Europe goes for Plan 'D'

As expected, European leaders at last week's EU summit in Brussels decided to extend - indefinitely - the ratification process for the EU constitutional treaty. Originally the ratification process was meant to be concluded by November 2006, but the massive rejection of the treaty by French and Dutch voters in two referenda caused the treaty to fall into a coma and left Europe wondering what to do next.

In the circumstances the extension of the ratification process was probably the right thing to do, although a lack of an agreement over a new deadline does send out the signal that Europe is not quite sure just how this unfortunate episode will be concluded.

The fact that EU leaders saw the need for a 'period of reflection' or Plan 'D' for debate and democracy shows that anything can happen in the next couple of years - the treaty could be scrapped altogether (unlikely), the word 'Constitution' could be replaced by another name, such as the "Treaty of...", certain parts of the treaty could be simply deleted and other parts could be adopted by the European Council without the need for a formal treaty.

What will not change is that for the Constitution to be formally adopted it has be approved by all the EU member states, which means that both France and The Netherlands will have to vote again. However, since neither country has a legal obligation to hold a referendum to approve the treaty, a vote can be taken in Parliament.

It is likely that this is what will happen, but there will have to be changes - even cosmetic - to the original treaty for this to be politically acceptable. Approving the treaty by a parliamentary vote in France and The Netherlands after the referendum was rejected by such a large margin in these two countries would be a slap in the face for democracy, that is, if the treaty remains intact and is not amended in any way.

Of course, the difficulty will be knowing exactly what to change in the treaty because the majority of Dutch and French voters who voted No did so either for domestic reasons or because they were not happy with the way the EU was developing. So, yes, a period of reflection is certainly needed.

The extension of the ratification process deadline has prompted most of the countries which had planned to hold a referendum on the constitutional treaty to postpone the vote. Britain had already announced this a week before the summit but at last week's European Council meeting the Czech Republic, Denmark, Ireland, Portugal and Luxembourg - fearing a domino effect of the Dutch and French referenda - all followed suit. Poland still has to decide whether to postpone its referendum.

Meanwhile, those countries that intend to ratify the Constitution through a parliamentary vote, including Malta, have not postponed their vote, which is understandable. In Malta's case, for example, it is good to get the debate on the constitutional treaty out of the way - we have had a very long and emotional debate on Europe for the past 15 years - and it is also good that for once in our recent political history, there actually exists a consensus in the country over Europe. As Prime Minister Lawrence Gonzi told journalists at the summit in Brussels, every country has to evaluate its own particular circumstances.

Plan 'D' or the bloc's pause for reflection should now be used for a proper debate on the future of Europe: what parts of the treaty can be salvaged, where Europe should be heading, a complete review on the bloc's budget, how to narrow the gap between Europe's leaders and its citizens, the future of enlargement, job creation, economic reform and further liberalisation of the market.

The EU has yet to come to terms with globalisation and there is so much more potential for Europe to play a leading role in international affairs. Economic reform should feature prominently in Plan 'D'. There is no reason, for example, why services should not be included in the internal market, nor should members of the eurozone refrain from introducing flexibility in their labour markets, which are so essential for economic growth and job creation in Europe.

Of course, there is no "one size fits all" model of economic reform and flexibility. Sweden and Britain, two very successful economies, have quite different economic models. What is important is that Europe decide once and for all just what should be the prerogative of Brussels and what should be left to the member states. Areas such as trade, the environment and the internal market obviously belong to Brussels, but others such as taxation, welfare and labour markets should remain the prerogative of the member states.

Enlargement must remain an important objective of the EU. French Prime Minister Dominique de Villepin said before the summit that after the admission of Bulgaria and Romania, the EU should freeze the enlargement process, with an obvious reference to Croatia, Turkey, the Balkan countries and Ukraine.

While it is true that Europe needs a bit of breathing space before the next enlargement wave (after Bulgaria and Romania), I think it would be wrong to initiate a freeze because it sends out the wrong signal to remaining candidates and would-be applicants. EU leaders must properly explain the political and economic benefits of EU enlargements to their citizens.

Finally, all the EU member states must be prepared to be realistic and to compromise. Pointing accusing fingers at each other and adopting rigid positions, such as what we witnessed in the Anglo-French dispute over the British rebate and EU aid towards France's agricultural sector, is in nobody's interest.