Eurozone ‘outs’ and the ironic need for ‘more Europe’ (of a particular kind)

Prof. Peter Lindseth

With the economic and political incoherence of the Euro experiment becoming ever more obvious day-by-day, ironies and unexpected twists abound. Even Germany’s ‘sacred union with France’ is under deep strain, which is ironic to say the least, given how much Franco-German unilateralism has defined responses to the crisis so far.  As Le Monde reports (alas, sub. req.), irritation with ‘Merkozy’ seems definitely on the rise among other members of the Eurozone, particularly the debtor countries, unsurprisingly.  And as David Miliband noted it in a comment in the FT this week, David Cameron is now ironically calling ‘on the European Commission – the embodiment of “Brussels” bureaucracy and elitism that his government loves to hate – to prevent the 17 countries of the eurozone running the EU show in their own interests.’

Reports now suggest that the UK is negotiating to protect itself and other Eurozone ‘outs’ against a ‘union with the union’—i.e., the Eurozone within the broader EU—with its guaranteed qualified-majority under the Lisbon voting rules coming into effect in 2014.  There is also talk now of resurrecting some version of the ‘Ioannina compromise’, the pale 1990s version of the old ‘Luxembourg compromise’, to allow minority members to block decisions coming from a French- and German-dominated Eurozone that nevertheless affect the EU as a whole.

But the irony goes even deeper:  Eurozone ‘outs’ like the UK will need not merely the Commission but also the CJEU to ensure enforcement of any new voting protections for non-Eurozone members as well as to protect the integrity of the single market against Eurozone over-reaching (on this latter point, the CJEU would be especially critical).  As Charlemagne put it in a column in this week’s Economist, the purpose of such new responsibilities for EU institutions would be to prevent ‘the sort of two-speed Europe now openly advocated by France. More Europe should not mean more Sarkozy and less single market’.

Will the CJEU be willing to play this role?  Will it be prepared to use supranational power to protect continuing national prerogatives in the integration process?  From its subsidiarity case-law (see, e.g., Case C-233/94, Germany v. Parliament and Council, 1997 E.C.R. I-2405 (Deposit-Guarantee Schemes); or Case C-491/01, R. v. Secretary of State ex parte BAT and Imperial Tobacco, 2002 E.C.R. I-11543), to its treatment of disputes over legal basis (most notoriously for the UK, Case C-84/94, United Kingdom v. Council, 1996 E.C.R. I-5755 (Working Time Directive)), or even to its efforts in the deeper past to restrict the use of national vetoes before the advent of qualified-majority voting (see Case 804/79, Commission v. United Kingdom, 1981 E.C.R. 1045 (Sea Fisheries)), the track record of the Court of Justice in this regard might not inspire confidence.

But a more recent opinion (Opinion 1/09, European and Community Patents Court, 2011 E.C.R. (not yet published)) articulates a principle—albeit in defense of the Court’s own prerogatives—that could be relevant here.  If a group of member states takes action outside the confines of the existing treaties that ‘would alter the essential character of the powers which the Treaties confer on the institutions of the European Union and on the Member States and which are indispensable to the preservation of the very nature of European Union law’ (para.89), the Court has shown it is willing to find such actions incompatible with EU law.

Would the CJEU be prepared to mobilize that principle in defense of national prerogatives under the existing EU treaties in the face of efforts by Eurozone members to create a ‘union within a union’? Would Eurozone ‘ins’ be prepared to ignore the CJEU on this question?  It is a legally and politically complex question that I cannot answer here.

But it is nevertheless a question that the Court may be forced to address if some of the more aggressive plans for a ‘two-speed Europe’ come to fruition. For example, Jean-Claude Piris, former head of the Council’s legal service, has recently argued in favor of the Eurozone stepping outside the existing treaties to establish its own institutional framework. Piris says that any new framework would remain ‘[u]nder the control of the EU court of justice, [and that] participating states would continue to be bound by EU law, including on the single market. They would also be obliged not to harm the rights and interests of other EU members.’

Perhaps.  But the proposal would put the CJEU squarely on the spot.  And a redesign of the EU on this basis would involve considerable risks for Eurozone ‘outs’, most importantly the UK, which would find itself at the mercy of the CJEU in defense of the single market and minority voting-protections against Eurozone incursions or over-reaching.  If the UK is not prepared to place its faith solely in the CJEU here, then, as I’ve argued many times before, it may be time to give serious consideration to a ‘European Conflicts Tribunal’ staffed by national high-court judges, to police the actions of the CJEU on these critical questions.  More on that idea at a later date.

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