Monday 29 June 2015

EU migration policy: comments on the results of the latest European Council



Steve Peers

Alongside ‘Grexit’ and ‘Brexit’, the upsurge in immigration to the European Union is a further crisis which the EU has to juggle simultaneously. The first round of EU reactions to the crisis culminated in the emergency EU summit (‘European Council’) in April. I discussed the results of that summit here. Subsequently, the Commission released its ‘Agenda’ on EU migration in mid-May (see discussion here), and its detailed proposals later that month (see discussion here). Last week the European Council discussed immigration issues again, and came to a number of conclusions. This blog post sets out those conclusions, with my comments annotated. (I have left out the third part of the conclusions, which vaguely promise more cooperation with third countries.)

It’s interesting to compare the final text with the last draft of the summit conclusions (see full text here). To make that comparison easy, I have indicated below what changed between the penultimate and final versions of the text. (Underlined words were added to the final version; words in strikeout were deleted from it).

I. MIGRATION

1. Europe needs a balanced and geographically comprehensive approach to migration, based on solidarity and responsibility. Following the decisions taken by the European Council last April, concrete measures have been taken to prevent further loss of life at sea, to find new ways of confronting smugglers and to intensify cooperation with countries of origin and transit, while respecting the right to seek asylum. The launch of the EUNAVFOR MED mission, decided on 22 June by the Council, is an important contribution in this respect. Operational action to tackle the traffickers and smugglers in accordance with international law is an essential part of our comprehensive approach.

The EU's smuggling mission has officially got underway already, but its second and third phases (where the boats are destroyed) cannot get started until the Libyan government or the Security Council endorse the operation. For details and criticism see here.

2. Further to the Commission's European Agenda on Migration, work should be taken forward on all dimensions of a comprehensive and systemic approach.

The summit conclusions in fact address much of the detail of the Agenda.

3. Wider efforts, including the reinforcement of the management of the Union’s external borders, are required to better contain the growing flows of illegal migration. Today, the European Council focused on three key dimensions which must be advanced in parallel: relocation/resettlement, return/readmission/reintegration and cooperation with countries of origin and transit. The Council will regularly assess progress in all three strands and report back later in the year.

As noted above, I have omitted the third dimension (cooperation with countries of origin and transit) from this blog post.

Relocation/resettlement

4. In the light of the current emergency situation and of our commitment to reinforce solidarity and responsibility, and in line with its April decision in all its regards, including paragraph 3, the European Council agreed on the following interlinked measures to help 60.000 people:

Paragraph 3 of the April conclusions refers to the EU interception and search and rescue missions in the Mediterranean. Odd that such missions dare not speak their name in these latest conclusions.

a) the temporary and exceptional relocation over two years from the frontline Member States Italy and Greece to other Member States of 40.000 persons in clear need of international protection, in which all Member States will participate;

The final version of the conclusions adds a footnote stating that the UK will not participate. The number of 40,000 matches the number in the Commission’s proposal. So does the two-year time-frame, and the focus on Italy and Greece. The reference to ‘persons in clear need of international protection’ suggests that the focus will remain on Syrians and Eritreans (as the Commission proposed), as refugee claims from these two nationalities have a very high success rate.

b) the rapid adoption by the Council of a Decision setting up a temporary and exceptional mechanism to this effect; to that end, all Member States will agree by consensus by the end of July on the distribution of such persons, reflecting the specific situations of Member States;

There is a commitment to adopt a legally binding text, although presumably its content will differ greatly from the Commission proposal, in particular because many Member States dislike the idea (or the detail) of the Commission’s proposals on distribution. The added agreement that the distribution will be agreed by ‘consensus’ means effectively that the numbers accepted in each Member State will be voluntary, although the Treaty calls for qualified majority voting on this issue. The added reference to ‘specific situations’ is (according to press briefings) intended to exempt Hungary and Bulgaria from obligations, in light of the large number of asylum-seekers they currently receive. Obviously it is hard to see how the legally binding target of 40,000 asylum-seekers can actually be met if Member States only have to volunteer to take the relevant numbers. If a Decision with such an obligation is adopted but the offers of admission fall short of 40,000, there could be an interesting legal question as to whether and how the numbers could still be enforced.

c) the setting up of reception and first reception structured border zones and facilities in the frontline Member States, with the active support of Member States' experts and of EASO, Frontex and Europol to ensure the swift identification, registration and fingerprinting of migrants ("hotspots"). This will allow to determine those who need international protection and those who do not. The Commission will draw up, in close cooperation with the hosting Member States, a roadmap by July 2015 on the legal, financial and operational aspects of these facilities;

The reference to ‘structured border zones’ in the earlier draft has been altered, perhaps because some perceived it as a form of quarantine. Frontex is the EU borders agency, and the EASO is the EU asylum support agency. They don’t have powers to fingerprint migrants etc as such, but they can help coordinate Member States’ actions. On the other hand, it’s not clear why Europol, the EU police agency, needs to be involved, and indeed the conclusions seem to call for it to exceed its legal powers. It has a potential role in investigating smugglers, but the conclusions refer only to its involvement in an immigration law process.

Fingerprinting of irregular migrants who cross the external borders, as well as asylum-seekers, is a long standing EU law obligation in the Eurodac Regulation, but frontline Member States have often been accused of not applying it. If more such people are fingerprinted, then it will be easier to guarantee their return from other Member States like the UK under the EU’s Dublin rules on asylum responsibility, if those migrants travel to another Member State and apply for asylum there. The Commission recently released a paper on coercive methods to fingerprint migrants, discussed here.  

d) the immediate provision of enhanced financial assistance to the frontline Member States to help alleviate the costs of receiving and processing applications for international protection;

An emergency EU budget increase has already been approved.

e) the agreement that all Member States will participate including through multilateral and national schemes in the resettling of 20.000 displaced persons in clear need of international protection, reflecting the specific situations of Member States.

This matches a non-binding Commission Recommendation on this issue, which has already been adopted. Resettlement means that the persons concerned are moved straight from refugee camps in countries like Lebanon or Turkey. In fact the wording (‘displaced persons’) also covers Syrians who have fled to camps elsewhere within Syria. Legally speaking this group of people aren’t ‘refugees’ since they haven’t left their home country; international law refers to people who have fled within their own countries but who still have great protection needs as ‘displaced persons’ instead. They could qualify as ‘refugees’ once reaching the EU, however, since they would necessarily then have left Syria. The UK has pledged a very small increase in the small numbers of refugees that it currently resettles.

