A NEW EU TREATY?: WHAT IT MEANS FOR US

UNCLAS SECTION 01 OF 04 BRUSSELS 002001

SIPDIS

SENSITIVE
SIPDIS

E.O. 12958: N/A
TAGS: PREL EUN PGOV PHUM ECIN PBTS
SUBJECT: A NEW EU TREATY?: WHAT IT MEANS FOR US


1. (SBU) Summary. Given barely even odds six months ago, an
agreement on institutional reform at the June 21-22 European
summit has reached the realm of probability, with a strong
Polish objection on voting weights as the most serious
obstacle to agreement. The pressure to reach a deal is
enormous for the substantial majority of member state
governments who want to continue further integration. A
failure to reach agreement will not "bring the EU down". The
union has, after all, continued to function without reforms
since the rejection of the constitutional treaty by voters in
France and the Netherlands in 2005. The real problem is that
a second highly visible failure to reform the institutions
will land the Union in another, extended political funk. It
is important to note, however, that a few member state
governments may privately greet such a failure (and the
resulting slow-down in EU consolidation) with a sense of
relief.


2. (SBU) The good news for the EU is that there is a large
majority aligned on most of the key issues. The outlines are
now clear of a "simplified" treaty, shorn of the
constitutional title but which nevertheless manages to
incorporate almost all the original treaty's key elements.
The joker in the deck, however, is that "most countries" is
not good enough - all 27 must line up this week, leverage
that the Poles in particular are eager to exploit.


3. (SBU) For the in-coming Portuguese presidency, the
nightmare scenario is that the leaders, caught between Polish
intransigence and an intense desire to get a deal, will
settle for a nicely-packaged, but "false", consensus - one
that kicks crucial political disputes into the
inter-governmental conference (IGC) that will be charged with
wrapping up the package by Christmas. The Portuguese have
already hinted that they would refuse to open the IGC if they
think this week's agreement is too thin. Nevertheless, our
gut sense is that a weak deal is precisely the most probable
scenario.


4. (U) This message will spell out the key issues being
debated, their implications for EU decision-making and for
U.S. policy interests, and (where we dare) a USEU prediction
for the bookies. In the end, "success" will indeed be
avoiding another round of extended self-reflection that could
distract EU attention from working on the global issues that
we, and they, need to address. End Summary.

Key Issues
--------------


5. (SBU) Issue: Voting representation in (most) EU
decision-making

What's at stake: power, prestige, and sovereignty. Although
EU decision-making is consensual by tradition, member state
voting weights on "first pillar" (mainly economic
legislation) are loosely based on national population and
size of economy. However, the 1999 Nice treaty deal gave
Poland and Spain far more weight than their due, and Germany
far less. The proposed new voting system would create a
"double majority" voting system (55% of member states plus
65% of the total EU population). Although the last Polish
government signed off on this reform in the Constitution
draft, the present government has reneged and turned it into
a red-line issue. The usual EU approach to recalcitrants is
to buy them off, but our contacts admit that there are only
limited options here. At best, sweeteners to the Poles could
include a stronger provision allowing a minority of states to
delay Council decisions; giving the Poles more weight in the
Commission or the European Parliament; or adding a clause on
EU energy solidarity.

USEU prediction: This is a deal-breaker question. With the
stakes so high, pressure will be intense on Poland to fold.
More likely, however, our contacts think that the Poles will
force the question into further study, before or within the
IGC.

Implications for the U.S.: The proposed change in the voting
system would require an adjustment in our EU lobbying
tactics, with Poland and Spain the biggest losers and Germany
the clear winner.


6. (SBU) Issue: EU Charter of Fundamental Rights

What's at stake: incorporating the charter of fundamental
rights into EU law could mean more rigid EU limitations
regarding workers' rights. A red-line for the UK, this is
the second-most contentious political issue and the leaders
will not want to kick it down to the IGC. It is already a
given that it will no longer be in the treaties themselves,

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but only referred to as an annex. The fight will be over how
much legal value it is given.

USEU prediction: This will be largely a fight between the UK
and the Latin member states, with the others in various
stances in the middle. Well-placed Commission contacts
predict they will end up with an ugly opt-out or a
non-binding article in the treaty.

Implications for the U.S.: in some ways this is as much about
political symbolism as its legal impact. The ECJ has already
incorporated most of the rights and principles contained in
the Charter as sources of law when applying "General
Principles of Community Law" in its decisions, meaning this
change would not greatly alter the status quo.


