Tag Archives: United Kingdom

What’s Behind the New Eurozone Fiscal Stability Union?

This European Council meeting was quite tumultuous, it appears. But we do have an outcome – a “fiscal stability union”. Below I present a preliminary critical assessment of the proposal, as well as a comment on the toxic role of the United Kingdom in the negotiations.

The “Fiscal Stability Union” in a Nutshell

The statement of eurozone leaders is scant on details. However, what we know is that:

  • The golden fiscal stability rule that annual structural deficit should not exceed 0.5% of nominal GDP will be enshrined in eurozone Member States constitutions or equivalent acts;
  • There will be an automatic correction mechanism in national legislation that shall be triggered in the event of deviation;
  • There will be common standards for the automatic correction mechanism and compliance with those standards will be monitored by the European Commission; the transposition of those standards will be subjected to the jurisdiction of the European Court of Justice;
  • Eurozone Member states will have to report their national debt issuance plans;
  • When a Member State breaches the 3% budget deficit ceiling there will be automatic consequences unless a qualified majority of Member States decides otherwise;
  • Some of those measures will be pursued by more active use of enhanced cooperation.

Urgent Measures

The eurozone leaders have also agreed on a couple of urgent measures:

  • The European Stability Mechanism (ESM) treaty will enter into force as soon as Member States representing 90 % of the capital commitments have ratified it, preferably by July 2012;
  • Ensuring a combined effective lending capacity of EUR 500 billion by the European Financial Stability Facility (EFSF) and ESM;
  • Provision of additional resources for the IMF of up to EUR 200 billion (USD 270 billion), in the form of bilateral loans;
  • Unanimity for the ESM will be replaced by a qualified majority of 85 % in case the Commission and the ECB conclude that an urgent decision related to financial assistance is needed.

Legal Analysis of Proposals

Given the objection of the United Kingdom, and possibly Hungary, the revision of EU Treaties seems impossible at the moment. That is why the eurozone leaders speak about an “international agreement” that should be signed by March 2012. This agreement will not be part of EU law (at least initially). I fail to see, though, how can the European Commission participate in the monitoring of fiscal stability in this case. Enhanced cooperation (Art. 20 TEU and art. 329 TFEU) seems more appropriate. The problem there is that only the European Commission can propose an enhanced cooperation to the Council, and the European Parliament must also approve it. This can lead to substantial delays of the procedure. That is why a two-track strategy appears more appropriate. Common standards for fiscal stability should be specified in the “international” agreement. Together with it the eurozone member States should initiate an enhanced cooperation authorization procedure. That is important, because any credible fiscal stability regime will need to transfer monitoring powers to the European Commission. This means that the drafting of rules must start now, in close cooperation with the European Commission and the European Parliament.

The Toxic Role of the United Kingdom

For some time I have been quite skeptical of UK’s role in the European integration process. There are deep divisions within the British political establishment on UK’s place in the EU. However, those internal divisions are spilling over to the EU and creating instability. The truth is that there are too many UK politicians that want the UK out of the EU, and in the European Economic Area.

I fully support the right of UK to define its own place in the integration process. With its decision to object to the new eurozone governance rules, the UK is basically signaling its determination to distance itself further from core EU countries. However, I think that the UK must not be allowed to unilaterally obstruct the further building of the European project. That is why a new political dialogue must be started among EU Member States about the possible modifications of UK’s scope of membership and responsibilities in the EU. This process must reflect the UK’s concerns, as well as the strategic objectives of the Union. What is clear is that we cannot continue to pretend that the UK is on board in support of the integration process.

The Tedious Necessity of Treaty Revisions

The spirit of reform is haunting Europe once again. There’s talk of political union, scrapping EU institutions, and even leaving the European Union altogether. I can only sympathize with this spirit of reform and creative destruction. But one thing worries me – the lack of apprehension of the legal foundation of the EU.

The European Union is not a tribal clan. It is a supranational organization based on law, and encompassing an intricate network of rules that makes the whole thing possible. Having ideas about reform is cool, but reform necessitates the revision of the Treaties by the prescribed procedures.

That is why a political union cannot happen on a short notice. It will have to go the long way through the ordinary revision procedure, since it will provide new powers to the EU (art. 48 TEU). This is also the case with scrapping the European Economic and Social Committee, for example (it changes the institutional framework of the EU). As for the potential quitting of the EU by the United Kingdom, a more detailed legal analysis is needed in order to calculate all the costs and provisional time-frames for such a move.