Return/readmission/reintegration

5. Effective return, readmission and reintegration policies for those not qualifying for protection are an essential part of combating irregular illegal migration and will help discourage people from risking their lives. All tools shall be mobilised to promote readmission of irregular illegal migrants to countries of origin and transit, building on the ideas presented by the Commission at the Council on 16 June.

Notice the word ‘illegal’ was changed to ‘irregular’, to address objections that the word ‘illegal’ is the wrong term to use. There is a footnote referring to the letter and it can be found via Google, but it is hardly transparent not to attach it as an Annex to the Conclusions. It’s not hyperlinked to the conclusions either. But you can follow this link for the text of the Commission letter and discussion of it.

It must be noted that this section only applies to people who do not qualify as refugees or for some other form of protection. Some press stories had suggested, on the basis of leaked drafts of the conclusions, that the EU wants to ‘send all the migrants back’. This is patently false: this section is clearly limited in scope (‘those not qualifying for protection’) and the first section of the conclusions not only shows an intention to relocate people needing protection within the EU but also to bring more of them to the EU. Since a significant proportion of migrants come from Syria and Eritrea, and a huge proportion of their asylum claims are successful, anyone who claims that ‘the vast majority of people crossing the Mediterranean are economic migrants’ is quite simply lying.

In particular: a) high-level dialogues with the main countries of origin of irregular migrants should be launched by the High Representative as soon as possible, in close cooperation with the Member States. The Council, together with the Commission, will prepare a global package to support the negotiations with the third countries concerned;

Most of the issues here are not foreign policy issues as such, so the High Representative should only be discussing them in her role as the coordinator of her colleagues in the Commission, not as foreign policy representative. So this looks like an internal Commission power grab, although it’s probably also true that she will come with more political authority than the Home Affairs Commissioner. There may of course be a corresponding power struggle between national foreign and interior ministries here.

b) the Commission will ensure that readmission commitments are implemented effectively as soon as possible, notably those under the Cotonou Agreement, and that ongoing negotiations on readmission agreements are accelerated and concluded as soon as possible, while new negotiations will be launched with other third countries;

The ongoing negotiations are with Belarus (nearly complete), Morocco and Tunisia. Talks with Algeria and China were approved years ago, but never started. The ‘Cotonou’ countries are sub-Saharan African, Caribbean and small Pacific island States, although obviously the conclusions are referring only to African states. 

c) building on the "more-for-more" principle, EU assistance and policies will be used to create incentives for implementing existing readmission agreements and concluding new ones. Commitments set out in trade agreements regarding the temporary presence of persons for the provision of services should be used as an incentive to conclude readmission agreements; development policy tools should reinforce local capacity building, including for border control, asylum, counter-smuggling and reintegration;

The EU has concluded readmission treaties with most countries to the east and south-east by offering visa facilitation deals, and in some cases the long-term prospect of a visa waiver. It has also offered visa facilitation to Morocco and Tunisia. It’s clear from the other recent documents that the EU doesn’t want to offer visa facilitation to sub-Saharan African countries, hence the quite new idea of offering them admission of service providers instead. Interestingly, the market access aspects of service provision apply to all Member States (ie, including the UK), although the immigration law aspects (such as facilitated visas and permits just for this category of persons) arguably fall within the scope of immigration law, where the UK opt-out applies. The Commission’s migration agenda had referred to plans to propose rules on this issue, but it had not linked them to readmission.

As for development policy cash, this also applies to all Member States, unless some external money in the home affairs budgets can be used. This phrase could also refer to national development policy budgets. The important question is whether this is new money, or will be diverted from building schools or hospitals, or aiding human rights defenders.  

d) Member States will fully implement the Return Directive, making full use of all measures it provides to ensure the swift return of irregular migrants; return decisions issued by the Member States will be introduced in the Schengen Information System;

Fully implementing an existing law sounds uncontentious, but in fact the Commission paper referred to above urges Member States to lock up irregular migrants for as long as possible and to use derogations in that Directive, which could justify limiting judicial review, and holding irregular migrants (including families) in prisons, mixed in with the general prison population of convicted criminals. Further comments on this here.

Some or all entry bans are already introduced in the Schengen Information System (SIS), and the Commission plans to propose a legal obligation that all of them will be. But introducing all return decisions in the SIS is quite new, since not all return decisions result in entry bans. In fact, this is the first new category of data to be added to the SIS since it was established. It will take some time and money (as well as new EU legislation) to set this up.

Note that the UK will not have access to this data, since it does not participate in the immigration-related aspects of the Schengen system. It does have access to the separate Eurodac database, of people who applied for asylum or crossed the borders irregularly in another Member State, although it can only access this is those people then apply for asylum in the UK.

e) the Commission will set out by July 2015 how Frontex will bring immediate support to frontline States on return. The Commission has announced its intention to propose to amend the Frontex Regulation to strengthen the role of Frontex, notably so that it can initiate return missions;

The Commission paper also wants to give Frontex a role in going to third countries and arranging return flights, and in expelling people from a single Member State. The last set of amendments to the Frontex Regulation in 2011 allow Frontex to have its own assets. Perhaps ‘Air Frontex’ – the one airline you never want to travel on – is coming?

f) in order to accelerate the treatment of asylum applications, the Commission will set out by July 2015 measures to be taken to use EASO to coordinate the implementation of the "safe country of origin" provisions in the Asylum Procedures Directive. The Commission has indicated its intention to strengthen the "safe country of origin" provisions in the Asylum Procedures Directive, including the possible establishment of a common EU list of safe countries of origin;

It’s not clear what EASO will be doing here. It can’t decide on asylum applications, but only give guidance. As for the legislative proposal, the Council tried to agree on a common list of safe countries of origin in 2005, but failed epically. It’s not so problematic to include countries where the failure rate is 99%, but becomes difficult to include countries where even 10% or 20% of applications are successful – since that is a lot of people whose claims won’t be adequately assessed.

g) adequate means will rapidly be made available in support of an effective EU return policy; furthermore, the Commission is invited to make proposals in this respect in the context of the 2016 EU budget, and to set up a dedicated European Return Programme.

