The EU’s press release says the change to the Treaty of European Union is an amendment to Article 136, adding:
“The Member states whose currency is the Euro may establish a stability mechanism to be activated if indispensable to safeguard the stability of the Euro area as a whole. The granting of any required assistance under the mechanism will be made subject to strict conditionality.”
We are told this does not change the current powers of the EU so it should not need referenda. In the Uk we are told we will not get a referendum because the amendment does not apply to the UK.
If it does not change the powers of the EU at all it is difficult to see why it is needed. If it is needed, it implies that there is insufficient legal clarity behind the current use of Clause 122 to support the exisiting stabilisation fund.
We are told it should come into effect at the beginning of 2013, giving member states two years to put it through their legislatures. This is also curious, as they could ratify it in a matter of weeks if it is as simple as the EU says and does not need a referendum anywhere.
It means that for the likely duration of the current Euro crisis any further bail outs will have to rest on the existing Treaty base. If Germany is right to be worried about possible legal challenge, there will be plenty of opportunity to do so before this comes into effect.
The EU thinks it will take them a further six months to turn the Treaty Clause as amended into a working bail out mechanism, even though it could be based on the present one.
The EU has also pledged to press home more quickly with the five Regulations and a Directive to strengthen common economic governance.
The question of whether they should immediately enlarge the current arrangements was left over for Finance Ministers at a later meeting. There was no press release to say how they would handle the banking problems or respond to any crisis between now and 2013. That is what some of us want to know. All this looks like too little too late for the Euro area. I just hope the UK has clear language to underwrite our position well outside all these bail outs and problems.