How Europe’s least controversial rescue fund became controversial

Over the past week, UK Prime Minister David Cameron and his Chancellor of the Exchequer, George Osborne, made a fuss about emergency funding for Greece. The source of their grievances is that some of the funding comes from the European Financial Stabilisation Mechanism (EFSM). Use of this rescue fund entails that the UK indirectly guarantees short-term loans to Greece, whereas the UK is not part of the Eurozone. For this reason, Osborne vowed to block use of the rescue fund: “Britain is not in the euro, so the idea that British taxpayers will be on the line for this Greek deal is a complete non-starter. The Eurozone needs to foot its own bill.” By now, Osborne has backed down and use of the EFSM has been agreed upon. Yet, what was all the fuss about? Did the UK Government have a point? Were its objections based on sound legal arguments? And have its protests had any result?