This suggests more cash will soon be available for removals. It looks as if the ‘European Return programme’ is simply going to be an official name for this pot of cash, to give it greater visibility.

Final comments

Some analysis of the summit suggests that it was a failure on immigration issues, because Member States wouldn’t agree to binding quotas on relocation of refugees. This isn’t necessarily the case. The summit conclusions still refer to adopting a binding measure requiring the relocation of 40,000 people. If Member States do end up relocating 40,000 refugees, there’s not much point quibbling about exactly how they did it. However, the replacement of quotas by voluntary offers makes it less likely that this number will be achieved, and in that case the Council might decide not to adopt the Decision after all.  

Having said that, even if the number of people relocated ends up at 20,000 or 30,000, instead of 40,000, that will contribute to reducing the pressure on Greece and Italy. It will be significantly more than the piddling number of people relocated in the past. The very existence of this commitment is an implicit admission that the Dublin system is a failure. And the commitment to resettle 20,000 people is a bigger contribution than the EU has made before in that context too.

All this is counterbalanced by the decisions on return and readmission. It seems that there is a quid-pro-quo between a more generous policy on asylum and a more restrictive policy on irregular migration. Certainly this part of the conclusions shows the importance of implementation of EU law by the Member States. The Commission has committed itself to encouraging Member States to apply the Directive as restrictively as possible, so it will fall to NGOs and migrants’ legal advisers to monitor what goes in practice, and challenge it if necessary.

‘The Commissioner suggested that we do it’ is not in any way a sufficient legal reason to lock up families together with convicted prisoners, while limiting judicial review. Rather, any Member State wanting to apply exceptions from detention standards in the Returns Directive has to show that an ‘exceptionally large number of third-country nationals to be returned places an unforeseen heavy burden on the capacity of the detention facilities of a Member State or on its administrative or judicial staff’, presumably separately (ie it’s possible that the facilities are overburdened but the judges aren’t, or vice versa). It must also end the derogation as soon as conditions have changed, and also inform the Commission. CJEU case law (Kamberaj) suggests, by analogy, that the decision to lower detention standards is invalid unless that latter procedural requirement is fulfilled.  There’s a good argument that derogation clause is itself invalid, as a breach of the Charter rights to family life, access to court and the rights of the child. At the very least it must be interpreted in light of those Charter rights, and the similar protections set out in Article 5 of that Directive.



Barnard & Peers: chapter 26
Photo: Zaatari refugee camp in Jordan, by US Department of State

Sunday 28 June 2015

The law of Grexit: What does EU law say about leaving economic and monetary union?




Steve Peers 

A Greek referendum on whether to accept its creditors’ offer is currently scheduled for next week. It’s not clear at this point whether the Greek voters’ refusal to accept the offer would necessarily lead to Greece leaving the EU or EMU, or at least defaulting on its debts. In fact, it is not clear what would happen if Greek voters decided to accept the offer, since it was still under the process of negotiation when the referendum was announced, and may no longer be on the table at the time of the referendum.

However, since a wide range of outcomes are possible, it’s useful at this stage to look at the legal framework for departure from economic and monetary union (EMU) – and in particular whether Greece would have to leave the EU if it left the single currency. (See also my previous blog posts, before and after the last Greek election, and Ioannis Glinavos’ recent analysis of whether Greece could be forced out of the euro).

The starting point is that the EU Treaties contain detailed rules on signing up to the euro, which apply to every Member State except Denmark and the UK. Those countries have special protocols giving them an opt-out from the obligation to join EMU that applies to all other Member States. (I’ll say that again, more clearly, for the benefit of those who claim otherwise: there is absolutely no way that the UK can be required to sign up to the single currency. That would not change in any way if British voters decided that the UK should stay in the EU).

But there are no explicit rules whatsoever on a Member State leaving the euro, either of its own volition or unwillingly, at the behest of other Member States and/or the European Central Bank (ECB).  There’s an obvious reason for this: the drafters of the Maastricht Treaty wanted to ensure that monetary union went ahead, and express rules on leaving EMU would have destabilised it from the outset. Put simply, legally speaking, Greece can’t directly jump or be pushed from the single currency.

In practice, though, its continued existence in the single currency could be made very difficult, as Ioannis Glinavos pointed out, either by the ECB restricting or ending emergency assistance (ELA) to Greece, or by the ECB limiting or removing Greek access to payment systems. It’s possible that any such moves would be legally challenged by the Greek government, and perhaps by other litigants too. It could be argued that they are in breach of EU monetary law as such, and/or that they breach an implied rule that Member States cannot be forced out of monetary union.

But let’s imagine that some sequence of events leads to Greek departure from the official legal framework for EMU nonetheless. This could lead to the fully-fledged introduction of a national currency (the ‘New Drachma’, or somesuch). It could instead lead to some informal link with the single currency – for instance a Greek ‘version’ of the euro, or the use of the euro as Greek’s official currency in practice without participating in the legal framework of EMU. Several countries outside the EU (such as Montenegro) take the latter approach. None of these actions are legal (for a Member State) as a matter of EU law.

For that matter, the less extreme possibility of Greece defaulting on Greek debts without leaving EMU (if that were feasible in practice) is not provided for in the Treaties either. Moreover, other Member States and the EU institutions are arguably legally obliged to refuse debt relief for Greece, in accordance with the Treaties’ no bail-out rule: as the CJEU said in Pringle, this rule allows Member States to loan money to Greece in return for conditions and an appropriate rate of interest. But they cannot simply assume responsibility for Greek government debts. Forgiving those debts would have the de facto result of assuming them – although it might be possibly argued that the letter (but surely not the spirit) of EMU law would allow this as long as the Greek debts were not formally transferred to the EU institutions or Member States. It might also be argued that a Greek default on such debt would be a situation of force majeure, which could be accepted by creditors without this amounting to a breach of the no bail-out rule.

