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Home , Treaty of Lisbon, Treaty of Nice

The of Amendments to the EU and Their Consequences for EMU

Sylvia Gloggnitzer1 The is the EU’s new legal framework. The EU heads of state or government have agreed on a new EU treaty conceived to ensure that the enlarged EU consisting of 27 Member States functions more efficiently than under the , which is currently in place. The Treaty of Lisbon was signed by EU heads of state or government on , 2007, in Lisbon. The Treaty of Lisbon is to replace the EU Constitutional Treaty rejected in national in and the ; it has retained large parts of the constitutional treaty’s substance. First and foremost, the new EU treaty represents a reform that introduces increased majority voting, a clear delimitation of EU competences and a changed institutional framework for EU institutions. Other than the general institutional changes, elements of the Treaty of Lisbon rele- vant to Economic and Monetary Union (EMU) include, above all, the introduction of price stability to the new treaty’s list of objectives, the institutional status of the ECB and the protection of its independence as well as the strengthening of the . The condi- tions for EMU set out in the Treaty of Maastricht are now reinforced politically in the Treaty of Lisbon. For the EU’s new legal basis to enter into force on January 1, 2009, as scheduled, the Treaty of Lisbon needs to be ratified by all 27 Member States prior to the elections to the in 2009.

JEL classification: A12, E50, F15, F55, K0, K10, N44 Keywords: Treaty of Lisbon and EMU, ECB an institution of the EU, independence of the ECB.

1 Introduction with a focus on changes relating to This study describes the consensus- the ECB and the Eurogroup. The finding process for the Treaty of study concludes with section 5, which ­Lisbon2 and outlines the major results provides an overview of the Member of the 2007 Intergovernmental Con- States’ ratification process, which is ference and possible effects of the currently scheduled to be concluded treaty on the EU and EMU.3 This by January 1, 2009. study attempts to provide an over- view of the approach pursued at the 2 From the Treaty of Nice to Intergovernmental Conference. Sec- the Treaty of Lisbon tion 2 tries to span a bridge between By amending the EU treaties, the EU the Treaty of Nice and major revisions intends to pave the way for future introduced by the Treaty of Lisbon. integration processes to widen and Section 3 describes the structure of deepen the EU. The current legal the Treaty of Lisbon. Section 4 is basis of the EU is the Treaty of Nice, dedicated to consequences for EMU which has been in effect since 2003.

1 The author would like to thank Isabella Lindner, Marlies Stubits and Paul Schmidt for their valuable comments as well as Irene Mühldorf and Ingeborg Schuch (OeNB) for manuscript editing. Special thanks go to Gregor Schusterschitz for the scientific evaluation of this study. Refereed by: 2 Gregor Schusterschitz, Original name of the treaty: “Treaty of Lisbon amending the Treaty on and the Treaty establishing the European Community.” See OJEU 2007/C 306/01; referred to as the Treaty of Lisbon in this study. Director of the Legal 3 This study does not describe all milestones leading to the consensus about the new legal basis for the EU, nor does Department, Permanent it include information about articles that have been revised or added since the Treaty of Nice came into force; Mission of to the given that the treaty is several hundred pages long and that this endeavor would thus go beyond the scope and EU in . purpose of this paper.

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Table 1 Milestones Leading from the Treaty of Nice to the Consensus about the Treaty of Lisbon

Date Milestone

February 26, 2001 Signing of the Treaty of Nice. December 14/15, 2001 “Laeken Declaration.” In Laeken (), the decides to entrust consultations about the future of to a convention, which concludes in 2004 with the signing of the Constitutional Treaty. February 28, 2002 of the convention on the future of Europe, headed by Valéry Giscard d’Estaing, the former .

February 17, 2003 The Treaty of Nice enters into force. October 4, 2003 Opening of the 2003 intergovernmental conference. June 16/17, 2004 Consensus about the Constitutional Treaty among EU heads of state or government in Brussels. October 29, 2004 Signing of the Constitutional Treaty in Rome. May 29, 2005 on the Constitutional Treaty in France – the majority rejects the treaty. June 1, 2005 Referendum on the Constitutional Treaty in the Netherlands – the majority rejects the treaty. For the time being, reform efforts have thus failed. June 17 to 18, 2005 Crisis in Brussels – initiation of a period of reflection about the rejected Constitutional Treaty. March 25, 2007 “Berlin Declaration” on the occasion of the 50th anniversary of the signing of the Treaties of Rome – EU heads of state or government commit to providing a new legal basis for the EU by 2009. (At that time, 18 Member States had ratified the failed Constitutional Treaty). June 21/22, 2007 Political consensus about a detailed mandate for an intergovernmental conference on the reform treaty for Europe was reached at the European Council in Brussels. July 23, 2007 Opening of the 2007 intergovernmental conference. October 18/19, 2007 Political consensus about the reform treaty for Europe was reached among EU heads of state or government at the European Council in Lisbon (Treaty of Lisbon), following the shortest intergovernmental conference in the history of the EU. December 12, 2007 Proclamation of the Charter of Fundamental Rights at the European Parliament in Strasbourg by the president of the European Parliament, the EU Council president and the president of the . December 13, 2007 Signing of the Treaty of Lisbon by the heads of state or government of all 27 EU Member States; start of the ratification process.

Source: Weidenfeld and Wessels (2007); Borchardt (2006).

