The Constitutional Treaty is Dead: Whats Next

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The Constitutional Treaty is DeadWhats Next?

• Richard E. Baldwin Professor of International
  Economics, Graduate Institute of International
  Studies, Geneva
• Columbia Law, 12 September 2005

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The Headlines

• French Dutch voted no this summer.
• French and Dutch are founding members, solid
  supporters of the European ideal.
• 29 million French voters cast ballots with 15.5
  million saying no.
• Netherlands, the 61.5 no-vote meant 4.7 million
  Dutch rejected the Treaty.
• EU leaders agreed to suspend the ratification
  process,
• deadline of November 2006 erased, so no deadline.

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Is the CT Dead?

• Case for defence (i.e. no its not dead)
• Danish said no to Maastricht Irish said no to
  Nice
• ERGO, EU leaders can fix this one too.

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Case for prosecution (i.e. its dead)

• French Dutch nos very different to Danish and
  Irish nos.
• Irish no on the Nice Treaty
• Very low turnout (35)
• Only 529,4768 said no.
• No votes minus yes votes 76,017 votes.
• The causes of the Irish nos was fairly
  specific, or at least the objections of
  identifiable swing voters were known.
• Reassurances on neutrality from EU and more
  election spending by govt was enough to reverse
  vote after Irish were isolated.
• Danish no to Maastricht
• High turnout (83)
• Outcome VERY close, 50.7 said no.
• No votes minus yes votes 46,269 votes.
• Again easily identifiable swing voters
• EU reassurances on possibility of opt out of
  euro (which now de facto extends to all members)
  was sufficient.

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Case for prosecution (i.e. its dead)

• 20 million Dutch and French voted no
• Healthy turnouts
• Very energetic campaigning for yes
• Causes of the no extremely diffuse
  ill-defined
• Seemed to be a general reaction rather than a
  specific objections.
• Not easy to identify swing voters who could be
  assuaged.
• Attempts to cajole voters could backfire in a
  disastrous way.
• Current and likely future French governments will
  not want another fight with the voters.
• Wont risk adopting the Treaty despite the
  plebiscites.
• Trust me, its dead.

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How did we get here?

• Since 1994, Eastern enlargement of EU was
  inevitable so EU institutional reform required.
• Ten years of failed efforts Amsterdam 1997, Nice
  2000.
• Endpoint
• EU leaders accepted the Constitutional Treaty
  June 2004.
• Rejected by French and Dutch in Summer 2005.
• History of this critical to understanding whats
  next.

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Amsterdam Nice Failures

• 1996 IGC was supposed to reform EU institutions
  in preparation for enlargement
• Amsterdam Treaty failed ? Amsterdam leftovers
• 1. Council voting (QMV), 2. Commission
  composition, 3. Extension of QMV to more areas.
• 2000 IGC was supposed to finish the leftovers.
• Nice Treaty failed ? Nice leftovers.
• Nice Treaty Council voting system will not work,
  Commission not settled, little extension of QMV.

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Nice leftovers

• EU leaders knew that Nice Treaty left out a
  number of important issues.
• Nice Treaty includes Declaration on the future
  of the Union. highlighted four themes
• defining a more precise division of powers
  between the EU and its members
• clarifying the status of the Charter of
  Fundamental Rights proclaimed in Nice
• making the Treaties easier to understand without
  changing their meaning
• defining the role of national parliaments in the
  European institutions.
• NB no mention of a Constitution.

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Laeken Declaration

• 1 yr after Nice, Laeken Declaration Declaration
  on the Future of the European Union This
• Established the Convention on Future of Europe
• 56 questions for the Convention grouped into the
  main themes of the Nice Declaration.
• Two crucial novelties.
• FIRST. The Declaration implicitly admits that the
  Nice reforms were insufficient by asking how we
  can improve the efficiency of decision-making and
  the workings of the institutions in a Union of
  some thirty Member States despite the fact
  that this was the main goal of Nice Treaty
• i.e. asked the Convention to consider reforms of
  the Nice Treaty reforms, even before the Nice
  reforms were implemented (most Nice Treaty
  changes took effect only with the Eastern
  enlargement).

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Laeken Declaration

• SECOND. The C-word does appear in the Laeken
  Declaration, BUT, did not instruct the Convention
  to write a constitution,
• includes a section entitled Towards a
  Constitution for European citizens.
• in the context of simplification theme The
  question ultimately arises as to whether this
  simplification and reorganisation might not lead
  in the long run to the adoption of a
  constitutional text in the Union. What might the
  basic features of such a constitution be? The
  values which the Union cherishes, the fundamental
  rights and obligations of its citizens, the
  relationship between Member States in the Union?
  

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EU reform history

• Giscard dEstaing turned a vague mandate into a
  Constitutional Treaty.
• Wildly undemocratic procedure Consensus with
  Giscard as sole arbitrator.
• George Tsebelis (UCLA political scientist)
• Giscard expanded the authority of the
  Convention, and shaped the document that it
  produced. By eliminating votes, he enabled the
  presidium and the secretariat (which means
  himself) to summarize the debates. By stretching
  the concept of agenda in order to place issues in
  the debate, by using time limits in as a way of
  limiting possible opponents from making
  proposals, by selecting the staff members
  himself, and taking them away from every possible
  source of opposition he was able to shape the
  document in a very efficient way. This is one
  of the reasons that the process is encountering
  significant problems for ratification. (Tsebelis
  2005).

