BRUSSELS — If there are two words that tense the jaws of European policy makers and prompt a concerned sucking of teeth, they are “treaty change.”
It is not unlike telling a nervous driver midroute that a different map is required to reach the destination: No one is sure whether the outcome will be road rage, a car crash or a smoother, if longer, journey.
So when the German finance minister, Wolfgang Schäuble, spoke his mind during a meeting in Dublin on April 13 and said a change to the E.U. treaty was necessary if Europe were to build a full banking union, there was more than a little angst in the corridors of Brussels.
In Mr. Schäuble’s view, a banking union — originally a three-step plan to create a single euro zone banking supervisor, a unified system for resolving problem banks and a single deposit-guarantee program — makes sense only if there are strict rules for restructuring and winding up failing banks.
Since those measures are not explicitly laid out in existing law, some changes would have to be made to the fundamental underpinning of the Union, he argued.
“If we want European institutions for that,” said Mr. Schäuble, a lawyer who measures his words carefully, “we will need a treaty change.”
As with all Schäublerian pronouncements over the past three years, the first question on the lips of policy makers was whether he was speaking just for himself, as he often does, or also for his boss, Chancellor Angela Merkel, and thus represented a new red line.
In this case, the answer remains unclear. Ms. Merkel has not expressed a definitive position on the issue, at least not in public. And senior officials in Brussels who have regular contact with Berlin say they do not know how to read the signals emanating from the chancellery.
But in a sign last week that Ms. Merkel has her doubts about where things are headed, especially as she seeks to win a third term in September elections, she ruled out the deposit-guarantee part of the banking plan “for now.”
That, in itself, was not a huge surprise.
The idea of a fund through which euro zone countries would effectively cross-guarantee one another’s deposits was always going to make Germany and other northern Europe countries queasy, as it could force them to bail out a string of shaky, highly indebted banking systems to the south.
But it was the first time Ms. Merkel had been so explicit. And it renewed doubts about her overall commitment to a banking union, which many see as the most important initiative Europe has undertaken to resolve the crisis.
So what does Germany want? Is it really seeking treaty change, or is Mr. Schäuble just bringing up the idea to stall a banking union? And if Germany were to get a treaty change, would it suddenly like a banking union more?
When quizzed, hesitant policy makers in Brussels — after clenching their jaws and sucking their teeth — shrug. They wish they knew what Germany really wanted.
But they are more certain of two things: German elections are coming up, and Germany’s constitutional court will probably have to be consulted on the details of a banking union, especially on the single set of procedures for wrapping up failed banks.
“Germany has always had cold feet about banking union,” said one E.U. official, convinced that Berlin was determined to stall until after the Sept. 22 vote, if not long beyond.
Yet the reason the words “treaty change” cause so much consternation is not so much connected with a banking union itself. It is about the interplay of member states and the very real risk that a minor opening of the treaty could lead to a full-scale renegotiation of all 27 nations’ ties to the Union — the dreaded opening of a Pandora’s Box.
The European Commission has said it is “100 percent sure” that it has the legal grounds to implement a banking union without changing the treaty.
But if Germany is convinced otherwise and other member states follow its lead, it may be impossible to move ahead without tinkering with the fundamental law, a trying and cumbersome process that depending on how it is done, can take 18 months or more.
That immediately raises questions of timing.
With Germany in election mode until September, no serious discussions on either banking union or treaty change will take place until the end of the year, at the earliest.
But the next round of European Parliament elections will be in May 2014, and the European Commission and European Council will be reappointed only a few months later, making it all but impossible to make progress on any substantive issue until the new leadership is in place.
That moves the debate into early 2015, which puts the matter in close proximity to the next British election, expected in the spring of that year.
Prime Minister David Cameron wants to renegotiate Britain’s relationship with the Union. And he has promised voters a referendum on Britain’s membership in the European Union. That promise is already causing consternation from Berlin to Budapest.
Mr. Cameron’s call to “renegotiate” is another way of saying “treaty change.” But what the British prime minister wants from an altered treaty is very different from what is sought by Germany, let alone France, Italy, Poland or the Netherlands, most of whom are deeply ambivalent about the issue.
Mr. Schäuble knows that. And so while his reference to treaty change in Ireland may genuinely have been about laying the proper legal groundwork for the future of a banking union, it is equally likely that it was a good way of kicking up a storm that delays a banking union until well after the September election and perhaps even longer.
No wonder officials in Brussels are clenching their jaws.
Article source: http://www.nytimes.com/2013/04/30/business/global/30iht-inside30.html?partner=rss&emc=rss