However, the number of Member Nice was drafted – had yet to be States has increased from 15 to 27 achieved.4 since then. At the same time, EU Table 1 shows the milestones lead- Member States have stepped up their ing to the revision of the EU treaties cooperation in specific areas to stand since the signature of the Treaty of their ground in a globalized economy Nice in 2001. and in the international financial mar- kets. Moreover, while the consensus 2.1 The Consensus-Finding Process expressed in the Treaty of Nice paved at the 2007 Intergovernmental the way for the most recent enlarge- Conference ment of the EU, a forward-looking or Following the conclusion of a period comprehensive EU reform – to which of reflection of several years and the EU had already expressed its com- ­arduous negotiations, the foundations mitment even before the Treaty of for a new common basis for the EU

4 According to declaration No. 23 of the Treaty of Nice on the future of the Union, the debate about the reform was to focus on the following issues: the principle of , the future role of national parliaments, the status of the Charter of Fundamental Rights and the possible simplification of EU treaties.

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were laid during a European Council The main purpose of the mandate meeting under the German EU Coun- was to transfer the content envisaged cil Presidency on June 21–22, 2007. for the Constitutional Treaty to the This breakthrough was achieved by (TEU) the decision of the heads of state or and the Treaty establishing the - government to convene an inter­ pean Community (TEC).6 With this governmental conference and their approach, the substance of the Con- consensus about a mandate for this stitutional Treaty remained mostly intergovernmental conference. This intact. The content of the mandate mandate for treaty reform was the reflects previously agreed political groundwork to enhancing the effi- solutions. ciency and democratic legitimacy of the enlarged EU as well as the coher- 2.1.2 Swift Negotiations at ence of its external action compared the Technical Level – A Decisive to the situation today (European Factor for the Breakthrough Council, 2007). The Intergovern- When assumed the EU mental Conference opened on July Council Presidency on July 1, 2007, 23, 2007,5 on the occasion of a meet- it aimed at reaching an agreement ing of the EU foreign ministers under about the new Treaty during the in- Portuguese Presidency. formal summit of the heads of state or government held on October 18–19, 2.1.1 Specifications for the Treaty 2007. It was to be the shortest Inter- of Lisbon – the Mandate for the governmental Conference in the his- 2007 Intergovernmental tory of the EU: formally opened on Conference July 23, 2007, a political consensus The basis for negotiations at the 2007 about a new Treaty was reached on Intergovernmental Conference was a ­October 18, 2007. On December 13, highly detailed 16-page mandate that 2007, EU heads of state or govern- largely determined the wording of ment signed the Treaty of Lisbon at the new treaty to reform the EU the meeting of the European Council. ­institutions. This paper was the only The conduct of negotiations dur- basis for negotiations and therefore, ing the 2007 Intergovernmental Con- all work done by the Intergovern­ ference differed greatly from the one mental Conference relied on this at the 2003/2004 Intergovernmental mandate. All changes vis-à-vis the Conference7 which passed the Con- draft constitutional treaty had to be stitutional Treaty. explicitly itemized in the mandate A tight timeline was applied at the (European Council, 2007). 2007 Intergovernmental Conference

5 The convening of intergovernmental conferences is based on article 48 of the TEU, which determines that, in the case of institutional changes to monetary matters, the ECB must be consulted, in addition to the European Commission, the European Parliament and the European Council. 6 See section 3. 7 The 2003/2004 intergovernmental conference was preceded by a convention whose members essentially drafted the Constitutional Treaty for Europe. Not only the governments of Member States participated in this European convention, but also two members of each national parliament. There was an extensive debate, which was also open to the general public, and negotiations documents were therefore made publicly available. This approach was to bring to bear the democratic element in the drafting process of the Constitutional Treaty.

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– the goal being that it “... complete On October 5, 2007 a “finished its work as quickly as possible, and in draft” of the reform treaty was avail- any case before the end of 2007 ...” able. On October 19, 2007, at the (European Council, 2007). European Council in Lisbon, the Por- Actual negotiations were not con- tuguese President of the European ducted at the political, but at the Council announced the agreement on technical level, i.e. in the committee a new constitutional basis for Europe, of legal experts of all 27 Member the Treaty of Lisbon. The ceremony States, chaired by the Director- for the formal proclamation of the ­General of the Legal Service of the Charter of Fundamental Rights by the Council of the European Union. European Parliament in Strasbourg However, the previously specified took place on December 12, 2007. timeline (IGC 6/07, 2007) was not On December 13, 2007, the Treaty fully met. The legal experts held of Lisbon was signed by EU heads of meetings until October 3, 2007. Rep- state or government and foreign min- resentatives of the European Parlia- isters at the European Council. The ment and the European Commission Treaty of Lisbon is scheduled to enter were closely involved in these nego­ into force on January 1, 2009, before tiations. The General Secretariat of the elections to the European Parlia- the Council was in charge of the con- ment. However, the ratification pro- ference’s secretarial tasks. All docu- cess could still constitute a road- ments and information about the block. 2007 Intergovernmental Conference have been published on a dedicated 2.2 Major Amendments vis-à-vis European Council website.8 EU heads the Treaty of Nice of state or government had the over- The Treaty of Lisbon contains the fol- all responsibility for the Intergovern- lowing major institutional amend- mental Conference and were sup- ments vis-à-vis the Treaty of Nice ported by the Council of Foreign (Dippel, 2007). Ministers. Generally speaking, this – A single legal personality for was an unprecedented approach in the EU: The Treaty of Nice distin­ the history of EU Intergovernmental guishes between two separate Conferences (IGCs). ­entities, the EC and the EU. In The group of legal experts carried contrast to the EC, the EU had out its work while strictly adhering not had any treaty-making power to the IGC mandate. This mandate up to now. The EU was previously was the “manual” for amendments not entitled to enter into treaties to fundamental EU treaties. Issues with third parties (Seeger and that could not be resolved at the Emmanouilidis, 2007). This will technical level were addressed at the change as soon as the Treaty of political level during the Council of Lisbon takes effect, because the Foreign Ministers9 and at the Euro- EC – EU dichotomy will cease to pean Council.10 exist in matters relating to exter-

8 http://www.consilium.europa.eu/cms3_fo/showPage.asp?id=1297&lang=en 9 Meeting of foreign ministers of all member states: September 7 to 8 and October 15, 2007. 10 Meeting of EU heads of state and government at the European Council, October 18 to 19, 2007.

