EUROPEAN UNION:Bedding down recovery will sorely test the reforms brought about by the Lisbon Treaty, writes ARTHUR BEESLEYEurope Correspondent
AFTER THE EU finally drew a line under protracted debate with the entry into force of the Lisbon Treaty, fresh efforts to revitalise the union’s struggling economy will dominate its work in 2010.
Designed to make the EU more efficient and more democratic following its expansion in 2004, the treaty will be put to the test in the coming year as EU leaders seek to consolidate the economic turnaround and add impetus to the recovery.
Ireland played no small part in the enactment of the Lisbon reforms, a second referendum in October clearing the roadblock in place since voters rejected the treaty a little more than a year earlier. Amid overbearing pressure on the ailing domestic economy, a better-managed Yes campaign served to amplify support for the treaty as the No campaign failed to regain the traction it secured first time out.
For good measure, Taoiseach Brian Cowen secured legal guarantees from his European counterparts on taxation, military neutrality and ethical issues. A further concession ensuring that every member state would retain the right to a seat on the European Commission was designed to provide additional reassurance to wary voters. The result was overwhelming. In excess of 1.21 million people backed the treaty, with little short of 595,000 rejecting it. The about-turn was decisive. In the first referendum, more than 862,000 rejected the treaty while almost 750,000 voted for it.
Research by the commission suggests voters changed their minds because they felt better-informed about the treaty and felt a Yes vote would help the economy through an unsparing recession.
Even if the size of the No vote in the second poll points to deep-seated questioning about the scope and nature of the European project among a large portion of the population, two-thirds of people surveyed by the commission found the Yes campaign more convincing and a quarter switched their vote because of the economy.
If the trend was evident in the failure of the arch No campaigner Declan Ganley to win a seat in the European Parliament in June, the net point from second referendum was clear enough. The Irish people had declared their desire to return the European centre.
It was more or less the same with the Nice Treaty, voted down in 2001 only to be endorsed a year later. Between the first and second Lisbon votes, however, the Irish economy and banking sector had undergone the equivalent of an electric shock. By the time Lisbon II came around, support from the EU and the European Central Bank (ECB) came to be seen as a bulwark against the risk of outright catastrophe.
Minister for Finance Brian Lenihan, borrowing billions to keep the State afloat, confirmed as much in December. “We’re very fortunate to be in the euro zone because were we not in the euro zone in the last year our banking crisis could have resulted in a general financial collapse of the Irish State,” he said.
While Lenihan won plaudits in Europe for his willingness to unleash swingeing cutbacks on an ungrateful public, the fact remains that Ireland’s economy remains in intensive care. With the wider EU economy projected to be emerging from the deepest recession in the union’s history, the prime task for Europe’s leaders in 2010 is to bed down the recovery.
This will not be easy. Unemployment is well up, huge swathes of the financial sector are still underwritten by EU governments and extraordinary fiscal stimuli remain in place.
No surprise then that José Manuel Barroso, the European Commission chief, and Herman Van Rompuy, incoming president of the European Council, have each declared the drive to boost growth to be their top priority. The same goes for Spain’s rotating presidency of the EU, which begins on January 1st.
While preparations for the unwinding of once-off measures and a strengthening of financial regulation have been to the fore in recent political debate, EU leaders will strive in the opening months of 2010 to agree a new 10-year economic strategy for the union.
Ambitious targets are likely in the EU2020 initiative, as the grand plan is already known. Achieving them, however, will require more monitoring and evaluation of each country’s performance and a greater degree of co-ordination between member states. Even though EU leaders are at one on the need for a transparent governance system to oversee the new strategy, political agreement could prove tricky.
On another front, a delayed mid-term review by the commission of the EU’s €141 billion annual budget will proceed next year. With contentious agriculture spending set to come under scrutiny yet again, the review could well be a prelude to a battle royal in mid-2011 when the commission must table proposals for its 2014-2021 budget.
First up next year, however, will be confirmation hearings in the European Parliament for Barroso’s new commission. Only with the parliament’s approval can members of the new EU executive – Máire Geoghegan-Quinn among them – begin the task of policy formulation.
From the parliament’s own perspective, we should see next year how MEPs start exercising power over 40 new policy areas they gained when Lisbon entered into force. The policy areas include agriculture, energy policy, immigration and EU funds, each of them with potential for political fireworks.
Other looming challenges include the pursuit of a legally binding text to give effect to agreements on climate change from Copenhagen.
With the Spanish presidency seeking a deal by April on the shape of the union’s new External Action Service, as its diplomatic corps will be known, there will be plenty scope for political bargaining among member states.
Just a few weeks ago, EU leaders predicted that Lisbon’s entry into force would bring the union into a period of stability after eight long years of discord over the reform project.
If the EU’s adoption of the euro and its historic expansion into the former Soviet zone stand out as the union’s prime achievements in the first 10 years of the new century, the battle to restore economic growth may well shape its destiny in the next decade.