7. (SBU) Issue: Justice and Home Affairs (JHA) decision-making

What's at stake: the member state veto over justice and home
affairs cooperation. This is one of the few truly
substantive changes, as compared to the rest which focus
mostly on process. The proposed change would move JHA issues
out of their protective cover of required unanimity.
Instead, sensitive judicial and law enforcement issues would
become subject to majority decision-making as well as the
involvement of the European Parliament and European Court of
Justice.

USEU prediction: The proposal is likely to go ahead, but with
a provision permitting a limited period of further discussion
and, ultimately, an opt-out if any member state disagrees
with the eventual majority decision. The UK and Ireland
reportedly want such a provision to protect their legal
systems, which differ from those in much of continental
Europe.

Implications for U.S.-EU relations: would facilitate EU
decision making on judicial and police cooperation. However,
the additional powers of the European Parliament -- often
less like-minded with the U.S. than other EU institutions on
JHA issues -- could move EU policy in a direction we don't
like.


8. (SBU) Issue: creation of an EU "Foreign Minister"

What's at stake: boosting the EU's global role,
effectiveness, and profile. The EU FM post will combine the
existing policy functions of CFSP High Rep (Solana) with the
role, budget, staff, and programs of RELEX Commissioner
(Ferrero-Waldner). He/she would also control the new EU
diplomatic service that will create for the first time a
3500-strong professional EU diplomatic corps (the majority of
whom will be seconded from national services). In theory,
this would create synergies, since the Council's foreign
policy apparatus today has no ability to tell the Commission
how to spend its development and foreign cooperation budget.
The new EU FM would play a substantially bigger role in
conducting CFSP/ESDP and take over external representation
duties from the current rotating Presidency.

USEU prediction: the job will be created, as most member
states agree to the double-hatting concept, but the name
"foreign minister" will not survive - because the Brits,
Dutch, and Czechs say it sounds too much like a national
government position.

Implications for U.S.-EU relations: The new EU FM would be a
substantial personality. Not only would he chair the Foreign
Affairs Council, but more importantly, his control over the
combined Council/Commission bureaucracy would give him
enormous ability to shape the foreign policy agenda and to
bring resources directly to bear on foreign policy issues.
However, there is potential for confusion over lines of
authority, as the Foreign Minister will report to the
Commission President but derive his powers from the Council.
In the long run - assuming the personalities mesh well - it
should increase coherence of EU foreign and security policy,
since the policymaker will also control the purse strings.


9. (SBU) Issue: EU permanent President of the European
Council

What's at stake: Surprisingly little. The EU would still
maintain rotating presidencies by member states for the
specialized Council meetings, but the new permanent President
would ensure top-level coordination and continuity in the
EU's work (compared to the current six-month change). The
term would be for two and a half years, renewable once.

USEU prediction: This proposal seems to inspire neither much
enthusiasm nor opposition. Not as controversial as EU

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"foreign minister" so will probbly happen.

Implications for U.S.-EU relations: The new President will
represent the Union at the Heads of State/Government level on
common foreign policy (CFSP) issues. However, this could
create confusion as well as a potential turf battle with the
Commission President Barroso.


10. (U) Issue: Reducing the number of Commissioners

What's at stake: trimmingthe Commission in 2014 to nominees
of two-thirds of member states chosen by equal rotation
(currently, one Commissioner per country). Also up for
discussion is a French proposal: should the EP select the
Commissioners?

USEU prediction: This may be an area that could be traded
off to the Poles in exchange for Warsaw's cooperation
elsewhere.


11. (SBU) Issue: Additional co-decision rights for European
Parliament(EP)

What's at stake: Power gain for the EP. A "tearing down" of
the pillar system would increase the number of areas where
decisions are made jointly with the EP from 50% of EU
legislation to 95%. The EP also stands to gain even more
power over the EU budget. (Nevertheless, the EP's role in
CFSP will remain limited.)

USEU prediction: Although there remains opposition to
completely tearing down the pillar system, under any scenario
except a complete failure to agree on any reforms, it looks
like the EP will win big.

