By Julian Priestly

For certain media commentators, self-appointed spokespersons for the market, our friends outside the EU and some ministers in some EU governments who should know better, the debt crisis currently engulfing the eurozone has an easy solution. The European Central Bank should just step up to the plate and guarantee the solvency of the euroland member states. In this black-and-white version of the world, Germany is the obstacle, haunted by its fears of returning to the hyperinflation of the early 1920s when its national bank just printed those much-photographed cartloads of million deutschmark notes. As the situation deteriorates from difficult to dangerous, the blame game has intensified.

And the culprits are now supposed to be found in the shadowy Frankfurt Group, a sinister secret society whose members happen to be the German Chancellor, the French President (i.e. the democratically elected heads of government of the two largest euroland countries) the President of the ECB, the Presidents of the European Council, the Commission and the Eurogroup, with the occasional participation of the head of the IMF and the Commissioner responsible for economic and monetary policy. In the current hysteria this ‘Gang of Eight’ is assuming the reins of power in Europe,  overthrowing democratic governments and parachuting technocrats in their place (worse still technocrats with European experience) , and imposing the fiat of Brussels in the 17 euro countries. Cooler heads might recognise the value in having regular consultations throughout this crisis with a manageable number of people who will in the end have to propose the solutions; and that this is a sensible if partial response to the much criticised leadership vacuum which has bedevilled the crisis.

And those solutions are not so straightforward. First, conferring on the ECB the role of ‘lender of last resort’ for the Eurozone would almost certainly require a Treaty change; anything less would be challenged in the courts, particularly in Germany. It is true that Germany has a federal structure, a multiparty coalition and an assertive judiciary which makes it impossible for any leader to push through proposals which would not only be politically controversial but also legally questionable.

And it would not just be Germany which would shudder at the thought of an open-ended commitment to other euro countries, now that the costs of servicing their debts have spiralled. So they would seek guarantees that would be tantamount to euro countries losing at least some theoretical national control over domestic spending.

And for this to have credibility it would need the same legal sanctity as that which would authorise the ECB’s new role, namely a Treaty change.

There are some who would relish the thought of a new constitutional process for the EU; certain federalists would see this as the defining moment, to complete business unfinished at Maastricht, Nice, Amsterdam or Lisbon ; others, such as the Council’s former top lawyer, Jean-Claude Piris would want a new Treaty to consecrate the schism between the ins and the outs, a hardcore of the 17 virtuous with the other 10 banished formally to the margins; yet others, like at least some in the main party in the UK coalition would want to seize  a chance gifted by heaven to repatriate labour legislation powers and other social dispositions back to member states, or at least to organise new opt-outs. And these are what are already being talked about; who knows what inventiveness will be shown, and what shopping-lists will be drawn up, once the starting pistol is fired on Treaty change?

Enthusiasts should remember that any significant change to the Treaty takes time, would have to be prepared by a Convention of European and national parliamentarians, and when finalised would have to be subject to parliamentary ratification in all 27 member states, and would- in the case of transfer of powers over national budgets- have to be submitted to a referendum in Ireland at least: the same Ireland which has in the past twice voted against an EU treaty at the first time of asking. And all of this would take place under intense market scrutiny, every setback or delay in the process ratcheting up the financial turmoil; and at a time of great electoral volatility.

For any Treaty change to help in finding a longer-term solution to the problems of economic governance of the euro- problems which should have been sorted out before the launch of the new currency- it will need to be limited to the essential minimum with no extraneous points muddling the process, and organised according to a tight timetable.

But even with the greatest political efficiency and discipline it is not Treaty change which is going to halt the current crisis, and fend off defaults of euroland countries. Stop-gap solutions- however unsatisfactory- involving bolstering by one means or another the bail-out fund, the continued purchase of government bonds by the ECB, the support of the IMF and the main creditor third parties, the installing of credible broad-based governments with the authority to carry forward  judicious reforms are the only palliative means available in the time left before some pretty miserable outcomes threaten the return to deep and prolonged recession in Europe, and elsewhere. And for those governments to be able to maintain public support they will need to be able to point to a European growth strategy of investment in future competitiveness  and support for innovation which have been the neglected weapons in the arsenal for dealing with the crisis.

Treaty change is something else. It is for the medium- not the short-term. It is not a magic wand. But if sensibly organised, with a limited, realistic agenda, it could help at last to create the institutional underpinning which the currency has so far lacked.