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A Midsummer Night's Treaty

European Policy Centre

Date: 24/06/2007

After two days of brinkmanship and high drama, EU leaders agreed a package of institutional reforms at the June summit that, despite the concessions made to the ‘minimalists’, will make the Union more effective.

The German Presidency’s approach to the European Council which finally delivered a deal on EU treaty reform may have been unconventional - but the denouement in Brussels on 21-23 June had an all too familiar ring about it.

After a long and sleepless night of twists, turns, and eleventh-hour negotiations, the EU’s 27 Heads of State and Government eventually agreed on a mandate for an Intergovernmental Conference (IGC) to be opened before the end of July and concluded “as quickly as possible” - and in any case before the end of 2007 - to allow enough time for the resulting treaty to be ratified before the European Parliament elections in June 2009.

As a result, after “two years of uncertainty over the Union’s treaty reform process” - to quote the words used in the Presidency Conclusions to sum up the long political crisis over the failed ratification of the Constitutional Treaty (CT) signed in 2004 - the enlarged EU now has much more than a roadmap and a few guidelines for institutional reform.

The week preceding the European Council and the summit itself were, in fact, a sort of IGC avant lettre, with the 27 sherpas (technically known as “focal points”) and their political masters pre-negotiating all the main elements of the new treaty which will amend the existing ones and replace the 2004 ‘Constitution’.

The forthcoming Portuguese EU Presidency is thus expected to submit a new draft Treaty right at the start of the IGC, based on the detailed instructions enshrined in the mandate agreed on 21-22 (and 23) June.

The IGC itself is set to become mainly a technical exercise of reorganisation and consolidation of the existing treaties in light of the agreed changes, rather than a traditional intergovernmental negotiation similar to those carried out in 1990-91 (Maastricht), 1996-97 (Amsterdam), 2000 (Nice), and 2003-04 (the Constitutional Treaty, following the 2002-03 Convention on the Future of Europe).

Exhaustion, relief and a slight sense of puzzlement were the prevailing moods among the various players in the marathon negotiations as dawn broke on Saturday morning over Brussels’ Justus Lipsius building. On the one hand, a feeling of déjà vu was palpable, especially among those who had lived through the Nice IGC negotiations of December 2000: an extra night of frantic and nervous bargaining, with helpless officials and reporters mingling in the atrium and the corridors hunting for news (and food). On the other hand, everyone had the sense there that a deal would come eventually, as no one could afford another failure.

After the long “pause for reflection” and the patient wait for a more favourable political climate, a unique window of opportunity had opened up for settling the pending institutional issues once and for all.

The combination of the election of Nicolas Sarkozy in France and the formation of a new coalition government in the Netherlands (the two ‘Nay-Sayers’), the imminent departure of Tony Blair from Downing Street, and, last but not least, the absence of elections in virtually all 27 EU Member States in the coming months encouraged the German Presidency to try to forge an acceptable compromise between the different ‘camps’ rapidly and decisively.

Postponing the search for a consensual solution until the IGC proper, in fact, risked opening a Pandora’s box and crystallising well-known differences among the Member States. Addressing them in advance and in one go proved effective, and allowed many European leaders to declare on Saturday - regardless of how they individually evaluated the outcome of the summit - that the Union is now “out of the bind” it has been in for some years and free to concentrate on the policy challenges it faces.

German Chancellor Angela Merkel deserves full credit for this choice: her gamble paid off and the EU has passed what had turned into a crucial test of its credibility, proving to both itself and the wider world that it is still capable of taking fundamental decisions over its future at 27 and moving on.

That said, reaching a comprehensive deal at the summit was not a foregone conclusion and there were moments failure appeared to be a distinct possibility. Very diverse demands had to be met and interests accommodated; talks and consultations were conducted by many players; tentative ‘packages’ were floated in an uncoordinated fashion; and leaks were not always helpful.

What appeared to be the outline of an agreement on Friday evening, for instance, turned out to be illusory, only to be resuscitated on Saturday at dawn after a nocturnal supplement of negotiations. And the largely unnecessary drama of the last night of the summit cast a shadow over the general satisfaction with its final outcome.

Still, the Polish veto threats and the ensuing German response not only highlighted the problems the enlarged Union stills faces, but also indirectly vindicated the decision to reform the institutions to make the EU more effective.

The mandate – preparation and ingredients

The German Presidency only circulated the first draft version of the IGC mandate on 14 June, just a week before the summit.