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Table 2 The Treaty of Nice and the Treaty of Lisbon: Comparison of Specific Areas

Regulatory area Regulations in the Treaty of Nice Regulations in the Treaty of Lisbon

Structure of the treaty Treaty of Nice Treaty of Lisbon consists of two parts: consists of two parts: EU Treaty (TEU) Amendments to the EU Treaty (TEU) EC Treaty (TEC) Amendments to the EC treaty and renamed “Treaty on the Functioning of the EU” (TFEU) Legal personality EU does not have legal personality EU has legal personality European Council European Council is not an EU institution European Council becomes an EU institution External representation High Representative for Foreign Affairs and High Representative for Foreign Affairs and Security Policy is Security Policy also the vice president of the European Commission European Parliament 732 seats in the European Parliament in 751 seats in the European Parliament, effective 2009 accordance with the Treaty of Nice (due to the enlargement, currently 785 seats); Codecision procedure in selected areas Codecision procedure becomes the rule

Charter of Fundamental Rights Not legally binding Legally binding European Commission 1 commissioner per Member State, currently 27 Reduction of number of commissioners to two thirds of current number, effective 2014; introduction of a rotation principle with equal rights Council of Ministers Term of presidency six months Term of “team presidency” 18 months Vote allocation in the council The system of Nice applies until November 1, Transitional period from November 1, 2014, to March 31, 2017; 2014: principle of “qualified majority” with 255 out applicable as of 2017: principle of “” representing of 345 votes 55% of EU Member States and 65% of the population

Majority votings In 137 policy areas In 181 policy areas ECB1 The ECB is not an EU institution, but an The ECB is an EU institution institution “sui generis” Eurogroup 2 No president President elected for 2.5 years Eurogroup is not part of the treaty Eurogroup explicitly enshrined in primary Withdrawal from the EU Not possible Withdrawal possible Source: Dippel (2007); OJEU 2007/C 306/01. 1 See section 4.2. 2 See section 4.3.

nal policy. In the future, the EU ­political leadership in the EU will have the right to negotiate (Schwarzer and Richter, 2007). ­international treaties and to be- The President of the European come a member of international Council will preside over the four organizations. annual meetings of EU heads of – The European Council will state or government and will become an EU institution: In ­expedite the work of this com- the Treaty of Lisbon, the Euro- mittee, which is the EU’s highest pean Council is listed as an EU decision-making institution. The institution. The Treaty of Lisbon rotation of Councils of Ministers creates the function of President will be retained, with the effect of the European Council, who is that the chairpersons of Councils elected for two and a half years by will change semiannually (except the EU heads of state or govern- for the Council of Foreign Minis- ment; the term is renewable once. ters). Three countries will have The purpose of this innovation equal rights and work in a team is to enhance the continuity of presidency.

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– External representation of the become effective even before the EU: The function of “High Repre- next elections to the European sentative of the Union for Foreign Parliament. Effective in 2009, Affairs and Security Policy” will Austria will have 19 seats in the considerably increase in relevance. European Parliament instead of This function will combine the 18. This maximum of 751 mem- tasks of the former EU Represen- bers of parliament will be retained tative for Foreign Policy and the even in the case of further EU EU Commissioner for External ­enlargements. Hence, a new seat Relations. The High Representa- allocation within the European tive will have a diplomatic service, Parliament has to be introduced will be the Vice-President of the no later than in 2014 for the European Commission and will ­accession of . preside over the Council of For- – A strengthened role for national eign Ministers. The function of parliaments: National parlia- the Commissioner for External ments will now have eight weeks Relations at the European Com- to scrutinize proposed EU legisla- mission will therefore cease to tion, allowing them to object to exist. The High Representative is legislation if the Member States in to serve as the highest diplomatic question believe that national authority of the EU. competences are threatened. The – Strengthened role of the Euro- Treaty of Lisbon also strengthens pean Parliament: With the the principle of subsidiarity by ­establishment of the codecision ­introducing clearly defined areas procedure as the primary law- of competence between Mem- making procedure in the EU, the ber States and the EU and by in- European Parliament and the creased monitoring of the subsid- Council will now be on an equal iarity principle by national parlia- footing as legislative bodies. This ments.12 will lead to increased control and – Binding legal force of the Char- more . In the future, ter of Fundamental Rights: The the European Parliament will also Charter of Fundamental Rights elect the president of the Euro- establishes civil rights, e.g. the pean Commission. The reduction freedom of speech, in 54 Articles. of the number of members of par- Enshrined in Article 6 of the liament from 785 to 751,11 effec- TEU by a cross-reference,13 fun- tive in 2009, will give the Euro- damental rights have binding legal pean Parliament more capacity for force and can therefore be as- action. The new allocation of seats serted before the European Court in the European Parliament will of Justice.

11 Consensus was reached about a maximum of 750 members plus the President of the European Parliament because the seat of the President was attributed to , which was established in a declaration. 12 See the protocol on the application of the principles of subsidiarity and proportionality to the Treaty of Lisbon, which describes subsidiarity as the principle that the EU is to provide only those regulations that are required at the supranational level and which promise more positive effects than measures taken by single states or regional measures. 13 The Charter of Fundamental Rights is not part of the treaty, but was formally passed one day prior to the signing of the Treaty of Lisbon. Article 6 of the TEU refers to the charter passed on December 12, 2007.

