Europe's new treaty: Towards a multi-speed Union

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All 27 EU countries – except Britain and the Czech Republic – have agreed on a new treaty for tighter fiscal discipline and deeper economic integration to save the euro currency. The treaty came into force on 1 January 2013.

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Overview

Pressed by Germany, European leaders agreed on a new treaty to tighten fiscal discipline in the eurozone and deepen economic integration as a way to address the bloc's sovereign debt crisis.

The new treaty, approved at a European summit on 9 December, was vetoed by Britain, which tried to win concessions in return for backing an amendment to the EU's existing treaties.

Prime Minister David Cameron sought to exempt the UK financial services industry from EU regulations, a demand deemed unacceptable by its European partners.

Circumventing the British veto, EU leaders – led by France and Germany – pressed ahead with a new treaty of their own, an intergovernmental agreement outside the EU legal framework.

The new treaty text, which was finalised on 30 January, was opened to ratification by countries outside the 17-member eurozone. All 27 EU nations except Britain and the Czech Republic have expressed their desire to join this new "fiscal compact".

>> Read the article: 25 EU countries sign up to German-led fiscal treaty

However, questions remain as to how EU institutions such as the European Commission or the Court of Justice can be used to enforce what is for now essentially an international agreement among sovereign nations.

Crucially, the agreement remains silent on what will happen to countries – especially eurozone members – that fail to ratify the new treaty. The question becomes particularly acute for Ireland, which will have to pass the new treaty via a popular referendum, something that has proven difficult in the recent past with the Lisbon Treaty, initially rejected by Irish voters in 2008 but approved in a second referendum.

Other eurozone members like Finland, which have Eurosceptic parties in their parliaments, might experience difficulties in ratifying a treaty.

As a consequence, the future of these countries as eurozone members could be put into question should they fail to ratify.

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