THE FUTURE OF THE EUROPEAN CONSTITUTIONAL ORDER
IN THE CONTEXT OF THE RECENT CRISES AND THE
CONTINUING DEMAND FOR FURTHER INTEGRATION
Author: Elena Petkova
1st August 2013
Queen Mary, University of London
1
Table of Contents
ABSTRACT .......................................................................................................................................... 2
I. INTRODUCTION ............................................................................................................................ 3
II. EUROPEAN FINANCIAL AND SOVEREIGN DEBT CRISES AS DRIVERS OF
CONSTITUTIONAL CHANGE .......................................................................................................... 4
III. DIFFERENT MEANS OF ACHIEVING THE SAME ENDS (VOL.1) – GETTING
CREATIVE WITH CURRENT TREATY PROVISIONS AND THE RETURN OF
INTEGROVERNMENTALISM .......................................................................................................... 9 A. USING EXISTING TREATY PROVISIONS TO THE FULLEST ........................................................................ 9 Flexibility clause ......................................................................................................................................... 10 Enhanced cooperation ............................................................................................................................. 12 Art 136 TFEU ................................................................................................................................................ 16
B. USE OF INTERNATIONAL TREATIES ......................................................................................................... 18
IV. DIFFERENT MEANS OF ACHIEVING THE SAME ENDS (VOL.2)-‐ TREATY CHANGE
OR NO TREATY CHANGE: THAT IS THE QUESTION ............................................................ 24 A. FORMAL REASONS IN SUPPORT AND AGAINST TREATY AMENDMENT .............................................. 24 Reasons in support ..................................................................................................................................... 24 Obstacles to treaty change ..................................................................................................................... 28
B. SUBSTANTIVE REASONS: A CASE STUDY ON FISCAL AND BANKING UNION .................................... 30 C. REFORM TREATY VS. CONSTITUTIONAL TREATY ................................................................................. 34
V. THE QUESTION OF POPULAR SUPPORT. IS PERSUADING THE PUBLIC THE
HARDEST PART OF THE PROCESS? ......................................................................................... 40
VI. CONCLUSION ............................................................................................................................ 43
BIBLIOGRAPHY .............................................................................................................................. 44
2
Abstract This paper is concerned with the effects of the recent financial and sovereign
debt crises on the constitutional order of the European Union and the
prospects of its future development. Due to the lack of ideas of political
finalité, trying to predict the evolutionary trajectory of a sui-generis entity
such as the Union proves a challenging task. For this reason, the present
research examines in detail three possible paths of effecting reforms aimed
at optimizing the working of the Economic and Monetary Union- i.e. making
full use of existent treaty-based powers of action, reaching agreements on an
intergovernmental basis and changing the EU’s founding Treaties. It will be
argued that the latter constitutes the best option due to its functional and
normative advantages, while at the same time acknowledging its problematic
political and popular appeal.
3
I. Introduction The European Union is in turmoil. Its members are faced with difficult policy
decisions, its populations are unsettled by the rise of austerity and its principles and
goals are being questioned now more than ever. With the future of the integration
project on the line, inaction is not an option. The EU has to evolve to survive, but the
means by which this should happen are not as straightforward. This paper sets out to
provide some clarification on this matter by following two main aims- first, to draw
upon the impact of the financial and sovereign debt crises in order to discuss the
suitability of different options for deeper economic integration, and second, to explore
the potential for success of a new EU Treaty. To put the discussion in context, section
II acknowledges the importance of the recent crises in providing motivation for
constitutional change and outlines authoritative proposals for stronger legal
underpinning of measures aiming to bring about a fiscal and banking. Section III
provides a comprehensive evaluation of two methods for effecting reforms- i.e. use of
current treaty provisions and contraction of intergovernmental agreements, which
have both generally been considered easier to implement and have, to some extent,
already been tried for the purposes of crisis-management. Section IV concentrates on
the third possible method of reform, that has been neglected so far, namely- a change
in the founding Treaties of the EU. Rather than simply dismissing it as unrealistic, the
present work engages in an examination of the advantages and limitations of treaty
change and even takes the liberty to make a tentative suggestion regarding the form of
this new founding document. As identified in this section, the prospects of any
proposal for treaty change will be poor unless it manages to persuade the public that it
will bring about essential improvements that will affect their lives in a positive
manner and compensate for the loss of national sovereignty. Section V elaborates
further on the idea that popular support could constitute arguably the greatest obstacle
that any plan for a treaty change has to overcome and provides a number of
recommendations on what can be done to increase its chances of success. Ultimately,
this paper concedes that it is not based on a grand ambition of persuading its reader
that reform of the EU Treaties is the only possibility of addressing the challenges that
the EU is currently facing, but what it hopes to demonstrate is the functional and
normative superiority of this choice as a measure for furthering the traditional
integration process.
4
II. European financial and sovereign debt crises as drivers
of constitutional change
If asked to comment on the recent history of the EU one would find it difficult to omit
the important role that the 2008 financial crisis played in the shaping of the Union and
its institutional workings. The spread of financial difficulties from the US to the
continent was a new challenge for the integration project, which was until then seen
as constituting a relative success. As the crisis evolved, it became apparent that
Europe was facing its biggest challenge since the Second World War1. This multi-
facetted phenomenon began as a bank crisis and then converted into sovereign debt
crisis, which coupled with lack of adequate action, also provoked a crisis of
confidence. The latter began reinstating the constraining power of national borders,
questioning the Single market and threatening the achievements and as yet unfulfilled
ambitions of the Economic and Monetary Union2. What followed was a bunch of
desperate measures to fight, or at least contain, the devastating effects on the national
economies of certain Member States. At EU level, the crisis revealed some inherent
shortcomings in the architecture of the previously widely-praised Economic and
Monetary Union. A general agreement has been reached over the causes of EMU’s
weakness. They can be summarized in the so-called asymmetry between a centralized
monetary policy and decentralized fiscal and supply-side policies, combined with a
build up of competitiveness imbalances among Member States3. In particular, the
non-observance and lack of respect for the Stability and Growth Pact that embodied
the commonly-agreed set of rules that were essential for the proper functioning of
EMU and the failure to recognize the potential importance of creating a crisis-
management mechanism were important issues that were systematically overlooked in
the years preceding the financial meltdown. These inconsistencies in the economic
governance arrangement of EMU became even more apparent with the start of the
sovereign debt crisis. The sense of urgency suddenly sky-rocketed with the change of
1 Angela Merkel, Speech to the CDU Party Conference, Leipzig, 14th Nov 2011 2 European Commission, Blueprint for Deep and Genuine EMU, 28th Nov 2012, p.10, <http://eur-lex.europa.eu/LexUriServ/LexUriServ.do?uri=COM:2012:0777:FIN:EN:PDF> accessed 25th June 2013 3 House of Lords EU Committee Report, The Future of Economic Governance in the EU, 24th March 2011, p.15
5
emphasis from private to public sector debt, as the threat for the stability of the
Eurozone became imminent. Setting aside the immediate effects4 that this disastrous
change of economic climate produced, the more indirect systemic consequences for
the European project will be of greater interest for present purposes. The economic
unease provoked questions about the future of the EU, the continuity of the single
currency, the efficiency of Union institutions and last but not least, the doubtful
presence of an integration impulse necessary to see the EU through its difficulties.
These primarily constitutional concerns were exacerbated by the lack of coordinated
action on the Union level, especially in the early stages of the financial crisis when
individual member states were fighting the challenges each on their own. Even when
collective action finally proved unavoidable, it was slow, lacked focus and didn’t
seem to be part of an overarching plan with an agreed direction. With a number of ad
hoc measures5 the Member States managed to patch up the shaky foundations of their
Union. One thing was certain, the crises provided a test for the natural tendency of
Member State governments to abstain from measures of solidarity and to avoid bold
and courageous decisions that could make the EU stronger.6 The latter was reflected
in the absence of common crisis-management framework and the predominance of
“fire-fighting” measures that questioned the usefulness of Union membership in
conditions that differ from prosperity. Rising levels of disillusionment with the
European project became typical of both the public in general and the political leaders
as both groups came to realize that increased interdependence might not be a
justifiable risk when the collateral of economic benefit has been majorly devalued.
Notwithstanding the negative reactions to austerity, the political leaders continued to
push forward with isolated steps aimed at strengthening the economic governance of
the Eurozone and increasing the effectiveness of existent economic cooperation rules
that were adopted on 13th Dec 2011. Prime example was the reform of both the
preventive and corrective arms of the SGP and the introduction of the
Macroeconomic Imbalance Procedure (MIP) that allows for the prevention and
correction of macroeconomic imbalances via EU-level surveillance. The crises also
4 Such as economic instability, distrust of the financial system and social discontent 5 For example, rescue packages, establishment of EFSM and EFSF and temporary programmes by the ECB 6 Jean-Claude Piris, The Future of Europe: Towards a Two-Speed EU? (2012), CUP, p.5
6
brought to the foreground the need for a supervisory framework7 to better protect
European citizens and to rebuild trust in the financial system. The establishment of
the European Stability Mechanism and the signing of the Treaty on Stability,
Coordination and Growth, despite being concluded outside the EU framework, were
also crisis-fueled measures adopted to provide a permanent stability fund and a
tightening of the rules contained in the SGP respectively.
The dynamics of the crises have produced two conflicting ideological positions as
regards the direction of the EU’s future development. On the one hand, the
consequences of the crisis are seen to have created centrifugal forces that highlight the
safeness and resulting appeal of individual (nationalistic) policy-making and are also
pulling public opinion in different member states further apart. On the other hand, the
struggles of the Union are perceived as indicators of the need for deeper
harmonisation and cooperation, with an economic government and a closer political
union being on the opposite extreme of the integration paradigm. Namely this idea
will form the backbone of the present paper by using as evidence the recent proposals
for deepening of European integration in the fiscal and budgetary spheres and
providing suggestions on how those reforms could be accommodated. Of central
importance to this paper’s pro-integrationist premise will be the Blueprint for a deep
and genuine EMU as published by the Commission in October 2012 which provides a
good itinerary of steps, with a number already under way, whilst others predicted to
take a few years to implement. It puts forward the idea that the crisis kick-started a
long-awaited overhaul of EMU but despite the variety of reactionary measures, the
process is far from being complete.
