Q+A-What lies behind Germany’s push to change EU treaty?

By Luke Baker

BRUSSELS, Oct 22 (BestGrowthStock) – Germany is pushing for changes
in the European Union’s fundamental framework — the Lisbon
treaty — to set up a permanent system for handling financial
crises such as a sovereign debt default.

Following a deal struck in the French town of Deauville on
Monday, Paris supports the initiative, meaning the two biggest
and most influential EU states back the idea.

But others in the 27-country EU are sceptical about changing
a document that took nearly a decade to negotiate and bring into
law, and caused deep internal debate in the process.

Here are some questions and answers on the idea:

WHY DOES GERMANY WANT TO CHANGE THE TREATY?

When the Greek debt crisis exploded early this year and
threatened to spread to other euro zone member states, the EU
scrambled to come up with a way to handle the situation. The
result was a crisis mechanism called the European Financial
Stability Fund, a 500-billion-euro safety net put together in
May this year with IMF help.
Germany was reluctant to set up the EFSF and remains
uncomfortable about it, in large part because it comes
dangerously close to violating a clause in the Lisbon treaty
against financial bailouts, is taxpayer funded, and has led to
legal challenges in Germany’s highest court.

The EFSF will expire in 2013. Germany wants to have a
more-structured, permanent crisis resolution mechanism in place
after that. To do so, and to ensure it is legally sound, the
Lisbon treaty would have to be changed.

WHAT DO OTHER EU MEMBER STATES THINK?

While France has indicated it will back Germany in pushing
for changes to the treaty, most of the remaining 25 EU member
states are thought to be wary of such a move.

In many countries, such as Ireland, Britain, the Netherlands
and the Czech Republic, it took a lot of political will and
years of handwringing to win approval for the Lisbon treaty,
which like all EU treaties had to be unanimously backed by
member states and approved by parliament or by referendum.

Reopening the treaty to make changes would again prove
divisive and politically dangerous. In countries such as
Ireland, which is going through its own Greek-style debt and
deficit crisis, there is almost no appetite for such a move.

However, signs are emerging that there may be more support
for the idea than originally thought.

For example, Britain has indicated that it could support a
change as long as any alterations pertain only to the 16
countries in the EU that use the euro. If that is the case, it
would not mean any transfer of power from Britain to Brussels
and therefore the move could be approved by parliament without
the need to go to the nation for a referendum.

However, ordinary Conservative members of the British
parliament are highly sensitive to any sense that the EU is
interfering with British affairs and are likely to oppose treaty
change, potentially destabilising the Conservative coalition
with the centre-left Liberal Democrats.

In several other member states, such as Finland, Slovakia,
Spain and Sweden, there is a sense that while governments would
prefer not to change the Lisbon treaty, it may be the only way
to guarantee a permanent crisis mechanism and stave off the
threat of another Greek-style meltdown.

WHAT ARE THE NEXT STEPS?

EU leaders will meet in Brussels on Oct. 28-29 for a summit
at which they are expected to debate the treaty change issue. If
they agree, they could give Herman Van Rompuy, the president of
the European Council, a mandate to explore the issue further. In
a statement made after their Deauville deal, France and Germany
said they would like to have concrete proposals on treaty change
prepared before an EU leaders’ summit in March 2011.

EU sources have told Reuters that Van Rompuy has already
held extensive discussions with EU leaders about the issue and
appointed the leader of a treaty change team even before he
secures a mandate — a sign he is confident of getting one.

WHAT ARE THE RISKS IF COUNTRIES AGREE TO CHANGE THE TREATY?

The biggest risk is that once the treaty is in play, every
EU member state steps forward with its own proposal for changes
— the Pandora’s Box scenario. This would risk unravelling the
document that is supposed to hold the EU and its institutions
together. The key is for any treaty change to be tightly and
carefully defined, so that one tweak — which in the Germany
case could potentially be the addition of just one or two
clauses — does not lead to a destructive free-for-all.

WHAT HAPPENS IF CHANGES ARE MADE TO THE TREATY?

If — and it’s a big if that has to negotiate a great number
of hurdles first — there is backing for treaty change and
changes are made, they would have to be approved unanimously by
all 27 member states and then ratified by each country, in some
cases in a referendum. That process could take many months. In
the case of the Lisbon treaty, it took two years between the
signing of the treaty in the Portguese capital on Dec. 13, 2007,
and its entering into force on Dec. 1, 2009, after all member
states had ratified it.

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Q+A-What lies behind Germany’s push to change EU treaty?