17th Aug 2022

EU Commission pushing for narrowest possible treaty

  • EU officials are currently poring over legal texts to get to grips with the new intergovernmental route (Photo: European Commission)

The European Commission is pushing to have the narrowest possible treaty to tightening budgetary rules among member states, arguing that most measures can be made using normal EU law-making procedures.

EU officials are still digesting the implications of last week's decision by all member states, except the UK, to pursue an intergovernmental treaty, with the route currently raising more legal and political questions than it answers.

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One of main questions concerns the content of the agreement. Last week's summit agreement is very similar in tone and nature to the so-called six-pack of legislation, centralising budgetary surveillance, which came into force on Tuesday (13 December) and to the further moves announced in that direction by the commission late last month.

“Our legal analysis is that by far the vast majority of measures decided on Friday can be introduced through [EU] legislation,” EU economic affairs commissioner Olli Rehn said Monday.

At moment commission officials suggest that only the debt brake rule - requiring countries to have balanced budgets - and making sanctions easier to impose by changing the voting system would need to be in the new intergovernmental text.

“If you want to introduce and implement automatic sanctions, to which there is a reference in the new fiscal compact, it may be that you may require a treaty change for that,” Rehn said.

Speaking to MEPs on Tuesday, European Commission President Jose Manuel Barroso pledged to make full use of Article 136 in the treaty - governing budgetary surveillance in eurozone countries - to see that most changes are made via the normal process of a commission proposal, which passes approval to parliament and member states.

"It could actually be reasonably limited," one source said, but added it depends how far member states will actually go.

But even where the treaty will be drawn up remains in question. The secretariat of member states - the council - is expected to draw up the legal text, with work to start by the end of the week. A draft may already be on the table by next Tuesday, one diplomat said.

This may then be discussed by the so-called "euro-working group" which consists of eurozone treasury officials as well as a representative from the commission's finance department.

The group would have to be "extended to those who wish to be involved" said a diplomat from one non-euro country.

But the diplomat added: "No one knows the details yet."

There is talk of using the Economic and Financial Committee, which has also includes representatives from the European Central Bank, or the regular meetings of EU ambassadors. However, this is complicated because these are bodies for all 27 member states, when only up to 26 are to be involved.

Ratification questions

One central question will be the ratification process. It remains unclear what will happen if one of the countries rejects the treaty.

Meanwhile, non-euro countries are likely to push to be able to choose during the ratification process which measures would apply from the treaty coming into force and which will follow actual entry into the eurozone.

The commission is also fighting to make sure that it would have the powers to oversee any agreement while the court could enforce it, something of a legal minefield, although commission officials say there is already legal precedent.

Euro-deputies are also looking for a seat at the negotiating table. So far, they have been offered the nebulous term of being "associated" with drawing up the text.

Joseph Daul, leader of the centre-right European People's Party, the largest group in the EU assembly, called for parliament to have its "rightful" role in the process, while his socialist counterpart Martin Schulz said it should be on the same level as the commission and the council.

Governments want the treaty to be signed by the March EU summit at the latest. But much is expected to depend not only on how the legal and political questions are answered but also on what France and Germany expect from the text.

French President Nicolas Sarkozy recently repeated that no new powers should be transferred to EU level. France may be keen to widen the scope of the text to include other issues dear to Paris, but which it only wants dealt with among states.

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