In short, the Blueprint describes three categories of measures necessary to unlock the
full potential of the Economic and Monetary Union. In the short-term (6-18 months),
the Commission believes developments of economic union, such as the introduction
of a new instrument for an ex-ante coordination of major reform projects
(Convergence and Competitiveness Instrument), can take place within the Union’s
current powers. However, medium-term (18 months-5 years) and long-term (beyond 5 7 The supervisory framework consists of the European Systemic Risk Board (ESRB) which is responsible for macro-prudential oversight and the three European Supervisory Authorities (ESAs) that oversee on a micro-prudential level- EBA, EIOPA and ESMA
7
years) measures will necessitate further transfers of competence if proposals for an
EU redemption fund, other measures of solidarity (i.e. “eurobills), an EMU Treasury,
and ultimately, an autonomous euro-area budget, are to materialize. As for measures
of banking union, a Single Supervisory Mechanism is already adopted and a Single
Resolution Mechanism8 is under consideration, but there are doubts as to whether the
establishment of a central resolution authority, if found politically appealing, will find
ground in existing legislation9. The third component of a banking union- a common
deposit protection mechanism - will also inevitably require treaty change.
It is beyond the present author’s expertise and immediate purpose to discuss the
substantive merit or the political appeal of the above integration proposals. Due to the
lack of a clearly defined finalité for economic integration, which is true also for the
EU in general, the measures outlined in the Blueprint will be used as authoritative
guidance10 on what the future may bring in terms of substantive policy changes.
Having this guidance will prove essential when attempting to make the right choice of
procedural tools for bringing about the necessary reforms. In essence, the ends might
be seen to justify the means in this case.
To summarize, the measures undertaken so far in the form of “fire-fighting” or “re-
building” exemplify the potential of the three-partite11 crisis to drive constitutional
change within the EU. Most of them were positioned within the current treaty
parameters, while some resulted from a treaty amendment12 and others had to be
negotiated on an intergovernmental basis13. With proposals for future coordination
centered around the ideas of banking and fiscal union, crisis-management is reaching
8 A political agreement on a Directive on Bank Recovery and Resolution was reached on 27th June 2013, but the idea of an SRM was substituted for a network of national authorities and resolution funds for now. 9 Wolfgang Schauble, “Banking Union Must be Built on Firm Foundations”, Financial Times, 12th May 2013 10 Authoritative because of the Commission’s track record of proposing legislative measures that tend to materialize, albeit with changes and in a more watered-down form. Some of the proposed measures for banking union have been either already adopted (the Single Supervisory Mechanism) or currently undergoing adoption (the Single Resolution Mechanism). 11 As previously discussed there were three types- financial, sovereign debt and confidence crises 12 The ESM was only made possible by the addition of a third paragraph to Art. 136 TFEU 13 The TSCG and ESM Treaty took the form of international treaties.
8
the boundaries of the current Treaties and is increasingly provoking debates about the
appropriate means for effecting those systemic changes. On the basis of careful
evaluation of the advantages and limitations of the different avenues for future
reform, this paper will attempt to sustain the author’s conviction that the best way to
effect extensive budgetary and banking reforms will be by amending the Union’s
founding Treaties.
9
III. Different means of achieving the same ends (vol.1) –
Getting creative with current Treaty provisions and the
return of integrovernmentalism
As discussed in Section 2, the financial, sovereign debt and public confidence crises
acted as catalysts for the surfacing of ideas of deep economic integration that
remained dormant for over a decade following the introduction of EMU in 1992.
Political leaders of today will have to make some important decisions on the extent of
future cooperation and choose the most appropriate way to convey those changes.
This section will examine two proposed routes that have been, to some extent, already
used to address the recent events and comment on their suitability as means for
bringing about these long overdue reforms- one is to remain within the confines of the
current Lisbon Treaty and make full use of its provisions, whilst the other considers
whether the recent proliferation of intergovernmental treaties will present a good
alternative for implementing the needed changes in the future.
A. Using existing Treaty provisions to the fullest
It is widely acknowledged by EU institutions that only where a move towards a
genuine economic union is not possible within the current framework, but is
indispensible for improving the functioning of EMU, should an amendment to the
Treaties be preferred14. The EU Treaties, as they stand, contain certain mechanisms,
which allow the Union to extend its reach beyond what was explicitly spelled out on
paper by the Member states. These are the so-called “flexibility clause” (Art 352
TFEU), the mechanism of enhanced cooperation (Arts 326-334 TFEU and Art 20
TEU) and the use of Art 136 TFEU as a legal basis for the adoption of secondary
legislation.
14 Blueprint supra n.2, p.14
10
Flexibility clause
Art 352 TFEU provides a convenient way of extending the EU’s powers in certain
areas that have already been covered by other treaty provisions without the need for a
formal amendment to the treaty document. Its purpose is to enable the EU to react to
unforeseen circumstances via the establishment of common EU policies 15 . It,
therefore, resembles a suitable “instrument for filling the gaps”16 with any post-crisis
measures that were not anticipated by the current Treaties’ drafters. It is limited,
however, to attaining “one of the objectives set out in the Treaties” for which the
Union has not been expressly conferred power to act. Even though the Lisbon Treaty
extended the potential scope of application of Art 352 TFEU beyond the remit of the
internal market, due to the nature of the proposals for deeper economic and budgetary
reforms, it could be argued that a basis for these reforms may only be found in the
vaguely formulated Art 3 (3) TEU. The latter describes the establishment of the single
market as one of the Union’s aims, but it also refers to the objective of attaining
“sustainable development of Europe based on balanced economic growth and price
stability” as well as the promotion of economic cohesion and solidarity among
Member States. Even if we were to turn a blind eye to the uncertain legal basis in
those wide proclamations, there are a number of additional hurdles that those
proposals will have to jump before they are given a green light under the flexibility
procedure.
First of all, on a purely procedural ground, the proposals would have to overcome the
requirement of unanimity in the Council, be proposed by the Commission and agreed
by the European Parliament, even if they were to follow the special legislative
procedure. It is doubtful that Member States will agree unanimously to such a
significant extension of Union competence based on such a dubious legal provision.
15 Theodore Konstadinides, ‘Drawing the Line Between Circumvention and Gap-Filling: An Exploration of the Conceptual Limits of the Treaty’s Flexibility Clause”, Yearbook of European Law, vol.31, no.1 (2012), pp.227-262, at p. 228 16 Lucia Serena Rossi, “Does the Lisbon Treaty Provide a Clearer Separation of Competences between EU and Member States” in Andrea Biondi, Piet Eeckhout & Stefanie Ripley (eds.), EU Law after Lisbon (2012), OUP, pp.85-106, at p.103
11
Secondly, Art 352(3) TFEU strictly forbids any harmonization of Member States’
laws based on the article if they were excluded from the Treaties in the first place. It
was apparent at the time of establishment of EMU that Member States were reluctant
to part with their economic competence, and that was reiterated in Art 5(1) TFEU,
which indirectly excludes the Union from undertaking any harmonization in the area
by limiting its role to mere issuance of broad guidelines.
Thirdly, even if somehow the proposals for deepening of EMU are deemed suitable to
be legislated via the means of Art 352 TFEU (which is very unlikely), a final nail in
the coffin of this idea will be the controversy that it will create with regards to the
principle of conferral of competence as contained in Art 4(1) TFEU. Due to the
magnitude of the proposed reforms their authorization could only be realized via an
express agreement by the Member States, otherwise the possibility of technocratic
self-empowerment17 of the Council could amount to self-conferral of powers in this
sensitive area. Such unprecedented use of this type of evolutionary clause will be met
with disapproval by the Member States and especially by strong Constitutional Courts
like the German Federal Constitutional Court, which is bound to reiterate the Union’s
lack of Kompetenz-Kompetenz in areas of economic policy. A confirmation for this
can be found in the recent judgment on the Lisbon Treaty18 in which the BVerfG
pointed out that Art 352 is to be construed narrowly and that any developments
concerning European integration should still be “predicted and determined”19
by the national legislative bodies. In practical terms, this creates an implied
“suitability check” on the use of the flexibility clause, which even though not
present as a condition in the Treaties will be applied by inter alia the German
Bundestag20, the Czech Senate21 and the UK Parliament22 before use is made of
17 Jurgen Habermas, The Crisis of the EU: A response (2012), translated by Ciaran Cronin, Polity Press, p.6 18 Case 2 BvE 2/08 Treaty of Lisbon, judgment of 30 June 2009, available in English at: <http://www.bverfg.de/entscheidungen/es20090630_2bve000208en.html> accessed 5th July 2013 19 Ibid. para 322 20 The Federal Constitutional Court believes this has been necessitated by the fact that “the newly worded provision makes it possible to substantially amend Treaty foundations of the European Union” (para. 328, BvE 2/08) 21 Section 119k(d) of Act 107/1999 Coll., as amended by Act 162/2009 Coll. Standing Rules of the Czech Senate
12
this so-called “dynamic treaty provision”23. The latter could be interpreted as a
sort of reclamation of the carte blanche that was given to the EU in the 1980s
to shape the internal market. This restriction in the potential use of Art 352
TFEU was highlighted in another case24 regarding the Lisbon Treaty in which
the Czech Constitutional Court denied the use of the flexibility mechanism as a
“blanket norm” for extending the competences of the Union.
As a result, the requirement of formal authorization by national legislatures
comes close to defying the objective of having a flexibility clause since the
level of national scrutiny will be similar to that for a treaty revision. The latter,
coupled with the abovementioned unanimity, places the use of art 352 TFEU at
par with the difficulty in decision-making associated with Art 48 TFEU. It
follows that using the flexibility clause to extend the Union’s powers to
legislate on fiscal and budgetary matters will prove highly controversial and
thus highly unlikely.
