Legal gymnastics cause confusion in Brussels

Inserted way back in the Maastricht Treaty - which contained the now widely criticised foundations of the single currency - the paragraph allows for protocol 12, with its crucial articles on deficit procedure, to be adjusted by agreement by EU leaders.

At the time, it was seen as way of allowing the eurozone, for example, to expand without the need for full-blown treaty change.

The un-earthing of the article and the idea to use it as a get-out clause started to surface around 10 days ago but one senior EU diplomat Wednesday noted he only heard about protocol 12 some "72 hours ago" - with EU leaders due to meet to discuss possible treaty change on Thursday and Friday.

The route could potentially "lead to rapid and significant changes," as Van Rompuy's paper puts it, but it would still have to go through parliamentary ratification in the UK, following the country's recent EU bill.

Van Rompuy's protocol idea has already run into opposition by Berlin, which is calling it "trickery". Germany's objections are said largely to be because the legal sleight of hand would not allow it to strengthen the powers of the European Court of Justice to surveil national budgets.

Van Rompuy's paper lists two routes to achieve the tightening of economic governance and fiscal discipline that Germany and others think is key to solving the eurozone crisis - the protocol route or a full treaty change - the second a process that tends to get hijacked by other demands.

Option number three

However, there is a third route that is increasingly being talked about. This would see a new treaty established with the 17 eurozone countries, plus any others that wanted to join, using the EU institutions.

It is being pushed by Germany as the second best option if full treaty change with all 27 member states proves impossible.

It is also fraught with legal and political difficulties. First of all, any such set-up would need the agreement of all member states, including the UK, which is feeling increasingly concerned about the internal market in general and its financial services sector in particular.

The European Commission can legally be asked by a group of member states to supervise some intergovernmental agreement, the legal precedent for which was established in 1993 in an arcane European Court of Justice ruling on humanitarian aid to Bangladesh.

The existing eurozone rescue fund, the European Financial Stability Facility, operates in this way, as will its successor, the permanent European Stability Facility.

But lawyers are not clear about how the mechanics of such a set-up would work in difficult situations. According to one official, it is not legally clear that the European Commission could, for example, take Italy to court for breaching excessive deficit rules.

"Can the 17 ask the commission to take a member state to court? It is not obvious. So it would have to be Germany taking Italy to court," said the official.

With all this change of treaty talk, some diplomats say member states risk getting stuck in byzantine legalese about solutions that are only for the medium to long term anyway.

They suggest it would be better to look at how to leverage the eurozone bailout fund which has failed to attract significant interest from investors.

"This is as important for restoring confidence in the markets," said one diplomat.

Long night

Officials from the 27 member states will begin preparatory talks on Van Rompuy's "Interim Report for a Stronger Economic Union" on Wednesday evening.

EU leaders will kick off the summit on Thursday evening at 7:30 pm with a dinner discussion on treaty change and short-term solutions to the eurozone crisis.

Van Rompuy himself told Europe ministers on Monday that member states should be "prepared for a very long night."