As EU governments hurtle forward towards a new Fiscal Treaty to address the euro crisis one should not fall into the trap of overlooking the consequences of the method that has been chosen to bring about this latest reform.

Of course, time is of the essence and the money markets will not sit idly by until Governments decide.
But just a second. Are we going about this in the right way?

I doubt it.

Last December, EU leaders sought to change the EU Treaty to enforce tighter commitments on fiscal discipline.
That was fine.

However, their plan was botched when the UK slapped its veto and blocked the changes.

Caught between a rock and a hard place, the other 26 EU countries told the UK that they would proceed without it and draw up, instead, a new treaty outside the EU framework.

But the devil is in the detail.

Doing it outside the EU framework means that the new agreement would essentially be a classic international treaty: a treaty agreed between governments, that is, on an intergovernmental basis.

I see at least three problems with this approach.
The first is that the commitments on fiscal discipline in this international treaty are completely linked to the countries' commitments as EU members and as euro zone members.

So it is bizarre, to put it mildly, that new fiscal obligations should be written in an international agreement rather than in the treaty that established the euro itself.

Secondly, an intergovernmental agreement necessarily limits the role of the EU institutions and the EU decision-making process - what is known as the Community method.

Thus, rather than an agreement devised within institutions that are subject to ongoing public scrutiny, we are getting an international agreement negotiated by government representatives in closed rooms. All we are allowed to see is what they agreed. But in no way are we allowed to influence the negotiations.
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