Here is a remarkable “breaking news” item from Europe, as usual overlooked and neglected by the mainstream media (with the exception of the Telegraph online): The President of the European Council made a quite astonishing statement recently, in which he proposes the enactment of the “reverse majority rule”, under which a Commission proposal is to be considered adopted automatically unless rejected by the European Council.

 Below is the relevant part from the press release as posted on the website of the President:

 “Remarks by Herman Van Rompuy, President of the European Council, following the meeting of the Task force on economic governance , Brussels, 27 September 2010:

 A new enforcement system will be developed:

 There is an agreement that, in a system where fiscal responsibility remains largely under the

responsibility of national authorities, there is a need for a credible enforcement mechanism at the EU level.

 Whenever possible, decision-making rules on sanctions should be more automatic and based on a reverse majority rule, implying a Commission proposal is adopted unless rejected by the Council.”

 see full statement here

 First question which comes to ones mind is why is a change in rules needed at this time?

 Here is a hint from a recent interview with the head of the International Monetary Fund (IMF) from the Daily Bell Online:

 Sitting in his office, surrounded by the scent of flowers, Strauss-Kahn prefers to talk about Europe's sad future. "The European institutions," he says, "were absolutely necessary and very useful for many reasons, but only in quiet times. ... The crisis exposed very clearly the way the EU is working. There is, in my view, too much concern about domestic safeguarding and domestic problems rather than concern about the EU itself.”

 “After building the Union and creating the Euro, the European Union now needs to take a third step, which is more economic policy coordination and more fiscal policy integration, and so more centralization. But the system moves very slowly."

 ... Then he says: "You can't have a monetary union without a reasonably coordinated fiscal policy. And you cannot make it work when neighbors make deals: If you're nice to me, I'll be nice to you -- just as France and Germany did when they exceeded the 3 percent deficit limit. Europe needs rules, surveillance and sanctions. Sanctions should not be the suspension of voting rights. Who cares about voting rights? They have to be financial sanctions -- payable not during a crisis, of course, but a few years later." Read full article here

 In light of this useful insight, one can conclude that the President of the European Council is trying to get the job done: “New rules”, which would enable the Commission to start imposing financial sanctions on the defaulting member states, without having to go through the usual circus at the European Council. (On a side note, it has been widely reported in the press that during the last Council meeting some of the leaders engaged even in physical violence against each other).

 Thus, the Commission would monitor member states' fiscal policies, and will punish those who fail to keep their budget in restraint. Since it will be a little difficult to block the enforcement of this decision of the Commission at the European Council, the decision would go into effect automatically as required by the reverse majority voting rule, escaping the “veto” of the nation states. As demanded by the head of the IMF, this would be the third and last step in the process of constructing European federalism. It would mark the ultimate take over, triumphant victory of the Eurocracy against the nation states members in the EU club.

 “Reverse Majority Rule at the WTO”

This “reverse majority rule” technique is not new, as it has already been tested for some years now at the WTO (World Trade Organization). The GATT system preceding the WTO had a dispute settlement mechanism under which trade disputes between the member states were to be settled by GATT “panels”, but their decisions would only be adopted if all members of the GATT club agreed with its findings. The new rule, embodied in the organization succeeding the GATT, is that decisions of the panels (and the decisions of the newly created Appellate body) are considered to be adopted unless all member states reject its findings. Since there is always a winner in any trade dispute, that member state will never block a decision brought by WTO panels in its favor.

The consequence of the “slight change” in the rules is that all decisions of WTO dispute settlement panels are automatically adopted, and become legally binding on the concerned member state. To the extent that that state does not change its trade policy as required by the decision of the dispute settlement panel, so will economic sanctions be authorized against the losing state in the amount of the economic injury it has caused to the other member states.

 In other words, an international organization's decisions are automatically binding on the member states, and non compliance carries with it a risk of “real” sanctions, aimed at pressuring the deviant state to alter its behavior and comply with the rules.

 This is a classic “efficient breach” of contracts scenario, when the deviant state will only maintain its non compliance with the rules, as long as the amount of the sanction is lower than the gains from non compliance. Or putting it simply: if you can afford the price of sanction (i.e., compensation for the loss of the others), you may go ahead and violate the rules.

In the case of international trade disputes, it is the “experts” at the WTO who will decide the amount of the sanction, and this decision, too, will automatically be adopted, unless rejected by all the member states of the WTO.

Will it happen in the EU?

 The remaining question is whether the member states at the European Council will agree to go along this proposal, thereby giving away much of their remaining "Sovereignty" and risking a considerable domestic loss of  the sympathy of their citizens, or will they resist and keep the rules as they are, thereby risking the future of the Eurozone?