However, the no bail-out rule does not apply to the private sector, which explains the ‘haircuts’ already imposed on private banks, or to international bodies or third States. So Greece could default on its loans to the IMF without infringing the no bail-out rule (although that would surely breach some other legal rule). Thanks to the gods of irony, the IMF is the biggest supporter of Greek debt relief. And equally, without infringing that rule, Greece could refuse to pay back any loans that Putin might be foolish enough to give it.

Of course, the reason we got to this position in the first place was a series of legal breaches: Greece joined the single currency on the basis of allegedly inaccurate economic data (for the debate on that issue, see here), and was not punished (as EU law provides for) when it started to run debts and deficits well above the legal limits of EU law.

So if Greece does leave the EMU framework, and/or default on its debts in violation of EU law, is it obliged to leave the EU, as some have suggested? On the face of it, it’s certainly illegal for a Member State to leave EMU unless it also leaves the EU. But having said that, there would still be no legal obligation for Greece to leave the EU if it defaulted or left EMU.

Why is that? The main legal reason is that the Treaties have a specific legal regime on withdrawing from the EU: Article 50 TEU, as discussed in detail here. Article 50 says that a Member State ‘may decide to withdraw from the Union, in accordance with its own constitutional requirements’. This is manifestly a voluntary choice. There are no rules in the Treaty stating that a Member State ‘shall’ withdraw from the Union in any particular circumstances.

Nor is it possible to throw a Member State out. Article 7 TEU allows a Member State to be suspended for breaching key principles such as human rights, democracy and the rule of law. But there is no provision allowing a Member State to be fully expelled from the Union against its will.

So implicitly but necessarily, the Treaties rule out any expulsion from the EU and any requirement to leave it, in any circumstances.  But the Treaty drafters didn’t provide for States to leave EMU and/or default on debts either. If those States can’t be forced to leave the EU in such circumstances, what is the legal way forward?

Solutions to the tragedy

Classical Greek tragedies often ended with a ‘deus ex machina’ (‘god out of the box’). The playwright had manoeuvred the characters into an impossible situation, and the only way to resolve the plot was by the introduction of a radically new plot element – a god or goddess who could use his or her divine powers to resolve all of the problems which the characters faced. The normal rules of narrative are suspended.

In my view, this is where we stand with Greek participation in the EU’s single currency. Whether or not Greece stays in EMU, a new approach to the legal framework is necessary to try and address the Greek position.

I see four main possibilities. First of all, the Treaties could be amended to try to regulate the situation, if necessary with some degree of retroactivity. There could, for instance, be a new general power for the Eurozone States in the Council and/or the European Council to adopt measures to address the legal consequences of Greece departing EMU. Legally, this is the tidiest solution; but politically, it’s the most difficult one, since the Greek issues would get bound up with the British ones. It’s possible that the Treaty amendment process would fail due to issues related to Greece, rather than the UK – or the other way around.

Secondly, it could be argued that the implied powers of the EU (most obviously, Article 352 of the TFEU) could be used to address the situation. This is a difficult argument since the Treaty drafters considered EMU to be ‘irrevocable’. However, the CJEU has taken a generous approach to measures aimed at saving EMU that many people believed were clearly ruled out: financial assistance in Pringle, and the ECB’s bond purchasing programme in Gauweiler (discussed by Alicia Hinarejos here). It might equally take a generous approach to the legality of any measures aiming to clean up the enormous mess that a ‘Grexit’ would make.

Thirdly, some Greek law-makers have suggested that the Greek debts might be illegal, on the basis of a theory of ‘odious debts’ that violate human rights. As noted above, though, the CJEU has insisted on the conditionality of financial assistance, and it has also repeatedly refused to answer questions from national courts about the legality of those conditions. So at first sight, it looks difficult for this argument to succeed as a matter of EU law, although the Court has not ruled on this issue as such yet.

Fourthly, there’s a novel argument that I haven’t seen suggested before: Greek participation in the euro was invalid in the first place, because of the allegedly inaccurate economic statistics used at the time. The CJEU could declare in the same ruling that all of the legal commitments relating to Greek participation in EMU in the past remain legal, so as not to disturb legal certainty (there’s plenty of precedent for CJEU rulings like that). There are two possible variations here: a) if Greece is still participating in EMU, its participation must be retained for the same reasons of legal certainty; or b) if Greece has left EMU, its departure is legal because the original participation was invalid.

But in either case, a crucial exception to the ‘legal certainty’ rule can justify debt relief for Greece. It’s arguable that due to the essential illegality of the legal framework in which Greek debts were incurred, the no bail-out rule did not fully apply, leaving the creditors and Greece free to negotiate a realistic amount of debt relief. (True, the no bail-out rule does apply to non-Eurozone States too; but Greece borrowed far more than it would have done due to its illegal participation in the euro). If Greece has left the euro already, it could in future benefit from the slightly different regime for financial assistance to non-Eurozone States.

Although Greece would still be formally required to try to join the single currency in future, the EU tends not to pressure countries (like Sweden) which have no real intention of joining. Realistically, no one would pressure it to join for a very long time.

All of these solutions provide, in one way or another, that ‘it was all a dream’: either the debt or the euro participation never existed in the first place, or the Treaty or EU legislation retroactively apply to address the issues, or the Treaty means something quite different from what it was generally thought to mean. It is always preferable to avoid such an approach to the law, but it’s hard to see how any other type of solution could work in this case. Legally, simply put: Greece allegedly should not have joined the euro; it should not have been allowed to run up huge debts; it cannot leave EMU; and it cannot be forced to leave the EU. Economically and politically: Greeks have suffered more than enough; Greece can never pay its accumulated debts while taking austerity measures which depress its economy; but taxpayers of other Eurozone States understandably would like to see their money back.  

These illegalities and economic and political conflicts cannot be resolved within the current framework, so we need to revise it radically. Of the suggestions considered here, the fourth solution has the most appeal: it is consistent not only with the classical tradition of Greek tragedy, but disturbs the current legal framework as little as possible while offering solutions (a fully legal Grexit, effective debt relief) that aim to resolve the situation as best it can be managed. It is impossible to find any solution that would satisfy every legitimate demand, but in my view this approach is the least bad alternative.


