The most interesting thing is that a major change of the Treaties may not be needed.
One can probably work expediencies within the existing Treaty of Lisbon where needed and in some cases, the simplified revision procedure can be used (Article 48.6), which has already been done in March 2011, when the European Council agreed a regulation that amends Article 136 with two new sentences which simply state that Eurozone members may well set up a European Stability Mechanism.
This is currently going through a process of ratification in each member state (Ireland ratified it by a simple act of the Oireachtas on the 20th September 2011, it might be added without much debate which focused on the legalities of the instrument, although this was raised in Ireland: see: http://www.people.ie/eu/esmref.pdf and somewhat refuted by Dr. Gavin Barrett: see:http://www.ucd.ie/law/news/name,103484,en.html )
For an accessible primer of the EU legal rules relevant here see: http://www.creditwritedowns.com/2011/11/the-relevant-articles-of-the-lisbon-treaty-for-the-sovereign-debt-crisis.html
The points I would make here are simple ones.
- The EU’s leaders have to move very fast-we are taking days and weeks not months and years needed for a proper and detailed reform of the Treaty of Lisbon.
- The EU’s leaders probably have to do things that the Treaty of Lisbon does not make easy or even strictly speaking does not even permit-therefore a combination of working around the rules and revising them will become necessary.
- There is a very quick mechanism to revise the Treaty of Lisbon under Article 48(6), however it cannot be used to give the EU a new competence or power, and agreement must be by unanimity of the heads of state/government (all 27), and the measure must be ratified by each member states’ appropriate means-usually a simple vote of Parliament. If even one parliament rejects it, then the speedy amendment falls (that could be the UK’s House of Commons). We in Ireland may or may not require a referendum subject to the interpretation of the Crotty judgement. It depends on the substance of the amendment, but the fact that the use of Article 48(6) precludes any case where a new competence is given to the EU, this might seem to imply it would fall outside the test set down in the Crotty judgement. So we might not need a referendum as long as Article 48.6 is used. However, it still depends on the exact details of any Treaty changes.
- Article 123 of The Treaty of Lisbon prohibits the ECB from printing money to give to governments, and even any EU agencies, or any public authorities. However, it is entirely possible for the ECB to print money and pass this directly to banks across Europe to meet their liquidity but also solvency requirements. A special commercial vehicle could be created to manage the banking crises which is at the heart of the Eurozone crisis in a much more aggressive and systematic way than heretofore. To date, ECB intervention has been limited to interbank market liquidity requirements, but a more long lasting credit facility to banks could be created (although the ECB would hate the idea….it would be preferable to a mass banking collapse across the Eurozone and beyond?)
- Article 125 would appear to exclude Eurobonds, but then it has already been side stepped by the creation of a European Financial Stability Facility and the new European Stability mechanism after 2013. This was done invoking the ‘emergency measures’ clause of Article 122. The Commission’s recent report on three options for Eurobonds noted that there was nothing legally to prevent a co-ordination of national bond auctions which would be structured by common rules, as to what countries could participate, how much they could raise and and how they would repay, and what additional security/collateral could be offered, without formally involving a joint legal liability for the bond between all parties [see http://europa.eu/rapid/pressReleasesAction.do?reference=MEMO/11/820 ] Notice also that Article 125 does explicitly allow some form of joint funding which would involve mutual guarantees for ‘joint projects’. This could be a ‘back door’ by which some member states could agree to issue bonds via the European Investment Bank to fund some capital expenditure projects, which by the way are very important for creating demand in the context of the current recession, impeding depression.
- Article 126.14 allows for a protocol on the excessive deficit procedure-the old Maastricht Treaty Rules of the Growth and Stability pact which were supposed to prevent moral hazard and countries like Greece borrowing too much or issuing too much debt paper. Obviously these failed. Indeed they were ignored by France and Germany when they were challenged in the early noughties on their borrowing! It would be possible to re-write these via Article 124.14 and do also a rewrite of Protocol 12 (see below) all using Article 48. The only trick is you cannot grant the EU a new competence in doing this…but could the rules be made more binding in a way that did not yet involve a new competence? In fact all that really has to happen is for there to be political will to apply what is already written down in Article 126……..the need for some entirely new complex Treaty that makes the process in Article 126 seems too unlikely to ever be achieved…
And the point is? There is enough room within the existing EU Lisbon Treaty to take some pretty radical and unorthodox measures which might provide some help in the current crisis. The idea that a major reform of the Lisbon Treaty is technically needed or desirable both seems crazy given the political risk such will be undeliverable, and most all, will be too little too late even if it was.