Wednesday

24th Aug 2016

Irish No, fuel & food crisis to dominate EU summit

The EU's 27 leaders are gathering in Brussels to chew and swallow two hot potatoes - how to respond to Irish voters' rejection of the Lisbon Treaty, a set of EU internal reforms, and to the record high oil and food prices.

Precisely one week ago, Ireland put on ice the EU's latest attempt to undergo wide-reaching institutional changes aimed at simplifying the way the 27-nation bloc is run and allowing it to absorb more new member states.

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  • The Brussels venue: EU leaders have two hot topics on the agenda (Photo: Council)

All eyes will be on the Irish prime minister, Brian Cowen, with European Commission President Jose Manuel Barroso saying ahead of the top-level meeting: "Ireland has a responsibility to contribute to finding a solution. When governments sign a treaty they assume a responsibility to have it ratified."

But according to one EU diplomat, Mr Cowen is likely to request time out and his plea will be respected. The diplomat suggested that the issue is likely to be formally re-visited during the first summit under the French EU presidency in October.

"There is no justification to start renegotiating of the treaty," a French diplomat added, saying that Ireland could secure a "declaration," tailored to accomodate its specific concerns in the area of taxation, defence and family policy.

So far, EU heavyweights - France and Germany - have insisted that the ratification marathon continues. On Wednesday (18 June), the legal document was ratified by the UK parliament, bringing the overall number of countries to 19.

But one diplomat has suggested EU leaders are likely to tiptoe around the eurosceptic government of the Czech Republic, seen as the most unpredictable player when it comes to the ratification process.

The Lisbon Treaty is now under review of the country's Constitutional Court - something that puts ratification on hold - while president Vaclav Klaus is openly hostile to the project.

It is also expected that leaders will spend some time brainstorming about how to deal with the practical consequences of the Irish referendum failure, such as the size of the European Commission and the European Parliament.

"The latest deadline to solve it is next March," the diplomat said, pointing to the upcoming European elections in June 2009.

Soaring oil and food prices

Aside from institutional affairs, EU leaders are also set to look for a co-ordinated response to oil prices, which are at their highest level since the end of the 1970s and are pushing up inflation in the EU.

"These high price levels are squeezing the purchasing power of all EU citizens, with the most severe impact on the lowest income families, and putting a strain on business," the European Commission says.

Energy and food bills currently amount to one fifth of the expenses of an average European household.

The commission is to push for a response based on the assumption that "prices are likely to remain high in the medium to long term."

Member states will be given a "possibility of mitigating the burden on the most vulnerable segments of the population," but it should be "targeted."

According to EU energy commissioner Andris Piebalgs, member states should be also "cautious" when it comes to changes in taxation regimes. "Experience has shown that these measures - though politically attractive - make the longer term transition more difficult," he argued.

Among other issues, EU leaders are likely to support the idea of a high-level summit between oil consuming and producing countries and to call for more transparency on oil markets.

They will also reaffirm their ambition to agree on tools that would enable them to fulfill 2020 targets for renewables, biofuels and greenhouse gas reductions by the end of 2008.

According to one diplomat, French President Nicolas Sarkozy seems set to continue to push his proposal to introduce Europe-wide fuel tax cuts - despite earlier rejection from several EU quaters. "It should be at least studied seriously," the diplomat said of Mr Sarkozy's intentions for the summit.

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