Barnard & Peers: chapter 19

Cartoon: Peter Schrank, Independent on Sunday 

Friday 26 June 2015

The Five Presidents’ Report on Completing the EMU: A Glimpse at the Future of Europe



Menelaos Markakis, DPhil student at University of Oxford, Academy of Athens scholar

On 22 June 2015 the Presidents of the EU and Euro area institutions presented their report on ‘Completing Europe’s Economic and Monetary Union’. The report provides a roadmap for ‘deepening’ and ‘completing’ the Economic and Monetary Union (EMU). Building on the measures enacted to combat the crisis, the Five Presidents’ Report makes a wealth of valuable suggestions for strengthening the EMU governance framework and deepening economic integration in the Euro area. The EU Presidents recommend that progress be made towards a genuine Economic Union, a Financial Union, a Fiscal Union, and a Political Union.

An overview of the proposed reforms

The proposed reforms would be implemented in two consecutive stages. In the first stage (1 July 2015 – 30 June 2017), the EU institutions and Member States ‘would build on existing instruments and make the best possible use of the existing Treaties’ (p. 5). In the second stage (mid-2017 to 2025), ‘concrete measures of a more far-reaching nature would be agreed to complete EMU’s economic and institutional architecture’ (p. 5). What follows is perforce merely a general indication of the content covered within the report.

(i)                 A genuine Economic Union

As regards the economic ‘pillar’ of the EMU, the Five Presidents’ Report recommends that each Euro area Member State create a Competitiveness Authority which would be ‘in charge of tracking performance and policies in the field of competitiveness’ (p. 7). The rationale behind this proposal is twofold. Such bodies ‘would help to prevent economic divergence’ and ‘would increase ownership of the necessary reforms at the national level’ (p. 7).

It is patently clear that these Authorities are expected to boost economic convergence in the Euro area, most notably in relation to policy areas which fall outside the EU’s competence. These bodies would have a mandate to ‘assess whether wages are evolving in line with productivity and compare with developments in other euro area countries and in the main comparable trading partners’ (p. 8). Moreover, ‘these bodies could be mandated to assess progress made with economic reforms to enhance competitiveness more generally’ (p. 8). The Five Presidents’ Report further recommends that a Euro area system of Competitiveness Authorities be created, in order to coordinate the actions of these Authorities on an annual basis.

The report seeks to link this proposed technique of policy co-ordination to already existing forms of rules-based governance in the Euro area. The Commission is expected to ‘take into account the outcome of this coordination … in particular for … decisions to be taken under the Macroeconomic Imbalance Procedure (MIP), including whether to recommend the activation of the Excessive Imbalance Procedure’ (p. 8). In principle, Euro area Member States are and would remain free to choose whether to follow the best practices in Europe. However, if they choose not to, the Commission and Council might respond to such divergence by subjecting the Member States concerned to the Excessive Imbalance Procedure. In this connection, the presidents of the institutions explicitly recommend that the corrective arm of the MIP be used ‘forcefully’, in order to ‘encourage structural reforms’ (p. 8). Furthermore, they do not shy away from adding that social partners ‘should use the opinions of the Authorities as guidance during wage setting negotiations’ (p. 8).

At a later stage, ‘the convergence process would be made more binding through a set of commonly agreed benchmarks for convergence that could be given a legal nature’ (pp. 5 and 9). These binding standards would be laid down in EU legislation. In some areas, this would lead to ‘further harmonisation’ (p. 9). In other areas, ‘it will mean finding country-specific solutions’ (p. 9).  ‘Significant progress towards these standards – and continued adherence to them once they are reached – would be among the conditions for each euro area Member State to participate in a shock absorption mechanism for the euro area’ (p. 5), which will be discussed below (iii).

It is not clear which competence basis the EU institutions would use for the adoption of such instruments. It might be the case that the Five Presidents’ proposals rest on the implicit assumption that the EU Treaties will be amended before or during stage two of this process. It might also be the case that the EU institutions plan to make full use of Articles 114, 136, 153 and 352 TFEU and/or of the Treaty provisions on enhanced cooperation.

In this connection, the Constitutional Affairs Committee of the European Parliament has proposed that binding economic policy guidelines for the Euro area countries be adopted on the basis of Article 136 TFEU (p. 10 para. 15). It has further called for ‘the dropping of the restrictions under Article 136 TFEU’ and for ‘the upgrading of this article into a general clause for the adoption of legal acts concerning the coordination and setting of legally-binding minimum standards with regard to economic, employment and social policy’ (p. 16 para. 73). This would give more say to the European Parliament on Country-Specific Recommendations.

Moreover, it should not escape our notice that ‘Country-Specific Recommendations would continue to be used in this context’ (p. 9). Furthermore, the report suggests that the MIP ‘be utilised as a tool … to foster reforms and monitor progress in each euro area Member State towards these common standards’ (p. 9). As such, rules-based and co-ordination based governance techniques would continue to ‘form “hybrid” normative grids and accountability frameworks’ (Armstrong).

(ii)               Towards a Financial Union

As regards the proposed Financial Union, the Five Presidents’ Report recommends that the Banking Union be completed and that the Capital Markets Union be launched. First, the report recommends the full transposition into national law of the Bank Resolution and Recovery Directive. It is recalled that, in the opinion of the Commission, 11 Member States have not fully implemented the Directive into national law. Second, the report argues that, before the Single Resolution Fund (SRF) is sufficiently capitalised, an ‘adequate bridge financing mechanism’ should be created for banks that need to be orderly unwound (p. 11). Third, a common backstop to the SRF should be implemented. In the opinion of the EU Presidents, this could be achieved through a credit line from the European Stability Mechanism (ESM) to the SRF (see p. 11). ‘In due course, the effectiveness of the ESM’s direct bank recapitalisation instrument should be reviewed, especially given the restrictive eligibility criteria currently attached to it’ (p. 11). Fourth, the report recommends that a European Deposit Insurance Scheme be launched. Fifth, it proposes strengthening macroprudential supervision at EU level and ‘review[ing] the treatment of bank exposures to sovereign debt, for example by setting large exposure limits’ (p. 12).

