Sovereignty, the Constitution and the ‘fiscal compact’

By Eoin Daly, School of Law and Government, DCU

Will Ireland need to hold a referendum to ratify the fiscal ‘compact’ recently agreed by 26 EU member states? To answer this, I will explain the concept and status of sovereignty in the Constitution. This, in turn, dictates whether, and under what circumstances, Ireland’s participation in supra-national institutional systems requires constitutional amendments specifically permitting such arrangements.

Along with a good deal of rhetoric about sovereignty in the preamble and Article 1,  Article 5 of the Constitution says that “Ireland is  a sovereign, independent, democratic state”. This sovereignty principle has legal effect, enforceable by courts; it is not simply a high-minded national mission statement. The description of Ireland as “sovereign” binds all the organs of the State, and has formed the basis of important Supreme Court decisions. Of course, the term “sovereignty” is so vague and open-textured as to accord the judiciary a great deal of interpretive power, straying beyond the domain of law as such, mandating the courts to consider, essentially, the broader nature and ethos of the State, first, in order to determine, second, what specific constitutional strictures flow from this. Reflecting the nature of the concept of sovereignty itself, the Constitution aims, broadly speaking, to protect the sovereign powers of its institutions by fettering the ways these institutions exercise such powers. Sovereign power cannot be exercised against itself.

But there are clear limits to this sort of constitutional oversight. The state’s freedom of action is often voluntarily fettered without obvious constitutional consequences. For courts, at least, the concept of sovereignty our Constitution imposes is a relatively formal and technical one. It certainly does not empower the courts to ensure the Irish nation retains a bracing and virile control over its own destiny, as the aesthetic and rhetoric of the document might ostensibly suggest.

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To illustrate this, one of the question I am most frequently asked by constitutional law students is roughly the following: “if the Constitution protects sovereignty, and everyone says the IMF/ECB bailout gives away economic sovereignty, then how can the bailout be constitutional?”

The answer is roughly as follows: while the Constitution prevents the powers of our Legislature, Executive and Judiciary from being formally devolved or alienated to other bodies, domestic or foreign, it cannot prevent these institutions from exercising these very powers in such a way as substantively fetters their freedom of action in real terms. Thus, while the Constitution prevents legislative powers being devolved or alienated without an appropriate amendment specifically mandating this, it cannot prevent, for example, that loans the State receives are conditioned on the legislative power being exercised in a manner dictated by other authorities.

Unsurprisingly, the students find this answer somewhat baffling and unsatisfactory.

In any case, the real constitutional barrier to participation in supranational institutions is not the broad, sweeping assertion of “sovereignty” in Article 5, but rather, the vesting of legislative, executive and judicial powers, by the Constitution, in the domestic organs of State, the Oireachtas, Government and judiciary, in Articles 15.2.1, 28.2 and 34.1 respectively. The vesting of powers in organs prevents these organs from alienating or abdicating their powers to external bodies. This is clarified in Article 6 which sets out that the “powers of government are exercisable only by or on the authority of the organs of State established by this Constitution.” Thus, the Oireachtas cannot pass a statute devolving legislative power (except on matters of “detail”) to a Minister or any other body. In this way, “sovereignty” is self-limiting; sovereign powers cannot be exercised so as to alienate these very powers. These powers are exclusive, and cannot ordinarily be fettered by being pooled or shared with other bodies, even when shared at the initiative of the body in which the power in question is constitutionally vested.

This is essentially the reason why adhesion to the EEC in 1972 required an amendment to the Constitution. While the conduct of foreign relations comes under the Executive power in the Constitution, and so international treaties can normally be signed by the Government without specific constitutional provision for these, the Government’s exercise of this foreign affairs power cannot be used in such a way as alienates or devolves, to foreign or supranational bodies, powers which, by the Constitution, are vested in the domestic organs. This includes alienation of the executive power itself. It was mainly the extensive and novel nature of community law, its supremacy over national law, for example, the effect of regulations and ECJ decisions, which required a referendum to ratify the initial Treaty in the first place. The signing of this treaty was effectively to alienate to supranational bodies powers which the Constitution vested exclusively in the domestic organs of State; therefore, it would have been unconstitutional had the Constitution not been amended so as to make specific provision for it.

