The new European Treaty being drafted will not be the one we were anticipating. The draft agreed upon on 9 December last year in the declaration of the heads of state or government of the eurozone (which, as you will remember, borrowed largely from the Merkel-Sarkozy letter) is being broadly modified: this budgetary pact uniting the countries of the euro and the other member states (with the exception of the United Kingdom) wishing to join them will be different. Some changes should even be seen as a done deal.
Changes under discussion. As we stated in our bulletin 10526, at the end of last week, the members of the working group tasked with drafting the text presented their comments and wishes: it appeared that there are a great many changes and innovations required, and many of them are fairly radical. We must not forget that not only do the member states make up this group, but also the Commission and the European Parliament; they have all put forward suggestions and requests. The result is that almost everything has been put to discussion, starting with the nature of the instrument to be created: a treaty, an agreement or a pact? In fact, the very need for this new instrument has, at times, been called into question; the MEP Roberto Gualtieri (Socialist group) believes that it is not required, stressing that the Six Pack (in practice, the Stability Pact) which has just entered into force already amply governs the same areas.
Additionally, Italy argues that the obligatory scaling down of the budgetary deficits should be put back for a year, to come into line with the timetable already included in the above-mentioned stability pact; other member states agree. The role of the European Commission in the event of any infringements is the subject of disagreements, as is the possibility of involving the Court of Justice in the management of a treaty (or agreement) which is extra-Community in nature. Other legal aspects have been corrected: in particular, the new treaty would enter into force once it has been ratified by 15 countries, rather than by nine as originally planned. And a new element has been brought in: for this text, a period of validity (five years?) is to be laid down, not to get rid of its contents, but to move it into Community law as quickly as possible (which would call for the UK to be on board).
This is why the future treaty will not correspond to the one included in the declaration of 9 December.
About 100 amendments. The draft needs to be ready by 23 January, so that it can be put before the Eurogroup (finance ministers) before the summit meetings at the end of the month. Around 100 amendments have been brought in. The delegation of the European Parliament (Elmar Brok representing the EPP, Roberto Gualtieri representing the Socialists, and Guy Verhofstadt the Liberals) proposed the largest number of changes: 26. Some of these call into question the very nature of the project (the EP will not be taking part in the negotiations at political level; it will formally express its view at a later date). The ECB (European Central Bank) is believed to have called for 14 modifications, the European Commission 13, and the rest were the work of the various states. Germany apparently took a moderate position to avoid giving the impression of wanting to impose its opinions; it will be more explicit at political level. The United Kingdom, as readers will be aware, has observer status.
Positive development. I believe that the evolution of these negotiations, from which the economic governance of the eurozone will be born, is positive, because when put to scrutiny, the 9 December draft looked like a little legal monster. A treaty (or a pact) is vital in order to fight speculation and reduce market abuse, and the Franco-German initiative was absolutely necessary to begin with, to kick-start the project; but the form and content must move on. The main thing lies in two principles: the countries of the eurozone must lay down an obligation of budgetary balance in their constitutions; sanctions against those failing to respect their commitments will be automatic, unless the qualified majority of eurozone countries decide otherwise. All the rest, or practically all, is the subject of negotiations, with the hope that the agreement will then pave the way to extend the opportunities for action of the ECB and the creation of eurobonds.
But so far, nothing can be taken for granted. If the project fails, the euro could disappear, or survive as the single currency of a small number of countries. If, on the other hand, the results are positive, the advantages would go far further than the world of finance: the obligation to bring back budgetary balance would, in a number of member states, mean getting rid of many, many instances of waste and abuse, on which light has been shed by the analyses carried out. This column has more to say on the subject. (FR/transl.fl)