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– A smaller Commission: Starting annexing the “Ioannina clause” to on November 1, 2014, the num- the Treaty of Lisbon as a protocol. ber of EU Commissioners will be – Increased use of qualified ma- reduced to two-thirds of the cur- jority voting: Decision-making rent number, and a rotation prin- processes in the EU will be made ciple will be introduced. The Euro- easier because in many cases,15 pean Council can determine the unanimity will no longer be number of commissioners by ­required, potentially making the unanimous vote. Details regard- EU’s work more efficient. How- ing the rotation principle have yet ever, the principle of unanimity to be determined. The President will remain in place for decisions of the Commission will, in the in sensitive areas, for instance for- ­future, be elected by the Euro- eign policy, fiscal policy and pean Parliament. The High Rep- ­social policy as well as for amend- resentative for the Union in For- ments to EU treaties. eign Affairs and Security Policy – The EU’s enlargement strategy: will become one of the Vice-Presi­ In the Treaty of Lisbon, no speci- dents of the Commission. fications about the criteria for – Vote allocation in the Council ­enlargement with regard to the of Ministers: Until 2014, voting EU’s capacity of integration have rules in the EU will continue to been made. A reference has been follow the qualified majority added to Article 34 of the TEU to ­voting procedure established in take into account the conditions the Treaty of Nice (Hummer and of eligibility agreed upon by the Obwexer, 2001). As of Novem- European Council. Hence, defin- ber 1, 2014, the “double majority” ing the capacity for integration principle will be introduced, and/or absorption capacity is in- while respecting a transitional cumbent on the European Council. ­period applicable until 2017. This – Withdrawal from the EU: The means that decisions taken by the Treaty of Lisbon provides the pos- Council of Ministers will require sibility for a Member State to a double majority of 55% of the withdraw from the EU on its own Member States representing at accord. Member States now have least 65% of the Union’s popula- the option of systematically with- tion. In the transitional period drawing from the Union within a from 2014 to 2017, the system timeframe of two years. During ­determined in the Treaty of Nice the course of these two years, a may be used for voting as long as a withdrawal agreement determin- single Member State requests it. ing the political and economic ’s demand to incorporate ­relations between EU Member the “Ioannina clause”14 into primary States and the withdrawing Mem- law of the new TEU was met by ber State is to be drafted.

14 The “compromise of Ioannina” provides that Council members backed by at least 75% of the required blocking minority (either in terms of number of states or population) may demand further discussion of a given issue. If that is the case, the European Council commits to doing everything within its power within a reasonable period of time to find a satisfactory solution to the problem at hand. 15 See section 4.3.

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3 The Structure of the Treaty The Treaty of Lisbon (OJEU of Lisbon 2007/C 306/01) is more than 250 The Treaty of Lisbon consists of the pages long and consists of the intro- Treaty on European Union (TEU) ductory preamble, the TEU, the and the Treaty on the Functioning of TFEU, 13 protocols and 65 declara- the European Union (TFEU), includ- tions. The TEU and the TFEU have ing annexed protocols and declara- the same legal force and are inter- tions. Table 3 shows the structure of preted as such. Both have the status of both treaties.16 primary law, as do the protocols All treaty innovations were intro- ­annexed to the Treaty of Lisbon. The duced by way of traditional amend- term “Community” has been replaced ments and were incorporated into by the term “Union” in the entire the existing structure of the TEU TEU. The three-pillar structure of and the Treaty establishing the Euro- EU treaties has been abandoned. pean Community (TEC). As a con­ In its current version, the Treaty sequence, the Treaty of Lisbon is, of Lisbon is difficult to read and like previous treaties, an amendment ­understand. This lack of accessibility ­instruction. Article 1 of the Treaty is, among others, due to the fact that of Lisbon amends the TEU and Arti- different treaties dating from differ- cle 2 of the Treaty of Lisbon amends ent eras of the EU’s history of unifica- the TEC. The TEU will, by defini- tion have been combined. An official tion, remain in place, and the TEC consolidated version will probably will be renamed TFEU (Treaty on not be available before the conclusion the Functioning of the European of the ratification process by the Union). Member States.

Table 3 Structure of the TEU and of the TFEU

The TEU is divided into six titles: The TFEU is divided into seven titles:

Title I. Common provisions Part One: Principles Title II. Provisions on democratic principles Part Two: Non-discrimination and citizenship of the Union Title III. Provisions on the institutions Part Three: Policies and internal actions of the Union Title IV. Provisions on Part Four: Association of the overseas countries and territories Title V. General provisions on the Union‘s external action and specific Part Five: External action by the Union provisions on the common foreign and security policy Title VI. Final provisions Part Six: Institutional and budgetary provisions Part Seven: General and final provisions Source: OJEU 2007/C 306/01.

16 The articles in the Treaty on European Union (TEU) and the Treaty on the Functioning of the European Union (TFEU) cited in this study are derived from http://cms.euro-info.net/received/_4580_Unionsvertraege_Lissabon_MWalther.pdf, published by the Austrian Society for European Politics on November 20, 2007, and http://www.consilium.europa.eu/cms3_fo/showPage.asp?id=1317&lang=de&mode=g under “Oktober 2007: (CIG 1/1/07 REV 1)”. At the time of writing, no official, consolidated version of the Treaty of Lisbon was available.