So while Article 29 now specifically allows for membership of the EEC and EU,  Article 29.4.10 also sets out:

“No provision of this Constitution invalidates laws enacted, acts done or measures adopted by the State which are necessitated by the obligations of membership of the European Union or of the Communities, or prevents laws enacted, acts done or measures adopted by the European Union or by the Communities or by institutions thereof, or by bodies competent under the Treaties establishing the Communities, from having the force of law in the State.”

This essentially means that the other provisions in the Constitution vesting exclusive sovereign powers in domestic institutions cannot now be read as invalidating laws, acts or measures “necessitated by the obligations of membership of the European Union or the Communities”. Therefore, constitutional provisions on national sovereignty are qualified with reference to the requirements of EU membership. However, this did not mean that the deepening obligations of EU membership were Constitution-proofed for all time, as opposed to these obligations as they stood at the time Article 29.4.10 was inserted in the Constitution by amendment.  In the landmark Crotty case (1987), in the context of a challenge to the ratification of the Single European Act, the Supreme Court held that the initial “consent” to in Article 29.4 did not cover all future changes in the constitution and powers of the EEC/EU. Treaties devolving significant new powers could not be constitutionally allowed unless an amendment made specific provision for these. This decision essentially underlay the necessity of holding referendums to allow for the ratification of the treaties of Maastricht, Amsterdam, Nice and Lisbon.

Let me now turn to the prospective fiscal compact treaty, which can only be approached at a very general level, given that its precise terms are not yet known. What is known is that this will constitute a multilateral international treaty outside the existing structure and treaties of the EU, and that it will contain some form of supranational sanction upon national budgetary policy. Therefore, this constitutional debate is not at all akin to that which took place on the necessity of the Lisbon amendment. Clearly, the fiscal compact treaty is not “necessitated by the obligations of EU membership” – as Britain has demonstrated – therefore, it is not covered by the existing provisions of article 29.4.10. If a member state can legally remain outside the agreement while still remaining a member state of the EU, participation in this agreement is clearly not “necessitated” by membership. This raises the prospect of fresh constitutional consent being needed, but this would only apply if the agreement formally fetters, afresh, the powers of the national organs.

Then, the question can be phrased as follows: since the fiscal compact treaty is outside the scope of the existing constitutional provisions allowing for EU membership, does it formally fetter or alienate the governmental powers vested by the Constitution exclusively in the domestic organs of State?

Since we do know that the fiscal compact treaty will entail submitting national budgetary powers not only to scrutiny and informal supervision– but to specific, formal supranational sanction – it is almost certain to require an amendment.

Darren O’Donovan argues on humanrights.ie that this treaty will require an amendment for the same reason that an amendment was held in 1996 allowing for the ratification of the statute of the International Criminal Court. He rightly says: “this was necessary because the international agreement was formally transferring powers previously vested exclusively in the organs of our national governments to the International Criminal Court.” Because of the British veto, the fiscal compact will entail an “entirely separate and fresh Treaty regime.” From a constitutional point of view, this means that the question of whether amendment is required is the same as in the case of Ireland joining an entirely new supranational governmental entity. Then, the question turns on the degree of formal sanction power granted to the supranational entity, and the extent to which this correspondingly alienates the powers constitutionally accorded to the domestic organs. In Crotty, the Supreme Court held that the foreign policy provisions of the SEA would require a fresh amendment, because they could partly alienate the Executive’s existing constitutional power to formulate and conduct foreign policy. This was not covered by the preexisting provision validating that which was “necessitated” by community membership. Although its precise form is unclear, a fiscal compact would raise similar problems from the point of view of both legislative and executive power. The power to determine taxation and expenditure is held in trust from the people by the Oireachtas and cannot be alienated by the government (formally, at least) to any supraconstitutional authority. Article 28.4.4 sets out that “The Government shall prepare Estimates of the Receipts and Estimates of the Expenditure of the State for each financial year, and shall present them to Dáil Éireann for consideration”, but it is in any case obvious from the overall constitutional scheme that budgetary choice is a core component of national sovereignty and within the institutional competence of the domestic organs.

