Citizens left out of plans for EU reform

Wed, May 23, 2012, 01:00

There are increasing signs of indifference at the top of the EU over democratic procedures

THE CASE being taken by Thomas Pringle TD on the fiscal treaty and the European Stability Mechanism (ESM) could have very considerable significance not just here but throughout the European Union.

If successful here, first in the High Court in June and in the Supreme Court probably in the autumn, the fiscal treaty and the ESM could, if a decision were upheld in the European Court of Justice, be found to be illegal throughout the EU, and the new edifice could collapse.

As I understand the case, it is founded in part on the unanimous decision by the European Council (involving the heads of government) on December 17th, 2010, under what is known as a “simplified revision procedure”. This was to add to article 136 of the Treaty on the Functioning of the European Union (the original Treaty of Rome of 1957, with later additions) the following provision: “The Member States whose currency is the euro may establish a stability mechanism to be activated if indispensable to safeguard the stability of the euro area as a whole.”

This is to be the basis on which the new European Stability Mechanism fund is to be established, in place of the legally suspect European Financial Stability Facility (EFSF) and the European Financial Stabilisation Mechanism (EFSM), the agencies – along with the International Monetary Fund – that bailed out Greece, Ireland and Portugal.

This seemingly harmless amendment represents a very significant U-turn on the part of the EU on the very nature of the union itself, because embedded in previous treaties is a total ban on bailouts, subject to very rare exceptions.

Article 125 of the Treaty on the Functioning of the European Union states: “The Union shall not be liable for or assume the commitments of central governments, regional, local or other public authorities, other bodies governed by public law, or public undertakings of any Member State . . . A Member State shall not be liable or assume the commitments of central governments, regional, local or other public authorities, other bodies governed by public law, or public undertakings of another Member State.”

The exceptions are contained in article 122.2, which states when a member state is in difficulties caused by natural disasters or exceptional circumstances beyond its control, the European Council may grant financial assistance.

It is obvious from the tenor of the relevant articles that bailouts by the union itself or member states were not to be tolerated, except in very unusual conditions.

There is a second significance to this very crucial amendment to the treaties. Article 3 on the Treaty on the Functioning of the European Union states quite categorically: “The Union shall have exclusive competence in the following areas: ‘Monetary policy for Member States whose currency is the Euro’.” This December 2010 proposed amendment to the treaties will permit other agencies to have competence in the area of monetary policy.

Both these changes represented a major change to the nature of the EU, and the question arises should such fundamental changes have been done through the “simplified” or through the “ordinary” procedure, which would have involved a convention composed of representatives of national parliaments, members of the European Parliament and of the European Commission, and heads of government. This would have been followed by a conference of representatives of the governments of member states.

The simplified procedure is not permitted where the proposed amendment is to increase the competence of the EU, but it is by no means clear the “ordinary” procedure involving an extensive consultative process can be dispensed with, even where issues of an extension of competences does not arise.

It isn’t that there was any urgency about this change, for this happened well over a year ago and the establishment of the ESM is not to happen, officially, until the beginning of 2013. The haste suggests an endemic indifference among the movers and shakers of the EU towards democratic procedures which they find tiresome.

An argument has been advanced by Gavin Barrett of the UCD law faculty that the amendment to article 136 was not necessary for the establishment of the ESM.

While I respect his expertise in this area, it seems difficult to see how an extension of competence in the area of monetary policy to agencies outside the ambit of the EU, such as envisaged in the ESM treaty and in the fiscal treaty, could be permitted, given article 3.

Oddly, it seems that while the amendment to article 136 requires the approval of member states in accordance with their constitutional requirements, it might be the case that there is no need for a referendum here and, more than that, no need for even a Dáil vote on the issue. This is because the proposed amendment does not amount to any further transfer of power from Ireland to the EU (this seems to be the test set down by our Supreme Court on whether a referendum is required). Article 29 of our own Constitution requires international agreements merely to be “laid before” the Dáil – approval of the Dáil is required only when there is a charge on the exchequer.

It seems fundamental change is planned for the EU’s structure by bypassing procedures suitable for such change and, of course, without any involvement on the part of us, the people, here or elsewhere in Europe.

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