Enhanced cooperation
Another possibility of accommodating deeper economic reforms is presented
by the mechanism of enhanced cooperation as “a means of organizing diversity
in an increasingly heterogeneous Europe, while at the same time preserving an
integration dynamic”25. The legal framework for enhanced cooperation is
provided for in Articles 326-334 TFEU and Art 20 TEU which clearly delimit
the scope of application of this tool of differentiated integration. Most
importantly, enhanced cooperation can only be used to promote integration in 22 Section 8 of the European Union Act 2011 provides for the consent of the UK Parliament prior to the adoption of a draft measure based on Art 352 TFEU. 23 Supra n.18, para 239 24 Case Pl ÚS 19/08 Treaty of Lisbon I, judgment of 26 Nov. 2008, para 150 et seq.; available in English at: <http://www.usoud.cz/en/decisions/?tx_ttnews%5Btt_news%5D=484&cHash=621d8068f5e20ecadd84e0bae0527552> accessed 6th July 2013 25Françoise de La Serre & Helen Wallace, “Flexibility and Enhanced Cooperation in the EU: Placebo rather than a Panacea?” (1997), Research Policy Paper 2, Notre Europe, p.5
13
areas that do not fall under the Union’s exclusive competence26 and it should
only be deployed to further the objectives of the Union, to protect its interests
and reinforce its integration process. Economic policy as such is not an
exclusive Union policy, which reveals its potential to be subject to enhanced
cooperation and, arguably, to be seen as furthering the objectives of the EU by
strengthening the economic arm of EMU and providing stability for the single
market. However, the interrelation between economic and monetary policy
could prove challenging as changes in one could have indirect consequences on
the other. If we were to follow functionalist logic, the creation of a European
fiscal and budgetary policy would result in spillovers into monetary policy and
the single market due to the central role of the single currency. This was
foreseen to an extent by Art 10 TSCG, which provided for the use of enhanced
fiscal cooperation but “without undermining the internal market”.27
Another characteristic of the mechanism of enhanced cooperation is that it
should only be utilized as an instrument of last resort in cases where the same
objectives cannot be attained within a reasonable period of time by the Union
as a whole28. This is particularly important in our scenario, as economic
convergence policies have been known to be deeply divisive due to their
assumed belonging to spheres of national sovereignty. It might be the case that
not all member states would want to proceed with a fiscal and banking union as
outlined by the Commission’s Blueprint, which would imply that only a group
of them will converge on this occasion with the door left open for future
joiners. This will be in line with the two most successful instances of enhanced
cooperation within the EU framework so far- EMU and Schengen, which are
both examples of “in-built”29 closer cooperation, the arrangements for which
were laid down in the Treaties themselves instead of following the general
26 Exclusive areas of competence are listed in Art 3(1) (a-e) TFEU. 27 Art 10, Treaty on Stability, Coordination and Growth, available at: <http://www.consilium.europa.eu/media/1478399/07_-_tscg.en12.pdf> accessed 12th July 2013 28 Art 20(2) TEU 29 Piris supra n.6, p.71
14
enhanced cooperation legal regime. Since no specific arrangements were made
for a future banking Union or budgetary measures that go beyond coordination,
any potential developments in these sectors will have to follow the rules in Arts
326-334 TFEU.
Notably, enhanced cooperation has exceptional value as a tool for political
compromise as it ensures at the same time unity and diversity30. An obvious
advantage is that it presents a good alternative to the time-consuming and
laborious treaty amendment process. That said, it is important to underline that
any request for enhanced cooperation would still need to comply with certain
requirements, such as the minimum membership of 9 Member States and the
receipt of authorization to proceed by the Council only following a proposal
from the Commission and after obtaining consent from the Parliament31.
As well as its advantages, however, this method of policy development brings
certain risks. Firstly, the very fact that it does not involve all Union Member
States hints to the fragmentation of the European project and the potential
distancing from the original goal of European unification32. In other words, it
increases the differentiation within the legal body of the EU, which, with
extended use, could lead to the loss of European identity and disturbance of
internal coherence33. It can be argued, therefore, that adopting a fiscal and
banking union via the means of an enhanced cooperation could result in the
worsening of the current polemic on the creation of a two-speed (or to be more
specific, multi-speed34) Europe. The idea of multi-speed Europe has at its heart
the varying composition of the closer cooperating group compared to earlier
such measures, with Euro area member states expected to participate, while
30 Giuseppe Martinico, “The Euro Area Crisis: A First Legal Analysis”(2011), Perspectives on Federalism, vol.3, issue 3, p.5 31 Art 329 TFEU 32 Jan-Emmanuel de Neve, “The European Onion? How Differentiated Integration is Reshaping the EU”(2007), European Integration, vol.29, No.4, pp.503-521, at p.505 33 Joschka Fisher, “From Confederacy to Federation: Thoughts on the Finality of European Integration”, Speech at the Humboldt University, Berlin, 12th May 2000 34 Piris, supra n.6, p.61
15
Eurosceptic member states such as the UK, Denmark and the Czech Republic
withholding their participation in such an exercise. That encourages the
emergence of several circles of enhanced cooperation, which is likely to
require some adjustment in institutional arrangements, and will bring about
decreased transparency and comprehensibility35 of the EU order.
Even though enhanced cooperation may appropriately reflect the difference in
integration needs between a monetary union in trouble and a wider club of
countries primarily interested in free trade36, it will create a culture of double
standards where the “outs” are likely to share a sense of paranoia that their
interests will not be protected if they are not part of the decision-making
process37. A recent case of crisis-related enhanced cooperation measure that
was badly received by certain Member States, among which the UK, the Czech
Republic, Luxembourg and Malta, was the proposal for an EU-wide Financial
Transactions Tax aimed at ensuring that the financial sector contributes its
share to the cost of the crisis. Despite the fact that the minimum criteria for
enhanced cooperation were satisfied and the proposal was adopted in January
2013, supported by no less than 11 Member States, it generated a lot of
hostility from non-participants. In fact, the UK launched a legal challenge in
April 2013, following a letter38 of concern submitted by the House of Lords
European Union Committee, which expressed worries about the extraterritorial
impact of the FTT and the resulting expenses on non-participating Member
States. Depending on the outcome of this case, the practical value of the
mechanism of enhanced cooperation might experience a potential drop, as
Member States willing to cooperate in the future would fear that their cause
would be undermined by challenges from opposing governments.
35 La Serre & Wallace, supra n.25, p.15 36 Wolfgang Munchau, “What saves the euro will kill the Union”, Financial Times, 30th Oct 2011 37 Despite the fact that Art 327 TFEU seeks to ensure that any enhanced cooperation respects the competences and, rights and obligations of non-participating Member States. 38 Full text of the letter available at: <http://www.parliament.uk/documents/lords-committees/eu-sub-com-a/FTTEnhancedScrutiny/260313FTT.pdf> accessed 14th July 2013
16
Lastly, an important limitation of enhanced cooperation is the fact that any acts
adopted within its framework remain binding only on the participants and do
not become a part of the acquis communitaire. Therefore, arrangements made
for a fiscal and banking union between, say, Euro-area member states, would
not be part of the legal order that countries joining the EU will have to agree to,
which could potentially lead to further difficulties in reaching an agreement
further down the line. Bearing in mind that all current39 and future non-
Eurozone member states are, according to the Treaties, expected to accede to
EMU and adopt the single currency at some point, relegating such an important
integration step to the status of enhanced cooperation will defy the logic of
unification.
For all the above reasons, enhanced cooperation does not present the most
appropriate choice for implementing reforms in fiscal and budgetary
integration. It would be simply a half-baked solution that would only bind the
participating Member States while triggering the suspicion of the rest as to
whether their interests will be compromised.
Art 136 TFEU
A third possibility for introducing reforms to “ensure the proper functioning of
EMU”40 from within the existing treaty architecture is the deployment of the
residual power that was given to the Council within the text of the Lisbon
Treaty41. Art 136 TFEU was intended to provide a sort of enhanced cooperation
between the euro area Member States by allowing for easier decision-making
during which only those member states will be entitled to vote in the Council
using QMV. Bearing in mind the “extremely wide”42 scope of the provision, it
can be argued that it has the potential to be the legal basis for the enactment of
39 With the exception of the UK and Denmark, both with derogations. 40 Art 136(1) TFEU 41 The essence of Art 136 TFEU first appeared in Art III-194 of the ill-fated Constitutional Treaty. 42 Piris supra n.6 p.107
17
wide-ranging provisions concerning the Eurozone43. In theory, it is possible to
use this empowering clause for purposes of strengthening budgetary
coordination and surveillance, as well as for setting out of economic policy
guidelines for the EU 1744. In fact, Art 136 TFEU was used on a number of
occasions since the start of Europe’s crises. To briefly mention but a few, it
was used by the Council in 2010, together with Art 126(9) TFEU, to address
the dire situation in Greece45 and in 2011 became the legal basis for the ESM46.
Its use in combination with measures for multilateral surveillance was also
justified for the adoption of sanction-based procedures47 and the introduction of
reverse QMV within those procedures that formed part of both the preventive
and corrective arms of the SGP as reformed in 2011. Most recently, it played a
central role in the enactment of the “two-pack”48 measures for enhanced
monitoring and surveillance in the euro area.
When compared with the previous two in-treaty options, Art 136 TFEU has the
advantage of providing measures authorized by it with the status of secondary
EU law and thus of belonging to the EU acquis, unlike those under regular
enhanced cooperation, while at the same time its authorizing ability does not
stretch as far as that of Art 352 TFEU as no new powers can be conferred on
the EU outside the confines of EMU49. With respect to future reforms, the
usefulness of Art 136 for deepening the integration of the euro area will depend
on how bold the proposals for reform are. The Commission50 has already
acknowledged its value for the potential establishments, such as the 43 As long as they fall within the procedures of Arts 121 and 126 TFEU (with the exception of Art 126(14)) 44 Soon to be 18, with Latvia joining the Eurozone in 2014 45 Decision of the Council 2010/320/EU of 8th June 2010, and all subsequent decisions amending it 46 Decision of the Council 2011/ 199/EU of 25th March 2011 47 Excessive Deficit Procedure (EDP), Macroeconomic Imbalances Procedure (MIP) and Medium Term Budgetary Objective Procedure (MTO) 48 Regulation 472/2013 and Regulation 473/2013 of 21st May 2013 49 It has been suitably dubbed “Eurozone flexibility clause” by Thomas Beukers in “The Eurozone Crisis and the Legitimacy of Differentiated Integration”, in Bruno de Witte, Adrienne Héritier & Alexander H. Trechsel(eds.), The Euro Crisis and the State of European Democracy (2013), EUI e-book, p.12 50 Blueprint supra n.2, p.23
18
Convergence and Competitiveness Instrument (CCI), a new mechanism for ex-
ante reform coordination as part of MIP.
On the other hand, using Art 136 TFEU could also have its limitations. Even
though it provides for easier decision-making in the Council, proposals for any
measures based on it will still have to come from the Commission and receive
the consent of the European Parliament, where the representatives of all 28
Member States will be entitled to a vote51. If extensively used, Art 136 could
provoke legitimacy concerns over certain sensitive provisions that some
Eurozone states might oppose, but be outvoted in the Council52. Overstretching
the scope of the article could also pose a threat to the principle of conferral of
powers to the EU53, similar to those associated with the use of the flexibility
clause.