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It should be noted that the Crotty rationale was not applied in two unsuccessful challenges in the foreign affairs arena, in Boland and McGimpsey, which involved challenges to the constitutionality of the Sunningdale and Anglo-Irish agreements respectively. These did not involve any alienation of the State’s sovereign executive power in the foreign affairs arena; in particular, the difference with the SEA lay in the bilateral nature of the agreements, with the consequent maintenance, by the State, of an effective veto in respect of the content of any common policy.

Clearly, this qualification on the rule against alienating sovereign powers does not apply in the case of a prospective supranational budgetary discipline body, equipped with sanctions that would be valid at international law. Whatever the eventual detail of the treaty, the political consensus seems to have crystallized around the need for enforcement powers of some sort – meaning that the powers recognized will almost certainly be of an executive nature, from the constitutional standpoint, therefore represent an incursion on the domestic executive’s constitutional authority in a way that is not currently provided for. By contrast, the IMF memorandum of understanding does not create legal obligations at international law, as such, and so does not formally, as opposed to substantively fetter the executive and legislative powers in a similar way.

The Crotty decision apparently caused consternation in the Government in 1987, as it had previously been assumed that the courts would practically never exercise oversight in the Government’s conduct of international relations. James Casey notes (Constitutional Law in Ireland ,3rd ed, 2000): ‘it was suggested that the line between the executive and the judicial power had been blurred, with the result that no one could be certain about the constitutional limits on the Government’s power to conduct international relations.’ Moreover, the full implications of the Crotty decision, and its conception of the underlying concept of sovereignty in the Constitution, is still quite unclear.

The analysis in this post assumes that it will be actually possible to conclude a separate treaty regime. As Darren O’Donovan pointed out, it has been argued that any effective modification to the provisions on monetary union could only be carried out within the existing legal framework. If true, this would change the constitutional calculus in an unpredictable way.

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12 thoughts on “Sovereignty, the Constitution and the ‘fiscal compact’

  1. Many thanks for this informed and enlightening post. There obviously is considerable uncertainty about the nature of the ‘fiscal pact’ that will emerge and there is uncertainty, given the UK’s effective withdrawal from the process, about the ability of the EU’s institutions to enact this in a binding manner for a number of Member States fewer than the total. But a consensus seems to be forming that, whatever finally emerges, it will require an amendment of Ireland’s Constitution. The idea, advanced by Council President Van Rompuy, that specific protocols of existing treaties could be amended requiring only national parliamentary ratification seems to have been shot down comprehensively by Berlin.

    It should also be noted that there is an over-riding political dimension to this. President Sarkozy is determined, by hook or by crook, to be re-elected next May; similarly Chancellor Merkel is determined to be re-elected in Sep. 2013. Although Germany has conceded some inter-governmental oversight (to allow Sarkozy to strut as he campaigns among his voters), this ‘fiscal pact’ is simply a means of imposing sound economic governance on the PIIGS.by the well-governed northern EU Member States. Voters there will not accept anything less if they are to be persuaded to extend some solidarity to the PIIGS. For years all they have encountered from the PIIGS is deception, trickery, evasion and bluster. They are not prepared to accept this any longer, so binding constitutional and legal constraints will be required to enforce sensible economic governance..

