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A Union at Risk: The Future of the European Project

Author: Ettore Greco, Institute of International Affairs
Jun 20, 2017

African Union Expert Brief "Pulse of Europe" supporters hold EU flags in front of the Chancellery in Berlin, Germany May 15, 2017. (Hannibal Hanschke/Reuters)

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Developments in the past six months have fed perceptions that, while the European Union is not perfect, it is no longer under threat of collapse. The election of the pro-EU French President Emmanuel Macron combined with other electoral setbacks for far-right anti-EU parties can be taken as a sign that the populist wave is now receding. However, this emerging perception could induce a dangerously complacent attitude that EU leaders can ill afford. In fact, the EU remains mired in a crisis of confidence and legitimacy of unprecedented proportion that threatens to block or even reverse the European integration process and could eventually result in the breakup of the eurozone. 

What is needed, therefore, is a sober assessment of the challenges and risks that the EU faces and its possible options to sort out the present crisis and resume a sustainable integration path. A promising and pragmatic way forward already embraced by the EU is to allow member states to pursue different integration paths. Even though the two most common models of differentiated integration—“multi-speed”, which implies a common destination for all member states, and “variable geometry,” which recognizes the existence of irreconcilable differences among them—carry their own risks, a higher degree of flexibility in integration plans can play an important role in solidifying the union and increasing European security and prosperity.

Challenges to the Union

Macron’s success, along with the unexpected defeat of other far-right anti-EU parties, has been interpreted as a sign that the populist wave is now receding. The fact remains, however, that in several countries, movements and parties outright hostile to the EU and its founding principles are much stronger and more influential than they were a decade ago.

Despite some encouraging developments both on the region’s economy and migration that may help counter the populist wave, the EU remains fragile. The state of public finances and the banking system are still precarious in several countries, with eurozone policy mechanisms widely considered to be ill-prepared to manage another financial crisis. Furthermore, the lack of economic convergence between northern and southern countries—arguably one of the EU’s big failures—is at the root of the mutual distrust that is preventing member states from agreeing on further steps to reform European economic governance.

Thanks to the reintroduction of border controls in many places and the migration agreement with Turkey, the flow of migrants and asylum seekers into the EU along the Balkan route has been successfully contained. However, as a result of the restrictive measures imposed on the free movement of people, the Schengen system of border-free travel has been seriously destabilized, and it is unclear if or when it will be fully reestablished [PDF]. Furthermore, the migration crisis has continued unabated along the Central Mediterranean, and the failure of the plan [PDF] to redistribute refugees arriving in Greece and Italy has continued to generate deep acrimony among member states.

Brexit negotiations will also put the cohesion of the twenty-seven remaining member states to a serious test. By rapidly and unanimously approving the guidelines for Brexit talks with the United Kingdom on April 29, they showed a considerable unity of purpose and a firm determination to negotiate as a single entity. However, there remain substantial divergences between the EU guidelines and the position of the UK government that will not be easy to iron out, including the thorny issue over the size of the exit bill that the EU will ask Britain to pay. UK Prime Minister Theresa May lost her parliamentary majority the UK’s June 8 national election and it remains to be seen whether, with a hung Parliament, the prospect of a “soft Brexit” will become more plausible. In fact, the weaker negotiating position of the British government could exacerbate the Brexit dilemmas it is facing, further complicating both the consensus building process in the UK and the negotiation process.

Unavoidably, Brexit discussions will absorb considerable time and energy in the coming two years, impeding the management of other vital political matters. In addition, the imperative to preserve unity amid Brexit may make EU institutions even more cautious about pushing for integration plans that could create divisions among the member states.

A Roadmap to Exit the Crisis?

Realistically, no major initiative will be undertaken to relaunch the integration process or reform the EU’s policies before the end of the current electoral season, which notably includes Germany’s national elections in September. This is also the time horizon indicated by the European Commission in its recent white paper [PDF] that, tellingly, limits itself to sketching out five scenarios for the future of the union, with a concrete program of action expected to be unveiled in June 2019. The lengthy timetable and absence of straightforward policy recommendations demonstrates the depth of the current impasse in the debate over the future of the union.

Indeed, attempts to deepen integration on economic governance [PDF] and management of external borders over the past several years have suffered from fundamental disagreements over how to proceed. The lack of progress on the latter is striking, as public opinion polls show that most EU citizens support the prospect of greater integration to tackle the migration crisis. The debate over the creation of new instruments and capacities in the field of defense policy has also intensified. Following the publication in June 2016 of the EU Global Strategy, institutions within the bloc have approved several documents calling for the deeper development of the union’s defense dimension by a group of willing and able member states.

If implemented, some of the plans for deeper cooperation and integration in the fields mentioned above can contribute significantly to relaunching the European project. There are, however, three more general questions that will continue to be central to the debate on the future of the EU. First, some critics argue that the EU has become increasingly intergovernmental, as shown by the growing role acquired by the European Council—that is, by national capitals—in the last decade. However, several initiatives undertaken in response to the economic crisis have in parallel strengthened the powers of the more “federal” EU institutions such as the European Central Bank and the Commission itself. This indicates that the EU will most probably continue to be ruled via mixed governance, and a single coherent blueprint for the EU’s decision-making is unlikely to prevail.

Even more politically divisive is the problem of balance of power among member states, which could be exacerbated by Brexit. Without Britain to balance the triangle with France and Germany, Germany’s dominant role, which has caused much resentment especially in southern Europe, may grow further. With Macron at the Elysee, there could be a better chance for a renewed Franco-German partnership, but the prospect that Germany or a revamped Franco-German coupling will provide the needed political impulse to relaunch the European project remains highly uncertain.