Finally, because it is a form of differentiated integration, any measure adopted
on the basis of Art 136 will inevitably widen the divide between the
participating Eurozone Member states and those with derogation and contribute
to the complication of the EU legal framework by developing a second layer of
closer cooperation within the already exclusive EMU. All in all, Art 136 TFEU
might be sufficient as a legal basis for some secondary legislation measures
that come within the limits prescribed for its application, but will most
certainly not be enough to affect a major change towards a fiscal and banking
union without raising questions of legality.
B. Use of international treaties
Recent developments have demonstrated that EU Member States with the necessary
determination to implement measures of closer economic coordination are willing to
do so even if it means foregoing the established supranational route and returning to
51 Piris supra n.6, p. 108 52 For instance, France was opposed to the introduction of semi-automatic sanctioning or reverse QMV in the Excessive Deficit Procedure. 53 Beukers supra n.49, p.15
19
the basics of intergovernmentalism. Two international treaties were signed since the
start of the financial crisis, both of variable membership but with the goal of
correcting the weaknesses revealed by the insufficiently developed EMU. The Treaty
Establishing the European Stability Mechanism (ESM Treaty) was concluded after an
amendment54 was made to Art 136 TFEU to authorize Member States (and not the
Union) to take measures to safeguard the stability of the euro area as a whole by
establishing a permanent rescue fund. The ESM Treaty was signed between the
Eurozone member states only and as such represents a form of enhanced cooperation
outside the EU framework. The Treaty on Stability, Coordination and Governance
(TSCG), on the other hand, was an attempt to build upon the rules of the updated
Eurozone budgetary discipline code, the SGP, by enhancing both its preventive and
corrective arms and conferring an obligation to incorporate the provisions of the
Treaty in national legislation “of binding force and permanent character, preferably
constitutional, or otherwise guaranteed to be fully respected and adhered to
throughout the national budgetary process”.
Both treaties presented an escape route from the constitutional impasse that the Union
was experiencing. The ESM Treaty was a good alternative to changing the founding
Treaties in order to create a basis for a permanent55 stability fund, as the German
Chancellor insisted on in 2010, while the TSCG was pursued as a response to the UK
veto on any revision of the economic governance rules of the Union that would not
provide the safeguards that Westminster wanted for its financial sector. It appears,
therefore, that intergovernmental agreements can be used to further Union interests,
perhaps to the point that they actually aid supranational integration, rather than
frustrate it56.
54 Decision 2011/199/EU adopted by the European Council on 25 March 2011 55 The two emergency stability funds- EFSF and EFSM were based on Art 122 (2) TFEU that only allowed temporary financial support and the establishment of a permanent stability fund was precluded by the no-bailout clause in Art 125 TFEU. 56 Steve Peers, “Towards a new form of EU law? The use of EU institutions outside the EU legal framework”, European Constitutional Law Review, 2013, vol.9, issue.1, pp.37-72, p.72
20
Despite the obvious advantages of speed and sidestepping unanimity requirements57,
international treaties present a number of restrictions in the context of the attainment
of a deep and genuine EMU. First of all, any agreement between the Member States
that purports to affect the EU legal order will have to be compatible with the principle
of loyal cooperation contained in Art 4(3) TEU. Even though Member States may be
entitled to agree on measures of budgetary and fiscal policy that the Union has not
legislated on, such an agreement has to be compatible with the goals of the EU. This
was clarified in the recent case of Pringle58, where the CJEU reiterated that Member
States are free to partake in international agreements as long as they remain compliant
with their long-standing obligations under EU law.
Second, in case that any new intergovernmental treaty confers a role on a Union
institution59, that role is likely to be subject to fierce scrutiny. Even at present, the
issue of using Union institutions for the purposes of upholding external agreements is
controversial. Formally speaking, the institutions of the Union can only operate within
the powers conferred on them in the Treaties60 and should aim to serve the interests of
the Union, of its citizens and of the Member States, while upholding the consistency,
effectiveness and continuity of Union policies and actions61. Authors such as Peers
draw the line of acceptability of such “task extension” at the use of Union institutions
for treaties whose subject matter does not fall within the EU’s exclusive
competences62 and where those institutions’ essential role has not been altered.63 In
other words, EU non-judicial institutions cannot be vested with powers that would
give them discretion to adopt binding decisions that would go beyond what their
formal role entails in a particular policy64. In the case of judicial institutions, the ECJ
has a generic competence to rule on disputes between member states, which relate to
57 Both the TSCG and ESM Treaties are to enter into force following ratification by 12 Eurozone Member States and 90% of participants, respectively. 58 Case C-370/12, Thomas Pringle v Government of Ireland, 27th Nov 2012 59 For instance, if within the remit of a hypothetical fiscal agreement, the Commission was to be given powers of a Eurozone Treasury. 60 Art 13(2) TEU 61 Art 13(1) TEU 62 Peers supra n. 56, p.48 63 Peers supra n. 56, p.50 64 This was confirmed in Pringle at para 158
21
the subject matter of the Treaties 65 and to ensure the valid interpretation and
observance of EU law with regards to the international agreements between member
states66. The debate on the legitimacy of use of EU institutions by international
agreements was recently re-ignited with the UK feeling strongly against such high-
jacking for the purposes of the TSCG and claiming (perhaps quite rightly) that the
Union institutions were created to serve all member states, not only a group of them67.
A third criticism of the use of international treaties for deepening the Economic and
Monetary Union is largely formalistic and relates to the so-called mutation of the
European project. It concerns the change in the tools for cooperation between the
Members of the Union. Traditionally, cooperation has been effected within the
framework of the founding Treaties and secondary legislation via supranational
policy-making, which has benefited from relatively good levels of democratic
legitimacy due to developed mechanisms of accountability and enforcement.
Intergovernmental cooperation, on the other hand, usually means the absence of EU
decision-making procedure, the absence of control by the Commission and the ECJ on
the implementation by the participating MSs and the absence of sanctions68. Even
though it has been demonstrated that all of these are not necessarily true69, it is still
possible to argue that due to the potential overlap between Union provisions and
intergovernmental agreements, there will be a chance of “contamination”70 of EU
institutions with intergovernmental processes and the resulting reduction of the levels
of parliamentary and judicial control for certain areas of coordination. Transparency
will become problematic should there be a proliferation of intergovernmental
agreements that concern economic integration, as was demonstrated by the TSCG71.
The latter also provided evidence that such a fragmentation of the integration process
65 Art 273 TFEU states: “the Court of Justice shall have jurisdiction in any dispute between Member States which relates to the subject matter of the Treaties if the dispute is submitted to it under a special agreement between the parties” 66Pringle supra n.58, paras 80-81 67 It should be noted that the UK eventually agreed to this extension of powers of the Union institutions, despite openly expressing doubts about its lawfulness. 68 Piris supra n.6, p.117 69 With the TSCG giving de facto surveillance control to the Commission and allowing for the CJEU to enforce budgetary rules and impose sanctions 70 Peers supra n.56, p.41 71 It can be argued that the TSCG made a de facto amendment to primary EU law despite the lack of approval by all MSs (see Peers supra n.56, p.38)
22
will suffer from poor democratic openness and legitimation due to the increase
sidelining of the European Parliament.
Fourthly, the willingness of the signatories to both the ESM and TSCG Treaty to
incorporate the terms of their agreements into the EU Treaties is puzzling. If the
cooperating group could not secure unanimity for a Treaty revision in the first place,
what is to say that they will be able to in the next five years? If anything, the
abstaining Member States will be even more unwilling to engage in Treaty
amendment to simply insert an existent set of rules that they weren’t given the option
of debating and voting on. In case that the Treaty amendment becomes necessary for a
different reason and the accommodation of the ESM and TSCG provisions are only
ancillary, it is very likely that pressure will be applied on the non-participants to agree
due to the uneven split of 25/272 in the case of TSCG or alternatively, they could
attempt to negotiate an opt-out. Another issue will be the dubious democratic value of
an “alien” piece of legislation that did not go through the ordinary treaty revision
procedure but was instead conceived to further the interests of only part, albeit a
majority in the case of TSCG, of the EU Member States. Taking into account past
incorporations, such as the Treaty of Prum, it would appear that chances of success
are higher if the “outs” are kept constantly informed and involved73, but the all-
important variable of political willingness will retain its strong position.
Lastly, an unwanted consequence of the diversion of economic policy-making via an
intergovernmental channel will be the marginalization of the EU as a means of
cooperation. Although in the short term, intergovernmental treaties might be easier to
agree and quicker to implement, especially when time is of the essence, as it was in
the case of the worsening Eurozone crisis, the long-term implications of this
weakening of the Community method will certainly prove erosive of the relevance
and image of the EU as facilitator of inter-state cooperation and agent of prosperity. 72 Croatia, as the newest member of the EU, will (at least until it decides to sign up to it) not be a signatory to the TSCG, so perhaps the number of non-participating Member states will increase to 3. 73 Janis Emmanouilidis, “Which lessons to draw from the past and current differentiated integration?” in Challenges of Multi-tier Governance in the EU: Workshop, Outlines of Presentations, 4th Oct 2012, p. 11 available at: <http://www.europarl.europa.eu/document/activities/cont/201210/20121003ATT52863/20121003ATT52863EN.pdf> accessed 8th July 2013
23
The shifting of discussions to “outside channels”74 is also bound to exacerbate the
divide between Eurozone and non-Eurozone Member states, or in cases such as the
TSCG, where even non-Eurozone members signed the agreement, the divide between
signatories of the new agreement and those who abstained from joining. Much like
with enhanced cooperation, the result will be increased differentiation and the
creation of a two-class order, where the non-participating Member states will become
more and more frustrated at their lack of voice on matters that can have a potential
impact on them in the future.
For all the above reasons the present author believes that using intergovernmental
treaties to perfect the weakness of EMU, as revealed by the financial and sovereign
debt crises, will be unsuitable. Economic and Monetary Union has been an aim of the
EU since the inception of the idea in the Werner Report in 196975. Its eventual
realization with the Maastricht Treaty brought about an asymmetric project, with a
well-developed monetary arm and an overlooked economic one. It would be totally
inappropriate to try and even out this asymmetry by externalizing policy-making. It
will result in a complex myriad of provisions that will be inherently related to one
another, but not forming part of a single-hearted attempt at improving the wellbeing
of the citizens of the EU. The following section will direct attention to a method of
policy reform, which will present arguably the best bet for a determined move
towards deepening of economic union, despite being the least politically desirable.