Building on the Commission’s Green Paper on ‘Building a Capital Market Union’, the report further proposes launching a Capital Markets Union for all 28 EU Member States. This would ‘ensure more diversified sources of finance’ and would ‘strengthen private sector risk-sharing across countries’ (p. 12). However, financial integration carries risks with it, because a problem in one country can rapidly spread to another. As such, the Five Presidents’ Report recommends that financial supervision be strengthened in the EU and that a single European capital markets supervisor be created (p. 12).

(iii)             Towards a Fiscal Union

As regards the proposed fiscal union, the Five Presidents’ Report puts forward two proposals. First, it recommends that an advisory European Fiscal Board be created. This body would coordinate and complement the national fiscal councils that have been set up in accordance with Regulation 473/2013. The European Fiscal Board ‘would provide a public and independent assessment, at European level, of how budgets – and their execution – perform against the economic objectives and recommendations set out in the EU fiscal framework’ (p. 14), thereby adding extra pressure on national Executives and legislatures to take EU fiscal rules seriously. ‘Such a European Fiscal Board should lead to better compliance with the common fiscal rules, a more informed public debate, and stronger coordination of national fiscal policies’ (p. 14).

Second, the report proposes the creation of a fiscal stabilisation function for the Euro area. Such a mechanism would enhance public risk-sharing in the Euro area (p. 4) and could build on the European Fund for Strategic Investments. However, it ‘should not lead to permanent transfers between countries or to transfers in one direction only’ (p. 15). ‘It should also not be conceived as a way to equalise incomes between Member States’ (p. 15). Notably, this stabilisation function ‘should be developed within the framework of the European Union’ (p. 15, emphasis added).

Democratic Accountability, Legitimacy, and Institutional Reform

The discussion thus far has focused on the economic reforms proposed by the presidents of the EU institutions. The focus now shifts to proposed reforms for enhancing the democratic credentials of the EMU. Save for the proposals for a more timely and better-structured parliamentary debate during the European Semester (see p. 17), it is hard to see how these proposals add anything to the already existing ‘six-pack’ and ‘two-pack’ arrangements for ‘institutional dialogue’. Be that as it may, the added emphasis on the role of social partners and civil society, as well as on consultation with EU-level social partners, should be readily applauded (see p. 22).

There is a strong focus on output legitimacy and on synergies between the European and national parliaments. ‘After many years of crisis, governments and institutions must demonstrate to citizens and markets that the euro area will do more than just survive. They need to see that it will thrive’ (p. 5).

Moreover, the report lays down a number of proposals for strengthening the EMU governance framework. More specifically, the EU Presidents suggest that the various treaties concluded outside the formal confines of the Lisbon Treaty be incorporated into the EU Treaties and secondary legislation and that the governance structure of the ESM be ‘fully integrated within the EU Treaties’ (p. 18). The report further suggests that a full-time presidency of the Eurogroup be considered and proposes the creation of a Euro area treasury (see p. 18). In the opinion of the authors of the report, ‘the world’s second largest economy cannot be managed through rule-based cooperation alone’; ‘it will need to shift from a system of rules and guidelines for national economic policy-making to a system of further sovereignty sharing within common institutions’ (p. 5). The division of labour between a Euro area and national treasuries is not made clear.

Regrettably, there is no elaboration of what accountability structures should be put in place if a Euro area treasury or fiscal stabilisation function were to be created. Likewise, there is no analysis of the desired accountability mechanisms for the proposed Financial Union. To be sure, requiring the consent of the European Parliament for the appointment of the Chair and the Vice-Chair of the Supervisory Board was a major step forward (see Article 26(3) of Regulation 1024/2013). What is more, there are no proposals for improving transparency in the workings of the Eurogroup, whose role in economic governance has now been heightened. A body actively seeking to foster economic convergence among Euro area countries (see p. 9) should not operate behind closed doors.

Final remarks

There will be no attempt to summarise the preceding argument. It is nonetheless worth highlighting certain features that are of particular importance. First, since ‘all euro area Member States must participate in all Unions’ (p. 5), these proposals would, if implemented,  put the idea of a multi-speed Euro area to sleep. To be sure, it might still be the case that not all Euro area Member States would meet the requirements to make use of the proposed shock absorption mechanism. Second, the EU Presidents’ proposals would, if implemented, entail a massive upward flow of power from the national to the EU/Euro area institutions and bodies. Arguably, this should be matched by increased democratic controls and robust accountability mechanisms. Third, it is particularly noteworthy that the report notes that all members of the Euro area should gain from EMU membership (p. 4). Spreading welfare gains across the Union and promoting economic, social and territorial cohesion might require that more thought be given to the EU’s regional and structural policies (see also the 1989 Delors Report). Lastly, at least some of the proposed reforms might require a Treaty amendment in order to be implemented, and therefore the Prime Minister of the United Kingdom might get his chance to renegotiate Britain’s relationship with the EU and to enshrine the desired precepts in primary law.


Barnard & Peers: chapter 19 
Photo credit: roarmap.org

A legally binding commitment to Treaty change: is it humanly possible?




Steve Peers

Prime Minister David Cameron has already achieved some feats that some thought impossible: a cut in the EU budget, and a majority in the House of Commons for the Conservative party. But are his plans for renegotiation of the UK’s EU membership genuinely impossible for any human to achieve?

The context of this is yesterday’s confirmation that his intention in the forthcoming renegotiation is not an immediate Treaty change, but a ‘legally binding’ and ‘irreversible’ text that (apparently) commits to Treaty change. I have blogged before on the content of possible Treaty changes (see here on economic reform, and here on migration of EU citizens), but I will focus today on the form which a deal might take to satisfy Cameron’s demands.  

There is an EU history of promising Treaty amendments to its Member States. Back in 1992, the Member States’ Heads of State and Government adopted a Decision addressing Danish concerns with the Maastricht Treaty. This was later transformed into a Protocol next time the Treaties were amended (in the form of the Treaty of Amsterdam), although this was not formally promised as such when the original decision was adopted.

Then, in 2008, a similar Decision was adopted to address Irish concerns about the Treaty of Lisbon. Apart from the Decision itself, look closely at point 5 of the European Council (summit) conclusions on that date, which specify that:

‘(iii) the Decision is legally binding and will take effect on the date of entry into force of the Treaty of Lisbon; (iv) they will, at the time of the conclusion of the next accession Treaty, set out the provisions of the annexed Decision in a Protocol to be attached, in accordance with their respective constitutional requirements, to the Treaty on European Union and the Treaty on the Functioning of the European Union;’

A Protocol amending the Treaties to this effect was indeed later drawn up, and entered into force last year.

