A citizen’s guide to the Council meeting

So the European Council meeting is underway and in full swing; an important event that could decide the future of Europe for years to come. But it can all be a bit confusing. What is the European Council, anyway? Who are the key players and what do they want? And what results are we likely to see? Read on!

What is the European Council?

The European Council is an institution of the EU, just like the Parliament, the Commission, the Court and so on. It consists of the 27 executive heads of state or government of the Member States, the President of the Commission, and its own President. It should not be confused with the Council of Ministers, which is a different institution within the EU, or with the Council of Europe, which is a different international organization entirely and not a part of the EU.

Before the adoption of the Lisbon Treaty, the European Council existed in an informal capacity, as the heads of state or government used to meet twice a year under the leadership of the rotating precidency of the Council of Ministers. However, in Lisbon it was established as a separate institution with a President elected for 2½ years and four annual meetings in Brussels.

What can they do?

The Justus Lipsius Building in Brussels: Where the magic happens

The European Council does not have specific legislative, executive or judicial powers within the EU. On the other hand, in the words of the Lisbon Treaty , it “…shall provide the Union with the necessary impetus for its development and shall define the general political directions and priorities thereof” (Art. 15 TEU) – in other words, it has a general policy-setting power for the Union as a whole.

Subject to the approval of the European Parliament, the European Council also appoints certain key positions in the EU, such as the President of the Commission, the High Representative, and the President of the European Central Bank. Finally, it has various powers relating to the Treaties and the Member States – it can declare a Member State in violation of the core values of the Union, postpone Union legislation on application of a Member State, etc.

Who are the key players, and what do they want?

German Chancellor Dr. Angela Merkel

Angela Merkel and Nicolas Sarkozy have taken the lead on finding a solution to the crisis to such an extent that the wit of the press have dubbed the alliance ‘Merkoz; although strictly speaking, neither their objectives nor their problems are entirely coincidental. For instance, Angela Merkel has to contend with an increasingly Euro-sceptic German population (in itself highly unusual for Germany) as well as quite strict constitutional constraints recently imposed by the German Constitutional Court in Karlsruhe. Sarkozy’s problem, on the other hand, is not so much French Euro-scepticism as it is Sarkozy-scepticism: The next French presidential elections are just over four months away, and his poll numbers have been consistently abysmal for the last year or so.

On the other hand, they both have a keen interest in solving the debt crisis as soon as possible. Both Germany and France currently enjoy the highest (“triple-A”) credit ratings, but that could change very quickly if the crisis develops any further. In particular, French banks are highly exposed to credit risks and would be hit very hard by e.g. a Greek government default, while the German economy (and thus growth) depends heavily on exports to the rest of the Union.

French President Nicolas Sarkozy

Briefly described, the German-French proposal aims at restoring the credibility of the Euro by mandating financial responsibility among the members of the Eurozone. This includes implementation of the already existing financial requirements of the Stability and Growth Pact (budget deficits of max. 3% and national debt of max. 60% of GDP) in national legislation or even constitutions, combined with increased powers for the European Commission to inspect national budgets, and to impose sanctions in case of non-compliance, including the ability to bring a Member State before the European Court of Justice.

In addition, the German-French plan proposes an “acceleration” of the European Stability Mechanism, which is essentially a permanent €500 billion bail-out fund for Eurozone members in financial troubles. The ESM was originally scheduled for launch in 2013, but the current plan would see that advanced to sometime during 2012. On the other hand, an introduction of Eurobonds or any other mechanism that would require Member States to be in any way jointly responsible for debts seems to be out of the question.

Finally, it is a key part of the proposal that these measures must be implemented in the fundamental treaties of the Union in order to make them legally binding on the Member States. In the French and German view, one of the most important causes of the present crisis is that the Eurozone states have effectively been allowed to ignore the Stability and Growth Pact requirements with impunity. If on the other hand those requirements were enshrined in the Treaties along with robust sanctions for those who break them, fiscal discipline and confidence in the Euro would be much easier to maintain.

President of the European Council Herman van Rompuy

Herman van Rompuy is another key player, although a bit more low-key. As the permanent President of the European Council, his job is to “chair and drive forward” the work of the Council and “endeavour to facilitate and ensure cohesion and consensus” among its members. Considering the seriousness of the topics discussed and the divergences of opinions present within the Council, he can expect to do a lot of both driving forward and facilitating cohesion over the course of the meeting.

At the same time, van Rompuy delivered what was probably a bit of a last-minute surprise on Wednesday in a letter that suggested that the aims of the meeting could be achieved by means of a more technical adjustment of a treaty protocol, rather than a full-scale reform of the whole treaty. Unlike the latter, the protocol method would be faster, less complicated, and less likely to require approvals by referendum. However, it is unlikely to get much support, as it has been rejected by Angela Merkel who, as mentioned above, has been quite adamant that a reform is absolutely necessary.

