Danger everywhere but curtains are down on drama - for now

EUROPEAN DIARY:The sense prevails in Brussels that there is no point in getting into a panic over the possibility of a No vote

THE EU summit that begins today is shaping up to be a modest occasion. Talks to expand Europe’s rescue net have been scrapped and Ireland’s referendum on the fiscal treaty is seen – at least for the moment – as an Irish affair.

Numerous tricky questions remain to be settled, but a certain lack of urgency is palpable.

After prolonged upheaval, top officials say the sense of anti-climax is in keeping with the increasing “banalisation” of the crisis. “A little less drama would do no one any harm,” says EU Commission chief José Manuel Barroso.

In Brussels, people are relatively relaxed about the referendum. For one thing, the 12-country ratification threshold means no single member state has a veto over the treaty.

For another, the sense prevails that there is no point having a panic-attack over the risk of a No vote.

That wouldn’t solve anything, and Europe has confronted a cascade of more immediate – and bigger – threats in recent months.

Yes, the plebiscite presents a grave new danger for Ireland and Europe. After all, any rejection of the pact would seriously impede Dublin’s return to private debt markets.

Because the State would be debarred from drawing aid from the European Stability Mechanism permanent fund, this would bring with it a real threat of default.

Europe could not lightly contemplate such an outcome, but it is not an issue to be tackled at the moment.

Danger is everywhere these days – and the referendum is but one of several unpredictable variables on the horizon.

This helps explain the “wait-and-see” attitude.

Then there is the assessment that the stakes will be so high as to weigh the debate heavily in favour of a commonsense Yes vote. The argument goes that it will not be in voters’ self-interest to inflict a mortal wound on themselves, and that they are capable of figuring that out for themselves.

Only time will tell.

The brute experience of previous referendums shows that any complacency would be extremely misguided. For obvious reasons, neither austerity nor bank bailouts are held in high regard by voters.

Meanwhile, there is little support in Brussels for the notion that Dublin is now in a better position to extract better terms from Europe on the Anglo Irish Bank promissory notes. “I’m not sure there’s a lot of appetite for that,” says a well-placed European source. No one wants to be seen to “bribe” the Irish. What is more, no one believes the Irish are in a position to hold everyone else to ransom.

The fact remains, however, that these two questions are now in play at the same time. Whatever about attitudes within the EU-IMF “troika”, the all-powerful Germans remain unconvinced as to the merits of the Anglo plan. For as long as they say so, there will be no breakthrough.

The Government insists there is no link between the treaty and the “prom notes”, as they are known. Still, it might well be asked whether a concession might suddenly come into the frame if opinion polls showed the No side was in prime position.

To play games on that front, however, is to dice with danger.

In some European quarters, the greater interest lies in the treaty stance of French socialist presidential candidate François Hollande.

Although senior diplomats say his camp is clearly backtracking on the demand for renegotiation, victory against Nicolas Sarkozy might change that.

“If he does win, does he push for renegotiation and, if so, what?” asks a European official.

This is but one of many riddles to be solved. Time was, of course, that the summit was billed as the deadline for a definitive settlement of the “firewall” debate. At €500 billion, the ESM fund is still held to be too small to beat down the flames of contagion.

Germany is not ready yet for an increase, however, so everyone else must wait.

True, Berlin agreed months ago to review the fund’s lending capacity in March. Once it became clear that this summit would not yield a result on this front, the refrain was quickly adopted that there are 31 days in March.

This, in turn, is fanning speculation that yet another summit might be called later in the month.

On a separate note, European leaders are likely tomorrow to grant EU “candidate” status to Serbia.

Romania has held out against this, in a dispute over the rights of the 30,000-strong Romanian minority in Serbia.

The expectation remains, however, that this final roadblock will be overcome. Such a move will trigger accession talks with Serbia.

While the debt crisis has exposed an abundance of faults, frailties and shortcomings in the slow-moving EU system, membership remains a glittering prize.