,” he said.
The comments will place mounting pressure on the government, particularly chancellor George Osborne, to limit any British role.
Last week in the Commons, David Cameron pinned the blame for the UK’s liability on Mr Darling, but added: “Frustratingly, we are stuck with it for the duration of the emergency mechanism.”