74 House of Lords European Union Committee Report, The Euro Area Crisis, 14th February 2012, p.39 75 It took four attempts to create EMU- new plans were put forward roughly every 10 years from 1969 until its eventual adoption in 1999. For more historical details, see: <http://ec.europa.eu/economy_finance/emu_history/history/part_a_2.htm >
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IV. Different means of achieving the same ends (vol.2)-
Treaty change or no Treaty change: that is the question
Upon the initiation of the ratification process of the Lisbon Treaty the Council
proclaimed that it will provide the Union with a “stable and lasting institutional
framework” that will be requiring “no change in the foreseeable future”76. Taking into
consideration the instrumental role of the financial and sovereign debt crises, as
discussed in Section II, and the limited suitability of alternative options for progress
explored in Section III, the present section will consider the option of treaty change
and attempt to provide evidence to support its necessity, outline the main difficulties
associated with this idea and also make some suggestions as to the form the new
Treaty should take. Before moving on to discuss some formal justifications of this
choice of action, an important qualification must be made- namely, that the discussion
of advantages and disadvantages of treaty change is in no way exhaustive, but at best
selective. This is particularly true for section B, which concentrates on the proposals
for fiscal and banking union as a justification for preferring a change of the EU’s
founding documents.
A. Formal reasons in support and against treaty amendment
Reasons in support
The first formal justification that can be put forward in support of the need for treaty
change is the unsettling complexity of the existing constitutional provisions.
Currently, the system of EU competences is spread between two founding Treaties
and a long list of annexes and protocols, which make a cumbersome whole. The need
to respond to market pressure in recent years resulted in the piling of texts and the
creation of a complex system of EU secondary law, international treaties and soft law
76 Presidency conclusions, Council of the EU, 14th Dec 2007, 16616/1/07 REV, p.2
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political agreements77. The result was a perceived need for a comprehensive overhaul
of the Treaties to reduce the number of primary legal instruments as much as
possible78, which could be done by the merging of the TEU, TFEU and their
accompanying protocols in a single text. Such a step would reduce repetition and
eliminate duplication79, by removing the need for two preambles, for example. A
subsequent re-shuffling and combining80 of articles that concern the same areas81 will
introduce order and encourage ease of use. New provisions on economic governance
should be positioned along with existent EMU legal framework (currently in Title
VIII of TFEU). A relevant criticism, as raised in the case of the Constitutional Treaty,
might be that it will result in a very long and unreadable82 document. In response to
such criticisms the present author would suggest the incorporation of the essence of
certain protocols and annexes within the relevant treaty articles of the new Treaty,
which would significantly decrease the volume of the final Treaty document. By
doing so, the new Treaty could potentially consist of no more than 250 pages83, which
is still rather long but arguably more in line with the size of constitutional documents
of some of the constituent Member States84.
Second, revision of the treaties has been put on the agenda of European policy-makers
on a number of occasions in the six years since the signing of the Lisbon Treaty. One
example is the protocol85 giving legally binding political “guarantees” to Ireland in
77 Rosa Lastra & Jean-Victor Louis, “European Economic and Monetary Union: History, Trends and Prospects” (2013), Yearbook of European Law, SSRN 136/2013, pp.1-150, at p.140 78 Steve Peers, “The Future of EU Treaty Amendments” (2012), Yearbook of European Law, vol. 31, issue 1, pp. 17-111, p. 100 79 Andrew Duff, A Fundamental Law of the European Union, Speech to the Federal Trust, London, 10 Jan 2013, PDF available at: <http://www.fedtrust.co.uk/filepool/Andrew_Duff_Speech_10thJanuary2013.pdf> accessed 20th July 2013 80 Ibid. 81 For example, bring together Title V of TEU and Part V of TFEU as both relate to foreign policy cooperation or uniting the provisions of enhanced cooperation in Articles 326-334 TFEU and Art 20 TEU. 82 Peers supra n.78, p.100 83 The actual content (articles) of the Treaty Establishing the Constitutional for Europe was to be found in the first 200 pages of the document with the remaining over 250 pages consisting of various protocols and declarations. 84 For instance, the German Constitution, which contains 140 pages. 85 Protocol on the Concerns of the Irish People on the Treaty of Lisbon, OJEU 60, p. 131, 2nd March 2013
26
the course of the adoption of the Lisbon Treaty86. During the same tense ratification
period the Irish managed to secure another concession in the form of de facto
repealing Art 17(5) TEU, which provided for the reduction of the number of
Commissioners from 1 Nov 2014. Assurances were given to the Irish government that
the “one Commissioner per Member State” rule will remain in place, but no formal
action has been taken to amend the Treaty yet. Similarly, an arrangement was made
extending the application of Protocol 30 on the application of the Charter of
Fundamental Rights of the EU to the Czech Republic87. In the context of EMU, the
provisions of both intergovernmental treaties- ESM Treaty and Fiscal Compact- will
need to be incorporated within EU law with the next EU Treaty revision.
Furthermore, Art 16 of the Fiscal Compact explicitly provides a timeframe of five
years within which that incorporation should take place, which pre-supposes that
there will be another amendment of the Treaties by 2017. Most recently, the European
Commission voiced its support for an amendment in the following lines: “The Euro
area is a product of the Treaties. Its deepening should be done within the Treaties, so
as to avoid any fragmentation of the legal framework, which would weaken the Union
and question the paramount importance of EU law for the dynamics of integration”88.
Flowing from this, a fourth reason in support of a Treaty change is that it will reflect
the evolutionary nature of the integration process via the continuing use of the so-
called Community method, which consists of the pooling of national sovereignty and
empowerment of supranational institutions to advance and give effect to joint
solutions89. It is possible to assume that measures will be more authoritative, with
greater political resonance and more effective if taken on the Union level because
there will be a larger authority behind them which will make compliance easier to
observe and sustain. In practice, this claim has already been undermined in the past by
the German and French non-observance of the SGP rules in 2003. There is hope,
86 It should be noted, however, that this was recently annexed to the TEU and TFEU with the accession Treaty of Croatia. 87 See Annex I of the 2009 European Council Conclusions, available at: <http://www.consilium.europa.eu/uedocs/cms_data/docs/pressdata/en/ec/110889.pdf> 88 Blueprint supra n.2, p. 13 89 Andrew Duff, Federal Union Now, September 2011, p.3, PDF available at: <http://andrewduff.eu/en/article/2011/509160/federal-union-now-new-publication-by-andrew-duff > accessed 20th July 2013
27
however, that with increasing de-politization of enforcement mechanisms90 for EU
policies the above assertion might become more realistic.
Fifthly, amending the Treaties to reflect the changes necessary to strengthen EMU
will mean the observance of the conferral of powers principle, which is going to make
the process more democratic and legitimate. Such amendment will also settle the
uncomfortable tension between national parliaments and the Union that has resulted
from the EU gradually entering the unchartered territory of fiscal and budgetary
governance. A clear competence transfer would avoid complaints similar to the
German Bundestag’s protestations about its sidelining on the transfer of emergency
support funds within the EFSF91 or the potential controversy surrounding the new
budgetary surveillance procedure within the European Semester during which the
proposed budgets of Member states are evaluated before they have been submitted to
national parliaments.
A final formal justification lies in the need to reform the current treaty revision
procedure to make it more effective for a Union of 28 Member States. The current
“double” 92 unanimity requirement of Art 48(4) TEU is unjustifiably rigid and
discourages treaty amendment discourse due to the difficulty of reaching a consensus
between a large number of participants with varying interests. There have been calls
for relaxation of this requirement by substituting it with some sort of majoritarian
ratification rule that would allow a treaty to enter into force once, for example, four-
fifths of its signatories have successfully ratified it 93 . Recent cases of such
majoritarian ratification clauses can be found in the Fiscal Compact Treaty and the
ESM treaty- 12 Eurozone Member States94 and 90% of all signatories95, respectively.
90 The flaw in the corrective arm of the SGP was remedied by the introduction of the Reverse Qualified Majority Voting for the adoption of sanctions in the content of the Excessive Deficit Procedure. The measure was introduced as part of the Six Pack (more specifically, Regulation No.1174/2011), with its main aim to downplay the political influence that MSs in breach can have in the Council. 91 Although it should be noted that the Bundestag was given a say on future bailout transfers in a decision by the German Federal Court from 7th Sep 2011, 2 BvR 987/10 92 First, unanimity has to be secured by the IGC and then the proposed amendment has to be ratified by all Member states before it enters into force. 93 Duff supra n.79 Fundamental Law of the EU, Speech to the Federal Trust in London, 10th Jan 2013 94 Art 14(2) TSCG
28
A step further will be to substitute unanimity for majority voting during the IGC.
Unfortunately, such a revision of the constitutional charter without the unanimous
agreement of the constituent parts of the entity is perceived as a significant mark of
federalism96 that might not prove agreeable for some Member states. In fact, Peers
suggests that such an abolition of national vetoes over Treaty amendment, despite the
obvious boost it might bring to European integration process, would irreparably
damage the EU’s already volatile political legitimacy97.
Obstacles to treaty change
The first, and most obvious, hurdle that needs to be overcome in order to proceed with
treaty change is the requirement of unanimity contained in Art 48 TEU. As discussed
at length above, this rigid requirement fails to capture the political dynamic of an
increasingly heterogeneous EU. Conditioning ratification upon unanimity can act as
an important deterrent for politicians, as they fear their negotiation efforts could be
endangered by a single Member State deciding to withhold its support (potentially for
ulterior motives, as in the case of the UK’s rejection to Treaty amendment for TSCG
reforms). The likelihood of treaty reform, therefore, hinges upon a decisive change in
behavior on the part of political elites98, who should abandon their usual “foot-
dragging” and “fence-sitting”99 approaches to European integration and demonstrate
the needed persistence and determination. It is understandable that a feeling of relief
and reluctance for further reform has settled in, especially following the protracted
gestation of the Lisbon Treaty. Despite this institutional reform fatigue, however,
Member States would have to come to terms with the fact that the text of the current
Treaties is not, and could not possibly be, a definite document carved in stone for
generations to come100.
