A Deal at All Costs?

In the small hours of 23 June, European Union (EU) leaders finally reached accord over a new reform treaty at their summit in Brussels. Emerging bleary-eyed but upbeat, the heads of state and government of the 27 member states announced that they had managed to agree a last-minute deal, after the competing interests of notably Poland, the United Kingdom, the Netherlands, and France had threatened to derail talks.

Several alliances appeared to have been struck up, with the picture looking grim on the evening of 22 June, when the Polish leadership threatened to veto the whole deal on the basis of the voting rights provisions that had been revised under the European constitution proposals, reducing the country’s voting rights awarded under the 2000 Nice Treaty. Germany and Italy led those in favour of deeper integration, with Poland and the United Kingdom providing the main resistance to any handover of national sovereignty, cheered on by smaller states such as the Czech Republic and the Netherlands.

Luxembourg Prime Minister Jean-Claude Juncker was a strong candidate for “man of the match”, with tireless negotiations between parties peppered with warnings of the effects on the Eurozone and EU economies should they fail to reach an agreement.

Italian Prime Minister Romano Prodi was clearly seething over the Polish and U.K. actions. Prodi, a former European Commission president and card-carrying Europhile, said that there had never been such obvious levels of Eurosceptcism than at this latest summit, a blow to the efforts of the German presidency over the last six months. There was evidence of a “good cop, bad cop” routine being played with regards to Poland, as French President Nicolas Sarkozy stepped into the breach in an attempt to assuage the Polish leadership after German Chancellor Angela Merkel had issued a threat to hold an inter-governmental conference among all EU states bar Poland. The mood was not improved by Polish President Lech Kaczynski, who broke off negotiations at each stage to call home and canvass the opinion of his older brother, Prime Minister Jaroslaw Kaczynski; before the summit, it had been assumed that the latter would be the Polish representative, as the known powerbroker and decision-maker.

In the end, the deal that was struck hardly resolves the issue, but rather puts off the troubles for a future set of leaders. The constitutional treaty will see the same voting rights agreed at Nice in 2000 kept in place for the present, but in 2014 the changes proposed in the constitutional draft will begin to be phased in, before full adoption in 2017.

There are two opportunities for Poland to reject the deal—at the inter-governmental conference (IGC) later this year, or when the treaty changes are due to come into force.

The IGC was agreed with some sense of resignation, and with concessions already having been offered that watered down the proposals on the table, changing them from a constitutional document of the kind rejected by French and Dutch voters in 2005 to a series of treaties to update existing constitutional provisions, in order to make them more relevant to a 27-member body.

What Was Agreed?

The main changes brought in are:

• Phased in from 2014, qualified majority voting (QMV) will be increasingly used, to overcome the problematic national vetoes that have blocked decision-making in the past. The deal widens the scope of QMV to 40-50 additional areas, bar some opt-outs for the United Kingdom in the judicial and home affairs field—one of the United Kingdom’s “red lines”.
• The role of the European Parliament is to be strengthened, and the right of national parliaments to review and respond to legislation is to be improved, extending the time allowed for examination of text, and providing a facility to request that the Commission examine areas the national parliaments deem to be encroaching on the subsidiarity principle.
• The European Commission, which has grown to a 27-member body following the 2004 and 2007 enlargements, is to be scaled back to 17 commissioners appointed from all member states on a rotating basis.
• A new post of European president is to be created, along with a foreign policy chief—this is not a “ministerial” role; rather, it is less controversially labelled “high representative”. The holder will also act as vice-president of the Commission. The creation of the role of president means that the rotating presidency system currently employed will be phased out, and the holder will be elected by EU leaders for a term of two-and-a-half years. Although the holders of these posts lack formal power, concern has been raised by the Eurosceptic U.K. press that responses to international crises will have to be okayed by the foreign policy chief and that the United Kingdom’s actions will be restricted, as the protective clause allowing member states to formulate their own foreign policy and national representation in third countries is only a declaration, and thus in effect could be overruled.

