Tag Archives: amendment

New Insights on Possible Treaty Amendments

The idea for an amendment of the founding Treaties in order to accommodate a permanent bail-out mechanism is on the table after the last European Council meeting. Now there are new developments and opinions that touch on this subject.

CEPS has published three reports that contemplate on possible Treaty amendments – a post-mortem on the European Council, an overview of revision procedures under the Lisbon Treaty, and a more specific overview of the practicalities of the Lisbon Treaty revision(s). All documents suggest that a limited revision of the Treaties is achievable. The more specific proposals are:

  • amending art. 122 TFEU, and including a reference to financial stability (plus a permanent European Financial Stability Facility – EFSF, created on an intergovernmental basis), or
  • adding a reference to art. 143 TFEU – the legal basis to extend the existing EU support mechanism to non-euro area member countries in art. 136 TFEU – the special Treaty article for the euro area countries.

The authors note that the viability of both approaches will depend on the interpretation whether such an amendment would affect the no-bailout clause in Art. 125 TFEU, thereby changing the nature of monetary union and creating a fiscal transfer union (in German Transferunion). Additionally, it is arguable whether such an amendment would constitute a change to the “essential scope and objectives” of the EU, thus requiring an ordinary revision procedure.

Meanwhile some Dutch parties are trying to force a preliminary referendum on any pending Lisbon Treaty amendments.

It appears that any proposal for Treaty amendment must be considered very carefully in the light of possible ratification, as well as taking into account the no-bailout clause of art. 125 TFEU. My personal conviction is that any institutionalisation of a permanent bailout mechanism is legally troublesome, and in any case should be subject to ordinary revision procedure. But first of all we need to see the amendments in print before speculating on their legal essence.

What Limited Treaty Amendment?

The European Council has apparently decided that some limited amendments of the EU Treaties are necessary in order to establish a permanent crisis management mechanism for the eurozone.  Herman Van Rompuy and the European Commission have been mandated with preparing proposals for such a crisis mechanism – which would provide emergency lending in the event of a sovereign-debt crisis. The proposal for the restriction of voting rights of Member States violating fiscal stability requirements seems to have been shelved for the moment.

An important feature of the mandate is the question whether a simplified revision procedure can be used (art. 48, para. 6 TFEU).  The simplified procedure may be used for the amendment of provisions in part three of TFEU (Union Policies and Internal Actions). The European Council acts by unanimity after consulting the European Parliament and the Commission, and the European Central Bank in the case of institutional changes in the monetary area.

The main requirement for the simplified revision procedure, however, is that it should not increase the competences conferred on the European Union in the Treaties. This test is very important and it remains to be seen how any meaningful crisis management mechanism could pass it.

To Amend or Not to Amend? That is the Question

Today EU leaders will discuss a very important proposal put forward by France and Germany. It’s all about fiscal supervision and bail-outs, and the question is whether an amendment of the Treaties is necessary or not. Germany insists that a credible system of fiscal monitoring needs a credible sanctioning mechanism in order to keep EU Member States’ spending in check. To do that, Germany proposes the introduction of new texts in the Treaties. In exchange Germany would support a permanent bail-out mechanism. But it turns out that many are opposed to this proposal.

A number of media (EUobserver, Euractiv, FT’s brusselsblog) report that a number of Member states are very critical of the proposal. Viviane Reding has called the plans “irresponsible” and has been immediately reprimanded by France’s State Secretary in charge of European affairs, Pierre Lellouche. But that’s another story.

The important debate here is not whether an amendment is achievable in the medium term (it will probably be put to referendum in Ireland and possibly the UK and Denmark). The conceptual shift in the coordination of economic governance is where interests of Member States diverge.

Germany wants to impose strict fiscal discipline on all eurozone members, including the possibility of removing a Member State’s voting rights. But many argue that such budget austerity may not be the solution to the problem. George Soros himself has compared the proposals to the 1930s, where some countries became overly focused on balancing budgets during a depression. Other go further and note that it is Greece, in fact, which is bailing out Germany – in the form of an annual trade deficit that has averaged 5 billion euros, stimulating German jobs but destroying them in Greece. That is why many economists advocate for measures to stimulate demand in trade surplus countries – Germany, Netherlands, Denmark, etc.

Axel Weber, president of the German national bank, disagrees. He says that the proposal of raising wages to support domestic demand and reduce competitiveness neglects that wages are not a political control variable. Moreover, according to him simulation studies show that the effects would be confined almost entirely to the home economy in the form of changes in employment.

So who’s got it right? I’m not sure, and I am (thankfully) not an economist. But the German position will not be easy to defend unless it addresses the concerns about German policies that stimulate the aggregation of a trade surplus.

Second Amendment of the Cotonou Agreement

The second amendment of the Cotonou Agreement with the African, Caribbean and Pacific states has been signed. The Cotonou Agreement constitutes the foundation of the special relationship between the EU and ACP nations. It is aimed at reducing and eventually eradicating poverty as well as at sustainable development and the gradual integration of the ACP states into the world economy.

The changes include strengthened provisions against the proliferation of small arms and light weapons, as well as provisions against organized crime and trafficking of human beings, drugs and weapons. There are new procedures for assistance to ACP states for adapting to global warming and for integrating climate change into their development strategies, as well as improved support to the aquaculture and fisheries sectors in ACP states and to the fight against HIV/AIDS.

For a critical assessment see the briefing paper of the CONCORD Cotonou Working Group.