EU LEADERS are poised this week to agree an amendment to the Lisbon Treaty to create a permanent rescue fund for euro countries, a step they believe they can take without prompting another Irish referendum.
At a summit here on Thursday and Friday, the leaders of the 27 member states will agree to insert a paragraph into the treaty to empower euro zone countries to bail out any distressed member of the single currency.
The move comes amid disunity over the necessity for any new measures to boost confidence in the euro after Ireland’s rescue failed to calm financial markets.
With Portugal and Spain under pressure, German chancellor Angela Merkel and French president Nicolas Sarkozy are resisting demands to enlarge the €750 billion temporary bailout scheme.
Agreement has been reached, however, on the parameters of a looming change to the treaty, which was enacted only on December 1st last year.
Draft "conclusions" for the summit, seen by The Irish Times, say the permanent mechanism to be established by member states will be created by way of an inter-governmental arrangement.
As such, the mechanism will operate outside the ambit of the European institutions, leaving the leaders free to deploy a “simplified” treaty revision procedure reserved for changes which do not increase the competences of the European Union.
This is significant because the Government is bound by the Crotty Supreme Court ruling, which holds that any significant transfer of powers to the EU from Ireland must be referred to the people.
Given the rejection of the first Lisbon Treaty and Nice Treaty referendums, the Government entered talks on the proposed change with the specific intention of avoiding any requirement for another referendum. If there is no referendum, the change would be made by way of legislation.
The draft conclusions, signed off late last week by senior European diplomats, say the amendment will be inserted into article 136 of the treaty, which governs the operations of the single currency.
There are two sentences in the proposed amendment: “The member states whose currency is the euro may establish a stability mechanism to safeguard the stability of the euro area as a whole. The granting of financial assistance under the mechanism will be made subject to strict conditionality.”
While most countries opposed revising the treaty, Dr Merkel has been pressing for change because she fears her country’s constitutional court will take issue with the €750 billion fund which is being used in the €85 billion rescue of Ireland by the EU and the International Monetary Fund.
At the summit, the leaders will agree to “immediately launch” the simplified revision procedure set out in article 48.6 of the Lisbon pact.
In so doing they must consult the European Commission, the European Central Bank (ECB) and the European Parliament.
“The consultation of the institutions concerned should be concluded on time to allow the formal adoption of the decision in March 2011, completion of national approval procedures by the end of 2012 and entry into force on” January 1st, 2013, say the draft conclusions.
“The mechanism will be activated by mutual agreement of the euro area member states in case of risk to the stability of the euro area as a whole,” they add.
“Member states whose currency is not the euro will, if they so wish, be involved in this work. They may decide to participate in operations conducted by the mechanism on an ad-hoc basis.”