    So, not only repentance for previous folly, but also a firm commitment to reform is required by the PIIGS. The penny has not dropped with Irish politicians and policy-makers – and certainly has not dropped with most Irish voters – that, in addition to the Troika-mandated fiscal adjustments, this will require meaningful and deep-seated structural reforms.

    So, with reasonable confidence, I can predict that, to avoid any consideration of these structural reforms and to protect the sovereignty of the Mythic and Transcendental Republic, any ‘fiscal pact’ amendment to the Constitution will be defeated.

  2. Eoin,

    Thanks for posting this comprehensive analysis. Reading between the lines of what the Tanaiste and Minister for Foreign Affairs, Eamon Gilmore, had to say on RTE radio yesterday it is clear that the government would prefer to be told that no referendum will be required. His inference was that the Compact will be an international Treaty that countries can opt in or out of, deftly ignoring the point about sanctions that you mention above.

    Even if the government constructed an argument that a referendum was not required and managed to get the media on side, it is likely their position would be challenged in the courts..

    • @Veronica,

      I’m sure the Government will use every trick in the book to avoid a referendum. I expect we’ll just have to wait and see what kind of beast emerges to see whether or not a referendum would be required. However, if the Government’s likely intent to avoid a referendum is challenged in the courts, as you suggest, the judgement handed down would be based on the fine points of law and could go either way – though I expect the justices might have a slight preference in favour of asking voters directly.

      Irrespective of the Government’s intent or how well founded it might be, the popular demand for a referendum would be directly related to the impotence of the Dail and to the fact that people generally elect TDs to elect a government and to act as constituency advocates and min-ombudspersons. They don’t, in general, rely on TDs to exercise restraint on government on thier behalf. They prefer to do this themselves directly using whatever popular vote is coming up – or, in the case of referenda, may be compelled to come up.

      This is the irony of the executive dominance of government and impotence of the Oireachtas. If there were a better balance between the powers of government and of the Oireachtas, voters might be more inclined to focus on the issues and policies in popular votes between general elections rather than partly, or often mainly, using them to fire a shot across the bow of an overmighty government.

      And, even if the justices were aware that making a judgement in favour of popular consent could result in many voters deciding not on the merits of the issue, but on their feelings about the government or the policies it was pursuing, they could not allow this to influence their judgement.

      I suppose it should not be surprising that such extensive dysfunction often leads to such a damaging application of so-called democratic governance.

  3. @Paul
    @Veronica

    In suggesting that our political and administrative class will do everything they can to avoid having a referendum, I hope you are not overlooking Germany may hold a referendum in Germany on this issue, according to a report in the on-line English edition of Der Spiegel last month

    “A German Referendum on Europe?
    Merkel Eyes Constitution Revamp to Boost EU Powers

    Constitutional judges in Karlsruhe: Are changes to Germany’s cherished consititution afoot?

    Germany’s constitution is highly respected, but it also obstructs the transfer of power from Berlin to Brussels — a fact that has hindered the rescue of Europe’s common currency. At the CDU’s party conference this week, Angela Merkel may push for an overhaul of the Basic Law in order to hasten euro bailout efforts. ”
    http://www.spiegel.de/international/europe/0,1518,797584,00.html#ref=nlint

    I have not followed developments in Germany since that article appeared nor over the weekend. Without strong German, one could not even catch the tenor of any debate in Germany on this.

    Would it not be very ironic if Angela Merkel said she would hold a referendum on this issue (perhaps as part of her re-election campaign), while our governing classes are hoping to avoid it?

    As this would be the first Federal referendum since the FRGermany was founded, the outcome cannot be guaranteed – regardless of what question or questions are put.

    • @Donal,

      I’m not overlooking this at all. Although the details have yet to be worked out regarding what might be put to parliaments and voters throughout Europe, I expect Germany (and the Netherlands, Finland, Austria, the other smaller northern and central EZ members and (most likely) Denmark and Sweden) will want to see a solid constitutional or legislative commitment to sound economic governance (as they interpret it) by the PIIGS before voters there will be asked to alter their constitutional arrangements in a way to provide some solidarity with the PIIGS.