Finally, EU institutions continue to face a huge democratic accountability problem, which has deepened despite the stronger powers attributed to the European Parliament under the Lisbon Treaty. New transnational mechanisms of democratic participation, such as the indirect election of the commission’s president have had little impact. The growing role of EU institutions in shaping the economic policies of eurozone countries makes democratic control particularly urgent.

The Dilemmas of Differentiated Integration

The notion that EU member states should be allowed to pursue different integration paths—or commit themselves to varying degrees of integration in the various policy areas—has been increasingly presented as a pragmatic way to keep the EU united and, at the same time, keep open the prospect of growing integration for the willing and able. The viability of differentiated integration as a blueprint for the future modus operandi of the EU seems to be confirmed by the numerous opt-outs from common policies already existing in several fields, notably the eurozone, the Schengen regime, internal security, and defense policy. Also, the notion has been embraced in several EU official documents, including most recently the Rome declaration [PDF] adopted in March 2017, which states that all member states should move “in the same direction,” although “at different paces and intensity.” The language offers a soft version of differentiated integration that reflects the concern to limit the degree of divergence and preserve a unity of purpose within the EU as a whole. The commission’s white paper considered a somewhat more radical scenario characterized by the emergence of “coalitions of the willing” in one or more policy sectors.

There are various possible models of differentiated integration. One basic distinction is between temporary differentiation evoked by the “multi-speed” Europe formula, which implies the same destination for all, and a more stable or permanent one typical of the “variable geometry” model, which accepts that the different views and interests on integration are irreducible even in the long run.

These varying views on differentiated integration reflect, of course, different types of concerns about its implications. One is that a more pronounced and formalized differentiation could inadvertently accelerate EU disintegration in the absence of a commonly shared view on the overall direction of the integration process. More politically relevant is the fear voiced by those that would probably remain outside the vanguard groups or the inner circle that they would be marginalized and lose influence in the EU’s decision-making. In particular, the Visegrad Group—the Czech Republic, Hungary, Poland, and Slovakia—has insisted on the inclusiveness of any future enhanced cooperation plan. In view of the Brexit challenge, prudence could also suggest not to proceed along the differentiated integration path for the sake of unity. Clearly, differentiated integration is no magic formula and remains politically controversial.

One established form of differentiated integration—the enhanced cooperation procedure foreseen by EU treaties—is based on relatively clear rules. Other forms of differentiated integration involving only a limited number of member states could pose politically sensitive dilemmas with regard to the legal framework; the decision-making procedures, particularly the role played by common institutions; the degree of openness to potential latecomers; the mechanisms to ensure democratic accountability; and the mechanisms to raise the needed financial resources. New forms of differentiated integration could develop, in particular, in the defense sector as well as in the areas of justice and homeland security. Indeed, in both fields the capabilities and willingness to integrate differ widely among the member states. If the plans to strengthen eurozone governance make progress, there will also be a greater differentiation in the economic sphere.

On the other hand, not to be underestimated is the call to return some powers from Brussels to national capitals on the basis of stricter interpretation of the subsidiarity principle as pushed in particular by the Dutch government. However, even among those in favor of reducing the EU’s sphere of action, there is little agreement on how to achieve that. For instance, repatriating farm support or regional spending policies from which some member countries derive considerable benefit remains highly controversial. In fact, a more immediate and widely shared objective among Euroskeptic groups is to prevent the union’s bodies from expanding their powers—this applies in particular to the independent agencies—while keeping the EU budget as limited as possible, blocking any further harmonization of the social security systems, and reasserting the role of national parliaments.

Conclusion

Powerful centrifugal forces are threatening the historical achievements of European integration to the point that the disintegration of the eurozone, or the EU itself, has ceased to be a completely implausible scenario. However, the EU has also demonstrated considerable resilience, and there are signs that a reasonable unity of purpose among the member states can be preserved provided that member states move forward with some restructuring that enables it to cope with new challenges. However, no blueprint for reform has emerged. EU institutions themselves are understandably cautious when discussing the prospect. However, the union can hardly afford to prolong the current impasse for much longer given the many pressing challenges it is manifestly ill-equipped to handle.

After the Brexit decision, a revamped Franco-German leadership remains a crucial condition for relaunching the integration process, in particular for a renewed deal to enhance eurozone governance along the line of the four unions project [PDF]; this comprises the banking union, fiscal union, economic union, and political union. Such a deal should ensure Germany’s support for a stronger eurozone structure and the mobilization of additional financial resources for joint investment projects in exchange for more incisive structural reforms in countries that are in more precarious financial conditions. Deeper integration within the eurozone is strategically crucial not only to deal more effectively with crises and macroeconomic shocks but also for the overall stability of the EU.

Another strategic priority is the implementation of plans to reinforce border control to ensure better protection and security of citizens, which is widely seen as a critical element to restore the Schengen system. Significant progress can be made in the realm of home and justice affairs, including more police forces and intelligence cooperation. A more equitable sharing of burdens and responsibilities for the management of migrant and refugee flows remains politically problematic. While EU institutions should continue to insist on the implementation of the redistribution and resettlement plans, which have recently made limited progress, it has become increasingly evident that the EU should intensify its efforts to stabilize the most fragile countries of origin and move to establish, when possible, workable migration partnerships. The renewed interest for the “permanent structured cooperation” envisaged by the Lisbon Treaty could lead to more systematic efforts to build a common defense policy.

New forms of differentiated integration can play a growing role in implementing plans in such fields as defense, justice, and home affairs. A higher degree of flexibility should, however, be accompanied by mechanisms ensuring openness and transparency.

This memo is based on a longer panelist paper for the sixth annual Council of Councils Conference. The full paper can be accessed here [PDF].

Global Memos are briefs by the Council of Councils that gather opinions from global experts on major international developments.