Implications for U.S.-EU relations: A power gain by the EP
would lead us to increase our lobbying efforts there.
Left-center MEPs have shown a knack for using the Parliament
as a public forum for criticizing the United States.
Nevertheless, there are a number of Members (including the
bulk of the EP's largest, center-right, party) who are
favorable to our positions on many issues.


12. (U) Issue: giving national parliaments a voice in EU
decisions

What's at stake: the Dutch are pressing for national
parliaments to have the right to send warnings to the EU
institutions if they think the EU is acting beyond its
competencies. A tougher version would give the national
parliaments the ability to actually force the Commission to
propose laws in specific areas or even veto EU legislation.

USEU prediction: Increasing national parliaments' powers
will be a sweetener for the Netherlands and UK, who need to
show their constituents that this reform is really different
from the constitution. Some version of this (though likely
the weaker one) will make it in.

Implications for the U.S.: This could mean broadening our
lobbying efforts on EU issues to more consciously include
member state parliaments as well.


13. (SBU) Issue: The future of the Common Foreign and
Security Policy (CFSP)

What's at stake: Unlike pillar one issues, decision-making
on foreign and security policy (CFSP) has always been
consensus-based, on the basis that foreign policy is a member
state rather than a joint community prerogative. Although
the voting process won't change under the reform proposals,
the ideological foundation just might: the reforms would
move CFSP out of its current isolation and unite it with all
"policy" decision-making in the "Treaty of the Community".
Potentially, this would set the stage for a later shift to
majority voting on CFSP issues and is seen by proponents as
giving a strong political boost to the common foreign policy.


USEU prediction: Not a done deal, as national governments
will be loath to give up any control of CFSP. Likely to be
strong pushback from some member states.

Implications for the U.S.: Tough to assess. Member states
are already using Brussels as a platform to coordinate
foreign policy -- this shift will likely merely formalize
that. The important point here is that it is not enough to
focus on the EU-3 or the big five. Minority member states
can help block a policy we don't like (or vice versa).


14. (SBU) Issue: single legal personality

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What's at stake: how the EU is represented in international
organizations.

Implications for U.S.-EU relations: The "additionality"
question. By conferring on the Union an explicit legal
personality that would absorb that of the European Community,
a new treaty would make the EU a fully recognized subject of
international law. This may enhance transparency and
efficiency. More importantly it will certainly be used by
the EU institutions -- if not necessarily the member states
-- to push for additional EU representation in international
organizations.


15. (U) Issue: symbols of the constitutional treaty
(European flag, anthem, the word "constitution")

What's at stake: nothing of substance, but for the true
believers in a future federal Europe, the symbols were an
essential signpost of Europe's ambitions.

USEU prediction: EU Foreign Ministers already agreed June 17
to drop the term "constitution" as well as the flag and
anthem from the text of any new treaty.

The Road Ahead
--------------


16. (SBU) Comment: While nobody thinks member states can
reach decisions on all of these issues at the June 21-22
European Council, insiders hope that the key political
choices will be made, with only four or five of the
less-contentious issues left to be resolved by a largely
"technical" IGC. Senior Portuguese reps here seemed to be
thinking in these terms when they told us that they did not
expect the IGC to "monopolize" their time. If this scenario
holds, the Portuguese could formally open the IGC at the July
24 General Affairs Council, table "summer reading" documents
there, begin substantive work in September, and conclude by
Christmas. Scenario two (a deal full of hedges and holes)
would certainly disrupt this optimistic timeframe. Scenario
three (no deal) is a nightmare no one here wishes to
contemplate (though all agree that it will not stop the EU
machinery from functioning).

After the IGC: avoiding the referendum trap
--------------


17. (SBU) The member states have carefully limited the
present agreement's exposure to public referendum by deciding
that these reforms will only be "amendments" to the existing
treaties, rather than new ones (as were the treaties of Nice
and Amsterdam). Nevertheless, the EU and member state
governments will still have to sell any changes to the
European public -- partially in order to avoid further calls
for public referenda. A Financial Times/Harris Poll
published June 18 showed the majority of Spaniards, Germans,
Brits, Italians, and French "consider the post-constitution
treaty important enough to warrant a referendum". Gordon
Brown in particular may come under pressure from British
conservatives to call for a referendum. Our contacts say
that the leaders will want to focus their public message on
the EU's ability to deliver more and better services.
Specific areas they will cite for "increased delivery" are
climate change/energy, judicial and law enforcement, and
external relations. End Comment.
GRAY
.