Behold the latest proof . . .the new constitutional treaty unveiled last week. Except, of course, one mustn't use the word 'constitutional'. Nor should one call it a treaty, as there are, in effect two treaties that . . . like conjoined twins . . . form the lifeless body of Constitution II.

Confused? Here is a quick rundown of the proposed reformed documents that, if ratified as planned before 2009, will form the new foundation of the union.

Skipping all the highsounding lingo on international affairs, mind-twisting voting formulas and the adherence to international charters blabber, item 14 of the agreement reached last week refers to the provisions on enhanced co-operation between member states. This item amends the 'constitution' to allow such co-operation among a minimum of nine countries. Effectively, should the EU27 enlarge in the future, enhanced co-operation . . . a back-door provision that can be used to push through things like tax harmonisation . . . will be less strict than it was under the original 2004 treaty.

The next item of interest, 19 (i), promises that a new protocol will be annexed to the treaties to restrict the scope of the liberalisation of trade in services. The protocol effectively reduces the span of free trade within the European Union to approximately 40% of all trade flows, leaving the bulk of all economic activities subject to any protectionist measures a member state may deem desirable.

More fundamentally, article 1 of the treaty is being amended to state that "the union shall be founded on the present treaty and on the treaty on the functioning of the European Union. It shall replace and succeed the European Community".

De jure, this places the two treaties as the principal governing documents, granting the member states and the commission an arguably discretionary power over implementation of the numerous protocols. Thus, at its own convenience, France can selectively invoke any of the protocols, potentially restricting trade and competition and re-interpreting state aid limits. This suits the objectives of Sarkozy's plans to develop European (read French) national industry 'champions' . . . companies with preferential access to state 'investments' (aka subsidies) and monopoly powers in certain sectors.

The treaty also places severe and open-ended restrictions on free movement of persons, services and goods. These restrictions, in the case of movement of persons, will in practice abandon any commitment to the creation of a unified migration regime across the EU.

In the context of free movement of goods and services, the new treaty subjects free trade and investment principles to arbitrary constraints in the interests of the undefinable 'social' economy and 'sustainability'.

Perhaps the most telling sign of a dramatic reversal in the union's founding principles is that the present draft reduces the EU commitment to free and fair competition and common markets to a lowly protocol. Instead of providing constitutional protection to free and fair competition, the new treaty offers only a promissory note that the principle of undistorted competition may be upheld, "if necessary. . . under the provisions of the treaties".

In effect, the EU has potentially legalised economic protectionism, state subsidies, monopolies and a host of other policies that have proven to be economically disastrous in the past.

Having made these substantive and regressive changes to the original treaty, the current proposal left untouched some of the most absurd provisions of the constitution. These include a comical Protocol 7 that contains a six-page laundry list of items and privileges to which the employees and officers of the European Union are entitled. From furniture and cars that they can import into the countries of their station, the entire Protocol 7 of the original treaty represents a Kafkaesque synopsis of what the entire Treaty II is promising to be about . . . a combination of the worst excesses of the original draft, plus some new provisions aimed at clawing back the basic economic and social freedoms that used to form the basis of the European Community project.

It is hardly surprising that the treaty amendments were negotiated in a climate of secrecy and behind the backs of national parliaments. It is even less surprising that the EU elites are now concerned about the ability of the constitutional treaties II to clear a single referendum hurdle in any of the member states.

Hence the ardent push to devise ways to avoid popular referenda on ratification.

Given that they've been at this game ever since the old constitution collapsed in the flames of the French and Dutch referenda in 2005, this lack of real improvement in the draft documents and political tactics behind its approval last week are a sad reminder that foolishness truly transcends national boundaries.

Dr Constantin Gurdgiev is an economist and editor of Business & Finance magazine constantin@tribune. ie
www. businessandfinance. ie