The fiscal compact, officially the Treaty on stability, coordination and governance in the economic and monetary union (TSCG), was signed yesterday by 25 of the 27 governments of the EU member states. Only the Czech Republic and the United Kingdom chose to exclude themselves at this stage.
The TSCG text is available in the 22 authentic treaty languages (Bulgarian, Danish, Dutch, English, Estonian, Finnish, French, German, Greek, Hungarian, Irish, Italian, Latvian, Lithuanian, Maltese, Polish, Portuguese, Romanian, Slovak, Slovenian, Spanish and Swedish).
A common concern
The recital reminds us of the obligation of all member states of the European Union to regard their economic policies as a matter of common concern. This obligation was introduced by the Maastricht Treaty, which was signed twenty years ago.
Recently, the failure of the states to adhere to and to enforce this obligation has turned it into a grave concern, common to all EU citizens (and beyond).
The TSCG still builds on the principle of national economic policies, which need to be coordinated intergovernmentally, although it purports to shrink the straitjacket.
Treaty law and enhanced cooperation
The aim of the signatories is to incorporate the substance of the TSCG into the legal framework
of the European Union within five years (Article 16). According to Article 10, enhanced cooperation is seen as an option.
This intergovernmental treaty, close to but outside the institutional framework of the European Union, went through six different drafts, which were not officially made public. However, the draft texts were leaked to selected media. Even if selective leaks violate the principle of equality between EU citizens, openness was served.
According to Article 14(2) and (3), the TSCG needs to be ratified by at least twelve euro area member states to enter into force among them.
The meaning is twofold. The final number of ratifying states may be less than 25. For constitutional reasons Ireland is going to call yet another national referendum. Other countries may stumble when they try to transpose the changes into national law, although aid from the European Stability Mechanism (ESM) will become conditional upon the ratification of the TSCG.
On the other hand, a few dropouts won't spoil the party for the masochists.
The provisions on governance (Euro Summit) apply to all parties from the original entry into force. See Article 14(4). The TSCG legalises the recent practice of euro summits, which have eclipsed the Eurogroup, which meets informally but is mentioned in an EU Treaty protocol.
For the non-euro countries, the TSCG is mainly a symbol of political alignment, since they undertake no concrete obligations, if they do not expressly undertake obligations. See Article 14(5). However, according to Article 12(3) they are granted limited participation rights in the Euro Summit.
The TSCG as a whole applies to the eurozone countries, although only a part of the provisions are real additions to the euro area acquis.
The signing of the TSCG took care of the ”austerity” part at the European Council 1-2 March 2012, so the main part of the EUCO meeting could – for a change – be devoted to economic growth, competitiveness and jobs.
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