In 2009, another promise of Treaty amendment was made to the Czech Republic. This time it took the form of the full text of an agreed Treaty Protocol, along with the following text:

‘the Heads of State or Government have agreed that they will, at the time of the conclusion of the next Accession Treaty and in accordance with their respective constitutional requirements, attach the Protocol (in Annex I) to the Treaty on European Union and the Treaty on the Functioning of the European Union.’

A Protocol amending the Treaties to this effect was again drawn up, but the ratification of this Protocol did not go ahead because the Czech government withdrew its request for this amendment.

So with these precedents in mind, what would a ‘legally binding’ and ‘irreversible’ commitment to Treaty change as regards the UK look like? There are various ways it could be done, but here’s a suggestion, based on a combination of existing precedents. It would be possible to combine the Irish and the Czech approaches, and have a Decision of Heads of State and Government with an agreed Protocol attached.  The Decision could also address other issues (changes to EU secondary law) besides the planned Treaty amendment. If the Heads of State and Government agreed at the same time that the Decision was legally binding, as they did in the Irish case, that would suffice to meet one of Cameron’s criteria. The legally binding nature of the Decision could also be set out in the main text (although this wouldn’t be necessary as such to make it binding; the intention of the Heads of State and Government to this effect could be expressed separately, in a linked text, as in the Irish case).

What about ‘irreversible’? In fact the irreversibility of the commitment would be enshrined in the very nature of the Decision: a Decision of EU Heads of State and Government could only be amended by the unanimity of the Heads of State and Government which drew it up in the first place. (Note that this does not mean that the same individuals have to agree, since they are acting on behalf of States, not signing a personal contract). This could be explicitly set out in the main text of the Decision, or in a connected text, if that’s deemed to be desirable.

To reassure those who may worry that the UK government would change its mind, the European Union Act 2011 could be amended to state that the UK government could only agree to amend some or all of this particular Decision after a referendum took place. Or it would also (or additionally) be possible, by amending the same Act, to ensure that parliamentary approval (in the form either of an Act of Parliament, or a resolution in favour) would be needed before the UK government changed its position.

So in that way, the agreement would be ‘irreversible’. But would it be necessary also to build in a more specific guarantee that the intended Treaty amendment would take place? Cameron’s statement did not go that far, and a text in the form as described above would meet the criteria of being ‘legally binding’ and ‘irreversible’ from the perspective of international law. Many treaties go no further in providing for their enforceability in practice. It’s unlikely that Cameron meant more than this: he has a habit of opening his mouth before consulting lawyers. And it’s not as if he could get legal advice from the Minister of Justice – who, like his predecessor in that role, has no legal background whatsoever.

Having said that, it would be possible, if it were deemed desirable, to go further to ensure the enforceability of the Decision. It could be provided, for instance, that the EU’s Court of Justice has jurisdiction to give binding rulings as regards all or some of the Decision. Although the Decision would not constitute EU law as such, Article 273 of the Treaty on the Functioning of the European Union specifies that Member States may agree to give the Court dispute settlement powers as regards issues related to EU law. This power has been used several times in recent years, and the CJEU took a flexible approach to using this clause in its judgment in Pringle.

The clause could be used to ensure the enforceability of commitments in the Decision, as seen in the case of the so-called fiscal compact treaty, where the Court can issue binding decisions on whether part of that treaty was breached by a Member State, and then order the imposition of fines to enforce those binding decisions.

To give an idea of what a Decision meeting all these criteria would look like, I have provided a text in the Annex, which is a new version of the text I discussed in the prior blog post on economic reform. The new points are Sections J and K, and the proposed future Protocol.

Annex I


The Heads of State or Government of the 28 Member States of the European Union, whose Governments are signatories of the Treaties,

Taking note of the concerns of the British people identified by the Prime Minister of the United Kingdom,

Desiring to address those concerns in conformity with the Treaties,

Having regard to the Conclusions of the European Council of [xx date 2016],

Have agreed on the following Decision:



Section A

Enlargement and the movement of persons


In every forthcoming enlargement of the European Union, the current Member States agree that the free movement of persons from a new Member State will be dependent on a unanimous decision of the Council, which will be taken at the latest once the income of the new Member State concerned is 75% of that of the other Member States of the European Union.


Section B

Free movement of persons and social benefits


The Heads of State and Government confirm that, in accordance with the jurisprudence of the Court of Justice of the European Union, Member States may deny benefits to nationals of other Member States who are not workers or self-employed persons.

[Further provisions addressing Cameron agenda]


Section C

Powers of national parliaments


The Heads of State and Government take note of the Commission’s firm commitment that, building upon the Protocols on national parliaments and on subsidiarity and proportionality attached to the Treaties, it will withdraw any proposal which is opposed by one-third of Member States’ parliaments.


Section D

Economic reform


The Heads of State and Government [make specific commitments as regards free trade agreements and amendments to EU legislation, or refer to such agreements and treaties which have already been agreed].  


Section E

Policing and criminal law


The Heads of State and Government reaffirm the United Kingdom’s sovereign power not to opt in to proposals for new legislation on criminal law or policing pursuant to the Protocols attached to the Treaties, and the provisions of the Treaties which require respect for the national identity and legal system of every Member State.

They confirm their strong support for the ongoing process of reform of the system established by the European Convention on Human Rights.


Section F

Reduction of EU competences


The Heads of State and Government reaffirm that In accordance with Article 48 TEU, the competences conferred upon the Union can be reduced. In accordance with Articles 2 and 4 TFEU, the European Union can choose to exercise its competences less intensively in those areas where it shares competence with its Member States.


Section G

‘Ever Closer Union’


The Heads of State and Government confirm that the commitment in the Treaties to ‘ever closer union’ has no specific legal effect. It does not require that further competences be conferred upon the Union, or that the Union must exercise its existing competences. Nor, in accordance with Section D, does it constrain the Member States from adopting Treaty amendments which reduce the Union’s competences, or constrain the Union from choosing to exercise its competences less intensively.

