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Cablegate: Eu Leaders Clinch Landmark Deal On "Lisbon Treaty"

DE RUEHLI #2680/01 2921556
O 191556Z OCT 07




E.O. 12958: N/A

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(This message was prepared by USEU, coordinated with Embassy


1. EU leaders, at their informal Summit meeting in Lisbon
October 18-19, reached an overall agreement on the new EU
Treaty that will be signed in Lisbon on December 13. The
deal was clinched after the Portuguese Presidency managed
to overcome outstanding reservations by Italy and Poland
on two specific issues. Italian PM Prodi obtained an
extra seat in the European Parliament in a gesture from
colleagues aimed at easing his concerns that Italy would
emerge with fewer MEPs than other EU big states post-2009.
The Portuguese also found a formula unblocking the Polish
stalemate on voting rights in the EU Council. The treaty
deal, hailed as "historic" by Commission President
Barroso, puts an end to six years of inward-looking
debate by the Union about institutional reforms. It
immediately enabled the leaders, who claimed they are
now in a position to address the real concerns of
their citizens, to turn their attention to the challenges
of globalization. USEU will follow up with a detailed
analysis of the new treaty in the weeks ahead. END SUMMARY.

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2. EU leaders in the early hours of October 19 sealed
their agreement on the text of a new treaty seen as
essential for the EU to streamline its
institutional and decision-making mechanisms and to
enhance its ability to act on the international scene.
A delighted Portuguese PM Socrates said the leaders
would formally sign what will become the "Treaty of
Lisbon" in the Portuguese capital on December 13
(only five days after the EU-Africa Summit), right
before heading to Brussels to meet in their regular,
formal European Council meeting. The signing
will open the way for ratification of the new
treaty by the EU-27, a process to be conducted
by the individual Member States in accordance with
their own modalities. Only Ireland is expected
to hold a referendum at this point.

3. Bound to enter into force in 2009 (exact
timing will depend on pace of ratification
process), the "Treaty of Lisbon" will complement
and amend its predecessors, rather than replace
them as the draft Constitutional Treaty rejected
by the French and Dutch voters in 2005 was
supposed to do. Among the major innovations
is the creation of the job of permanent President of
the European Council, to be elected by EU
leaders for a two-and-a-half-year term (renewable
once). The jobholder will prepare EU summit
meetings and be the chief interlocutor with the
U.S. President, including at our bilateral
Summits. Another change of special interest
to the USG will be the merging of the current
functions of the High Representative for CFSP (Solana)
with those of the RELEX Commissioner
(Ferrero-Waldner) in the "High Representative
of the Union for Foreign Affairs and Security
Policy." The post-holder will also be
a Vice-President of Commission, which should
ease coordination of EU external actions.
Commission President Barroso said the leaders
assured the European Parliament it would have
a say in the nomination of the High Representative
if appointment took place before the installation of a new
Commission at the end of 2009.

4. "With this agreement Europe has emerged from its
institutional crisis," PM Socrates told a joint
press conference with Barroso in the early hours
of October 19. Socrates and Portuguese compatriot Barroso
openly displayed their cooperation, praising each
other in joint celebration of a major success
for their country and its capital. Socrates hailed
a "victory for Europe," saying the EU was
"coming out stronger" from its six years of
negotiations on institutional issues with the
ability to "play its full role" in the world.
Barroso opined: "In this case, we're really talking
about a historic agreement, which really gives the
European Union a capacity to act and to turn to
issues most important to its citizens." As an
illustration, the leaders turned their attention to
the EU's role in facing the challenges of
globalization at a two-hour working session on
the morning of October 19.

5. Though the Portuguese Presidency was credited

LISBON 00002680 002.3 OF 003

for its skillful handling of the treaty reform
negotiations, rumor in the press room had it that
French President Sarkozy and veteran EU summiteer,
Luxembourg PM Juncker, also worked behind the
scenes to address Polish and Italian concerns.


