As European leaders leave Brussels this weekend , they do so in the hope hoping that this latest in what is becoming a continuing series of “11th hour” eurozone rescue packages can be executed relatively swiftly – without the uncertainty of, among other things, another Irish referendum.
With technical details still being pored over by diplomats and civil servants from not just the 17 eurozone states but all 27 member countries, European Council President Herman Van Rompuy was still maintaining the new tighter fiscal regime will need only “minor” and “rapid” adjustments to the Lisbon Treaty.
The new regime is intended to ensure eurozone member states euro keep budget deficits below 3 percent of gross domestic product, their debts below 60 per cent of GDP and enact a legally-binding “golden rule” tieing them to a balanced budget.
That tighter fiscal regime is being felt in Ireland – which this week had yet another austerity budget designed to claw back in taxes and welfare cuts roughly the same amount it has to pay out each year (about
£3 billion) to support its zombie banks to pay back French and German bondholders of their debt. But that fiscal rectitude is also being felt in Portugal, Spain and Italy and also appears to be dragging David Cameron’s Tory Party into a deeply unwanted and divisive constitutional argument with not just his own Eurosceptics but also a wider constituency of critics in the Conservative fold.
Downing Street found it necessary, earlier this week, to deliver what some of them saw as a rebuke to Work and Pensions Secretary Iain Duncan Smith by rejecting his insistence that any changes to the EU treaties should trigger a promised referendum in this country as misplaced and incorrect.
The EU sovereignty referendum pledges given by the Prime Minister and Foreign Secretary William Hague only apply to any attempt to repatriate new or additional powers to the EU, said Number 10.
In Brussels, Mr Cameron found himself in an equally thankless position, as the main players appeared to be punishing him for what they considered unhelpful, grandstanding rhetoric by excluding him from the heart of the real negotiations. In Ireland, where the original Lisbon Treaty had to be put a second time to voters after it was rejected, the government is holding to a similar line: a referendum only applies if the existing ratified treaty is changed to give new powers to Brussels or the European Central Bank. How voters – who saw the Fine Gael Labour coalition elected earlier this year enact its latest austerity Budget, this time dictated by Berlin – might react to a referendum is uncertain and uncertainty about the euro has been proving very costly not just to eurozone members.
Mr Van Rompuy and the ECB’s Mario Draghi, acting on the instructions of German Chancellor Angela Merkel and French President Nicolas Sarkozy are understood to have recommended a banking license for the eurozone bailout fund, the European Stability Mechanism to give it far greater access to ECB funds above its current, unequal to the task, reserve of 500 billion euro.
They insist the new deficit and debt rules can be enshrined in member states’ constitutions or legal systems without ratification by national parliaments – in most member states – as they would just require change to protocol 12 of the existing treaty. No new treaty would be required just a speedy “consultation” with the European Parliament and the ECB, they are reported to have advised.
But questions were raised earlier this week as to whether the EU’s Stability and Growth Pact and article 48 of the treaty ( which sets out and governs how the treaty may be amended) may, in fact be necessary – which could lead to further drawn out uncertainty as the markets try and second guess the outcome at the expense of ordinary citizens.