British PM David Cameron

British Prime Minister David Cameron is in a difficult position, being pressed by the large Euro-sceptic wing of his Conservative Party who want to see two things: A British referendum on any treaty changes, and ideally a repatriation of powers ‘from Brussels’ back to London. This puts Cameron in a serious bind, because while he doesn’t want a referendum, the outcome of which would be unpredictable at best, he does want the Eurozone to fix its problems; after all, the crisis doesn’t pass over Britain just because it’s not a member. So his strategy seems to be to encourage his colleagues (repeatedly) to do anything necessary to solve the crisis, but at the same time insist that nothing they do should actually affect Britain in any way. In particular, he has put forward protecting the financial sector of the City of London from any further regulation or interference as a condicio sine qua non for British support.

In theory, Cameron could use his veto power to push his demands through, since treaty changes must be approved unanimously. However, in reality, his negotiating position is not invincible – as mentioned in a earlier post, the political capital of the United Kingdom and Cameron in particular has been eroded considerably in recent months by what the Eurozone members percieve as an unappealing combination of unwanted meddling and self-serving lack of solidarity. And the German government has made it clear that if a consensus cannot be achieved among all 27 Member States, they will settle for a separate treaty among the 17 Eurozone states alone. Such an outcome might even be preferable for Cameron, as it would allow him to return home “having protected British interests” and “prevented further interference by Brussels” or similar lines.

In the mid-to-long run, however, it means that Britain will stand even further apart from the Eurozone and will have even less influence over European developments – hardly a beneficial outcome.

Danish PM Helle Thorning-Schmidt

The Polish Prime Minister Donald Tusk and the recently-elected Danish Prime Minister Helle Thorning-Schmidt will also have somewhat significant roles to play, as respectively current and incoming Presidents of the Council of the European Union, even though the rotating Presidency is much less important to the Council meetings now than it was before Lisbon. However, if the German-French proposals for treaty reforms are successful, the details of such reforms will largely have to be negotiated during the Danish Presidency of the first six months of 2012, so PM Thorning-Schmidt in particular can expect to get pretty deeply involved with the process.

What is the best case scenario?

Santa Claus

Well, if Santa Claus dropped by early and said I could have precisely the outcome from the summit that I wanted, it would include a clear and visionary roadmap for thefuture of both the Union and the Eurozone. It would build on the German-French plan, but would also include one of the forms of Eurobonds that were recently proposed by the European Commission: Preferably the strongest option which would see the Union assume all government debts, but perhaps more practically the so-called “red-blue bond” solution which would jointly guarantee national debts up to the Stability and Growth Pact limit of 60%.

It would also establish the European Central Bank as a lender of last resort, i.e. as a true central bank rather than just an inflation-fighting institution as it is today. And crucially, it would involve fundamental reforms that give extensive powers of oversight and control to the European Parliament and the Court of Justice so that the project is not simply imposed from above, but implemented with due consideration of democratic accountability, and perhaps even creates a true public discourse about the status and the future of the European project.

So basically, I’m in more or less full agreement with the position of the Spinelli group on the question. I also don’t think any of that has a chance of happening any time soon.

So what is the more likely scenario?

Briefly speaking, I think the Germans and French will get what they want, as outlined above. They (Germany in particular) have the money for the project, so they get call the shots. Depending on how much kvetching there is from the non-Eurozone states, Britain in particular, it will most likely be a small-treaty solution, i.e. one that only covers the 17 Eurozoners. But we’ll see by tomorrow afternoon.

And the worst case scenario?

The worst case scenario is that the meeting ends on a note of disagreement, with at best a vague statement of intent, but no concrete solutions even for the 17 Eurozone states, much less for the Union as a whole. In that case, the primary policy-setting institution of the Union has failed to formulate an answer to what could very well be its worst crisis ever, and that means we should probably prepare to say “Good-night, sweet prince” to the Eurozone – and possibly the Union as well.

So when will things begin to happen?

At the time of this writing (Friday 1:30 CET), the ‘informal dinner’ part of the summit is over and the participants are probably in negotiations on the details. There was supposed to be a press briefing by President van Rompuy at 23:00, but that apparently never happend – not necessarily a god sign. The discussions will probably continue for several hours yet. A draft declaration of conclusions from the meeting has just surfaced on Twitter, but it seems mostly like a proposal for further discussion.

In any event, the meeting will go on until tomorrow afternoon probably around 16:00-ish, at which point there will be press conferences with van Rompuy and at least some of the national leaders. So I guess we’ll know by then whether everything will be fine or we should start stockpiling for the Apocalypse.

In the meantime, good night and good luck.

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One Response to A citizen’s guide to the Council meeting

  1. Pingback: Countdown to Another Summit | Facts and Norms

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