ANCaps Celebrate: EU Faces Gridlock After Ireland Rejects New Governing Treaty

June 14 (Bloomberg) -- Ireland's rejection of the European Union's new governing treaty is set to plunge the EU into gridlock, torpedoing plans to parlay Europe's economic strength into more clout in world affairs.

Irish voters shot down the treaty in a referendum two days ago by 53.4 percent to 46.6 percent, vetoing an agreement that required approval by all 27 EU countries, according to results announced late yesterday in Dublin. The rebuff turns next week's EU summit in Brussels into a crisis-management exercise, overshadowing efforts to tackle soaring food and energy costs.

``This vote doesn't resolve any of the European problems, it almost makes every European problem bigger,'' Luxembourg Prime Minister Jean-Claude Juncker told reporters in Luxembourg. ``It was a bad choice for Europe. There's no Plan B.''

European leaders vowed to press on with ratification of the 277-page rulebook, which was intended to streamline the 27- nation bloc's decision-making machinery, while conceding they were in ``uncharted territory.''

Signed in Lisbon in December, the agreement would create the post of president, strengthen the foreign-policy chief, give more power to the democratically elected European Parliament and shrink the European Commission, the EU's executive agency.

A week after French fishermen battled riot police in Brussels in a protest over high fuel prices, the commission's head, Jose Barroso, urged EU leaders not to ``fall again into depression and forget that we have other important issues to address.''

Biggest Economy

The EU has stitched together the world's biggest economic bloc, created a currency to rival the dollar, and expanded from a western European core to embrace 495 million people on Europe's Mediterranean flanks, the British isles, Scandinavia and the ex-communist countries of eastern Europe.

Eighteen countries have ratified the treaty so far. Britain, Spain, the Netherlands, Italy, Belgium and Sweden said they'd go on with ratification. The Czech Republic will decide after next week's Brussels summit, Prime Minister Mirek Topolanek said. The other country that hasn't completed the process, Cyprus, had no immediate comment.

In Britain, Foreign Secretary David Miliband affirmed plans to whisk the treaty through the House of Lords next week, rejecting renewed calls by the Conservative opposition to hold a popular vote in the U.K. as well.

Irish Vetoes

Ireland and the EU have been down this road before, when Irish voters in 2001 rejected the Nice Treaty, the EU's current, more limited governing treaty, fearing it would end Ireland's military neutrality. The EU offered assurances to the contrary, helping the ``yes'' side to victory in a second referendum a year later.

Irish opponents argued that the new treaty -- the latest revamp to the EU's governing articles dating back to the founding Treaty of Rome in 1957 -- would cede too much power to unelected officials in Brussels, the EU's headquarters, and put at risk Ireland's 12.5 percent business-tax rate.

After failing his first electoral test a month after taking office, Irish Prime Minister Brian Cowen said there is ``no quick fix'' and looked ahead to next week's summit to find a path out of ``uncharted territory.''

In theory, one option is for the rest of the EU to form a ``union within a union'' that sets policies based on the new treaty, then asks Ireland to go along or stand aside, said Peter Ludlow, a historian and chairman of EuroComment, a Brussels- based publisher.

`Enormous Capital'

Europe's political establishment has ``invested an enormous amount of political capital in this treaty, and I don't think they're going to sit idly by and see it thrown into the dustbin by 40 percent of the Irish electorate,'' Ludlow said.

The collapse in 2005 of a proposed constitution led the EU to produce today's scaled-down treaty.

The EU stripped out references to symbols such as the bloc's 12-starred flag or anthem that give it the trappings of a state and retained the post of president, the constitution's key innovation.

Serving a 2 1/2-year term, the president would organize and run meetings of national leaders and seek to give Europe the ``single phone number'' that Henry Kissinger famously asked for in the 1970s.

The appointment was to be made in December, with European media touting the potential candidacies of figures such as Juncker, former U.K. Prime Minister Tony Blair and Danish Prime Minister Anders Fogh Rasmussen.

Danish Doubts

Ireland's veto had immediate consequences for Denmark, with Rasmussen saying that the ``new situation'' may delay a planned Danish referendum over whether to adopt the euro currency. Danes said no to the euro once before, in September 2000.

The defeat of the treaty also threatened to set back further EU expansion, since the current treaties cap the bloc at 27 countries. The first victim would be Croatia, which aims to join by 2011, and Turkey, which is on a slower track.

EU governments normally ratify treaties in their national legislatures, as with trade or arms-control accords in the U.S. Ireland is the exception to that rule, required by its constitution to put EU treaties to a direct vote of citizens.

LNK

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