      This ‘fiscal pact’ is intended to impose sufficient fiscal austerity to provide an incentive for the PIIGS to pursue the structural economic reforms that, together with fiscal discipline, will provide the necessary assurance to sovereign bond market
      participants.

      The Irish Governemnt may think that going along with the programme of fiscal adjustment mandated by the Troika and presenting an optical illusion on the structural reforms mandated will be sufficient. But I fear it (and Irish citizens) will find out the hard way that it isn’t.

      I believe Veronica is contending that, although it may duck and dive to avoid one, the Government will be trapped eventually by internal constitutional and legal constraints. I would go further and argue that external pressure will be brought to bear. Quite simply, German voters (and other northern EU voters) will not accept the word of an irish Government (or that of any other government of the PIIGS) – even if it is confirmed by parliament. It’s a case of ‘fool me once, shame on you; fool me twice, shame on me’.

      A simple question will be posed to Irish voters indirectly by German and other northern EU voters: do you consent to apply and abide by the nature of economic governance required to be a member of this club? If you do, we will help; if you don’t, you’re on your own.

      And given the fiction that has been spun for more than two centuries about this mythic Republic, the excessive executive dominance that requires citizens to exercise restraint on government directly and the general discontent with government policy, it is almost certain that voters will reject what is on offer. But this time, unlike Nice and Lisbon, they won’t be asked a second time.

  4. The agreement last Friday states “General government budgets shall be balanced or in surplus; this principle shall be deemed
    respected if, as a rule, the annual structural deficit does not exceed 0.5% of nominal GDP. Such a rule will also be introduced in Member States’ national legal systems at constitutional
    or equivalent level.”

    Obviously this requirement could change in a any future negotiations, but, it seems hard to see how the deficit-limit agreement can be said to have a constitutional basis unless it’s in the constitution itself.

    And as this won’t be an EU agreement, it will be impossible to say it’s implied in the Lisbon (or any other) Treaty.

    The agreement is here http://www.consilium.europa.eu/uedocs/cms_data/docs/pressdata/en/ec/126658.pdf

    There is a good article on why this agreement seems economically illiterate as a rule here http://www.project-syndicate.org/commentary/orourke1/English

  5. This agreement should not be examined literally as it is totally economically illiterate; it is simply the proxy for an attempt to impose sound economic governance on the PIIGS – and, indirectly, on France and Belgium. It is also designed to deflect attention from the impact of persistent north-south current account imbalances and from the likely insolvency of many core EZ banks.

    The moral of the story for small economies (and a debates persists as to whether Ireland is a small open economy with limited autonomy or simply a regional economy within a much larger economic entity) is to stay well away from the edge of any cliff – fiscal, monetary or financial. Finland managed to do this since it joined the Euro; Greece, Ireland and Portugal didn’t.

    In actual fact for Greece, Ireland and Portugal, since they are in an official support programme because they have demonstrated convincingly an inability to govern themselves responsibly, there is a strong case for not giving them any say in whatever agreement is finally presented for ratification. They should be given the option of consenting (or not consenting) to what has been agreed prior to exiting their support programmes.

  6. My understanding from the above is that the new arrangement is effectively a type of loan facility – instead of itty bitty loans from here and there there would instead be an EU wide funding facility of some as yet to be determined format – and there’s nothing stopping those giving the loan (the ‘EU’) from dictating the terms of that loan, one of which is that a country getting the loan (Ireland) will have to agree to a balanced budget etc.

    Obviously the government will do whatever it takes to get the answer ‘no’ to any question asking if a referendum is needed.

    Reality is Ireland doesn’t really have a leg to stand on when it comes to making demands of the EU. Our only card is to default on our banking debt and let the French and Germans clean up their own mess but that would mean out budget deficit would have to wiped out overnight.