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4 The Treaty of Lisbon internal market; (c) monetary policy and EMU for the Member States whose cur- This section describes possible conse- rency is the euro …. and (e) common quences of the Treaty of Lisbon on commercial policy.” key areas of EMU.17 Shared competence (while re- Since the Treaty of Maastricht specting the principle of subsidiarity) (1993), EMU has been one of the between the Union and the Member main pillars promoting the integra- States applies in the following princi- tion process of the Union. Hence, pal areas as defined in Article 4(2) treaty changes relating to EMU will of the TFEU: “... (a) internal market; have a decisive effect on the EU as a (b) social policy …; (c) economic, whole. EMU relies both on the idea social and territorial cohesion; (d) ag- of an independent ECB and its exclu- riculture and fisheries …; (e) envi- sive competence for monetary policy ronment; (f) consumer protection; in the euro area and on the coordina- (g) transport; (h) trans-European net- tion of national measures taken by works; (i) energy.” Members States (Breuss, 2002). EU Economic and employment poli- Member States regard economic pol- cies will, in accordance with Arti- icy as an issue of common European cle 2(3) of the TFEU, be organized interest with the goal of promoting in through the “open coordination” growth, employment and price sta- method with Member States. This bility in the EU. Given this high applies especially to employment ­priority, EU heads of state or govern- ­programs (Gutmann, 2007). ment have accepted the application of Generally speaking, the Treaty of common rules for budget discipline Lisbon stipulates no substantial fun- and coordination procedures for eco- damental changes in areas relevant to nomic matters to all Member States. EMU (e.g. Brady and Barysch, 2007; All this has been included in the Garach, 2007). Most changes were Treaty of Lisbon. technical. In the Treaty of Lisbon, Since the Union’s three-pillar provisions affecting EMU are mainly structure will not be retained, the found in the Part Three of the TFEU, new treaty explicitly specifies the Union Policies and Internal Actions, ­allocation of competences between Title VII Economic and Monetary the Union and its Member States. Policy. Regulations concerning EMU Competences will now be divided are now found in four chapters: into “exclusive“ competences, compe­ “chapter 1 – the economic policy, tences shared among the Member chapter 2 – the monetary policy, States and competences that are subject chapter 3 – institutional provisions, to the process of “open coordination:” chapter 3a – provisions specific to According to Article 3(1) of the Member States whose currency is the TFEU, the Union will have exclu- euro, and finally chapter 4 – transi- sive competence in the following tional provisions.” ­areas: “... (a) customs union; (b) the In my comments below, I will establishing of the competition rules ­focus on the criterion for price stabil- necessary for the functioning of the ity, the ECB as an EU institution, the

17 This section does not include an exhaustive itemization of all changes made to EMU-related provisions. Rather, it describes the major effects changes introduced in the new treaty will have on EMU.

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Ecofin Council and the Eurogroup, fore, price stability as a premise of and the role of the euro in the Treaty stability-oriented monetary policy of Lisbon. will remain an intrinsic part of the Union’s new legal basis. 4.1 Price Stability Is Now a More Important Objective of 4.2 The ECB As a New “Body” Economic Policy than before of the EU EMU is based on an independent According to Article 48 of the TEU, monetary policy oriented toward sta- at intergovernmental conferences, bility, whose primary objective is to the ECB has to be consulted in the maintain the price stability of the case of institutional changes in the euro. The definition of the ESCB as area of monetary policy. In a declara- part of the Union’s monetary policy, tion, the ECB welcomed the opening which also emphasizes the primary of an intergovernmental conference objective of price stability, is speci- for the elaboration of a treaty to fied in Article 105 (1) of the TFEU. amend existing treaties (ECB, 2007). “The primary objective of the Euro- At the 2007 Intergovernmental Con- pean System of Central Banks … ference, the ECB Council introduced shall be to maintain price stability. a “Task Force of the Eurosystem,” as Without prejudice to that objective, it had previously done in 2003 (Lind- the ESCB shall support the general ner and Schmidt, 2004), where pos- economic policies in the Union as sible effects of institutional changes long as this does not affect its objec- on the ESCB/Eurosystem and the tive of maintaining price stability ...“ ECB were discussed. Special provi- The orientation of the ECB’s mone- sions relating to the ECB as estab- tary policy strategy toward the objec- lished in the Treaty of Lisbon are tive of price stability has been an ­described below. ­essential element of the success story of the euro so far and thus of EMU as 4.2.1 The ECB in the Treaty of Lisbon a whole. This objective has now also A major innovation compared to the been incorporated into the list of Treaty of Nice is the status of the ECB ­objectives specified in the Treaty of as a body. In Article 9(1) of the TEU, Lisbon. The list of objectives speci- the ECB is included in a list of EU fied in Article 3(3) of the TEU states, ­institutions, along with the European among others, the following: “The Council, the European Parliament, Union shall establish an internal mar- the Council of Ministers, the Euro- ket. It shall work for the sustainable pean Commission and the Court of development of Europe based on bal- Auditors and is thus part of the “insti- anced economic growth and price tutional framework” of the EU. How- stability, a highly competitive social ever, pursuant to Article 9(3) in the market economy, aiming at full em- TEU part of the Treaty of Lisbon, ployment and social progress, ...” “provisions concerning the ECB are (OJEU 2007/C 306/01). Since price specified in the Treaty about the func- stability has been defined as an objec- tioning of the Union ...” (OJEU 2007/ tive of economic policy within the C 306/01). Hence, the legal and entire Union, it will now be the guid- ­institutional basis for a common mon- ing principle of all actions by its insti- etary policy by the ECB has been tutions and Member States. There- ­determined both in the TEU part and

