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Thursday, March 28, 2013

Has Germany really gone off the idea of an EU treaty change?

Usually technical meetings behind closed doors in Brussels are pretty dull. However, judging by some of the reports floating around, yesterday’s meeting of the EU Committee of Permanent Representatives (COREPER) may have bucked the trend somewhat. This is the negotiation forum for member states' EU ambassadors - the key guys involved in talks over EU policy. This is where a lot of decisions, de facto, are being made.

As we noted in today’s press summary the UK was outright outvoted on the plans for capital requirements for banks (CRD IV), which entail the controversial caps on bankers' bonuses. 

However, though it was already clear that the UK had lost that particular battle, it was the talks over the EU's proposed, and in part agreed, banking union which caught our eye. EU ambassadors failed to reach agreement amid continued North-South divisions, but the reason why is interesting.
Most media failed to pick up on this, but the WSJ Real Time Brussels blog rightly notes that Germany was strongly pushing for a clearer separation between the ECB's monetary duties and supervisory responsibilities, to avoid a running conflict of interest (see here). The only way this can really happen is to give the supervisory board the final say over supervisory decisions (as opposed to now when it rests with the ECB's Governing Council). This, in turn, requires EU treaty change. The Germans wanted a clear commitment from other member states that this would happen.

According to the WSJ, Berlin also insisted on giving national parliaments (not just the European Parliament) the right to ask questions and get answers on supervisory policy, and giving states under the single supervisor along with the EP the power to remove the Vice Chairman of the supervisory body.
A couple of interesting points there. This is an incredibly fluid target but those who say that Germany has 'gone off the idea' of Treaty change - in light of David Cameron's speech where he mentioned EU treaty change as an avenue for reform - clearly haven't quite appreciated the nature of the proposals floating around. Of course, Berlin won't be shouting it from the rooftops ahead of a national elections and with the relationship with France at an all time low (well almost), but in many of the Germans demand on eurozone governance is an implicit acknowledgement that something has to change in the EU's institutional framework (see our table here of the broad proposals being discussed [p.9]).

The scope (limited or full treaty change), nature (EU treaty or inter-governmental) and timing will be discussed, but it will likely happen sooner or later.


Rik said...

As far as I understand the German Parliament is of the opinion that a treatychange is required.

Merkel is not good in this she tries to avoid complicated legal procedures but often end up in highly uncertain legal situations. Basically solving a smaller direct legal issue by creating a much bigger one furtheron in the pipeline.

Could be convenient as well to stop the bankingunion for another year or so. Everybody is sorry for the depositholders in Cyprus but that goes out of the window the moment they realise the alternative. Which is as a taxpayer in another country they should pick up the tab if they want it otherwise.

EU itself is often also missing the plot. They often only check if EU law allows things. A lot of things have to be formally approved at country level and in the way described in local legislation.

Re the ECB difficult to see how with the framework in an EU treaty you can make essential changes outside that. Also seen the seniority rules they apply themselves.

Jesper said...

The German constitutional court appears to have the opinion that Germany cannot give up more control over German tax-payer money to EU-institutions without a treaty change.

The people driving the idea of a treaty change are the ones who'd benefit from a treaty change. Who'd benefit of a treaty change? Germany or recipients of German tax-payer money?
Or maybe it is the ones who'd facilitate the transfer, EU-institutions filled with juicy jobs, who'd like a treaty change?

The situation is a you say fluid. It might be that UK and EU-institutions might have a common cause in asking for a treaty change but for opposite reasons. Less integration/more integration.

If the process for treaty change doesn't start soon then nothing will be completed before the UK-referendum. Who is risking the most by delaying the start of the process?
UK risk being stuck in an unreformed union
EU losing a netpayer by losing the UK?

I suppose a lot depends on whether or not people believe there will actually be a referendum, if there is no referendum then that could lead to the UK being stuck in an unreformed EU....

Denis Cooper said...

So is this going to be like the last time, when Merkel wanted an EU treaty change and Cameron gave it to her without getting anything substantive in return?

I refer of course to the EU treaty change agreed on March 25th 2011 through European Council Decision 2011/199/EU:


"EUROPEAN COUNCIL DECISION of 25 March 2011 amending Article 136 of the Treaty on the Functioning of the European Union with regard to a stability mechanism for Member States whose currency is the euro

Rik said...

The court requires a constitution change before more powers are moved away. Not a treaty change.
Problem being likely requiring a referendum which will almost certainly kill off any 'more Europe' stuff (unless it is for others of course).

The way Cameron has brought it it is on the changes than at place. Difficult to see how he could completely pull back from that. He might move it a year but that looks all the room he has.
And anyway the process should be on its way before the next UK election he has still some credibility restoring to do.
So imho most likely scenario in that case we get a knife on the table by Mr Cameron.