The ‘fiscal compact’ deal agreed at a recent European Union summit could yet founder on the need for referendums and on other legal delays in numerous participating countries.
The deal is designed to improve financial discipline in the euro-zone by transferring greater supervisory power over national budgets to EU institutions.
Due to the veto wielded by UK Prime Minister David Cameron at last week’s meeting of European heads of government, the deal will now have to be agreed between the ‘euro-plus’ group of participating countries outside the institutions of the EU.
But serious obstacles in the path of the deal are emerging in many of the countries that have opted to take part. Talk is rife of referendums in Ireland, the Netherlands, Austria, Romania and Denmark, while in Finland, Latvia and the Czech Republic other legal hurdles may delay approval of the new euro rules.
In Ireland, aspects of the deal are being put to the country’s attorney-general for a verdict on whether a referendum is required, but the Irish Europe Minister, Lucinda Creighton, has fed speculation by saying there is a 50/50 chance of a public vote. The government has said that a final decision on a referendum will not be made until March, once the text of the deal is agreed.
In the Netherlands, Prime Minister Mark Rutte has insisted that a referendum would not be needed. But with a highly EU-critical party as his partner in a coalition government and the opposition Labour party saying that new elections would be required if the deal amounts to a transfer of power to Brussels, Mr Rutte may face problems getting the deal through the Dutch Parliament. The country’s Socialist Party and the Greens have also called for a referendum.
In Austria, government officials have also indicated that the creation of a ‘fiscal union’ would require a referendum and, in Romania, while supporting the deal, President Traian Basescu has said that a new treaty would need a two-thirds majority in the Romanian parliament and approval in a public vote.
In Finland, Prime Minister Jyrki Katainen has dismissed any talk of problems in ratifying the deal. But the country’s constitutional committee has ruled that replacing unanimity by majority voting on the EU’s bailout funds would be unconstitutional, since it could result in a loss of parliamentary control over Finland’s financial contributions. An un-named Finnish official has said that it would be “impossible” for the government to negotiate this problem away.
Denmark’s new Prime Minister, Helle Thorning-Schmidt, has so far not commented on whether the deal would provoke a Danish referendum. However, leaders of the other two parties in her governing coalition have said that a vote might be needed. Crucial to a Danish decision may be the Red-Green Alliance, a key part of the governing coalition, which is a strong opponent of the EU’s “neo-liberal policies”.
Denmark rejected euro membership in a referendum back in September 2000, so moves to allow the EU to interfere in the country’s economic policy may be seen as a breach of this settlement.
In Latvia, the government has signed up to the ‘fiscal union’ deal, but many politicians have voiced a sense of betrayal over the imposition by the EU of strict economic austerity measures and cuts in EU structural funds. Raising the spectre of a referendum as a bargaining chip to win additional EU aid would only take the votes of 50 of the 100-member Latvian parliament.
Last but not least, the Czech Republic is home to Vaclav Klaus, the national President who caused the EU so much trouble over the bloc’s last treaty change, the Lisbon Treaty. While a referendum would not be automatically required on the changes, the strongly EU-critical President Klaus has the power at least to delay the law-making process by holding back his signature, which must be applied to all new legislation.
It looks like the EU could well be in for yet another lengthy period of introspection over its bid to create ‘fiscal union’. Even if the legal and political hurdles detailed above can all be overcome, the deal has already faced criticism for doing little to address the core underlying problems of the scale of debt and low growth that are at the heart of the economic hardship in several euro-zone economies.
The European Union’s last treaty change took eight years to be approved by all member countries. If the EU once again appears overly interested in its own institutional arrangements and in trying to extend its powers, calls in the UK and elsewhere for an EU referendum are only likely to grow.