This included the general ‘template’ that would eventually be accepted, as it proposed giving up on the CT in both terminology and structure: the new “Reform Treaty” to be negotiated would not be a “Constitution” and would not replace the existing treaties, namely the Treaty on European Union (TEU) and the Treaty of the European Community (TEC). It would be just an “amending treaty” consisting of two substantive clauses modifying, respectively, the TEU (which would keep its name) and the TEC, which would instead be called “Treaty on the Functioning of the Union”, and the EU would acquire a single legal personality (as foreseen by the CT).

As a result, the term “Community” would be replaced by “Union” throughout the text, and the two amended treaties would have the same legal value. Other terms used in the 2004 CT would change accordingly: no more “Union Minister for Foreign Affairs”, no more European “law” or “framework law” (regulations, directives and decisions would stay instead), and no more references to such EU symbols as the flag, the anthem or the motto.

In a further formal concession to the minimalist ‘camp’, the explicit reference to the primacy of EU law enshrined in the CT would be scrapped and replaced by a reference to the existing case law of the European Court of Justice. Most importantly, however, the innovations resulting from the CT on which there was still a consensus would be integrated in either treaty. 

This approach - incorporating the substance of the CT in the form of the existing treaties - proved viable from the outset, as it met the demands of most players. The only possible exception was Poland, whose requests were at the same time more radical (it bluntly rejected the ‘double majority’ voting system of the CT) and less specific.

From then on, the discussions were all about the precise formulae that could be adopted to satisfy both the ‘minimalists’ and those countries that had ratified the ‘Constitution’; and about exploring how Poland could be convinced to accept a deal along these lines without touching the ‘double majority’ system.

That is where the European Council talks started from on 21 June. The first set of issues was addressed right away and tentative solutions were soon drafted and tentatively approved. The second proved much more complicated and brought the summit to the brink of failure.

On the whole, the demands of the ‘minimalists’ were addressed in a balanced way:

  • as requested especially by the UK, the name of the “Union Minister for Foreign Affairs” was changed to “High Representative of the Union for Foreign Affairs and Security Policy”, somewhat broadening Javier Solana’s current title. However, the holder’s role and powers were not altered at all, despite some extra demands formulated in the run-up to the summit by UK Foreign Secretary Margaret Beckett;
  • similarly, the peculiar nature of the Common Foreign and Security Policy and its “specific procedures” will be reaffirmed in a special new article, but without any implications for the way in which it is, or will be, carried out;
  • the Dutch demands for a more incisive subsidiarity check and a bigger role for national parliaments have been mostly met by extending the period given to the latter to examine draft legislative texts and give a reasoned opinion;
  • a special protocol safeguarding state support for “services of general national interest” (another major Dutch concern) will be attached to the new treaty;
  • by contrast, the Dutch request to incorporate the so-called “Copenhagen criteria” for enlargement in the treaty text was rejected: there will only be a reference to the “conditions of eligibility” for EU membership agreed upon by the Council;
  • the most intricate issue of all was the status and location of the Charter of Fundamental Rights: the solution adopted in the mandate entails a cross-reference to the Charter (which preserves its legal value) in the treaty coupled with a series of exemptions, opt-outs and opt-ins - intended explicitly for the UK and its peculiar legal system;
  • in the field of judicial cooperation, a distinction is drawn between civil matters, where the CT provisions are basically retained and Qualified Majority Voting (QMV) becomes the prevailing rule, and criminal matters, where again the special position of the UK (and in part also Ireland) is ring-fenced. Furthermore, a new “mechanism” is to be inserted “enabling Member States to go forward with adopting measures in this field while allowing others not to participate”;
  • new references are to be inserted to “the spirit of solidarity between Member States”, especially in relation to energy and to “the particular need to combat climate change in measures at international level”, but without conferring new competences on the Union.

Last but not least, an unexpected dispute broke out on the second day of the summit over the mysterious disappearance in the initial draft mandate of a reference in the EU’s objectives to “free and undistorted competition”, at the insistence of the French. Tense consultations followed, resulting in a protocol being added reaffirming this principle, which is also stated in other sections of the treaties. But another apparent French demand - to replace the objective of “balanced economic growth and price stability” with “non-inflationary growth” - was rejected by the German Presidency.

Still, the new provisions on national parliaments and the dispute over “undistorted competition” triggered concerns about their possible impact on the European Commission’s competences - an issue that may have to be addressed at the IGC.

Much ado about nothing?

Unquestionably, however, the fiercest dispute at the summit - which nearly unravelled the whole ‘package’ of balanced concessions - was that which pitted Poland against the Presidency and almost all other Member States over the voting system.

