EUROPEAN UNION : A PRE- CRISIS TREATY FOR A POST- CRISIS WORLD / THE FINANCIAL TIMES COMMENTARY & ANALYSIS ( RECOMMENDED READING )

A pre-crisis treaty for a post-crisis world

By Wolfgang Münchau

Published: September 13 2009 20:38

So what will happen if the Irish vote No in their second referendum on the Lisbon treaty on October 2? Would a No vote not produce a massive political crisis, both in the European Union and in Ireland? Might it not lead to a speculative attack against Irish government bonds, and raise the risk of outright default? Last year, after a first referendum produced an overwhelming No, I argued in a series of columns that a definite rejection of the treaty would effectively strike that country off the political and economic map.

I no longer believe that to be the case. If the Irish vote No, I now believe it will be the end of the treaty, not of Ireland. The presidents of Poland and the Czech Republic will suspend ratification processes indefinitely. The treaty will not come back the following year, or even in five years, not even in disguise, or with a different name.

The main reason for my change of mind has been the conduct of the EU during the financial crisis, and the narrow-minded reassertion of national sovereignty in macro- and microeconomic policy. If EU leaders do not have the strength and solidarity to treat economic crisis management as a common endeavour, they will not have the strength, let alone the unanimity, it would require to isolate Ireland. It has never been safer not to ratify a European treaty than it is now.

None of this would have mattered until recently, since almost everybody took it for granted that the Irish would vote Yes in their second referendum. Voting No twice in a row is a serious business, and nobody believed in their hearts and minds that the Irish were really all that serious about a treaty that most voters, including government ministers, have not even read.

But there seems to be a non-trivial chance that the No vote might prevail again. A recent Irish opinion poll suggested that the lead of the Yes campaign was melting, just as it did ahead of the first referendum. Another poll, at the weekend, produced a much more stable majority for the Yes campaign. I would still expect the Yes campaign to prevail, though this is not a done deal yet. What helps the treaty’s proponents is that the No campaign is not nearly as well-organised as it was last year. But then again, the government of Brian Cowen, the Irish taoiseach, is hugely unpopular, and voters often use referendums to express disapproval of an incumbent prime minister.

There is an intrinsic problem for the Yes campaign in Ireland, but also in other places, which is that the core of the treaty was negotiated seven years ago. This is a pre-crisis treaty for a post-crisis world. It addressed the fears and reflected the aspirations of a previous generation of politicians, who believed that the EU could overtake the US as the world’s leading economic power. If we had to reinvent the treaty from scratch, we would probably produce a very different text.

One of the treaty’s most significant changes is the strengthening of the rights of the European parliament. Would we still want to prioritise this today, in view of the steadily declining voter turn-out at European parliamentary elections? Consider, also, the sordid piece of political theatre playing out in Brussels. This Wednesday, the European parliament is scheduled to vote for the reappointment of José Manuel Barroso for a second term as European Commission president. On the latest count, he will probably win the ballot, even though he has no intrinsic majority. He seems to have wooed many of his critics with behind-the-scenes political promises.

This sort of activity was harshly criticised by Germany’s constitutional court in its recent ruling on the Lisbon treaty. In Brussels, everybody co-governs, some with more influence, some with less. The German justices argued that the chronic lack of an opposition suggests that the European parliament is not a proper parliament, merely an assembly.

The parliament’s behaviour raises the question of why one would want to ratify a treaty one of whose main effects would be to strengthen its powers. I am not opposed to this as such, because I still harbour the hope that a stronger parliament might behave differently. But a stronger parliament could be either more or less transparent.

Bearing in mind the EU’s main defects at present, such as its inability to co-ordinate during a crisis, its failure to enact policies to strengthen its potential growth, and its failure to project itself effectively at a global level, the treaty’s institutional and legal changes will offer little comfort.

I have been, and still am, an unenthusiastic supporter of the Lisbon treaty, because its institutional rules are more appropriate for an enlarged EU. But I, too, find the treaty increasingly hard to defend with a straight face. The Irish Yes campaign could once again find itself in a tight spot. It is not that easy to explain why this particular treaty is necessary when the real problems of the EU lie so obviously outside its scope.

Copyright The Financial Times Limited 2009