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The heads of the EU's three main institutions on Wednesday (7 September) came together to point out to Czech President Vaclav Klaus the "costs" to Europe if he continues to delay ratification of the Lisbon Treaty, the union's new rulebook. European Commission chief Jose Manuel Barroso, European Parliament President Jerzy Buzek and Fredrik Reinfeldt, the Swedish Prime Minister and the current chair of the EU, said several pending decisions are awaiting clarification from Prague.

The uncertainty stems from the fact that the Czech constitutional court is examining a legal challenge to the Lisbon Treaty, lodged by senators close to Mr Klaus. It is unclear how quickly the court will make its decision and, if the decision is positive, how much later Mr Klaus would then sign the treaty, completing ratification. Time is pressing because the current commission's mandate expires at the end of October, as does the post of the current high representative for foreign affairs, held by Javier Solana. The Swedish presidency is nervous about entering uncharted legal territory. It can either keep the commission as a caretaker, but ineffectual, executive, or try to set up a new commission under the Lisbon Treaty rules. Another option would be to negotiate a new commission with the current rules, but that would mean unwanted negotiations on reducing its size.

European leaders have given way to German demands for a change to the European treaties, but the procedure for the change and its size has been calculated explicitly to avoid the danger that it could provoke referendums in some EU states.

Viritually all EU member states had vehemently opposed any treaty change going into the summit, but in the end they were convinced by Germany's need for the change in order to avoid a legal clash with its Karlsruhe-based Constitutional Court. The leaders agreed to construct a permanent crisis mechanism to fill the void left when the existing but temporary €110 billion bail-out package for Greece and €440 billion fund set up for the eurozone as a whole expire in 2013. According to diplomats, it is currently unclear whether this new mechanism would involve participation of eurozone members alone or the full 27 EU member states, including those who do not use the euro. Germany is worried that any permanent structure could run afoul of treaty rules forbidding EU bail-outs of member states and be struck down by the country's strict Constitutional Court, thus opening the euro once again to an assault by markets as occurred in the spring. Caught between the need for a structural change and their fear of both the activism of Karlsruhe and the growing euroscepticism of citizens, the other leaders signed off on the move only so long as the change envisaged was "small, small, small - the smallest possible ... in order to ensure there is no possibility of referendums," in the words of a Danish diplomat speaking to EUobserver. The method EU leaders chose to achieve the change will be via what is called the "special revision procedure," introduced by the Lisbon Treaty, under which the treaty can be amended by the European Council alone, so long as there is unanimity and the changes do not extend the competences of the European Union.

German Chancellor Angela Merkel has pressed EU leaders to accept the treaty change as she fears Germany's powerful constitutional court may raise objections to the €440 billion temporary European Financial Stability Facility (EFSF), agreed in May and set to provide aid to Ireland. While EU policymakers insist the temporary facility and earlier aid to Greece do not contravene the EU treaty's 'no bail-out clause', Berlin is keen to remove any legal uncertainty, with a number of legal challenges currently under examination by the German court.

The treaty change is to take place under a new procedure introduced under the Lisbon Treaty - the simplified revision procedure - allowing for limited treaty changes without the setting up of a convention, on condition that new powers are not transferred from the national to EU level. In the draft conclusions, EU leaders also call on euro area finance ministers and the commission to finalise work on setting up the permanent aid mechanism, including features that could force sovereign bond holders to accept diminished returns on their investments, should a eurozone government be forced to call for aid under the ESM from 2013 onwards. The move stands in marked contrast to aid terms recently agreed for Ireland, under which holders of Irish sovereign debt and senior debt in Irish banks were not forced to accept a 'haircut.' Instead, Irish taxpayers will indirectly pay back the €85 billion borrowed from the EU-IMF for many years to come. Analysts say this move was partially designed to prevent further instability in the European banking sector, with many firms considerably exposed to the Irish market.

Less than one year after the watershed ruling from Germany’s Federal Constitutional Court that empowered Germany’s parliament to trump EU law, Germany is using the ruling to force the EU to conform to its will. The issue Germany has chosen to test this extraordinary power not given to any other EU member nation is Iceland’s bid to join the EU. The EU’s decision to consider Iceland as an official candidate was expected to be made in a late March summit, following a favorable recommendation from the EU commission. It was delayed, however, to give the German parliament time to examine the commission’s opinion. For Iceland to be considered as an official candidate for EU membership, several German parliamentary committees must consent to the move.

It is interesting that the first time Germany has forced the EU to consult the Bundestag in an expansion of EU power is in the matter of enlargement—not even if a nation will become an actual member, but in such a trivial matter as whether it will be considered an official candidate. Just look at Turkey’s bid for membership to see how meaningful being an official candidate is. This area of EU power typically doesn’t have a direct impact on any of the current EU members, and so Germany chose to try out its new power in an uncontroversial way. This is apparent by the lack of headlines devoted to Germany’s first use of its national “supremacy clause.” The other heavyweights of the EU, France and Britain, are not calling foul, and none of the other member nations seem concerned that the EU’s enlargement policy was just hijacked by Germany.