Föhrenbergkreis Finanzwirtschaft

Unkonventionelle Lösungen für eine zukunftsfähige Gesellschaft

Europe’s future is multi-speed and multi-tier

Posted by hkarner - 27. März 2017

Date: 23-03-2017
Source: The Economist

The EU must embrace greater differentiation or face potential disintegration

Charlemagne had a point

IS EUROPE READY to embrace a new model built around not sameness but difference? Although the recent commission white paper and several national leaders have come out for a multi-speed Europe, they really have in mind a way for small groups of countries to go forward in such areas as defence or taxation, without having to wait for all, using the treaty’s tools that allow enhanced co-operation. A true multi-speed, multi-tier Europe would be far more ambitious. Yet the troubles of the EU may seem to many quite enough to worry about without having to rethink the structure of their project.

That is certainly the message coming from national capitals and Brussels. Asked about how euro and non-euro countries will co-exist in future, one senior official in Paris notes that, after Brexit, nearly 90% of the union’s GDP will be generated by the euro zone. Others say all non-members except Denmark will join the euro within five years. The rows over asylum-seekers between east and west will similarly end, says a Eurocrat in Brussels, because central Europe gains so much from the EU. Brexit will hurt Britain more than its partners. And ideas for more variable geometry, such as the “continental partnerships” touted by Bruegel, are “suitable for think-tanks”, as another senior official (this time in Berlin) puts it, not to be taken seriously.Yet this is too complacent. The union will have non-euro as well as euro members for years to come. The migration crisis is not turning the citizens of central Europe into good Europeans; instead, some are attacking the union’s core principles. And although Brexit does seem likely to damage Britain more than the EU, the decision of a majority of voters in a large member country to leave is a huge indictment of the whole organisation, gravely weakening it in the eyes of the world.

A Europe for all reasons
A more differentiated Europe, based around the idea of variable geometry, a range of speeds or concentric circles, would be a good way to ease the tensions and problems that afflict the present, overly rigid EU. At the centre would be the 19-member euro zone, which will need deeper political and economic integration to survive. Next would be full EU members that are not in the euro. In principle, it would be helpful if those that find euro membership too demanding, or are not prepared to embrace the political integration it implies, were able to migrate into this looser second grouping without undermining or destroying the single currency. The main candidate for such a move is Greece, but there could be others in the future.

A third tier could then take in countries that do not currently want to join the EU but would like to participate as fully as possible in the single market. This would entail payments into the EU budget and a willingness to abide by almost all of the club’s rules, including, in effect, an acceptance of the jurisdiction of the European Court of Justice. This group would take in the three members of the European Economic Area—Norway, Iceland and Liechtenstein—and, albeit in a slightly looser relationship, Switzerland. Again, others might aspire to join this group.

Beyond these three tiers would be a fourth set of countries that are unwilling to accept the rules made in Brussels but still want a deep and comprehensive free-trade arrangement with the EU. Some of these might also wish to be closely linked, through some form of observer or associate status, with the EU in foreign and defence policies and in domestic security issues. Britain is the most obvious candidate for such a group. But Turkey and some western Balkan countries might also be interested, and perhaps one day Ukraine, Georgia, Moldova and even Belarus might be added to the list. This tier, or something like it, might also become a home for countries that either choose or are asked temporarily to suspend their EU membership.

Different, not lesser
Why does the idea of institutionalised variable geometry provoke opposition? There are three answers. One is that countries in the outer tiers might feel they have been given second-class status. Even Britain, a firm believer in variable geometry, long fretted over the creation of a two-speed Europe built around the single currency, fearing that the real power and decision-making would be exercised by the inner circle. It is notable that the euro zone on its own now constitutes the “qualified majority” needed for the Council of Ministers to approve legislation.

Denmark, which has long had several opt-outs, has been similarly sensitive to being treated as an outsider. In the 1990s Italy felt that it needed to be in the euro from the start to avoid relegation. Greece and, later, several central European countries repeatedly objected to the idea of a two-speed Europe. Jaroslaw Kaczynski, the de facto leader of Poland, recently declared that this would lead to the “breakdown, in fact the liquidation of the European Union in its current sense”.

Yet such fears seem largely groundless. With variable geometry already so extensive, the idea of a first, superior class of highly integrated members and a second, inferior class of more loosely associated ones no longer stacks up. Indeed, some countries might be better off standing aside from ventures they are not ready for, even if it involves some sacrifice of broader influence. Uffe Ellemann-Jensen, a Danish former foreign minister, recalls that at the time of Denmark’s Maastricht opt-outs, such thinking was captured in the phrase: “To be or not to be, that is the question; to be and not to be, that is the answer.”

This leads to the second reason for dismissing the idea, which is the opposite of the first: the fear that, unless everyone is prepared to agree on common principles and an ultimate goal, the club might slowly but surely fall apart. That was why purists always objected to British and Danish opt-outs. After the collapse of the Soviet Union, applicant countries from eastern Europe were presented with a take-it-or-leave-it choice: if they wanted to join the EU, they would have to accept the entire acquis communautaire, including commitments to Schengen and the euro.

As Britain negotiates its way through Brexit, it is faced with the same attitude: any special access to the single market or other forms of co-operation are out, since they are available only in return for taking on all the union’s obligations. A multi-speed, multi-tier Europe conjures up a vision of the dreaded “cherry-picking”, in which countries take the benefits of the EU without paying the appropriate price. To concede this, the thinking goes, is to risk destroying the union. Those who feel this way point out that golf clubs do not allow outsiders to change the rules and play whenever they choose. Yet this is a false analogy. Most golf clubs have many categories of membership, and most allow non-members to play at less busy times.

When the Treaty of Rome was signed 60 years ago and the club had only six members, a single class of membership made sense. With 28 members, and even with 27, one size is much less likely to fit all. It seems probable that the current overlapping memberships of the euro, NATO, parts of the single market, Schengen and co-operation on domestic security will persist for a long time, possibly for ever.

The third argument against variable geometry, again expressed by a senior Eurocrat, is that too much variation would turn the union into an ineffectual organisation reminiscent of the Holy Roman Empire. Yet this analogy does not work either. True, the empire was disparaged by one Frenchman, Voltaire, as “neither holy, nor Roman, nor an empire”, and later puffed out by another, Napoleon. But Charlemagne’s creation proved sufficiently flexible and decentralised to survive wars, plagues and religious upheavals. It repeatedly shed and gained territory, at different times taking in chunks of France, the Low Countries and northern Italy as well as the core German provinces (but never Britain). In so doing, it mostly brought more peace, prosperity, freedom and security to its inhabitants than were enjoyed by the rest of Europe—and it lasted for 1,000 years.

If it is too early to tell whether the Holy Roman Empire was a success, listen to one of Aesop’s fables, dating back 2,500 years. It is about a reed growing by a river alongside a mighty oak. The oak taunts the reed for being weak and having to bend with every breeze. But one day a great storm blows up and topples the oak, whereas the reed remains standing. There may be something to be said for flexibility.

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