Sarkozy Makes His Mark

French President Nicolas Sarkozy emerged from his first official EU summit as a strong player on the European scene. He managed not only to officiate between the messy German-Polish disagreement, but also convinced Merkel to delete the reference to “fair and undistorted competition” from one of the basic principles of the EU charter. Justifying his position, Sarkozy employed the argument that the EU needs to be seen as more socially just, and “humane”, warning of the social consequences of unhindered competition, such as job losses, outsourcing, and lower salaries. The deletion of such a fundamental aspect of the entire premise of the EU has angered the more liberal-minded states. Furthermore, the Commission has pledged to fight any nationally initiated measure encroaching on its powers, and is likely to continue to impose strict regulations on state aid and takeovers. Despite reassurances that the legal basis for free competition remains valid despite this change, feathers have understandably been ruffled. European Competition Commissioner Neelie Kroes issued a statement following the summit declaring, “The Commission will continue to enforce Europe's competition rules firmly and fairly: to bust cartels and monopolies, to vet mergers, to control state subsidies”, in a clear warning to member states.

Having only just been elected president, however, Sarkozy—a free-marketeer himself, although with shades of grey when it comes to EU interference in national policy—had to be seen as advancing social and domestic interests at the European level. EU legislation is often watered down to accommodate national self-interest versus the Community interest, and this was most recently the case with the Services Directive, which was intended to create a free market for services in the EU. The final version of this directive was distinctly less ambitious than the initial Commission proposal.

Outlook and Implications

Germany and Italy may not be too quick to forgive Poland and the United Kingdom for putting their own interests above those of the bloc, although the latter would argue that they had good reason for doing so. Although Poland’s argument on voting rights resonated with smaller states, the methods employed in its fight shocked many, as the Kaczynski leadership invoked the Nazi regime. U.K. Prime Minister Tony Blair did not escape unscathed in the domestic Eurosceptic press though, accused of handing over control to the EU, and with mounting calls to put the agreed text to a national referendum. Ireland has already signalled that it will put the treaty to a referendum, and a poll released today indicates that 70% of Danes favour a national vote as well. The issue is tricky, as one of the forces driving agreement for a toned-down treaty was the elimination of the possibility of rejection.

Politically, competing national interests have sought to limit the scope of the treaty, and the knock-on effect means that a chance to strengthen the areas of common interest, such as foreign policy and defence, has been missed. Unfortunately, by safeguarding national sovereignty, the bloc as a whole runs the risk of being seen as weak in international circles, through an inability to put forward a common position. The consequences of this have already been seen as the EU was outmanoeuvred by Russia at recent summits, and internal disagreement drew both criticism and undermined the EU’s negotiating position in World Trade Organization (WTO) talks. Ongoing divisions were again apparent over Germany and Russia’s plans for the undersea Baltic gas pipeline, and over the United States’ proposals for missile infrastructure in Poland and the Czech Republic.

The fact that an agreement was eventually hammered out at this latest summit will do little to reassure integrationists of the ongoing willingness of all 27 EU members to agree on a strong and common vision for the future of the bloc. Divisions in the run-up to the summit were apparent, and are unlikely to be mended easily. Mutual mistrust and the lack of solidarity were well hidden behind the superficial smiles of leaders emerging from the summit. They are well aware that the minute details will now be worked on, and legal experts will also pore over the small print before a final version is adopted by the end of the year. The summit was also the final opportunity for the German presidency of the European Council to leave its mark, bringing to an end a busy six months for Chancellor Merkel. Portugal takes over on 1 July, relieved that the groundwork on a new treaty has been laid, but apprehensive nonetheless about its ability to successfully conclude a difficult and challenging chapter for the EU.

It is of course true that integration need not mean agreeing on everything, but it is worrying that the 27-member bloc appears increasingly unable to find common themes.