The concept of ‘ever closer union’ allows for different paths of integration for different countries, allowing those who want to integrate to move ahead, while respecting the wish of those who do not want to deepen any further.


Section H

Economic and Monetary Union


The Heads of State and Government confirm that the reference to the euro as the single currency in the Treaties only means that the euro is the currency of some, not all, Member States. It does not in any way prejudice the Protocols which give the United Kingdom and Denmark the possibility of not adopting the euro, or alter the rules governing the extension of the euro to other Member States.


Section I

Member States’ voting in Council


In the event that Section 3 of the [decision on voting in Council] is applied, and agreement is not found within six months, the Heads of State and government undertake that they will not vote in favour of the proposed act. They may instead consider requesting the Commission to propose enhanced cooperation as regards the proposed act, in accordance with the Treaties. In that context, they agree that this constitutes a case of ‘last resort’ in accordance Article 20(2) TEU.

Member States undertake not to vote in favour of any amendment to the [decision on voting in Council] unless all Member States are in favour of that amendment.

Member States undertake to support a request by a Member State in accordance with [Article x] of the Council rules of procedure.

Section J

Treaty amendment

Within one year of the notification by the United Kingdom that the electorate of the United Kingdom has voted to remain a member of the European Union, the necessary steps shall be taken, in accordance with the Treaty on the European Union and the Treaty on the Functioning of the European Union, to incorporate the Protocol attached to this Decision into the legal framework of the European Union.

Note: This text is adapted from Article 16 of the fiscal compact treaty.

Section K

General provisions

This Decision is legally binding and will take effect on the date of its adoption, except where it provides otherwise.

It can be amended only by consensus of the Heads of State and Government.

Where a Member State considers that another Member State has failed to comply with any provision of this Decision, it may bring the matter to the Court of Justice. The judgment of the Court of Justice shall be binding on the parties to the proceedings, which shall take the necessary measures to comply with the judgment within a period to be decided by the Court of Justice.

Note: the final sub-paragraph is based on Article 8(1) of the fiscal compact treaty. It would be possible to limit the Court’s jurisdiction to certain provisions of the Decision only, as is the case in that treaty. It would also be possible to provide for fining Member States which breach a court order, as Article 8(2) of that treaty provides.


PROTOCOL ON [INSERT TITLE]

The Heads of State or Government of the 28 Member States of the European Union,

Having regard to the Conclusions of the European Council,

Have agreed on the following Protocol:

Article 1

Notwithstanding Article 45 of the Treaty on the Functioning of the European Union or any other provision of the Treaties, Member States may provide for a waiting period of up to four years for workers from another Member State to have access to work-related benefits.

Note: Cameron’s requests relating to the free movement of EU citizens might also require other Treaty amendments, as discussed here. So this is just by way of example.

Article 2

1. The Protocol on national parliaments is amended as follows:

2. The Protocol on subsidiarity and proportionality is amended as follows:

Note: Text to be inserted. This would enshrine in the Treaties the agreed changes relating to powers of national parliaments.

Article 3

The provisions of the Treaties referring to ‘ever closer union’ have no legal effect upon the United Kingdom.

Article 4

The following text shall be attached as a Protocol to the Treaty on European Union and the Treaty on the Functioning of the European Union:

“Protocol on voting in the Council of the European Union

Article 1

If members of the Council, representing (a) at least 55% of the population; or (b) at least 55% of the number of Member States necessary to constitute a blocking minority resulting from the application of the application of Article 17(4), first subparagraph of the Treaty on European Union or Article 238(2) of the Treaty on the Functioning of the European Union indicate their opposition to the Council adopting an act by qualified majority, the Council shall discuss the issue.

Article 2

If Members of the Council representing a qualified majority of Members not applying the euro as their currency, defined in accordance with Article 238(3)(b) TFEU, indicate their opposition to the Council adopting an act by qualified majority, on the grounds that it will discriminate against the financial services industry of those Member States, or create an obstacle to free movement of financial services from those Member States, the Council shall discuss the issue.

Article 3

If any Member of the Council indicates its opposition to the Council adopting an act by qualified majority, on one or more of the following grounds:

(a)    the national parliament of that Member State has expressed serious concern that the proposed act would breach the principle of subsidiarity, in accordance with the Protocol on subsidiarity and proportionality;

(b)   the proposed act would not respect Member States’ national identity, in accordance with Article 4(2) TEU;

(c)    the proposed act would severely impact, in that Member State, upon the Union’s aims of creating a highly competitive social market economy, aiming at full employment and social progress, a high level of protection of the environment, or the promotion of scientific and technological advance, as set out in Article 3(2) TEU; or

(d)   the proposed act, in the field of social policy, would not take account, in that Member State, of the diversity of national practices, or the need to maintain economic competitiveness, set out in Article 151 TFEU, or would impose a constraint that would hold back the creation and development of small and medium-sized undertakings, or affect the fundamental principles or financial equilibrium of social security systems, as set out in Article 153 TFEU,

the Council shall discuss the issue.

Article 4

The Council shall, in the course of the discussions referred to in Articles 1 to 3, do all in its power to reach, within a reasonable time and without prejudicing obligatory time limits laid down by Union law, a satisfactory solution to address concerns raised by the members of the Council referred to in Article 1.

Article 5

To this end, the President of the Council, with the assistance of the Commission and in compliance with the Rules of Procedure of the Council, shall undertake any initiative necessary to facilitate a wider basis of agreement in the Council. The members of the Council shall lend him or her their assistance.

Article 6

In the event agreement is not found within six months of discussions held pursuant to Article 4, the Council shall not hold a vote on the proposed measure. A group of Member States may instead consider requesting the Commission to propose enhanced cooperation as regards the proposed act, in accordance with the Treaties. The application of this Article shall constitute a case of ‘last resort’ in accordance with Article 20(2) TEU.

Note: this would enshrine in the Treaties the suggested changes to the rules on Council voting, discussed in the previous blog post, which would give a form of opt-out to Member States with major objections to EU proposals. These suggestions also address relations between the Eurozone and non-Eurozone countries.

Article 5

This Protocol shall be annexed to the Treaty on European Union and to the Treaty on the Functioning of the European Union.


Barnard & Peers: chapter 3
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