95 Art 48(1) ESM Treaty 96 Piris supra n.6, p.59 97 Peers, supra n. 78, p. 107 98 Habermas supra n.17, p.51 99 Tanja Borzel, “Pace-setting, Foot-dragging and Fence-sitting: Member State responses to Europeanization” (2002), JCMS vol.40, No.2, pp.193-214 100 Bruno de Witte, “Treaty Revision Procedures after Lisbon” in Biondi et al. supra n. 16 p.107-127, at p.107
29
A second disadvantage of treaty change is that it is very likely to result in watering
down of initial policy proposals for the creation of fiscal and banking union and de-
valuing their importance as a result of the “minimum common denominator”
approach that is characteristic of EU policy-making. These are, of course, all
problems stemming from the unanimity requirement, which gives Member States
bargaining power to influence the outcome of negotiations.
Thirdly, a new treaty transferring extensive fiscal competences to the EU will most
certainly attract the attention of activist constitutional courts within the Member
States. As previously discussed, the German Federal Constitutional Court made it
very clear in both its Maastricht Treaty101 and Lisbon Treaty102 judgments that it
retains a degree of oversight over the minimum level of competence that should
remain exclusively sovereign to the Member States and budgetary powers are
certainly an example of such “national sanctuary”.
A fourth, and final, challenge that needs to be overcome in order for a treaty reform to
be successful, is the decline in democratic legitimacy of the EU and the rise in
Eurosceptic movements that point to a popular “disengagement” with the integration
project. This has been exacerbated in recent years by the economic downturn and
measures of austerity that have accompanied the financial and sovereign debt crises.
Bearing in mind the obligation of some Member States to hold referenda to
accommodate reforms within their domestic constitutional traditions and the history
of problematic ratifications in the past103, winning the support of national electorates
will be crucial. It is, therefore, essential for the success of any new treaty reform that
it is substantial104 and sufficiently bold to attract popular backing. The EU must be
seen to address issues that affect the citizens’ every-day lives, so-called salient
issues105. Only then would European electorates be able to accept that further
101 BVerfG, 2 BvR 2134/92 of 12th Oct 1993 102 BVerfG, 2 BvE 2/08 of 30th June 2009 103 Treaty ratification was challenged on five occasions so far: by the Danish Maastricht Treaty referendum in 2002, the Irish Nice Treaty referendum in 2001, the French and Dutch referenda on the Constitutional Treaty in 2005, and the Irish referendum in 2008 on the Lisbon Treaty. 104 Piris supra n.6, p.52 105 Andrew Moravcsik, “In Defence of the Democratic Deficit: Reassessing Legitimacy in the European Union” (2002) JCMS, vol. 40, No.4, pp.603-24
30
centralization will be justified. Due to the central importance of popular support for
the adoption of a new treaty, this topic will be discussed in greater detail in section V
below.
Despite strong formal justifications, it is very unlikely that politicians of today will
approve of the idea of opening up the can of worms that is treaty change without
having a more substantive justification for it. For the present purpose this work will
provide evidence that such justification can be found in the recently revealed need for
deeper economic integration.
B. Substantive reasons: A case study on Fiscal and Banking Union
“A new treaty is badly needed to mark the important new stage in European
integration in which the Eurozone is transformed into a fiscal union”106
In the following paragraphs this paper will discuss the insufficiency of competence of
the EU to bring about the necessary harmonization of national economies107, whose
levels of competitiveness are drifting drastically apart, and as a result to efficiently
prevent future crises. As revealed by the recent publication of the Commission’s
Blueprint “ a deep and genuine economic and monetary union can be started under the
current Treaties, but can only be completed with changes in [those] Treaties”. This is
due to the narrow limits of EU economic governance as exposed in the last five years.
During the financial and sovereign debt crises, a crucial “construction flaw”108 of
EMU was brought to the surface- namely, the asymmetry between a centralized
monetary policy and decentralized fiscal policies. This lack of economic government
was left unrectified by treaty amendments following the Maastricht Treaty and
culminated with the revelation of shocking macroeconomic imbalances in the
economies of the Member States. These events provoked calls for tighter budgetary
106 Duff supra n. 93 107 Habermas supra n.17, p.3 108 Habermas supra n.17, p. vii
31
control and stricter surveillance of financial institutions to ensure the stability of the
Eurozone and the trustworthiness of the single currency. The result was an alarming
rise in “positive” integration measures intended to patch up the gaps left in the
original design of EMU. On a purely legalistic note, however, the completion of a
closer budgetary and fiscal coordination, as well as a banking union, is being
restricted by the limits of EU law as it currently stands. Over a decade after the
introduction of the single currency, Eurozone Member States continue to be
individually responsible for the soundness of their budgets and observance of their
fiscal obligations, while the degree of interdependence between them continues to
grow.
As is now widely recognized, economic policy coordination was overlooked from the
inception of EMU. The Union competence in that sphere remained shared with that of
the Member States and there was no transfer of fiscal authority in the way that
monetary competence was transferred to the ECB. Alexander Lamfalussy identified
this fundamental shortcoming as the “weak E”109 of EMU years before the financial
crisis hit Europe. He argued that there was a need for an improved institutional
structure in order to ensure the effectiveness and stability of EMU. Unfortunately, no
action was taken to address these sources of tension, which coupled with disregard of
the SGP, soft enforcement mechanisms for non-budgetary economic policy
coordination and irresponsible public financing presented the conditions for a perfect
storm. As a result, the Eurozone Member States had to overcome their reluctance and
adopt economic governance reforms in a desperate attempt to contain the raging
crises. These crisis-fighting measures, among which the SGP-enhancing Six Pack, the
“two-pack” for strengthening of budgetary surveillance, the Treaty on Stability,
Coordination and Growth and measures codifying the foundations of a Eurozone
banking union110, have received strong publicity111 and will not be analysed in detail
in this work. It is sufficient to note, however, that some of them (in particular, the 109 Mark Milner, “Europe’s Financial Architect: An interview with Alexander Lamfalussy”, The Guardian, Saturday 16th August 2003 110 Final political agreement was reached recently on both the regulations establishing the Single Supervisory Mechanism (April 2013) and the Bank Recovery and Resolution Directive (June 2013). 111 For a comprehensive overview of EU crisis-fuelled economic governance see: <http://ec.europa.eu/economy_finance/articles/governance/2012-03-14_six_pack_en.htm> accessed 12th July 2013
32
SSM and the Fiscal Compact) were considered vital emergency measures, but are
increasingly criticized for lacking democratic accountability and therefore, being
unsuitable as a long-term solution112. This resonates the opinion of the German
Chancellor Angela Merkel who insisted that long-term framework for future crisis
prevention must be embedded in the Treaties so as to be “legally unchallengeable”113.
Following this line of thought, the Commission put forward proposals for deeper
economic reform in which they recognize that a start can, and has been, made by
using secondary EU law (and international agreements), but certain medium- and
long-term measures will inevitably necessitate a revision of the Treaties.
The medium-term objectives of the Commission’s Blueprint center upon the ideas of
collective budgetary control to avoid negative spill-over effects, stronger coordination
of taxation and employment policies and the creation of a fiscal capacity for EMU.
Since the crisis, the powers of the EU to intervene in national budgetary processes
have gradually been extended to empower the Commission with an opinion over draft
national budgets and ability to require a revised draft of those if it detects non-
compliance with the rules of the updated SGP114. Going further, by requiring a
revision of national budgets that have already been implemented, however, would
overstep the competence for coordination of budgetary policies of Euro area Member
States as provided for in Art 136 TFEU. Due to the special position that taxation and
labour and social policies hold in the core of national sovereignty, any power to
collectively manage those will have to be expressly granted by the Member States.
Furthermore, the establishment of a fiscal capacity to support structural reforms
within EMU will have to be given a Treaty base, especially if it is to be able to
borrow money to subsidise such reforms, as there is currently no provision that allows
the EU to set up such mechanism.
112 Opinion of European Commission Vice-President Viviane Reding, <http://ec.europa.eu/debate-future-europe/ongoing-debate/articles/article_use_20130605_en.htm> accessed 20th July 2013 113 Quentin Peel, “Merkel Insists on Treaty Change”, Financial Times, 27th Oct 2010 114 The latest extension of Union powers was effected by the “Two-pack” regulations, agreed on 12th March 2013
33
Bolder proposals, such as the establishment of a European Debt Redemption Fund,
would definitely necessitate a new Treaty provision115 to iron out details on the
amounts of transferrable debt, duration of operation of such a fund, conditions for
participation and other arrangements for its successful functioning. An even more
radical step would be the authorization of collective debt-issuing via the adoption of
Eurobills, so as to eliminate the country-specific differentiation of sovereign credit
risk. Provided that such an instrument for collective issue of sovereign debt
overcomes concerns of Member States, such as Germany, about its potential to cause
moral hazards116, if it is ever to be adopted, it will certainly require a change in the
Treaties. What is more, the resulting need for closer cooperation and supervision of
Member States’ debt management might have to result in the establishment of an
EMU Treasury within the Commission, the institutional arrangements for which
would also have to be enshrined in the Treaties. Eventually, the Commission
envisions the achievement of a full fiscal and economic union with its own central
budget and capacity to impose budgetary and fiscal decisions on its members, which
would be made possible only by the necessary pooling of sovereignty which also pre-
supposes a greater degree of political integration.
With regards to the proposals for banking Union, the Commission’s main aim is to
break the vicious circle of cross-subsidisation between sovereigns and their banks.
Any future treaty change would have to settle the issue of controversial separation of
the supervisory and price-stability competence of the ECB, as agreed by political
leaders in April this year117. Creating a solid Treaty base for common frameworks for
deposit protection and recovery and resolution of failing banks will be a must, in
order to ensure the universality of application of such mechanisms. Developing an
accountable institutional framework to oversee this EU-level cooperation, however,
will go beyond the provisions of the Lisbon Treaty118. Nevertheless it is important to
115 Blueprint supra n.2, p.29 116 Germany fears that a joint guarantee of Eurozone members’ liabilities would create an incentive for national governments to spend beyond their means. 117 Council conclusions, 18th April 2013, <http://www.consilium.europa.eu/uedocs/cms_data/docs/pressdata/en/ecofin/136846.pdf> accessed 25th June 2013 118 Wolfgang Schäuble, quoted in “Berlin demands EU treaty change for banking Union”, 15th April 2013, available at: <http://www.euractiv.com/euro-finance/germany-requires-treaty-change-b-news-519105> accessed 20th July 2013
34
note that recent debates show that Member States have been antagonized by the
prospect of such a contentious treaty reform and as a result are more likely to prefer a
national solution rather than a pan-European institution119.