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in the TFEU part of the Treaty of ECB’s independence was not threat- ­Lisbon.18 In the Treaty of Lisbon, ened by the new treaty. The status of ­provisions concerning the ECB can the ECB as an EU institution does not be found in the following parts and affect the ECB’s or the ESCB’s struc- chapters: ture, tasks, statutes or objectives. – TEU: in Title III “Provisions on ­Revisions to the statutes of the ESCB the institutions”: Article 9 of the and the ECB, which are annexed to TEU. the TFEU as a protocol, were mostly – TFEU: Part Three of the TFEU: of technical nature (Garach, 2007). “Union Policies and Internal Some of the Articles of the Treaty of ­Actions” in Title VII – chapter on Lisbon that are relevant to the ECB monetary policy: Articles 105 to are analyzed on more detail below. 111, especially Article 105 and – TFEU: in Part Six of the TFEU: 4.2.2 Guaranteed Independence “Institutional and Financial Provi- of the ECB sions” in chapter 4a “The Euro- Provisions regarding the ECB’s free- pean Central Bank”: Articles dom from receiving instructions are spec- 245a, 245b and 245c. ified in Article 108 of the TFEU: Prior to the agreement on the Treaty “When exercising the powers and of Lisbon, the ECB and EU Member carrying out the tasks and duties States had different positions regard- ­conferred upon them by the Treaties ing the new approach of listing the and the Statutes of the ESCB and ECB as an institution along with other ECB, neither the ECB, nor a national EU institutions. The ECB pursued central bank, nor any member of the goal19 of being distinguished from their decision-making bodies shall other EU institutions by being named seek or take instructions from Union under “other institutions” in the institutions or bodies, from any treaty. There had already been an government of a Member State or ­intensive debate about the “institu- from any other body.” tional status” of the ECB at the 2004 In Article 245a (1) of the TFEU, Intergovernmental Conference. This the most important provisions regard­ debate was revived at the 2007 Inter- ing the functioning of the ESCB and governmental Conference. The goal the ECB’s Eurosystem are detailed was to emphasize the special status of (OJEU 2007/C 306/01). The opera­ the ECB’s tasks and the legal basis tional independence of the ECB is (personal, operational, financial and ­emphasized in Article 245a (3) of the legal independence) within the insti- TFEU: “... The European Central tutional framework of the EU (Euro- Bank shall have legal personality. It pean Commission, European Council alone may authorise the issue of the and European Parliament). These de- euro. It shall be independent in the mands brought forward by the ECB exercise of its powers and in the were not granted at the Intergovern- ­management of its resources. Union mental Conference. The argument institutions, bodies, offices and agen- against these demands was that the cies and the governments of the Mem-

18 It is also laid down in the statutes of the ESCB and the ECB, which have been annexed to the Treaty of; see http://www.ecb.int/ecb/legal/pdf/en_statute_2.pdf 19 , the Netherlands and supported the ECB in this approach.

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ber States shall respect that indepen- in particular broad policy guidelines. dence.” Specific provisions apply to Member Regarding the financial indepen- States whose currency is the euro. In dence of the ECB, it is especially the TFEU, additional details about ­Article 270b of the TFEU that was economic and monetary policy are adapted to the needs of the ECB. Pur- specified under Part Three Title VII, suant to Article 270b of the TFEU, “Economic and Monetary Policy” “every EU institution, with the excep­ (OJEU 2007/C 306/01). In this chap- tion of the ECB, shall present a bud- ter, changes introduced by the Treaty get ...” Given this statutory exemp- of Lisbon related to the Ecofin Coun- tion for the benefit of the ECB, its cil and the Eurogroup are described. ­financial independence is explicitly This description is followed by the acknowledged. analysis of possible effects of interin- An innovation regarding the appoint­ stitutional cooperation on economic ment of members of the Executive Board policy. of the with a qualified majority by the European 4.3.1 Changes Concerning the Council, but, just like in the past, Ecofin Council upon recommendation by the Ecofin The Council in the composition of Council20 and upon consultation of the economics and finance ministers the European Parliament and the ECB (Ecofin Council) is the primary body Council was laid down in Article for the coordination of the Member 245b of the TFEU. The current pro- States’ economic and financial policy. vision requires a consensual decision The Ecofin Council’s relevance resides by the European Council when nomi- mainly in its status as the primary nating the six members of the execu- law-making body for economic and tive board of the ECB. This innova- fiscal policy. It usually meets once a tion will “... probably accelerate the month. Ecofin meetings are presided nomination process and reduce the by the minister of the country that related insecurity on financial mar- has the Presidency of the Council at kets” (Walter and Becker, 2007). the time of the meeting. The Council The Treaty of Lisbon does not Presidency rotates every six months. question the personal, operational, Meetings of the Ecofin Council are, financial and legal independence of among others, prepared by the Eco- the ECB, nor does it have any sub- nomic and Financial Committee, stantive effects on the functioning of whose institutional provisions have the ESCB. now been laid down in Article 112 of the TFEU without any substance 4.3 The Ecofin Council and changes. the Eurogroup In order to increase the Union’s In accordance with Article 5 of the capacity for action, the qualified TFEU, EU Member States will con- ­majority principle was extended to most tinue to coordinate economic policies EMU areas in the Treaty of Lisbon. within the Union. For this purpose, This will be reflected in the decision- the Ecofin Council adopts measures, making process at the periodic meet-

20 Pursuant to article 116(h) of the TFEU, EU Member States who have introduced the euro may participate in the voting only.

