EU COMPROMISE:While deciding to make 'limited' changes resolves doubts over the legal process, the parameters have yet to be set, writes ARTHUR BEESLEY
IT WAS after 1am yesterday when EU leaders emerged tired-eyed from the negotiation of a contentious deal to reopen the European treaties. The compromise heals a rift, but it heralds further strife down the line.
How things change. It was only last February when EU leaders, in the face of Angela Merkel’s opposition, sent an unspecific signal of their willingness to rescue Greece. Although months of disruption followed before the deal was done, it was a seismic change which set in train events leading to a temporary rescue mechanism for distressed euro countries.
Now, moves are afoot to amend the Lisbon Treaty to create a permanent scheme. Not 11 months have passed since the treaty was enacted.
What happens next is that European Council president Herman Van Rompuy sets about an analysis of the legal revisions required to establish a permanent mechanism. His time is short. He must report back to EU leaders in seven weeks, at a summit just before Christmas.
For Taoiseach Brian Cowen, the main question now is whether he can steer the debate towards the narrowest possible revision of the Lisbon treaty. When he addressed his counterparts on Thursday night, he said Ireland saw the requirement for a permanent scheme, “but we need to avoid a referendum”.
Given his own bruising experience with Nice and Lisbon treaties, the last thing he needs now is another European vote.
Van Rompuy’s mandate is specifically crafted to enable EU leaders to deploy a new “simplified revision procedure” in the Lisbon pact, which empowers member states to rewrite sections of the treaty if that does not involve any “increase in the competences conferred on the union”.
This limitation on the debate may be Cowen’s best hope of avoiding a referral to the people as the key test in the Crotty judgment centres on whether the new measures embrace a significant transfer of power to the EU.
In the circumstances – given the force of pressure from Berlin for treaty change – this is probably as positive an outcome as he might have expected.
Crucial to the literal interpretation of the moves now afoot is that they reflect agreement on the need for “member states” to set up the mechanism. The absence here of a reference to the EU itself is not an accident, and may have an important bearing on the Government’s decision on the referendum question because it reinforces the notion that power is not being transferred to the EU per se.
These are legal issues, of course. Political pressure to give a voice to the people is another matter entirely, and must now be seen as something of an inevitability. Such questions will exercise legal minds and political calculations in the coming weeks as Van Rompuy crafts his report.
The expectation is that he will concentrate on Article 122 of the Lisbon Treaty, the clause invoked to avoid infringing the “no bailout” rule when the general safety net for euro members was established in the weeks after the Greek rescue. This clause empowers the European Council to grant EU “financial assistance” to a member state which is “in difficulties or is seriously threatened with severe difficulties caused by natural disasters or exceptional occurrences beyond its control”. There was just enough scope here to facilitate the EU Commission’s €60 billion contribution to the €750 billion rescue fund.
However, there are fears in Berlin that Germany’s powerful constitutional court will take issue with it in a ruling due next spring.
This helps explain Dr Merkel’s push for a revision of the treaty, something designed to iron out any lingering questions over the legality of the rescue mechanism. She has a result on this front, but her plan to deprive governments with wayward finances of their voting rights was rebuffed. Her opponents on this front included Greek prime minister George Papandreou, a man so hostile to the notion of “second-class” EU membership with no votes that he is reputed to have told Dr Merkel she might as well take back Berlin’s loans to Athens.
Does this deal settle matters? Far from it. While the decision to move forward with “limited” treaty changes resolves some doubt over the legal process, the parameters of the measures undertaken remain to be decided. This is crucial. Hugely sensitive here is Berlin’s call for “orderly insolvency” procedures, something that raises the possibility of sovereign default and debt restructuring in the euro zone.
This plays into still-potent concerns in Germany about its taxpayers assuming the brunt of the burden for the Greek rescue – and for any other rescue. For fiscally weak countries such as Ireland, however, it could increase borrowing costs indefinitely.
Cowen was silent on this question yesterday, but difficult talks are in store. Merkel’s determination is clear to all, but opposition is brewing in Spain. The drama continues.