In a nutshell, decisive steps towards a deep and genuine EMU would need to be
accompanied by express pooling of sovereignty by Member States as they will go
beyond simple coordination of budgets and surveillance of the financial sector, and
affect all aspects of budgetary planning and as a result encroach on a jealously-
guarded privilege of national parliaments. Optimizing EMU’s stability and stamina to
withstand future crisis will only be possible by mirroring the achievements in
monetary policy, thanks to which the ECB, as a federal body, was able to act swiftly
to ensure the irreversibility of the euro and the return of investor confidence, whilst
decisions on financial support mechanisms have been slow and probably
inadequate120. If the Eurozone does indeed need an “economic government” with its
own full-time president, budget and coordinated tax system121, this can only be
achieved by means of treaty change.
C. Reform Treaty vs. Constitutional treaty
As demonstrated by the previous section, there are significant reasons why European
policy-makers should take the idea of changing the Treaties seriously. With
influential European leaders conceding that EU treaty change “will be necessary”122
and prominent MEPs making tentative suggestions that formal talks on treaty revision
should start in early 2015123, one issue that will have to be settled is the question of
form. In the following paragraphs, this work will explore two options- a) a reform
Treaty, which would simply “tweak” the necessary provisions and perhaps introduce
119 The agreement reached at the end of June on the Bank Recovery and Resolution Directive retained the national responsibility for the resolution of failing banks. 120 Alberto Majocchi, “Towards a European Federal Fiscal Union”, Perspectives on Federalism, vol.3, issue 1, 2011, pp.78-98; p.96 121 François Hollande, quoted in Angelique Chrisafis, “François Hollande says Eurozone needs its own full-time president”, The Guardian, 16th May 2013 122 French president François Hollande, 28th June 2013, <http://www.euractiv.com/future-eu/hollande-treaty-change-necessary-news-528975> accessed 18th July 2013 123 Guy Verhofstad in Laurence Peter, “EU needs new Fundamental Law”, 3rd June 2013, <http://www.bbc.co.uk/news/world-europe-22756558> accessed 28th June 2013
35
a few new ones, so as to accommodate the needed reforms, and b) a fundamental
overhaul of the EU’s legal framework and the enactment of a new constitutional
treaty.
To begin with, it is important to clarify which Treaty revision procedure should be
used. The Lisbon Treaty provides for two choices in this respect- the ordinary
revision procedure and the simplified revision procedure. The limitations124 of the
latter, however, make it inapplicable in the context of radical reforms of EMU. Steve
Peers, on the other hand, believes that deeper “economic governance” could be
realized within the confines of the simplified revision procedure if all the powers to
act to this end were to be conferred to the Member States to act collectively125. This is
largely describing the scenario under which Art 136 TFEU was amended in 2011 to
create the ESM. With plans for economic reform envisaging harmonization of
budgetary rules and the creation of pan-European surveillance and solidarity
mechanisms, the extension of EU competence will be an unavoidable consequence,
which would prevent the application of Art 48(6) TFEU.
Revision procedure decided, it is time to turn to the two options. A more modest
change of the Treaties would constitute “fixing” only the parts that are “broken”. It
would follow suit with the long tradition of revision of the founding treaties,
constituting simply “an amendment of the existing treaties to be accomplished
according to existing rules of change”126. As already mentioned, the scope of this
work is largely limited to discussing measures of fiscal and banking integration, but
this is not to say that these will be the only problem areas that will be reformed should
a treaty change be undertaken 127 . Returning to our focus, however, the most
anticipated reforms will relate to Parts of the Treaties that deal with EMU (mostly
Chapter IV of TFEU), the EU’s common policies and institutional arrangements, so
as to incorporate proposals for deeper budgetary integration, the potential creation of
a common economic policy and the empowerment of new (or existing) institutions
124 Art 48(6) only applies to Part Three of the TFEU and cannot serve to increase the competences conferred on the Union in the Treaties. 125 Peers supra n.78, p.87 126 Bruno De Witte supra n. 100, p.107 127 In fact, areas of defence, Common Foreign and Security Policy and extension of the CJEU’s jurisdiction are also very likely to make it to the reform agenda.
36
with important new tasks. In this regard, Andrew Duff makes a suggestion for a
provisional Convention agenda128 to include, among others, amending Art 5 TFEU to
substitute coordination with harmonization of national economic policies, changing
Art 123(1)TFEU to allow the ECB to assume the role of Lender of Last Resort
(LOLR) and to give it powers to issue Eurobonds, and updating Art 126(6)TFEU to
reflect the changes introduced by the Six Pack (e.g. reverse qualified majority voting
for EDP). Duff also proposes certain procedural changes such as amending Art 48
TEU to permit entry into force of any new treaty once ratified by four-fifths of
Member States and widening of Art 275 TFEU to give the CJEU jurisdiction over
operational aspects of CFSP, to mention but a few. Following the logic of the Lisbon
Treaty, a new Reform Treaty would make substantial amendments to the relevant
articles of the Treaties and perhaps introduce some new ones to give appropriate legal
basis for envisaged economic and banking unions, but will fully preserve the pre-
existing two-treaty architecture. As this work previously argued, however, such a
patchwork of primary law provisions is hardly the most efficient way to organize the
EU legal framework. Despite proclamations that the two Treaties and their protocols
“should be read as a seamless ensemble of primary law”, a new Reform Treaty would
clearly continue the trend of nonsensical repetitions and allocations129 of articles
between them.
To solve this inefficiency, and for a number of other reasons discussed below, this
work makes a provocative suggestion that perhaps a more fundamental overhaul of
the Treaties is in order. Admittedly, the last big attempt to develop the Union along
more federal lines was certainly not a success story. The Treaty Establishing a
Constitution for Europe was rejected in referenda by the electorates of two of the
founding Member States of the EU and threw the integration project into a serious
political crisis. But “abandoning”130 the constitutional project altogether was perhaps
pre-mature in light of the failure of the Lisbon Treaty to keep the promise of its 128 The full text of the agenda is available here: <http://andrewduff.eu/en/article/2011/538248/andrew-duff-launches-convention-agenda> accessed 20th July 2013 129 For instance, the split between basic provisions on the types of competence contained in Art 2 TFEU, while provisions on principles of conferral, subsidiarity and proportionality are in Art 5 TEU, or between the provisions establishing the EU institutions in the TEU and those on decision making, types of legal acts and jurisdiction of the CJEU in the TFEU. 130 Presidency Conclusions of the Brussels European Council, 21st -22nd June 2007
37
drafters that it will complete a cycle of reforms following which there will be no need
for a further Treaty change for a while. Let us take our Eurosceptic glasses off for a
moment and allow for the possibility that a new constitutional treaty might be chosen
as the vehicle for the implementation of the reforms that were necessitated by
Europe’s crises. There are at least two good reasons why such a contentious thought
should be entertained.
First of all, the choice of a single constitutional treaty will provide the much-needed
organizational simplification of the EU’s legal provisions. In an attempt to avoid
repetition with part A of this section, it will be reiterated that a single and well-
ordered document would bring coherence and ease of use, especially if this is
complemented by a less technocratic and easy-to-understand language. As proposed
above, the volume of such document could be reduced in comparison to the failed CT,
by avoiding repetition and incorporating some protocols within treaty articles.
Granted, it will hardly be the “pocket size”131 that certain politicians would like to
see, but for a document purporting to contain all132 primary legal provisions of such a
complex creature of international law as the EU, it will provide a relatively
satisfactory solution.
The second reason in support of a consolidated constitutional document, that this
paper puts forward, is that such a choice will be normatively desirable. A sui generis
organization such as the EU would benefit from having a constitutional charter in two
senses. First, it will be a descriptive representation of the established institutional
framework that delimits the powers of main organs and the allocation of governance
authority between the national and supranational level. Secondly, because
constitutions are traditionally thought of as resulting from an agreement of the
“people”133 (a social contract), it will provide an ingrained sense of democratic
131 In an article for The Economist Jack Straw expressed the wish to see the EU Constitution resemble that of the UN and the US, which could both fit into his pocket, “A Constitution for Europe”, 10th Oct 2002, <http://www.economist.com/node/1378559> accessed 18th July 2013 132 Of course, that is not taking into account the Treaty Establishing the European Atomic Energy Community (Euratom) and decisions by the CJEU, which are also sources of primary EU law. 133 Ingolf Pernice, “Does Europe Need a Constitution? Achievements and Challenges after Lisbon” in Anthony Arnull et al., A Constitutional Order of States? (2011), Hart Publishing, pp.75-98, p. 81
38
legitimacy by means of emphasizing the importance of the citizens as agents in the
integration process. It is exactly those objectives of democratic legitimacy,
accountability and engagement of the public that will make a new constitutional treaty
a superior form of future economic integration compared to a reform treaty. In this
respect, it might even be desirable to reintroduce the symbolism that was proposed by
the old CT in an attempt to channel a new sense of “Europeannes”, of sharing a
common goal, and being in the “same boat”134. It can be hoped that with time this
common feeling of belonging will transform into social solidarity and, perhaps with
even more time, economic solidarity. Yet politicians of today, pressed by the urgency
of the crises, are starting from the opposite end- they expect Member States to
cooperate closely in economic measures and to take part in common resolution
mechanisms, but the foundations of social solidarity between them have been
overlooked. Therefore, due to the shortage of time, the role of a new constitution
would be to introduce the social solidarity component in an attempt to justify the
necessity of economic solidarity. It follows that its role will be justificatory, rather
than pre-emptive.
Bearing in mind the fate of the last Constitutional Treaty, it will be unwise to dismiss
certain “lessons” that the failed CT tried to teach. A popular misconception is that one
of the main reasons for the Dutch and French rejections in 2005 was the ideological
charge of the text as represented by the reference to federalist symbols. Upon close
examination of the post-referendum surveys in both France and the Netherlands,
however, the list of reasons for the negative vote would appear to be topped by
national issues. In France, for instance, the majority said they voted “Non” on the
ratification referendum due to general dissatisfaction with the domestic situation in
the country, a fear that the Treaty would increase unemployment and concerns that
the Treaty was too economically liberal135. In both Member States only a low
proportion of the people surveyed admitted they rejected the CT because they were
opposed to the idea of a European federal state/a “United States of Europe”- 5% of
Dutch 136 and 2% of French voters 137 . This would suggest that incorporating
134 Jose Manuel Barroso, State of the Union Address, 2012 135 Post-referendum survey in France, Eurobarometer, June 2005, section 2.3. 136 Post-referendum survey in the Netherlands, Eurobarometer, June 2005, section 2.3. 137 Ibid.
