EU might need to amend treaty, says Van Rompuy

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European Union leaders should not rule out changing the EU’s governing treaty as a way of driving forward economic integration and emerging from the present crisis, says Herman Van Rompuy, president of the European Council.

In a Financial Times interview, Mr Van Rompuy said treaty change – backed by Angela Merkel, German chancellor, but by few other leaders – was not a priority in his view, but might be required in future.

Treaty change is a highly charged issue. It took EU governments eight years to agree on the Lisbon treaty, which took effect last December after various political shocks, including failed referendums in France, Ireland and the Netherlands.

“If we agreed on it, that would be the next step, but it will take a long time. There is no taboo on it. But for now we are working within the framework of the existing treaties,” said Mr Van Rompuy.

“I personally am not in favour, because I see all the problems ahead. But my position is not the most important. If there is a consensus on treaty change, I will not oppose it. We are in a crisis. We are in one of the most difficult situations you can imagine. So to exclude certain solutions would not be wise.”

EU leaders would have no choice but to revise the Lisbon treaty if they were to introduce far-reaching changes, such as the possibility of expelling fiscally delinquent countries from the eurozone – as many German politicians want.

But Mr Van Rompuy and colleagues such as José Manuel Barroso, European Commission president, fear that a decision to rewrite Lisbon would spur the UK and other governments to demand changes tailored to their national interests.

Mr Van Rompuy made clear that he was sympathetic to the concerns of member states in central and eastern Europe about a proposal to cut off EU regional aid funds from nations that persistently broke EU fiscal rules.

These countries are more reliant than wealthier western states on EU aid programmes and therefore regard the proposal, backed by Germany and like-minded countries, as unfair.

Mr Van Rompuy noted that, when he had presented his ideas about eurozone governance at an EU meeting on May 21, he had talked about withholding “EU funding in general” rather than regional funds as such. He said financial markets’ worries that the fiscal austerity programmes across Europe would choke economic growth were exaggerated. “Fiscal consolidation, in my experience, has no real effect on economic growth. Certainly, when it is gradual, it can even be beneficial for economic growth,” he said.

He predicted that eurozone leaders would not merely strengthen their budgetary rules but introduce systems for monitoring national competitiveness and enforcing structural reforms.

If annual evaluations of a government’s performance showed it was avoiding measures needed to raise competitiveness, the government would come under pressure from its eurozone peers, public opinion and financial markets, he said.

“This can be a major contribution to strengthening economic growth.”

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