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ings of economics and finance minis- time (Walter and Becker, 2007), and ters. One example is that decisions the concept of the Eurogroup was about excessive deficits of Member ­enshrined in primary law for the first States no longer need to be unani- time in a dedicated protocol21 annexed mous. The principle of unanimity to the Treaty of Lisbon. The official will be required in only a few areas, function of President of the Euro- including the determination of the group, elected for two-and-a-half conversion rate between the euro and years, is explicitly laid down in the a Member State’s national currency, protocol. Special provisions concern- employment policy and tax policy. ing the Eurogroup are specified in The easier decision-making process “Provisions specific to Member States should increase the Ecofin Council’s whose currency is the euro” (OJEU efficiency. 2007/C 306/01). The room for inde- pendent decision-making by the Euro­ 4.3.2 Eurogroup Enshrined in Primary group had been extended accordingly. Law for the First Time The increased use of independent Today, the Eurogroup is an informal ­decision-making processes had already forum for objective and open discus- been envisaged as a result of the 2004 sions about current problems of eco- Convention for the Constitutional nomic and fiscal policy between the Treaty (Lindner and Stubits, 2004). respective ministers of countries The increased competences of the whose currency is the euro. It is also Eurogroup are described below. intended to serve as a catalyst to Member States whose currency is ­accelerate the initiation of structural the euro have the right to jointly and reforms. The Eurogroup is composed independently decide about coordina- of Member States whose single cur- tion measures and guidelines specifi- rency is the euro as well as the Com- cally referring to the Eurogroup. missioner for economic and monetary They can also make recommenda- affairs of the European Commission, tions about the admission of new the President of the ECB and the Chair- members into the Eurogroup and the person of the Economic and Financial Ecofin Council. However, the final Committee. Jean-Claude Juncker, the decision about the admission of new prime minister of Luxembourg, has members into the Eurogroup will been the Chairman of the Eurogroup ­remain with all EU Member States. since January 1, 2005. His nomina- According to Articles 114ff of the tion was a result of negotiations about TFEU, broad economic policy guide- the Constitutional Treaty. While this lines must be compatible with broad treaty never entered into force, the economic policy guidelines adopted nomination of a President for this by the European Union applicable to informal body was anticipated. In the entire Union. The Eurogroup also September of 2006, Juncker’s term makes recommendations to members of office was extended to run through of the Eurogroup within the frame- December 31, 2008. work of multilateral surveillance, in- The term “Eurogroup” was for- cluding surveillance regarding the mally used in the TEU for the first stability program. It can also take

21 Protocol no. 3 on the Eurogroup (OJEU 2007/C 306/01).

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measures regarding excessive deficit officeholders will now cooperate in procedures, provided that members economic and financial matters: of the Eurogroup are involved. – The new President of the Euro- Another new element is the pro- pean Council vision about the position of the Union – The team Presidency of three at an international level as laid down Member States of equal rank for a in Article 115a of the TFEU. The new period of 18 months following the Treaty empowers the Council to rotational principle of the Coun- ­“establish common positions on mat- cil Presidency on the level of ters of particular interest for eco- ­responsible ministers nomic and monetary union within – The new president of the Euro- the competent international financial group institutions” (e.g. the IMF) after con- At the earliest, this new allocation sulting the ECB. Only members of principle might come into effect the Eurogroup may vote. This inno- ­under the Czech Presidency of the vation might have considerable conse- European Council, starting on quences for the external representa- ­January 1, 2009. tion of the euro. Another noteworthy fact is that, Pursuant to chapter 4, transitional regarding EMU issues, the roles of provisions apply to those Member the European Parliament and of the States that with a derogation. An European Commission have been ­exhaustive list of these provisions is strengthened in interinstitutional provided in Articles 116ff of the ­cooperation. TFEU. For instance, the issue of the The European Parliament has been euro, the objectives and tasks of the strengthened insofar as the codecision ESCB and measures governing the procedure will become the primary use of the euro do not apply to these lawmaking procedure of the Union. Member States. This will give the European Parlia- ment greater influence on EMU- 4.3.3 Consequences of Interinstitutional ­related decisions. Cooperation on Economic Policy The position of the European Com- Matters Are Still Unforeseeable mission in its cooperation with the Ecofin In the interinstitutional cooperation Council has been strengthened in the between the Ecofin Council and the ­areas mentioned below. The Euro- Eurogroup on the one hand and other pean Commission may issue a warn- EU institutions on the other hand, ing directly to Member States whose the new role of the European Council national measures in the area of eco- regarding the preparation of eco- nomic policy are not consistent with nomic and employment policy pro- the broad guidelines of the common grams will affect EMU to a yet economic policy of the Union. The ­unforeseeable degree. The European option of issuing such warnings might Council, as the highest-ranking body lead to increased efficiency in the for the coordination of economic pol- ­implementation of national reform icies, will continue to play an impor- programs drawn up to achieve the tant role for EMU by providing impe- objectives defined in the Lisbon tus. Changes to the EU Council Presi­ Agenda, which would in turn result dency will affect the Ecofin Council in improved competitiveness, higher meetings insofar as the following employment rates and increased

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growth within the Union (Weiden- Treaty of Lisbon as a declaration. This fels and Wessels, 2007). In the future is an important commitment because and within the framework of multi- the euro is an especially strong iden- lateral surveillance, the European tity-building symbol for Europe. Commission will have the right to When asked about the EU, the ­issue warnings to Member States if ­majority of Austrians associate it with there are indications of an excessive the euro (Fluch et al., 2007). deficit. The Commission can now The euro has consistently been make a “proposal” to the Ecofin ­enshrined in the Treaty in lieu of the Council rather than just a “recom- ECU. Banknotes and coins are now mendation.” These proposals include called and . preliminary requests for correction While the euro has not been enshrined addressed to the Member State in in primary law as a symbol, it is now question. Revision of proposals by the explicitly mentioned as the official Ecofin Council against the resolve of currency in the list of objectives laid the European Commission require down in Article 3, paragraph 4 of the unanimous voting instead of a quali- TEU: “The Union shall establish an fied majority, as was the case before economic and monetary union whose (Walter and Becker, 2007). currency is the euro.” Hence, the From today’s perspective, specific Treaty of Lisbon accounts for actual consequences of crossfunctional inter­ institutional developments in the EU action between the Presidency of the that took place since the introduction EU Council in its new composition of the euro. and the strengthened Eurogroup and Green light for the euro in Cyrillic the one hand and strengthened EU script. A discussion about the spelling institutions on the EMU on the other of euro in Cyrillic script arose during hand cannot be foreseen (Kurpas the Intergovernmental Conference. et al., 2007). is the only Member State to use Cyrillic script; it spells the euro 4.4 The Role of the Euro in the “EBPO,” which corresponds to “Evro” Treaty of Lisbon in Latin script. After arduous negoti- The Constitutional Treaty provided ations, Bulgaria’s request about the that the euro become a symbol spelling of the word “euro” in Cyrillic (among other symbols, such as the was granted at the European Council flag, the anthem and the motto) of meeting held on October 18–19, the EU. Since all elements that 2007. had a constitutional character were removed from the treaty, the euro is 5 The Process of Ratification: no longer mentioned as a symbol in Wait and See the Treaty of Lisbon. While none of Following the signing of the Treaty of symbols of the EU has been enshrined Lisbon on December 13, 2007, its in primary law of the EU, they all ratification by all 27 Member States22 remain de facto symbols. A declara- will be a challenge. Amending trea- tion of intent about the future use of ties to the EU must be ratified by all EU symbols was annexed to the EU Member States to enter into force

