Darker side to Sarkozy's proposal for EU 'mini-treaty'

There are signs that the European Constitutional Treaty, the adoption of which was defeated in France and the Netherlands, may…

There are signs that the European Constitutional Treaty, the adoption of which was defeated in France and the Netherlands, may return to the European political stage - in a manner that could be of concern to Ireland, writes Garret FitzGerald.

This arises from the fact that France, like Ireland, faces a key election in 12 months. And potential candidates for the presidency of the French state are bound to take positions on how to address the vacuum left by the French referendum defeat of the constitutional project.

The first to do so has been the interior minister Nicolas Sarkozy, seen as the most likely candidate of the Right in that contest. On September 8th at a Brussels meeting, he presented his proposed solution to the referendum outcome.

Sarkozy believes it would be impossible to re-present the constitutional treaty to the French people in its present form. Instead, he says that after the 2009 European Parliament elections, a new convention should be convoked after major debates in member state parliaments.

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In the meantime he wants the German presidency of the EU during its term of office in the first part of next year to draft a "mini-treaty" to be ratified during the French presidency in the second half of next year. This would come into effect following the 2009 European elections.

This mini-treaty or "reference text" which he proposes would be ratified in France by parliament rather than the electorate, would cover institutional issues not contested during the French referendum. These would include the election of the president of the Commission by the European Parliament, the creation of a non-rotating chairmanship of the European Council, the appointment of an EU minister for foreign affairs, an extension of qualified majority voting in the justice area and the proposed modification of the council's voting system.

So far, so good. All member states have accepted these matters, and it is arguable that if by confining this mini-treaty to this shortlist of largely non-controversial matters, the Oireachtas, like the French and other parliaments, might be able to ratify it without a referendum - although some would no doubt contest that.

Other constitutional treaty provisions, including matters on the Commission's composition, would be left over to be considered by a new convention, with a view to effecting further changes by 2014.

Another proposal the convention could consider would involve the parties in the European Parliament fighting future European elections on European issues, rather than having the national parties in each of the European Parliament groups using them, as currently, to fight domestic opponents on national issues.

The proposal to reopen issues other than those covered by the draft constitutional treaty within a new post-2009 convention would, however, be controversial. For example Sarkozy wants to create an "open avant-garde" - ad hoc groups of countries affected by particular issues prepare the work of the European Council - such a proposal could sideline the Commission, whose exclusive right of legislative initiative protects smaller countries against big power dominance.

Sarkozy also wants the Commission's composition to be determined freely by each successive president of the Commission - subject to eventual approval by Parliament and European Council.

There is much to be said for enabling the president to choose his own team instead of finding himself lumbered with inadequate people who some national governments are trying to get rid of or advance for domestic political reasons.

But clearly Sarkozy is pursuing a traditional French agenda of seeking to squeeze out smaller countries from the Commission. There is a strong case for a smaller Commission - realistically one of 25 or more members is a recipe for ineffectiveness, from which small countries may eventually suffer more than large ones. It is clear he would oppose any proposal designed to ensure that in choosing the members of a smaller Commission, a president should treat all member states equally - something hitherto a key feature of proposals for a smaller Commission.

Another Sarkozy proposal, which he would wish to see adopted by his convention, would directly affect Ireland's interests. He proposes to get rid of what he calls "fiscal dumping, which prospers through being sheltered by the unanimity rule". That means, of course, our low corporate tax rate, deeply resented by the French, the Germans and the Dutch among others, because it has enabled us to attract a disproportionate share of external investment to our shores.

Sarkozy proposes for this purpose to replace unanimity with a new super-qualified majority voting system of 70-80 per cent. Under such an arrangement the opponents of fiscal harmonisation - Ireland, the UK and Sweden, together with some Eastern European states that have followed the Irish example on corporate taxation - could be voted down on this issue by the other member states.

We should have no illusions about the strength of feeling of countries such as France and Germany on this issue. The fact that we were right 50 years ago in identifying low corporate taxation rather than low personal taxation as the engine of economic growth, and that other states have pursued the wrong path in this matter will cut no ice.

On the wider issue of a mini-treaty, Germany's views differ from those of Sarkozy as do those of Italy and the UK.

Incidentally, this Sarkozy tax harmonisation initiative is likely to have the support of his Socialist opponent in the forthcoming French presidential election: for it was Socialist prime minister Lionel Jospin who first departed from a long tradition of Franco-Irish amity in the EU by attacking aggressively our corporate tax structure.