It wouldn’t be Nice if the Irish had voted for Lisbon

The voters of the Republic of Ireland have rejected the Lisbon Treaty (officially the Treaty of Lisbon amending the Treaty on European Union and the Treaty establishing the European Community) in the referendum held on June 12. According to the rules of the EU, as found in the Nice Treaty, this means that the Lisbon Treaty cannot come into effect, as the unanimous ratification of the Treaty by all EU member states is required for this.

No point moaning that 4 million Irish cannot be permitted to thwart the will of 490 million other Europeans. That argument is bogus and dangerous, even if the 8 remaining EU member states that have not yet reached a formal decision on the Lisbon Treaty were to ratify it – something that is by no means a done deal. The rules for ratification of the Treaty were clear. To change the rules when you are losing is a violation of the rule of law. Respect for the rule of law is even more important than the fate of the Lisbon Treaty.

The Lisbon Treaty had all the charm and appeal of the Manhattan Yellow Pages: the Consolidated versions of the Treaty on European Union and the Treaty on the Functioning of the
European Union
, plus Protocols, Annexes and Declarations runs to 392 pages. Trying to read it is like having root canal work done without the benefit of novocaine. Nevertheless, I regret its demise. I am a European federalist, and the Treaty of Lisbon would have represented a small further step towards a federal Europe. Now that process has suffered a setback and precious years will be lost in the swamp of European nation state irrelevance.

It is, however, important that the death of the Lisbon Treaty is acknowledged in Brussels and in the national capitals that favoured the Treaty. Trying to achieve a resurrection of Lazarus for the Lisbon Treaty by telling the Irish people: “keep on voting till you get it right”, would be both contemptible and counterproductive. This tactic worked once, when the Irish voters rejected the Nice Treaty in May 2001, held another referendum in October 2002 and passed the Treaty on that occasion. It will not work again. If it were to be attempted, I am certain that many of those who did not vote this time, and quite a few of those who voted in support of the Treaty, would want to hold up two fingers in the direction of the would-be bullies of Brussels, Paris and other corners of the continent.

When the European Constitution (officially the Treaty establishing a Constitution for Europe) was rejected in referenda in France and the Netherlands in 2005, plan B was to bury the Constitution pro forma, but to resurrect it without substantive modifications as the Lisbon Treaty (that, incidentally, is why the UK should have had a referendum on the Lisbon Treaty, and ought to have one even now – the government had promised a referendum on the European Constitution; reneging on that commitment after changing the name of the Treaty but nothing of substance, is dishonourable). Plan B has now back-fired. Both the form and the substance of the European Constitution are now dead. There is no plan B for the Lisbon Treaty (or plan C for the Constitution).

So what will happen? The EU will muddle on with the Nice Treaty. It has not led to gridlock thus far. It will not lead to gridlock in the future. Certainly, many of its institutional arrangements and decision-making bodies and procedures are ill-designed for an EU of 27 members.

I am sure love will find a way. There will be informal institutional adaptations and a proliferation of constitutional ‘common law’, born out of practice. The UK has evolved its largely unwritten constitution in exactly this manner. We have already seen it with the Eurogroup, the ministers of finance of the 15 full EMU members, which has taken over most of the power and many of the functions of Ecofin, the ministers of finance of the 27 EU members. There is no mention of the Eurogroup in any of the Treaties. The Lisbon Treaty would have been the first to officially recognise its existence. But it exists and it works. There will be many more such informal developments as the written Treaty arrangements and institutions become intolerable constraints on desirable actions an policies.

There will be a further impetus given to a multi-speed Europe (where every member state arrives at the same destination eventually, but not necessarily at the same time) and even to Europe-à-la-carte (where there may be permanent differences in the degree of integration along some dimensions). Of course already have a multi-speed Europe. Only 15 of the 27 EU members are also full members of the EMU. The rest have derogations from or, in the case of the UK and Denmark, opt-outs from the requirement to progress to the third stage for achieving economic and monetary union (to adopt the euro and join the Eurosystem). Indeed, with the opt-outs from stage 3 of EMU for the UK and Denmark, we already have a potential Europe-à-la-carte in the existing EU. Only 13 EU member states (plus Norway and Iceland) are part of the Schengen arrangement.

Enhanced cooperation

It is possible that a greater recourse to multi-speed Europe will be achieved through the enhanced cooperation arrangements. The Treaty of Amsterdam first brought the “enhanced cooperation” concept into the Treaty on European Union (in connection with regards judicial cooperation on criminal matters) and into the Treaty establishing the European Community (under the EC Treaty the initiative for enhanced cooperation is taken by the Commission at the request of the member states concerned; under the EU Treaty the initiative comes from the member states). In either case, enhanced cooperation is subject to a decision of the Council, acting by a qualified majority.

The Treaty of Nice introduced major changes. In particular, a Member State may not oppose the establishment of enhanced cooperation (except in the area of foreign policy). This matters because it removes the national veto over the enhanced cooperation proposals of other member states . Does this mean that if, say, 26 member states were to ratify the Lisbon Treaty, but Ireland did not, they could simply adopt the Lisbon Treaty for themselves and leave Ireland to potter along with the Nice Treaty?

If it ever were to come to that, the issue would no doubt end up in the European Court of Justice. I am not a lawyer, fortunately, but it seems unlikely that proceeding to create an EU of 26 countries under the Lisbon Treaty under the enhanced cooperation cloak would be compatible with the existing (Nice) Treaty. It also would not be Nice. According to the existing Treaties, enhanced cooperation may not constitute discrimination between the participating states and the other(s). Enhanced cooperation has to respect the single institutional framework of the Union. In addition, the actions and decisions taken under enhanced cooperation cannot become part of the EU acquis itself. (Less relevant, for the issue under consideration, is that enhanced cooperation must further the (Nice) Treaty objectives, must respect the whole of the acquis communautaire and the powers of the various parties, and may not apply to an area that falls within the exclusive competence of the Community).

There are further constraints on using the threat of enhanced cooperation by the member states that ratify the Lisbon Treaty as a stick to beat Ireland with. Enhanced cooperation does not allow extension of the powers as laid down by the existing Treaties. The general arrangements for enhanced cooperation require at least eight member states to be involved in enhanced cooperation (the arrangement must also remain open to any member state that wishes to participate). Also, while enhanced cooperation may involve the areas of the common foreign and security policy (CFSP), it cannot touch on military or defence matters, so the 26 could do nothing to threaten Ireland’s neutrality.

So the EU will muddle on, until events, dear boy, events will make it clear even to the most dedicated eurosceptic that there are a number of policy areas that can no longer be managed effectively even by the largest EU member state at the national level. For some of these, intergovernmentalism may suffice. Most, I would argue, require a supranational solution. For the UK and the other European nation states, the EU is the only currently available supranational solution framework.

The policy areas that will have to be transferred to the EU level include foreign policy, defence, immigration, environmental policy addressing border-crossing externalities like global warming, energy security, monetary policy, financial regulation (a common framework and, for financial institutions with significant cross-border activities, a single regulator/supervisor), and policies towards tax havens and regulatory havens. No doubt I have left out a few.

The logic of border-crossing externalities and border-crossing economies of scale for the above-mentioned policy areas is so blatantly obvious, that even the English will eventually recognise it – the rest of the British do already. Perhaps not in my time. But here’s hoping!

Maverecon: Willem Buiter

Willem Buiter's blog ran until December 2009. This blog is no longer active but it remains open as an archive.

Professor of European Political Economy, London School of Economics and Political Science; former chief economist of the EBRD, former external member of the MPC; adviser to international organisations, governments, central banks and private financial institutions.

Willem Buiter's website