22 The Treaty of Lisbon will enter into force as soon as all instruments of ratification have been deposited, but not before January 1, 2009.

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(Hummer and Obwexer, 2001). The un-clear which countries will eventu- Treaty of Lisbon should enter into ally hold a referendum, with the force in time, before the elections to ­exception of , where a referen- the European Parliament in June dum is constitutionally mandated. 2009, so that both the elections to Austria has planned parliamentary the parliament and the constitution of ratification, arguing that all previous Commission can EU treaties have been ratified by be carried out in accordance with the parliament. In Austria, the Constitu- new provisions set out in the Treaty tional Treaty was ratified in mid-May of Lisbon. In the conclusions of the 2005 with a parliamentary decision European Council of December 13–14, (181:1 votes in the lower chamber of 2007, the swift conclusion of the rati- parliament, the Nationalrat, and 59:3 fication process by the Member States votes in the upper chamber, the is called for. Bundesrat). The federal government The short Intergovernmental is opposed to holding a referendum Conference and the resulting hard- and is determined to ratify the Treaty to-read contractual basis for Europe of Lisbon as quickly as possible. For might be a considerable threat to the this purpose, the Austrian federal successful conclusion of the ratifica- government is currently implement- tion process. In various EU Member ing a public relations campaign. States, the ratification is regarded as In terms of political, economic extremely difficult. As a consequence, and social integration, the Treaty of the European Commission, in collab- Lisbon is, in many aspects, clearly oration with EU Member States, has ­superior to the Treaty of Nice. Its envisaged communication measures ­superiority resides in the fact that the to be implemented at a national level. institutional framework of the EU has The objective is to provide trans­ been renewed, which will enable the parent information about the sub- Union to adapt its policies to ever- stance of EU politics as well as deci- changing global conditions and thus sion-making structures and processes to be prepared to meet today’s global in Brussels perceived as abstract by challenges, such as sustainable devel- the people and their consequences on opment, competitiveness, climate Member States (SPEECH/07/572, change, energy policy, terrorism, mi- 2007). The European Parliament is gration and poverty. From today’s planning to send delegations on con- perspective, actual consequences of sultative visits to those Member States institutional changes to EMU intro- that are planning on holding a refer- duced by the Treaty of Lisbon are dif- endum. For this purpose, closer ficult to foresee. Despite all previous ­cooperation between the European difficulties, the fact that Member Parliament and national parliaments States formerly separated by the Iron is planned to ensure coherent action. Curtain have agreed on a single legal While most countries will attempt to basis for Europe as a result of peace- have the new TEU ratified by their ful negotiations is a landmark event in national parliament, other countries the history of the European integra- – e.g. the , the tion process. However, the Treaty of Netherlands, Poland and – Lisbon is not the final step in the EU are under pressure to hold a referen- integration process, even though, for dum. From today’s perspective, it is the first time ever, no “review clause”

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has been included in the treaty, mean- remains to be seen now is the positive ing that it is unlikely that other inter- conclusion of the ratification process, governmental conferences will be which will allow the EU to meet held in the foreseeable future. What ­future challenges.

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Lindner, I. and P. Schmidt. 2004. Der Vertrag über eine Verfassung für Europa: Institu- tionelle Aspekte der Währungsunion. In: Geldpolitik & Wirtschaft Q3/04. OeNB. 57–67. Lamassoure, A. and A. Severin. 2007. Bericht über einen Vorschlag zur Änderung der Bestimmungen des Vertrags betreffend die Zusammensetzung des Europäischen Parla- ments. Ausschuss für konstitutionelle Fragen des EP. www.europarl.europa.eu/meetdocs/2004_2009/documents/pr/681/681717/681717de.pdf Mahony, H. 2007. Unclear EU Treaty Provisions Causing ”Nervousness”. www.euobserver.com/9/25234/?rk=1 OJEU 2007/C 306/01. 2007. Official Journal of the European Union. ISSN 1725-2407. Treaty of Lisbon amending the Treaty on European Union and the Treaty establishing the European Community. Seeger, S. and J. Emmanouilidis. 2007. Ausweg oder Labyrinth? Analyse und Bewer- tung des Mandats für die Regierungskonferenz. Centrum für angewandte Politikforschung (C.A.P). Munich. SPEECH/07/572. 2007. Margot Wallström Vice-President of the European Commission. The Reform Treaty and Europe’s Future: the Communication Challenge. Economic and Social Committee Conference. September. Brussels. Schwarzer, R. and C. Richter. 2007. Europa-Kompendium. Hanns Seidel Stiftung. June. Walter, N. and W. Becker. 2007. Treaty Reform: Consequences for Monetary Policy. Deutsche Bank Research. October. Weidenfeld, W. and W. Wessels. 2007. Europa von A bis Z. Berlin. Nomos Verlag.

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