Whatever the spirit of reform brings to the table, we need to execute reform legally. Backdoors are not available (see the position of Otmar Issing against the adoption of a political union through the backdoor of a monetary union).

 

 

The Political Salience of the Burqa Ban

Henning Meyer from the Social Europe Journal turned my attention to this report of the Pew Global Attitudes Project measuring the public approval of the ban of face-covering veils (burqas). What I did was to compare the data for the approval rate with the percentage of the Muslim population in the respective countries (data was obtained from the 2009 report of the Pew Research Center). Not surprisingly, there is a strong positive correlation between the percentage of Muslim population and the support for the burqa ban (correlation= 0,84, R2=0,71).

The US citizens are somewhat more tolerant than the average and Britons somewhat less, but the overall correlation is quite strong.

This post is cross-posted on Think 3: Developing World.

Will the Cameron Government Be THAT Euroskeptical?

Update: the UK government has issued a statement on a common position on relations with the EU. As expected, it reiterates the idea of future referendums on new revisions of the founding treaties. The idea of new opt-outs from the Treaty of Lisbon is discarded, however.

The deed is done, and a coalition between the Conservative Party and the Liberal Democratic Party will probably govern the United Kingdom. As usual, I try to figure out what does this mean for the European Union.

First, on the personality effects. David Cameron and the future Foreign Secretary, William Hague, are not, well, real fans of the European Union. Cameron and Hague have given some pretty worrying signals in the past. Cameron promised to run a referendum on the Treaty of Lisbon, but later backed down. He also did try to sabotage the entry into force of the Treaty of Lisbon by writing to Vaclav Klaus.

Mr. Hague, the former chairman of the Conservative Party, and future Foreign Secretary, has a motto: ‘In Europe not run by Europe’. His special breed of euroskepticism was an essential part of his strategy as a party leader, and later as a shadow Foreign Secretary. He eagerly opposed any idea of joining the euro. He went so far that no other than the White House administration expressed its concern that the Conservative’s Euroscepticism could undermine the ability of a Conservative government to influence events in the EU. However, a leaked memo in the Guardian, drafted by civil servants on behalf of William Hague, shows that he is still in the same boat. He reiterates the earlier demand by Cameron for a number of new opt-outs (criminal justice, the Charter of Fundamental Rights, and social/employment issues) that would demand new revisions of the founding treaties.

So the question is will Mr. Cameron and Mr. Hague pursue this policy in full? I am not so sure. The Cameron government will be a coalition government, to begin with. On the criminal justice front the Liberal Democrats demand keeping Britain part of international crime-fighting measures such as the European Arrest Warrant, European Police Office (Europol), Eurojust, and the European Criminal Records Information System. They also believe that it is in Britain’s long-term interest to be part of the euro. Again, on a personal level, Nick Clegg – the future Deputy Prime Minister, was a European Commission official, and later – a member of the European Parliament.

This obvious contradiction must be cleared. It remains to be seen how the new British coalition government will manage these issues. In fact, the future government’s stance on Europe may the main stumbling block ahead. Perhaps Mr. Cameron can use some wisdom stemming from the special relationship.

Obama Will Not Meet European Union

US President Barack Obama will not attend a European Union-US summit to have been held in Spain in May.

Interestingly, Mr. Gordon Brown, the British Prime Minister, spoke instead of Mr. Obama:

“A trip to Spain for a summit was never on his agenda. He strongly values the bilateral relationship with Spain.”

David Cameron on EU – Just a Little Bit Softer

The leader of the British Conservative Party, David Cameron, has delivered a speech on the EU. One issue has obviously dropped off the Tory agenda – there will be no new referendum on the Treaty of Lisbon. The reason – holding a referendum now will be like holding “a referendum to stop the sun [from] rising in the morning”.

One of the concrete steps for a possible future Tory government will be to prohibit, by law, the transfer of power to the EU without a referendum. Cameron also proposes a new law “to make it clear that ultimate authority stays in this country, in our Parliament”. The third measure is to require all changes in primary EU law without a new ratified treaty (the so-called pasarelles) to be subject to “full approval by Parliament”.

Cameron demands also new opt-outs for Britain:

  • opt-out from the Social Chapter;
  • new, better opt-out from the Charter of Fundamental Rights;
  • limiting the European Court of Justice’s jurisdiction over criminal law to its pre-Lisbon level.

Cameron recognizes that these new opt-outs are subject to approval by all the Member states of the European Union.