EU veers from treaty change for all states

2011-11-29 19:29

Brussels - The European Union is veering away from attempts to change the treaty binding its members to provide a lasting response to the debt crisis, diplomats said on Tuesday.

Leaders from the 27 EU states will gather on December 8-9 to examine proposals on integrating eurozone economies setting new rules covering national budgets, controls aimed at avoiding asset bubbles and strict sanctions to ensure enforcement.

But heavy concessions that Britain would need to push a new treaty through parliament, far less win a referendum were one required, mean treaty change can only realistically happen among the 17 eurozone states at best, the diplomats now say.

"If forced to have a referendum in Britain on a full 27 treaty among the 27 states, let's face it, it would be very difficult to win," one diplomat said

The option of doing a deal purely for the eurozone "appeals to the Germans as they avoid the British asking questions, likewise the European Parliament and the European Commission," the EU's day-to-day executive, the diplomat said.

"At the end of the day, the Germans are in control of this," he said.

British sources say the government in London would make demands on four fronts, and that even a eurozone-only treaty would still raise questions among rising eurosceptic voices within Prime Minister David Cameron's Conservative party.

The most important demands would be for "no caucusing," another EU source said, meaning decisions taken in the interests of the single currency area that then impact on the 27, notably via distortion of the single market across the 27 EU states.

Britain could also be expected to demand a repatriation of certain powers concerning EU employment and social law, while London would also want to ring-fence its financial services sector from meaningful Brussels control.

The diplomatic source said Britain's preferred choice, "on balance," would be for a treaty change covering all 27 states.

However, the sort of "inter-governmental agreements" French President Nicolas Sarkozy raised as an alternative last week may actually be the only way to be sure that London will not open a Pandora's Box, as the type of integration envisaged involves "a substantial transfer of sovereignty to the centre", he added.

France and Germany are already planning to harmonise corporation tax, and other northern eurozone countries could also join such voluntary changes, with Britain "not worried" about this sort of approach, the diplomat said.