39
symbolism and federal rhetoric into the Treaty text was not a deal breaker. Eight years
on, the situation might have changed slightly with the rise of popularity of some anti-
establishment and openly anti-European movements, but it is doubtful that any
potential rejections will be based primarily on dissatisfaction with symbols aiming to
create solidarity. When it comes to the question of popular support, or lack of it, it is
likely that the main factors influencing voters’ sentiments towards a new treaty will
relate to economic situation and domestic politics.
Another flaw of the rejected CT was the fact that it contained the word “constitution”
in its title. Many politicians felt that it had very strong federal connotations and
signified the creation of a European superstate, which hinted at a far deeper political
integration than certain sovereignist member states were ready to accept. Using the
name “constitution” has been considered misleading and a political mistake138 which
was rectified with the Treaty of Lisbon by returning to the familiar model of naming
the agreement after the location of its signing. The present work, while being aware of
how unlikely this is, argues that naming the new EU treaty a constitution would have
its benefits for the enhancement of European values and increasing popular
attachment to the European project, as citizens (especially those from Member States
with written constitutions) would find it easier to recognize the importance of the
provisions contained in it. In any case, be it called a Constitution or not, the new
treaty will certainly possess a constitutional character in the sense that it will provide
the legal basis for the extension of the powers of the EU and at the same time provide
the limits of those powers. The form of the treaty will ultimately depend on the
willingness of political leaders involved in the process and the levels of public support
that it bolsters.
138 Piris supra n.6, p.45
40
V. The question of popular support. Is persuading the
public the hardest part of the process?
Even the most elaborate proposal for future Treaty change is doomed to fail if it
disregards the important role that public opinion plays for the constitutional evolution
of the European Union both directly, via the medium of ratification referenda, and
indirectly, by legitimizing national political regimes which are the main actors at the
supranational level. The crises of the past five years have resulted in a rise in austerity
measures, which provoked a fundamental change in attitude towards the European
project, from the permissive consensus of the past to public debate and social
unrest139 in some of the worst affected Member States. In countries where the EU (as
part of the Troika) is portrayed as the “Brussels monster”, imposing demands for
harsh spending cuts and reduction of people’s standards of living as conditions for
granting of financial aid, the levels of popular dissatisfaction with the ideals of
Europeanization have seen a dramatic increase. There is a danger in using the crises
as a justification for the dismantling of the welfare state, however, as it leads to the
erosion of the legitimacy of national governments, which produces indecision and
cautiousness at the level of EU policy-making. Signs of such popular disillusionment
are already visible in rising levels of distrust in national governments across the EU-
27, which reached 67% in 2012140. Following a similar trend, levels of public
confidence in the EU have also dropped to record lows even in traditionally pro-
European countries such as Italy, Spain and Germany141. With such troubling facts in
the background, it is no surprise that many dismiss the idea of treaty change as
inconvenient and perhaps, unrealistic. Consistent with earlier sections, this paper
argues here that securing popular support for a change of the founding treaties is not a
mission impossible as long as the process fulfills three main conditions.
139 Giandomenico Majone, “Rethinking European Integration After the Debt Crisis”, Working Paper No.3/2012, The European Institute, UCL, p.6 <http://www.ucl.ac.uk/european-institute/analysis-publications/publications/WP3.pdf> accessed 22nd July 2013 140 Standard Eurobarometer 77: Public Opinion in the EU, Spring 2012, section 4.2 141 Jose Ignacio Torreblanca & Mark Leonard, “The Remarkable Rise of Continental Euroscepticism”, 25th April 2013, <http://ecfr.eu/content/entry/commentary_the_remarkable_rise_of_continental_euroscepticism129> accessed 15th July 2013
41
First of all, as argued above, in order for a new EU Treaty to succeed, it would have
to contain bold proposals regarding issues of immediate concern to the majority of
European population. Economic considerations are, unsurprisingly, the leading
category of salient issues that the EU should be seen to address with most Europeans
being concerned by rising prices (45%), unemployment (21%) and the national
economic situation (19%)142. Therefore, proposals for fiscal and banking union,
carefully deconstructed and explained, have a good chance of generating popular
support due to their ultimate aim of providing financial stability, accountability and,
ultimately, the return of economic prosperity. While the failure of the CT could be
attributed to the absence of a key substantive goal inspiring change143, a new Treaty,
as advocated by this paper, will have the goal of optimizing the workings of EMU and
the development of banking policies with the specific aim of preventing future crises.
This should provide sufficient inspiration for further transfers of power to the EU.
Secondly, a Treaty change would have to grant more opportunities for direct political
involvement, so as to give electorates a sense of being able to affect critical policy
choices and confirm or reject European governance144. Ideally, the proposals for a
new treaty will enter the public sphere prior to the 2014 EP elections so that the
public can choose MEPs on the basis of their positions with regards to the proposed
reforms, rather than on purely national political agenda, as is usually the case. Now
that people have began to realize how profoundly EU decisions pervade their lives,
they are likely to express more interest in making use of their democratic rights as EU
citizens145. The traditional elite-led model of policy-making where decisions are
primarily made by “faceless Eurocrats” in backrooms and then served to the public in
pretty wrapping with labels “for your own good” encourages a feeling of
powerlessness evidenced by the fact that only a third of citizens feel that their voice
counts in the EU146. A further indication of the spreading “democratic deficit” can be
found in the steady decrease in turnout for EP elections from 63% in 1979 to 43% in
142 Eurobarometer 77 supra n. 140, s. 1.3. 143 Andrew Moravcsik, Europe Works Well Without the Grand Illusions, Financial Times, 14th June 2005 144 Joseph Weiler, The Constitution of Europe (1999), Harvard University Press, p.266 145 Habermas supra n.17, p.49 146 Special Eurobarometer 379: The Future of Europe, April 2012, Section 1.4.1
42
2009147. A new Treaty could change this by, for example, introducing pan-European
EP elections during the course of which citizens will be given a chance to vote for a
president of the European Commission. Given the instrumental role of the
Commission as initiator of legislation, this way the electorate will have a say on the
direction of European integration.
Lastly, a change in the Treaties will have to come with a corresponding re-
invigoration of ideas of solidarity and belonging to one Union. The EU is suffering
from a problematic identity and lack of cohesiveness, which are made worse by
scathing reports of national media and anti-European propaganda by nationalistic
movements. To overcome this, there needs to be more openness and public debates on
policy proposals, instead of decisions being taken by unaccountable summits. The
introduction of mechanisms of EU-level control and effective enforcement of
commonly agreed economic policies would be beneficial for trust-building, while the
introduction of debt mutualisation instruments (e.g. European Debt Agency and
Eurobonds) would symbolize the eventual acknowledgement by Member States of the
irreversible interdependence of their economies.
Even though it is not the only difficulty associated with treaty change, securing
popular support is vital for ensuring smooth ratification and as such constitutes a
disadvantage as opposed to the other two reform routes. Yet the greater clarity that
treaty amendment brings compared to using in-treaty dynamic provisions and higher
levels of legitimacy than those enjoyed by intergovernmental bargaining provide a
good incentive for European policy-makers to make an effort to involve the public.
147 Piris supra n.6 p.33
43
VI. Conclusion
Overall, providing a clear indication of the direction of European constitutional
evolution has proved a tricky matter. None of the three available vehicles of change
presents an ideal scenario with all suffering from some shortcomings. Using existing
treaty clauses for authorizing reforms has the obvious advantage of not requiring any
further transfers of power from the national to the supranational level but it is also
constrained by narrow measure-specific limitations which make the realization of an
ambitious fiscal and banking union practically impossible. The contraction of
intergovernmental agreements of variable membership, while previously justified by
the need for an urgent response to the crisis, should be avoided now that the “worst”
is behind us due to their erosive impact on the cohesiveness and continued relevance
of the European project. From the discussion above it becomes clear that changing the
Treaties will be the best way to accommodate bold fiscal, budgetary, and ensuing
political reforms of the EU. Overt transfers of economic competence, adjustment of
cumbersome procedures, such as unanimity, and the rejuvenation of federal
aspirations (if a constitutional treaty format is chosen) will indisputably restore hopes
that the EU will successfully overcome the challenges it is faced with and will
continue on its usual path towards deepening integration. But being hopeful does not
necessarily mean being naïve. Precisely because of such radical changes the option of
treaty revision is destined to face significant difficulties. The presence of an
integration impetus is questioned by the apparent lack of political will to proceed with
anything but ad hoc measures and the uncertainty as to whether EU citizens would
support the externalization of important national competences to an entity whose
image as a promoter of prosperity has been badly damaged. In any case, it seems
unlikely that any decisive action to put Treaty change on the agenda of policy-makers
will be taken prior to the European Parliament elections in 2014. Until then the Union
will have to continue using the tools at its disposal and hope for a brighter, more
determined future.
44
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48
Table of cases
BVerfG, 2 BvE 2/08 Treaty of Lisbon, 30th June 2009
BVerfG, 2 BvR 2134/92, 12th Oct 1993
BVerfG, 2 BvR 987/10, 7th Sep 2011
Case Pl ÚS 19/08 Treaty of Lisbon I, 26th Nov 2008
Case C-370/12, Thomas Pringle v Government of Ireland, 27th Nov 2012
Table of legislation
Act 107/1999 Coll., as amended by Act 162/2009 Coll. Standing Rules of Czech
Senate
Council Conclusions on Bank Supervision, Brussels, 18th April 2013
Decision of the Council 2010/320/EU of 8th June 2010
Decision of the Council 2011/ 199/EU of 25th March 2011
European Union Act 2011, UK Parliament
Presidency conclusions, Council of the EU, 14th Dec 2007
Presidency Conclusions of the Brussels European Council, 21st -22nd June 2007
Protocol on the Concerns of the Irish People on the Treaty of Lisbon, OJEU 60, p.
131, 2nd March 2013
49
Regulation (EU) No 472/2013 of the European Parliament and of the Council of 21st
May 2013 on the strengthening of economic and budgetary surveillance of Member
States in the euro area experiencing or threatened with serious difficulties with respect
to their financial stability
Regulation (EU) No 473/2013 of the European Parliamnet and of the Council of 21st
May 2013 on common provisions for monitoring and assessing draft budgetary plans
and ensuring the correction of excessive deficit of the Member States in the euro area
Treaty on the Functioning of the European Union (TFEU)
Treaty on European Union (TEU)
Treaty on Stability, Coordination and Growth (TSCG)
Treaty Establishing the European Stability Mechanism (ESM Treaty)