What is the Future of Europe in the light of this economic crisis?

On the way out? Image credit: Will Spaetzel

This was the question that Professor Steve Peers addressed at his talk on the 9th of November at the monthly Isel meetings organized by City Law School.

In his very complete account of the current situation he envisaged several possible scenarios to happen in the near future. Leaving aside the most improbable, that is that nothing will happen and that the Eurozone will carry on with its current Member States and its current law rules, he foresaw other possible scenarios such as the introduction of Treaty amendments, the utilization by Member States of alternative forms of collaboration or, as many already feel, the total collapse of the Euro and of the European Union.

As far as the first hypothesis is concerned, he envisaged, among the possible Treaty amendments, some possible and very important ones. The first one could be the creation of a special Commissioner that would take the responsibility of checking that the Stability Pact (the agreement signed by the 27 Member States in order to facilitate and maintain the stability of the Economic and Monetary Union) is fully respected. The second would be the possible use of an infringement procedure to the Court of Justice in case a state meets an excessive level of deficit. In simple terms, with the introduction of an infringement procedure, then it would be possible for the Commission to sue a Member State for having an excessive deficit. These two possible reforms, that in actual fact have already been suggested by Germany, could trigger a deeper sense of responsibility and every Member State would feel more controlled and certainly more committed to do a “good job” with its finance.

Finally, recently some politicians have also proposed the possibility of forcing some economically struggling Member States to leave the Euro. However, this hypothesis is currently not possible. According to Art. 50 TfEU, every Member State that wants to leave the Euro has to leave the EU. It is not possible for a state to decide to leave the Euro but, on the other side, to remain in the EU anyway. In simple terms, if it is possible for every Member State to decide to leave the EU and therefore to leave the Euro, on the other hand there are no legal provisions that can practically force a state to leave. In other words, it is up to the single state to decide whether or not to remain and nobody can impose this duty on it. In order to be able to force a Member State to leave the Euro another Treaty amendment would be necessary.

What would the position of the UK be in the light of these possible changes? Changes to the Treaty would in principle trigger a requirement for a referendum under UK law. However, changes to EU monetary provisions do not in principle call for a referendum, as the UK opted out from the monetary policy. Nevertheless, the UK could always be entitled to call a referendum anyway, maybe to clarify the scope of the UK’s Monetary Union opt out and even to consider the UK’s participation in the EU more generally, granting it opt-outs over other areas of EU policies (criminal law for instance) and perhaps creating a new form of collaboration between the EU and the UK.

Coming back to a more general European backdrop, Professor Peers envisaged another possible alternative approach: trying to regulate the economic relationship of some of the Euro Member States through enhanced cooperation agreements, given that these agreements do not breach the Treaty of Lisbon. This approach, although possible, might sound to someone, especially to states from the Southern part of Europe, quite elitarian, given the fact that it is likely that these enhanced cooperation agreements might happen among European states that have a stronger economic settlement, leaving aside those that are in major economic difficulties.

And what if all these attempts fail?

The last drastic scenario would be the collapse of the EU. If this is really what is going to happen why are we studying EU law for…or even doing PHDs on it like myself? No worries students, apparently this is a very unlikely scenario. The collapse of the European Union would mean the failure of the Common Market and of years and years of projects on collaboration and integration. Europe knows that this is a too high price to be paid. However, although officially changes are still hypothetical and nothing is confirmed yet, it is likely that the Treaty of Lisbon, after just two years from its enforcement, will change…and will change quite drastically.