    Maybe that’s not such a bad thing as if nothing else it would make Irish people face reality and who can say that the ‘markets’ wouldn’t step in to make up a funding gap? High risk gamble though and it would mean massive cuts at all levels of the public sector especially at the top.

  7. it is well understood that if you tax a particular item heavily and progressively a point comes at which the total take begins to decline. (and the people in search of the item may be driven to black market alternatives.)

    deciding whether to default or not is a decision that may have already passed us by. austerity has a limit – to go beyond which would constrict the economy and make us less able to pay interest.

    perhaps the economy can split into two ? – a ‘unionist’ society that complies with euro requirements – and a ‘rebel’ black market economy for those in home mortgage default and on tax strike.

    they say that you cannot get blood out of a turnip.

    present hope of sympathetic german loans is like prescribing blood transfusions for turnips.

  8. Eoin, this is most useful. Most of the analysis of EU poitics in Ireland is devoid of any solid constitutional perspective, especially as referendums draw closer and the white heat of political competition kicks in. I attach below my own article from today’s Sunday Business Post which introduces some more issues to the debate. Whilst I agree that there is still a great degree of uncertainty about the shape of a final agreement (which in itself may also constitute only a starting point for reform of the Eurozone regime), I cannot see anything but a decisively changed fiscal landscape facing us. Any kind of balanced budget amendment to the constitution would be a real departure from the existing regime, as it would be also for other member states. And whilst in the long run this might be something truly positive (an end to’ boom and bust’ cycles?) it also carries immense dangers, as Martin Wolf pointed out in the Financial Times earlier this week. And it is of profound significance for any kind of substantive democratic governance practiced in this state and others. Could you perhaps post something here about how such a balanced budget amendment would be incoporated into our constitution? The point I make in my article is that we should all welcome the opportunity for the Supreme Court to review Ireland’s relationship with the European Union. In fact such a juridical review is long overdue, as it is almost quarter of a century since ‘Crotty’. Although the German Constitutional Court performs a different function to our Supreme Court it is worth examining its input into German EU decision-making. For my part I would like to see the Oireachtas much more engaged with EU affairs and involved in the decision-making processes in Brussels. Anyway here is the article.

    ‘Do we Need a Referendum?

    Last week’s dramatic European Council meeting in Brussels seems to have finally signalled a collective EU will toward resolution of the Euro crisis.

    But quite apart from the problems posed by the United Kingdom’s latest lapse into self-imposed and self-defeating isolation, the big challenge ahead will lie in the ratification of the newly minted fiscal compact. And although there has been much speculation that referendums would be held in multiple jurisdictions, Ireland might well find itself once again in the unique and lonely position of being the only member state to ask its citizens to vote on the treaty change. And, as Minister for Europe Lucinda Creighton suggested in the immediate aftermath of the summit meeting, it is anyone’s guess whether such a referendum will succeed.

    Prior to the Brussels European Council there was a broad consensus amongst constitutional lawyers and political scientists that any Irish decision on approving new Eurozone rules could be implemented by the Oireachtas. But the seemingly far reaching implications for sovereignty in approving the fiscal compact will surely outweigh any nervousness about volatile public opinion. In any case should the government decide to deny the people a referendum it is almost certain that a constitutional challenge will be made by Irish Euro-sceptic groups of one hue or another.

    It is unfortunate that the Supreme Court has not been asked to clarify the relationship between executive and parliamentary authority over EU affairs since the celebrated Crotty case of 1987. Back then Raymond Crotty took a case to the High Court arguing that the Irish government’s intention to ratify the Single European Act by parliamentary statute was in conflict with the Constitution: Irish sovereignty was threatened by the transfer of key economic competences to the supranational institutions in Brussels.