Warsaw entered the summit negotiations without a clear set of objectives, as its demand for radically different voting rules (based on the so-called “square root” system) was categorically rejected by others because it would have reopened the whole institutional ‘package’. It was withdrawn by the Poles themselves at the beginning of the summit, but Polish President Lech Kaczynski used the dinner on the first evening to claim big power status for his country, and did so by resorting to dubious historical arguments to obtain concessions.

It eventually became clear that Poland would ultimately accept the double majority voting system, but only if its entry into force was postponed and it won some additional provisions that would make it easier to form ‘blocking minorities’ in the Council. By mid-afternoon Friday, it seemed Poland might subscribe to maintaining the Nice Treaty system of ‘weighted votes’ until 2014 (to coincide with the change in the size of the Commission), plus an updated version of the so-called “Ioannina compromise”.

Elaborated in 1994, on the eve of the EU’s enlargement to Austria, Sweden and Finland, this was designed to reassure John Major’s Britain, in particular, by allowing the possibility for legislation decided by QMV to be blocked with slightly less than the votes required: if the blocking minority met the previous threshold, this would be enough to trigger a rediscussion of the legislation in question before taking, if necessary, another vote.

Just as it seemed likely that Poland would give its green light to such a formula - ‘Nice until 2014 and Ioannina forever’, plus a possible increase in the number of Polish MEPs - Poland’s Prime Minister Jaroslav Kaczynski intervened from Warsaw.

Apparently prompted by a report from a Polish news agency quoting German Presidency sources as saying that the deal was done, he declared that the offer was unacceptable, condemned the “intransigence” of Poland’s partners, and threatened to sink the whole package. It appeared that the twin brothers had decided to play ‘good cop, bad cop’ in an attempt to extract yet more concessions.

This prompted the German Presidency to take the unusual step of floating the possibility of convening the IGC without Poland’s consent, and it went as far as to circulate a new draft mandate including all the compromises negotiated up to that point except those offered to Warsaw on the voting system.

The German gamble was based on two precedents: in June 1985, at the Milan European Council, the IGC that led to the Single European Act was launched after the then Italian Presidency, supported by Commission President Jacques Delors, argued that the decision was simply procedural (as the mandate was in line with the Rome Treaty and the goal of completing the internal market) and could therefore be decided by simple majority instead of unanimity. A vote was taken and the IGC was convened with seven countries in favour and three against (Denmark, Greece, and the UK). However, those on the ‘losing’ side participated in the subsequent negotiations and agreed to their eventual outcome. In 1990, a similar method was used to launch the IGC that led to the Maastricht Treaty: on this occasion, only the UK voted against but ended up, once again, fully participating in the ensuing negotiations.

There were, however, some question marks over the legality of the German move (the situation was not entirely comparable with the previous ones) - and its political feasibility. Some national delegations (the Czech Republic, Lithuania and Slovakia) expressed unease at the prospect of a breach with Poland and asked for more talks.

However, the tactic paid off. Warsaw was taken by surprise by the initiative and soon decided to return to the negotiating table. In the end, it accepted an offer similar to the one it had rejected earlier, with one concession taken out - the extra MEPs - but another added at the suggestion of Luxembourg Prime Minister Jean-Claude Juncker: the possibility of delaying full implementation of the double-majority voting system until March 2017.

So was it all much ado about nothing? Not really. The German move was bold but risky: on the one hand, it highlighted the determination of the Presidency and a large number of Member States not to be blackmailed ‘to the death’ by one country defending a vested interest - a determination which may be an interesting precedent for the future. On the other hand, all the possible implications of the initiative were not thought through and prompted new efforts by other leaders to mediate between Berlin and Warsaw in what risked turning into a lethal bilateral dispute with long-standing consequences for the EU’s future.

The final agreement on this issue is very complex and tortuous. The Polish government can present it at home as a “quasi-victory” and a reward for its tough negotiating style. But it demonstrates how bitter and entrenched disputes over power tend to become, and how elusive and ineffective their outcome often is.

In fact, many experts have shown that, rather than the specific arrangements for QMV, what matters in EU policy-making is that QMV as such (rather than unanimity) is the rule and can be applied if necessary (and the “Reform Treaty” will include a significant number of extensions to this rule). Still, the row has left a sour after-taste to a summit that otherwise produced results which will certainly improve the ability of the Union to take decisions and generate actions - and will do so from 2009, not 2017.

