Leaders united in desire to act but divided on detail
ANALYSIS: More than just a treaty change is needed, but there is little agreement about what to do next, writes ARTHUR BEESLEY
IT’S A measure of the strain on EU leaders that the most straightforward item on the agenda for their final summit of the year is a narrow revision to the Lisbon Treaty, something that would have been considered unthinkable a few months ago.
Although they are united in their desire finally to puncture the sovereign debt crisis, there is little agreement as to what they do next.
While the leaders are unlikely to unveil any drastic new initiative, the atmosphere as they gathered in Brussels was thick with speculation and rumour. Agreement is likely on the insertion of a new paragraph into the treaty, but the manoeuvre is not without complication. Far from it.
Although Taoiseach Brian Cowen says an Irish referendum is very unlikely, a court challenge seems virtually certain and that will take time. Nor is Ireland the only country with a referendum question to resolve. With the ratification process coming side-by-side with scrutiny of bailout measures by Germany’s constitutional court, well-placed sources said calendars were consulted in preparation for the summit.
Some believe ratification by 27 member states could take a minimum of three years with plenty of political potholes along the way.
Market tension is inevitable too for the permanent bailout fund is likely to include structured default procedures. The very mention of the notion at the leaders’ last summit helped tip Ireland over the precipice.
More immediately, however, serious concern lingers about Portugal’s capacity to survive the storm on its own. With further downgrades of Spain’s debt also in prospect, fear centres now on whether Spanish jitters would jeopardise Italy. That is a nightmarish scenario, but one given some credence in official circles.
The questions are that serious, although unity is elusive. Expectation last night centred on the possibility of a strongly worded statement of the leaders’ readiness to take whatever action is required to boost flagging confidence. But that will hardly do the deed. They have tried statements before, to no avail. While it is by now well recognised that further measures are required, caution is the watchword.
Still, background activity is intensive. Mr Cowen hinted as much yesterday after he lunched with Liberal group leaders, saying “a series of decisions over coming months” will ultimately restore stability. But what decisions? For every suggestion there are naysayers and for every naysayer someone else says yes.
Sitting up the table from Mr Cowen at a Liberal group press conference was Werner Hoyer, Germany’s Europe minister, who dismissed suggestions the €750 billion bailout fund should be enlarged by describing it as a “damned deep pocket”. Beside Mr Hoyer sat Belgian minister Didier Reynders, who wants to double the fund.
Also there was Finnish premier Mari Kiviniemi, who is not keen to increase the fund but who supports widening its remit. This is presumed to be a reference to the fund buying sovereign debt, another divisive suggestion.
There are as many opinions as protagonists, of course, and the most powerful of them all sees no need yet to move. The German chancellor, the driving force behind a treaty change that most of counterparts resisted, sees no reason to budge just yet. She has wary MPs to contend with, activist constitutional judges too.
Leaving aside the politics of enlarging the fund, sticky questions arise too as to where the money might come from.
Nothing in this scene lends itself to easy resolution. As the European Central Bank took steps yesterday to reinforce its own firewall with a near doubling of its capital base, the manoeuvre was seen as a clear reflection of the peril which is engulfing the euro zone. European Council president Herman Van Rompuy declared months ago that the campaign to save the currency was won.
He was wrong.