The Nice summit had two goals: to remove obstacles to Eastern enlargement of the European Union (EU) imposed by the Amsterdam Treaty; and to adopt reforms to ensure that EU institutions will operate efficiently and legitimately after membership nearly doubles. According to CEPR’s latest Monitoring European Integration (MEI) Report, the summit was successful on the first goal. It failed almost completely on the second.

The Amsterdam Treaty left three issues open, explicitly requiring that they be settled before enlargement: the size and composition of the Commission; extension of ‘qualified majority voting’ in the Council of Ministers; and reform of Council voting rules. The first two were not settled at Nice: on Commission reform, a makeshift, temporary reform was adopted; and on qualified majority voting, there was basically a house-cleaning exercise with little change in sensitive areas.

On reform of Council decision-making, Nice actually made things worse. With little more than hurried, late-night staff work and their political instincts to guide them, EU leaders adopted a massively complex system. Using the quantitative tools of voting theory, the Report reveals that far from maintaining efficiency, the Nice voting reforms will lower the enlarged EU’s ability to act. Nice also lessens the system’s legitimacy, shifting power to large members to such an extent that the historical balance between the EU as a union-of-states and a union-of-people has been fundamentally altered.

Nice was supposed to implement all the institutional reforms necessary for enlargement. But it largely ignored the fact that enlargement implies that the Governing Council of the European Central Bank (ECB) has the same ‘numbers problem’ that put Commission reform on the summit agenda. Enlarging an unreformed ECB to include five or twelve new members would turn this critical policy-making body into an unwieldy group that would have trouble making difficult decisions at the right time. The Nice Treaty simply invites the ECB and Commission to propose solutions, and institutes an ‘enabling clause’ that allows limited ECB reform in what amounts to a single issue Intergovernmental Conference (IGC).

The summit also sought to lock in a long-term enlargement procedure. But enlargement is a process, not an event, and there is a strong possibility that the first enlargement wave may seriously delay subsequent waves and hinder the reform momentum in applicant nations. To redress this, the Report argues that the EU should commit to a series of Maastricht-style ‘entrance exam’ dates that lock in occasions for evaluating whether nations are ready to join. This is not necessarily a matter for Treaty changes, but Nice would have been the ideal opportunity for a political commitment to dates.

In terms of the institutional balance of power, the Nice Treaty will significantly alter the way the EU functions. The Report argues that because of the Council’s reduced decision-making efficiency, the standard method of integration – which relies on legislation and the Council’s ability to act – will be slowed. Further integration is likely to be driven more by members’ initiatives, perhaps channelled through new ‘enhanced cooperation arrangements’. Thus, to the extent that the European Parliament and Commission derive their power from influencing legislation, Nice reduces their power.

As a body, the Council’s power will also be diminished. The winners will be members who wish to proceed with deeper integration in the form of enhanced cooperation or outside the EU framework altogether. The Commission has a crucial role in enhanced cooperation arrangements so if they become more common the Commission’s influence may expand. This may have been its biggest victory at Nice.

So should the Nice Treaty be ratified? The authors’ answer is a simple yes: institutional reforms can wait but Eastern enlargement should not. Enlargement, quite simply, is a historical imperative while Council voting weights will be a historical footnote. Moreover, killing the Treaty would recreate the situation that first caused a problem. The Amsterdam Treaty made reform a precondition for enlargement. This sequencing was at least part of the reason why Nice became the longest IGC in history and still failed. When reform is a precondition, interests that are lukewarm to enlargement enjoy important leverage. Had enlargement instead been locked in first, such ‘hostage taking’ would have been less effective.

Now, if the Nice Treaty is ratified, the sequencing will be reversed. When reform is next considered, enlargement will have happened or be imminent and no one will face the choice between accepting damaging reforms and delaying enlargement. There is even hope that the new members will have some say and this should make the reforms more sustainable. Fortunately, Nice also created an opportunity for reform: the IGC to be held in 2004, for which the agenda could be expanded to include ‘emergency repairs’.

Can any of the damage be fixed before then? The ECB’s numbers problem should be fixed soon, and the Treaty’s ‘enabling clause’ should make it possible well before IGC 2004. There are three practical solutions: first, rotation of voting rights among central bank governors; second, representation of groups of members by a single central bank governor; and third, delegation to a group of independent experts, with the governors participating in the debate but not in the vote.

The Report recommends the third option: it would yield a manageable-sized voting body whose composition was stable. Moreover, unlike the other two options, it would not encourage the public to view monetary policy from a national perspective. The ECB is likely to be deadlocked over a solution, handing a unique opportunity to the Commission. The Commission should exploit it by tabling the only rational proposal: delegation.

Assuming that EU leaders want the Council of Ministers to be able to act, IGC 2004 should adjust the voting procedures instituted at Nice, which involve a triple majority. The damage to the efficiency of an EU of 27 members could be fixed by lowering two of the three majority criteria. Specifically, the next Treaty should lower the 74% vote threshold to two-thirds, which would restore the Council’s ability to act. But since it would also reduce further the power of smaller members, the population threshold should be lowered to one-half.

But all this presumes that EU leaders meant what they said in Cologne: that the goal of Nice summit was to ‘ensure that the European Union’s institutions can continue to work efficiently after enlargement.’ Yet the question remains: did EU leaders know what they were doing at 4:30 in the morning on Monday 11 December 2000?

In one view, EU leaders did not realize the strong inefficiency consequences of their actions; the outcome was a collection of unintended consequences stemming from ill-prepared, late-night debates. This is not entirely implausible: the Council voting system that was adopted was never discussed during the IGC; and the reforms do not look so bad from the perspective of the ‘EU15’ – the Council that these leaders know well. Yet in an ‘EU27’ – a Council that might seem distant to leaders who are unlikely to hold office for even five more years – the efficiency consequences are dramatic.

In another view, the EU leaders got what they bargained for: a crippled legislative process that strips the Commission and Parliament of their agenda-setting power and the old ‘Community approach’ of its viability. In such circumstances, future integration will be guided by intergovernmental initiatives with the large members inevitably playing a role more commensurate with their economic and demographic importance. This view is also plausible: for some members, integration has reached the highest level perceived as legitimate by the voters and their leaders may be satisfied with an EU where the key institutions are seriously constrained and decisions are mainly taken directly between governments.

The question of which view is correct matters greatly for what comes next. If it was an oversight, then there is still time for emergency repairs and IGC 2004 provides a perfect opportunity. If it was wilful, it may take several high-profile decision-making crises in an enlarged EU to mobilize the resolve necessary to repair the Nice reforms. Either way, the Nice Treaty was no better than a ‘nice try’. Although it failed to adjust EU decision-making to the realities of a Union with 27-plus members, it did open the door to enlargement. It should be ratified and then repaired at IGC 2004.