As you like it

Every ‘camp’ can - and will - put its own spin on the deal which was eventually reached. The ‘minimalists’ are declaring that it is radically different from the “Constitution” and that all their “red lines” have been fundamentally respected. The countries which supported and ratified the CT claim that, apart from a few presentational concessions, the amended treaties include all the main elements of the ill-fated ‘Constitution’.

It is, in other words, a quintessential European compromise that allows virtually everyone to express qualified satisfaction – but in a rather subdued manner, as the mechanics of the eventual agreement have underlined a number of problems that may have enduring consequences.

In particular, a large number of EU leaders made it clear after the summit that Poland - and, to a lesser extent, the UK - stretched the willingness of their partners to accommodate their demands to the limit.

While everyone praised Ms Merkel for the way the summit was prepared and eventually finalised, even the Chancellor emerged somewhat bruised and certainly not amused. Her reputation as a consensus builder has been confirmed and even strengthened, but Germany had to concede a great deal to many people and may not be willing to do so again. It remains to be seen how all this will influence not so much the IGC itself, but more the debate on other issues, starting with the forthcoming EU budget review.

Tony Blair’s last European summit went relatively smoothly. British diplomats had sorted out the most controversial formulations in advance in bilateral consultations with the Presidency, and the summit was basically about dealing with the domestic media and the furore over “free and undistorted competition”.

Still, the Prime Minister’s final press conference was a somewhat folorn affair. While journalists flocked to hear what the ‘new boy in town’ - Nicolas Sarkozy - had to say in a neighbouring briefing room, Mr Blair’s last public appearance on the European stage was sparsely attended and British reporters used the occasion to attack his performance in Europe over the past decade, putting him on the defensive on what should have been a moment of ‘triumph’. Just think, he retorted wryly, what you would have said if I had not secured all my ‘red lines’ at this summit.

By contrast, Mr Sarkozy delivered an impressive performance, certainly in terms of his public image. His first press conference, on Thursday night, was a typical ‘Sarko-show’ of dynamism and informality, intended not least to underline the difference between him and his predecessor. He tried to present himself as a driving force (for the “simplified treaty”) and a crucial mediator (especially between Germany and Poland).

At the end, he even claimed to have contributed to overcoming the “dogma” of competition in Europe - a message clearly directed at those who voted No in the May 2005 French referendum because of the ‘ultra-liberal’ nature of the CT. And in underlining, half-jokingly, that he was the only ‘man of the right’ in the French delegation, he also tried to convey the message that at least part of the left was jointly responsible for the eventual outcome of the negotiations. This was clearly aimed at dividing the opposition and getting the extra support he needs for a successful parliamentary ratification of the new treaty.

However, his claim after the summit that the word “protection” is no longer taboo has set alarm bells ringing in Brussels, with many fearing that the battle over the reference to “free and undistorted competition” is just the first step in a concerted campaign to undermine the EU’s commitment to open markets and a level playing field.

Finally, the ‘integrationist’ camp - including outgoing Belgian Prime Minister Guy Verhofstadt, Italy’s Romano Prodi and Spain’s Jose’ Luis Zapatero - complained about the numerous concessions made to the ‘minimalists’. In Brussels’ long midsummer night, they forced a last-minute collective reassessment of the whole package - thus making the point that they had ‘red lines’ too - but eventually backed the German compromise solution. They also insisted on the need to devise ways in which those who want to move forward are allowed to do so by those who have a different and more limited vision of European integration. But the final IGC mandate is an outcome they can live with and build on.

And what now? The task facing the forthcoming IGC under the Portuguese Presidency is now clear and the focus will soon shift to the ratification process, which may well take more than a year.

However, this is not just a technical or temporal issue. For the sake of transparency and accountability, and for reasons of effectiveness, European leaders will now have to present and defend the outcome of the summit (and of the IGC itself) before their own citizens, especially if they want to counter calls for more referenda. In other words, making the case for the reforms in public - starting with national parliaments - is the next, most important step in the “treaty reform process” that was launched more than five years ago but has not yet been successfully completed.

Instead of trying to ratify the new treaties almost by stealth, EU leaders must now explain in public why the Union needs more effective institutional and decision-making arrangements.

Inevitably, there will be a defensive component to their cases: compromises always require mutual concessions and these, too, have to be explained and defended, as they constitute the essence of European politics and policy-making. But it will be crucial for leaders to illustrate the advantages of equipping the EU with the internal tools it needs to address the challenges of the 21st century. Only by doing so will they show that they have learned the lessons of the past two years and prepare the ground not only for a smooth ratification process but also for a new phase in European integration.

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