Estonia's watchdog asks top court to rule on EU bailout

(TALLINN) - Estonia's ombudsman asked the top court on Monday to decide if parts of the European Union's new bailout fund is in line with the Estonian constitution.

The constitutional question concerns the EU's European Stability Mechanism (ESM) intended to cushion eurozone members from future contagion in the event of a repetition of the Greek debt crisis elsewhere in the single currency zone.

Arguing that the ESM's "so-called emergency voting procedure is contrary to the Estonian Constitution," Ombudsman Indrek Teder "submitted an application to the Estonian Supreme Court, challenging the constitutionality of the provision of the Treaty Establishing the ESM", a statement said on Monday.

Designed as a permanent fund, the ESM is to begin operations in July and might run in parallel with the temporary European Financial Stability Facility for one year.

But it's emergency voting procedure "jeopardises the principle of parliamentary democracy, the principle of parliamentary prerogatives" and parliament's autonomy over public finances, Teder said.

"This kind of rapid procedure can create a situation that will force Estonia to allocate finances without having the right to impact the granting and conditions of the financial aid," he added.

The Ombudsman also said that he supported Estonia's participation in the ESM, key to "financial stability and to avoid the expansion of financial crises", but noted the potentially heavy price Estonia could pay for it.

"By ratifying the Treaty Establishing the ESM, Estonia will assume an extraordinarily large financial obligation: in the worst-case scenario Estonia will be liable to provide up to 1.302 billion euros to the ESM. This sum corresponds to approximately 8.5% of the Estonian GDP (gross domestic prodeuct)," Teder said.

Estonia's ESM commitment "is much bigger than any other obligation we have had on the international level and Estonian people have the justified right to be involved through parliament in how that money will be used."

Without that the legacy of Estonian membership in ESM is doubtful," he said.

Estonia, an ex-Soviet Baltic state of 1.3 million people, joined eurozone on January 1, 2011.