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Summary of CT

• Legal logic implies no real constitution possible
• Maintain all at primary level.
• Federalist wanted to make it conceivable that EU
  would continue to deepen
• Passerelle flexibility clauses (Treaty revision
  without a new Treaty)
• Removal of the 3-pillar structure.
• Inclusion of the Social Charter in the
  Constitution Fundamental rights
• Name could be important to the Court in future.
• Pillar removal Fundamental rights thin edge
  of the social policy wedge
• Right to leave.

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Summary of CT

• Euro-skeptics wanted to ensure European
  integration would not procede unless unanimous
  support.
• Blairs redlines
• Right to leave the EU.
• Very awkward balance, but on the whole the CT at
  least keeps the door open to deeper integration
  via a modified Community Appproach
  Commission/Court dynamo but with Council having
  more control.

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Summary of CT

• The articles in the Constitution fall into three
  groups
• i) Non-changes
• ii) Non-laws greater advisory role of national
  parliaments on subsidiarity, creation of the
  Council President and modifications of the
  rotating Presidency, creation of Mr Foreign
  Policy and reorganisation of EU foreign policy
  and the possibility of popular initiatives
• iii) Major legal changes
• the new voting rules,
• Commission size allocation
• the Social Charter,
• removal of the pillar system
• New ways to modify the Treaty bypassing national
  ratification. (Passerelle clauses)

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Summary of CT

• Many changes possible without Treaty revision
• EU has long experience with this.
• Not possible
• Social Charter
• Removal of pillars
• Passerelle
• Voting
• Commission

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Key points

• 1. EU leaders never asked for a Constitution
• 2. The Council voting rules from Nice were so bad
  that EU leaders agreed to reform them even before
  they had been tried.
• Treaty of Nice voting rules are still in place.
• Giscard created an extremely ad hoc coalition
  behind the CT
• Hard to explain what it was about.
• Not easy to reassemble the coalition.
• CEECs were second class citizens at the
  Convention not involved in setting the Agenda
  (Laeken Decl.)

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IMHO

• No way to renegotiate the CT.
• Will not allow another Giscard to control the
  agenda.
• Much wider differences among EU25 than EU15.
• The new member states likely to link CAP
  Structural Funds to any new CT negotiations.

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What must be done?

• Voting rules still need to be fixed.
• Need big detour to explain why

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Nice Treaty Voting Rules

• 3 main changes for Council of Ministers
• Maintained weighted voting in place since 1958
• Majority threshold raised
• Votes reweighted, favouring large members
• Added 2 new majority criteria
• Population (62) and members (50)

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Efficiency

• A quantitative measure of decision-making
  efficiency, or ability to act
• Passage probability
• Look at all possible coalitions of yes no
  (134 million in EU27)
• Calculate the share of these that wins given
  specific rules and distribution of voting weights.

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Nice Voting Rules Wont Work
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Examples
EU27-population threshold
(millions of citizens)
Council-votes
threshold
Number-of-Members
threshold
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Political difficulties power measures

• Formal power measures
• Power probability of making or breaking a
  winning coalition

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Political difficulties Winners Losers
Poland Spain Italy France UK Germany
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Political difficulties Winners Losers
Germany
Poland Spain
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Whats next?

• Need to fix voting rules need a new Treaty to
  do that.
• No new CT likely.
• Could do it in the Accession Treaties (RO BG ?)
• Could be part of a Grand Bargain with new
  Member States.
• My guess
• Years of decision-making deadlock before voting
  reform.

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Provocative part of the talk

• New members competition for budget
• EU budget 80 on farms and poor regions
• New members have lots of farmers and poor regions
• 1/3 as rich as EU15 average
• 3 times more agrian
• Newcomers have much power in Council.
• They will probably push for more SF and less CAP
  (at least in post 2013 budgets)

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Solutions

• More quick fix reforms?
• Radical re-think
• EU does 2 types of things
• Positive sum e.g. Integration, coordination
• All members can win
• Zero sum e.g. Budget
• One members gain is anothers loss.

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Concentrate on the positive

• Decision-making on positive sum issues is much
  easier
• Why not eliminate zero-sum decisions?

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My proposal

• Nationalise Common Agricultural Policy (CAP)
• Turn Structural Spending into project funding

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Nationalise the CAP

• CAP spending not solidarity based
• 0.6 of EU citizens receive 40 of EU budget
• Rich, northern farmers get most of the money

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Nationalise the CAP

• Agriculture is not common
• Arctic tundra to Carnary Islands to Agean Sea
• Nations have right to transfer income among
  society groups.
• Why channel this through EU budget when this
  causes conflict?
• Switzerland and Norway provide HIGHER support to
  their farmers, without the CAP

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Nationalise the CAP

• De-link production and subsidies
• Apply appropriately modified Single Market rules.
• Let national preferences decide

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Structural spending as Project financing

• Structural spending is not solidarity based
• What is idea of structural spending?
• Charity? or Venture Capital?
• If Charity should be income tested
• If Venture Capital should have project evaluation

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Structural spending as Project financing

• Charity is not the way forward
• too many poor entrants donor fatigue
• Project financing, World Bank-style
• Automatically limits spending
• 1 or 2 of GDP is typical
• Greatly reduces political conflict in EU
• Money more efficiency spent
• Bigger impact on real convergence

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My proposal

• Reduce EU budget by 50 to 80
• Reduce national contributions by same
• Nationalise CAP
• Structural Spending as Project Funding
• Return EU to its original mission of building an
  ever closer Union

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Further out on the limb

• EU institutions budget will be reformed to
  deal with new members (poor, agrian populous)
• Whatever these are, theyll make further
  enlargement easier
• SO, the EU will continue to enlarge
• Become the Single Market Clubs within the Club

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End
Thank you for listening www.hei.unige.ch/baldwin/