Monday, November 01, 2010

Thou bleak December wind

From what we can see the dry leaves to be blown from the tree this Decenmber will be the sheaves of papers produced by Mr Van Rompuy and Mr Barroso. You can see from this joint interview that they have what might be called differing opinions as to what will happen at the next European Council meeting in reference to states voting rights,

First van Rompuy makes it clear that he is not going to be providing detail on the German plans,
The questioner points out that in the Council Conclusions plans to strip are not "any more envisaged".
The European Council will revert to this matter at its December meeting with a view to taking the final decision both on the outline of a crisis mechanism and on a limited treaty amendment so that any change can be ratified at the latest by mid-2013.

The President of the European Council intends to subsequently examine in consultation with the Member States the issue of the right of euro area members to participate in decision making in EMU-related procedures in the case of a permanent threat to the stability of the euro area as a whole.
Van Rompy says that the above makes it clear that December is not the time to sort this out. Note 'subsequently', ie it is something on the table.
He says
"The text is very clear, I have a mandate to examine the problem and I will report to the European council but it will not be in December".
Barosso however thinks differently,
"There will be no suspension of voting rights, that's been ruled out, that certainly wont be part of this limited amendment"

So which is it? Will the German requirement for a Treaty change to deal with the fact that the current system for the Euro is hamstrung by its own rules as so effectively described here in the FT,
In terms of substance, the aim must be to overcome the big logical inconsistency of three principles underpinning the euro: “No bail-out, no exit, no default”. The first two are firmly enshrined in the European law. Default is legally possible, but politically unacceptable, at least for now. The EU is simply not in a position to handle the repercussions of a sovereign default.

The incompatibility of those goals lies at the heart of the eurozone’s governance crisis. At least one of those principles will have to be sacrificed.

The “no exit” clause will survive. This leaves bail-out and default. But would a regime that combines bail-out and default satisfy the German constitutional court? While Article 48.6 is part of the treaty the court approved, the court will nevertheless scrutinise whether the new arrangements constitute a power shift, and whether this reduces the Bundestag’s influence.
What seems to be increasingly clear is that Germany's Constitutional Court will rule that the EU is acting illegally. Thus Merkle has to have change, that will satisfy the jurists of Karlsrurh, but to do so will cause consternation amongst the smaller EU countries and trigger referenda in Ireland at the very least, and probably in the UK as well.

Or the EU continues acting illegally, no referenda but Merkle in an impossible position.

Interesting times.

Apropos of nothing. Isn't there something a little 1984ish about the concept of a Permanent Crisis Mechanism?

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