Not everyone will embark
By Pierre Lemoine | Monday 06 February 2012
A week after its adoption, the EU’s budget discipline pact looks likely to remain foremost in everyone’s minds right up until its signature at the summit of EU heads of state and government, on 1-2 March, and afterwards in national debates with unpredictable outcomes. Certain diplomats are categorical: if 25 (of the 27) states sign the text – an intergovernmental treaty – not all 25 will ratify it.
Pushed mainly by Germany and the European Central Bank, the instrument was judged useful for banning the excessive overspending of which most EU governments have been guilty in the past. The ink on the pact was barely dry when, the same evening, Chancellor Angela Merkel announced that, for any infringement of the treaty, the “procedure” for referral to the Court of Justice had to be put in place by March.
What will such referral cover? The text is perfectly clear: only transposition of the ‘golden rule’ (the brake on state debt) into national constitutions or legislations. It will not cover any budget overruns. Yet certain legal experts suggest that the scope of the procedure cannot be limited in this way. They claim that the balanced budget rule is useless if states do not abide by it. Proper transposition is more than simply writing this rule into national laws. It is also, in the name of effectiveness, the quality of the internal correction mechanisms that will be implemented if, as provided for in the treaty, a state’s public finances should start to go out of bounds. Version two of the treaty proposed to broaden the scope to these mechanisms. That proposal was kicked out the front door but has come back in through the back window.
Who will be able to refer such matters to the court? Here, too, the principle is clear: not the European Commission, which is supposed to act on behalf of the 27. Only those states that have signed and ratified the treaty can do so. The Commission is obliged to report and the signatory states are obliged to refer cases of non-compliance to the court. Will the states have to act collectively? Can one state act alone? This is not explicit in the treaty. At the meeting of the 27 permanent representatives, on 2 February, the Council’s legal service announced that it would be sending to all the member states, within a few days, an overview of its understanding of how all this will work. There is no question of reopening the talks. The idea is to produce a ‘user’s guide’.
More fundamentally, the purpose of the treaty, already called into question by certain political groups in the European Parliament, is bound to spark debate during member states’ ratification processes. After handing over their monetary powers to Europe, for the past ten years there remained one area in which at least the eurozone states had the duty to be coherent, namely their budgetary power. Governments, including in Berlin and Paris, managed to break loose from their commitments not to exceed the 3% deficit ceiling. The reason they were able to do so is because the commitments were not matched with sanctions. This time, the ‘Merkel treaty’ obliges states to acknowledge that controls and penalties are necessary. But will sanctions be automatic, and if so, under what kind of arrangements? A political representative of German budget discipline told
Europolitics, the day after the informal summit, on 30 January: “The greater the possibility to impose automatic sanctions, the better”. The Germans, traditional proponents of automatic mechanisms, also suggest that the bodies that order sanctions should be apolitical and, as with the ECB, non-elected. Because the odds are that, if you ask voters “Do you want us to tighten the belt?,” the answer will be ‘no’. This automatic functioning is a point of disagreement in the German coalition but also a potential source of dissension in every EU state, in the name of democracy.
The fact remains that the deep political significance of this intergovernmental treaty “outside the EU” was not really brought to light before 30 January. It is expected to emerge in the coming months or years, both in debates in national parliaments and in implementation of the treaty. We mentioned it in our editorials entitled ‘Birth of a mutant’ and ‘Treaty creating two camps, if not two Europes’. This time, Nicolas Sarkozy – and Sarkozy alone – put things clearly. Referring, at a press conference, to the non-participation of the United Kingdom, the Czech Republic and other states that might defect, he stated: “In any case, I think that it would be far better to have clarification, to bring Europe out of ambiguity. Those who agree with this new treaty must implement it with all the necessary strength and those not in agreement can say that they have reservations. I very seriously believe in this necessary clarification effort. Europe is built on compromises but there are times when a compromise, if it goes too far, can endanger the entire edifice. […] That does not mean that there are different speeds, that there are countries that will be left on the wayside. On the contrary. It means that there are different degrees of integration.”
In other words, those frightened away by the political cost of the co-management of economic policies (the missing link of monetary union) can withdraw. Since misgivings will end up being expressed more strongly and political courage will be lacking, especially in governments facing an election campaign, not everyone will be willing to embark. How many states will join? Twelve seems to be a safe bet (12 is the number of ratifications required for entry into force). Will all 17 eurozone members come aboard?
Whatever happens, with this treaty there will be the states that have signed up to and ratified the pact - and the others.