So the latest European Council ‘informal’ summit was held on Monday without too much trouble, and there were a couple of important decisions. Most importantly, all the attending countries except the United Kingdom and the Czech Republic agreed on a final text for the fiscal compact treaty. And although the major headlines have typically been along the lines of “UK and Czechs refuse to join fiscal compact“, they could just as well have read “25 EU members agree on fiscal compact” (to be fair, some did choose that angle), because considering how many different national interests that had to be brought in line with each other, that is actually a pretty remarkable accomplishment.
We already knew that Britain would stay out, anyway, and the Czech abstention was not unexpected, either – President Vaclav Klaus is a prominent eurosceptic, who has already said he will not sign the treaty, and there are diverging opinions in the government as well. However, Klaus’s mandate will expire in 2013, and the Czech government is keeping the door open for joining the treaty at a later date.
The treaty text, which was made public on Tuesday, doesn’t differ substantially from the latest pre-summit draft, but there are a few interesting differences. For one thing, as mentioned in the previous post, Poland disagreed on the question of participation by the non-euro countries in the summits to be held under the treaty, but apparently, a compromise deal was reached on that issue, so that according to the new Art. 12(3), those countries
“…shall participate in discussions of Euro Summit meetings concerning competitiveness for the Contracting Parties, the modification of the global architecture of the euro area and the fundamental rules that will apply to it in the future, as well as, when appropriate and at least once a year, in discussions on specific issues of implementation of this Treaty on Stability, Coordination and Governance in the Economic and Monetary Union.”
In other words, the non-euro countries will participate fully on high-level questions concerning the functioning and rules of the eurozone, while perhaps somewhat less fully on the more technical questions of how the treaty will be implemented in practice. On the other hand, the body “…charged with the preparation and follow up of the Euro Summit meetings…” is now specifically the Euro Group (Art. 12(4)).
Also, another compromise has been made regarding the payment of fines by those countries that fail to abide by the treaty’s budget limits. Originally, all fines would go to the European Stability Mechanism (one of the euro-zone bailout funds), but this has been changed (apparently on a Danish proposal) so that only euro-zone countries will pay to the ESM, which the other countries will pay their fines to the general EU budget (Art. 8(2)).
Finally, the final text assigns a somewhat greater role to the EU institutions, and especially the European Commission, than earlier drafts did. For instance, Art. 4 now mentions specifically that “[t]he existence of an excessive deficit due to the breach of the debt criterion will be decided according to the procedure set forth in Article 126 of the Treaty on the Functioning of the European Union”, which essentially means that the determination of whether a member state has exceeded the debt limit of 60% of GDP will depend on the judgement of the Council based on a report prepared by the European Commission. Technically, there’s nothing particularly novel about this, since that mechanism already exists in the Lisbon Treaty
Likewise, Art. 8(2) has been amended to state that member states may ask the Court of Justice to impose financial sanctions on other states that fail to abide by the budgetary rules “…following criteria established by the Commission in the framework of Article 260 of the Treaty on the Functioning of the European Union.” It seems that the intention of these additions is to allow the Contracting Parties to sort of indirectly draw on the authority of the European Commission by making use of provisions that already exist in the Lisbon Treaty, without offending British sensibilities too much by actually directly involving the Commission’s officials in the compact’s business.
So that is probably that – the treaty will be signed at the next formal European Council summit on March 1-2, and it seems unlikely that much, if anything, will be changed in the text as it is now before then. The one party which might make some noise about it is the European Parliament, which has been highly critical (and with good reason) of both the process of drafting the treaty and of the very limited role which Parliament will get to play in the governance of the compact; the treaty provides that the President of the Parliament may be invited to be heard at the summits (Art. 12(5)), and that a conference of representatives from the EP and the national parliaments should be established to discuss treaty-related issues, but that’s about it. On the other hand, as this is an intergovernmental treaty, there’s not much the EP can actually do about it, so it’s pretty certain that this is the text that will be signed in March.