    In a complex and multi-part judgment the Supreme Court found in Crotty’s favour by a narrow majority of 3 to 2. The problem with the Crotty’ test’, however, lies in its ambiguity. In a crucial part of its judgment the Court argued that the state does have the right to ratify amendments to the EU constitutional order so long as such amendments do not alter the essential scope or objectives of the (European) communities. The reservations of the Court revolved more around the embryonic plans to collectivize European security and defence arrangements than any substantive concern that Irish sovereignty would be traduced by the deepening of economic integration via the Single European Market.

    Subsequent to that decision, however, successive Irish governments interpreted the Court’s position to mean that all future changes to EU treaties had to be decided by popular referendum rather than parliamentary ratification. Ireland has thus held 7 further referendums on EU treaty change, and the results have demonstrated extreme volatility.

    Until recently the government has insisted that any amendments to the Lisbon Treaty connected to Eurozone reforms would not require a referendum. Its reasoning seemed to be that the proposed changes fell far short of what the Crotty case demanded (or was interpreted to demand). The European Stability Mechanism (ESM) would not alter ‘the essential scope or objectives of the EU’. Or at least that was the thinking until last week’s summit dramatically changed the terms of the economic framework underpinning the Eurozone. In particular the strengthening of economic and budgetary surveillance by the European authorities as well as the new instruments of sanction against those countries which break the rules of the fiscal compact imply a fundamental change in the nature of sovereignty. In effect it will make permanent much of the current framework of external oversight (by the troika) of the Irish public finances.

    Some commentators continue to argue that the Dail might reasonably be entitled to legislate for the fiscal compact without recourse to a referendum. Whilst this might constitute a more ‘efficient’ solution to the problem presented by the Eurozone’s continued existential difficulties, it is far from satisfactory from the point of view of democratic legitimation, given the scale of the recent EU ‘penetration’ of Irish economic sovereignty. The fiscal compact does not merely constitute an organic or benign evolutionary development in Ireland’s economic relationship with Brussels. In fact, if passed into law, it would constitute the most revolutionary development in the Irish economic landscape in the history of the state. In effect it would provide for a permanent and deeply penetrative oversight of Irish fiscal policy by EU authorities, including a balanced budget amendment and automatic sanctions for transgression which could condemn this country (and others within the Eurozone) to lengthy periods of economic stagnation.

    A Supreme Court judgment on the fiscal compact is necessary not just to throw light on these evolving supranational fiscal arrangements. As importantly it would specify whether the competence to ratify EU treaty changes lies with the Oireachtas or the Irish people. Such a judgment would help clarify the nature of Ireland’s constitutional relationship with the EU, in a context where there have been historically significant economic and political developments far beyond those which the Supreme Court justices of 1987 dealt with (or indeed envisaged) in the Crotty judgment.

    The EU has after all widened its membership from 12 member states in 1987 to 27 today with Croatian accession agreed at last week’s meeting and scheduled for 2013. It is arguable that successive enlargements have changed the EU much more radically than, say, the Amsterdam Treaty or the Nice Treaty. And yet Irish voters have never been asked to vote on any new accession. The scope of the integration process has also considerably deepened over 25 years so that a very significant portion of domestic policy now emanates from Brussels. The fiscal compact is thus the latest in a series of supranational economic bargains that can only be understood as a form of advanced ‘Europeanization’ of the domestic legislative landscape.

    We should also take note of the practice in other jurisdictions where both the courts and national parliaments play a much more prominent part in EU decision-making. The Danish government is constitutionally obliged to take instruction from the European affairs committee of its national parliament, the Folketinget when it negotiates with EU partners. Thus Danish MPs have an input into EU policy which their Irish counterparts in the Oireachtas can only dream about.

    The balance of power is also much more nuanced in Germany where the Constitutional Court has been a visible and increasingly assertive actor within the domestic processing of EU affairs, forcing Chancellor Merkel’s government to provide the Bundestag with important powers of oversight of EU-related legislation, particularly on budgetary matters.