6. Italy had voiced strong opposition over the
past few weeks to the proposed reallocation of
seats in the European Parliament. The leaders
had agreed last June to a revised treaty
provision setting the total of MEPs at 750
(from the current 785) after the next direct
election in June 2009. The EP itself worked
on the country-by-country breakout, roughly
based on population sizes. PM Prodi, under
pressure from his domestic opposition, resisted
the formula, under which Italy would lose the
parity in EP seats it currently enjoys with
France and the UK. Under the EP proposal,
the three countries would all lose seats
post-2009, with France going from 78 seats
to 74, the UK from 78 to 73, and Italy from 78 to 72. The
leaders eventually agreed to increase by one
the total number of MEPs from 750 (in creative
arithmetics, taking the EP President out of
this total), thus making it possible to
allocate an extra seat to Italy. PM Socrates
said the leaders would take a formal decision
on the detailed allocation of seats at their
next meeting in December 2007.


7. The new treaty will over time (not before 2014-2017)
replace the current system of weighted voting in the
Council by a simpler requirement for a "double
majority" (55 percent of countries, corresponding to
65 percent of the total EU population) that will
have the effect of reducing Poland's weight in
the approval of (mostly economic) legislation tabled by the
Commission. Anxious to appear as the
staunchest defenders of national interests on the eve of
Polish elections, the Kaczynski brothers had called for
the new treaty to enhance the legal status of the so-called
"Ioannina compromise," a complex mechanism that allows
outvoted EU governments to request further
deliberations of the draft legislation they
dislike. In essence, the mechanism will remain
the subject of a "Declaration" annexed to the new
treaty. However, the Poles secured a legally binding
Protocol specifying that the Ioannina mechanism can
only be altered by consensus (meaning with Poland's

8. Another demand from Poland to have its own
advocate-general at the European Court of Justice,
a right only Germany, the UK, France, Italy and
Spain currently have, was met through an undertaking
to create two new positions of advocate-general in
2009, one of which would be reserved for Poland.
The second position will allow for a better
rotation of posts. No treaty amendment is
actually required for this change. President Lech
Kaczynski concluded that "Poland got everything it
wanted. I'm very happy this business is behind us."


9. The UK kept a fairly low profile in the Lisbon
institutional discussions, having secured its "red
lines" in the June 2007 European Council and the
subsequent Intergovernmental Conference (IGC),
in which legal experts drafted the treaty text.
Gordon Brown, attending his first Summit in his
capacity as Prime Minister, confirmed his endorsement
of the draft before the meeting even started.
Speaking at a press conference, Brown said the
new treaty guaranteed British sovereignty in
justice, home and foreign affairs and security
issues. In exchanges with UK press intended
to defuse domestic criticism, Brown maintained,
"On these major issues ... the British national
interest is protected." Brown consequently made
it clear he had no intention of bowing to critics
urging him to hold a referendum on the new treaty.
"If it was the old draft Constitutional Treaty,
there would have been a referendum, but this is
an amending treaty." Brown stressed it was time
for the EU to move on to the major issues that
affect the people of Europe, "that is better

LISBON 00002680 003.3 OF 003

jobs, that is higher prosperity, that is better
security against terrorism, action against climate
change. These are the issues our people want us
to address."


10. Austria had called for the new treaty to
provide a legal basis codifying the quotas
imposed by universities on non-Austrian students,
a measure in breach of existing EU rules by the
EU Court of Justice. The Austrians argue that
their medical lecture halls are filled by German
students bound to return to their country of
origin after qualifying, a situation that could
soon lead to a drastic shortage of doctors.
Their EU partners countered that the problem
should be solved with the Commission, which was
prepared to give the Austrian government more
time to provide additional data in support of
its claim. The Commission thus opened the way
to a suspension of its ECJ proceedings against
Austria and to a compromise solution to be
worked out over time between Brussels and Vienna.

11. Further compromises were found in Lisbon
or beforehand with the Czech Republic and
Bulgaria, which had gripes, respectively, over
the possibility of rescinding EU legislation
and the spelling of the word "euro" in the
Cyrillic alphabet.


12. Although there remains some concern in
EU capitals that PM Brown might still run
into political troubles that would force him
to hold a referendum, the "Treaty of Lisbon"
was crafted in a way that makes its final
ratification and entry into force a good
probability. The Lisbon deal, ending years
of navel-gazing about the EU institutions,
enables the EU-27 to turn their attention
to the common challenges facing them in the
globalization era, thus giving the EU a
chance to reconnect to its citizens. However,
the leaders will likely encounter other bones
of contention soon, including questions about
the future course of the EU on the world stage
and the limits of its integration and expansion.

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