    The Court, based at Karlshrue, has been none too reluctant to set down what it considers to be the appropriate limits to EU integration, consistent with the German Basic Law (constitution). In a landmark ruling in June 2009 the Court made Germany’s ratification of the Lisbon Treaty conditional upon the passage of new legislation giving the Bundestag enhanced powers of scrutiny over European affairs. Most recently, in September 2011, the Court ruled on three lawsuits brought by prominent lawyers and economists against Germany’s participation in the EU bailout of Greece and other countries. Although the court rejected the substantive claim of the litigants it also handed them a partial victory by insisting that the Bundestag be given a greater role in any future bailouts and, more generally, in German decision-making on European Union issues. In the Court’s view the Bundestag had lost control over its constitutionally mandated right to determine budget policy and thus control how German taxpayers’ money was spent. The Court’s decision means that the German government will now have to ask the Bundestag budget committee before it agrees to any future bailout decisions at EU level. The latest Karlshrue decision thus considerably strengthens the power of Germany’s national Parliament vis a vis the executive.

    Because of the absence of the Supreme Court from Ireland’s EU engagement over the last 25 years, much of the discussion surrounding options for ratification of the fiscal compact has been taking place in a legal – constitutional vacuum. Therefore a Supreme Court hearing, brought under Article 26 of the Constitution, promises to bring much-needed clarity to the debate on how to proceed. If the Supreme Court were to decide that the fiscal compact requires popular consent the EU will be faced with the prospect of yet another Irish referendum on Europe. Thus the prominent part played by Ireland in Europe’s extended economic crisis looks set to continue.

    Dr. John O’Brennan lectures in European Politics at the National University of Ireland Maynooth (NUIM) and is Director of both the European Studies programme and the Centre for the Study of Wider Europe at NUIM (www.widereurope.ie ).

  9. @John O’Brennan,

    You raise many interesting points, but it appears that your discussion is predicated on the assumption that this draft ‘fiscal pact’ will be agreed eventually in a form suitable for popular or parliamentary ratification in all affected EU member-states. This is far from certain.

    The Euro crisis, at its core, is a political problem. The two leading politicians, one seeking re-election next year and the other hoping to be re-elected later in the following year, believe that they cannot reveal to their voters that they (the voters) placed their savings in banks and financial institutions that they (the politicians – and their predecessors) did not supervise or regulate properly. These banks and financial institutions lent foolishly and recklessly to the PIIGS. The second thing they are unwilling to reveal is that the current account imbalances within the EZ their policies have promoted are unsustainable and are a major cause of the crisis. The only things they harp on about and which is objectively and selectively true – and which feeds their voters’ resentments – is that, in various combinations, the public and private sectors in the PIIGS borrowed foolishly and recklessly, that these countries are poorly governed and that there are huge structural inefficiencies in the PIIGSs’ economies.

    Giving the over-riding lust of politicians everywhere to secure and retain power there is no possibility that these leading politicians will tell their voters the full story, take the steps to resolve this crisis and kiss goodbye to their chances of re-election. This ‘fiscal pact’ addresses only the final part of this story and, on its own, is totally inadequate. Most participants in the international capital markets recognise this and they are doing all they can to signal to the leading politicians to confront the ‘full story’. But the leading politicians seems to be determined to suspend disbelief and are inviting the bond market participants to contemplate the impact on them if they were to persist in creating mayhem in the bond markets and, possibly, lead to the collapse of the Euro.

    It’s a ‘phoney war’ at the moment and it’s not possible to determine how long it may be sustained.

    On the Irish front it appears the Government is applying a crude political calculation. It’s using a likely referendum on the ‘fiscal pact’ to extract concessions on the Anglo promissory notes from the ECB. This, of course, very conveniently distracts attention from the major governance and structural refroms that it should be pursuing while Ireland is protected from the international bond markets.

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