On EU differentiated integration

The complexity of a multifaceted Europe is a long term problem

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It has been 25 years since the Treaty of Maastricht. That is when the European Union was established as the successor organisation to the European Economic Community. It also is when the euro was envisaged as the final stage of the nascent Economic and Monetary Union. The Treaty of Maastricht can be considered a milestone. It signalled the change in scope of the European integration process and, most importantly, set the ambition to proceed towards political union.

While political union remains a laudable objective, the Treaty did not change the overarching theme of post-war European politics: inter-state cooperation, with the supranational level being an extension of the collective will of the participating nation states. Whatever the unity among Europeans, it is one based on the normative foundation of existing constitutional traditions and national lifeworlds. The EU is there to amplify, complement, or otherwise support the political processes at the local level. Nations qua nation states are the founders of the EU. The Treaty on European Union as well as the Treaty on the Functioning of the European Union reaffirm that from the very outset and through several provisions.

The EU is a system that builds on the nation state and its claims on sovereign authority. Because of the principle of equality inherent in national sovereignty, all EU Member States are equal in their capacity as states. It is the main reason why decisions at the highest level, where Treaties are made and the overall form of the integration process is defined, are governed by a spirit of consensus.

“Consensus” is such a key term when referring to the integration process. Unlike the way things tend to work in most democracies, where a ruling majority can have a diametrically different agenda than the opposition, Europe decides on the modal features of its longer term outlook (the integration process) as a community. Even major disagreements are settled through negotiations, where practically all relevant actors get to be involved. The Treaty of Maastricht presents such a case. For all the political capital invested in the realisation of an “ever closer union” and, in particular, the euro as Europe’s single currency, not all countries wanted to proceed. Formal opt-out clauses on euro membership were envisaged for the UK and Denmark. A bifurcation in the road towards political union was thus made clear.

Multiple speeds, multiple dimensions

When the euro was eventually introduced at the turn of the millennium, it became the currency of some, though not all Member States. The UK and Denmark were formally excluded. Sweden would have to pass euro membership through a referendum, something that is yet to happen (a de facto opt-out), while other countries were/are in the process of satisfying the technical criteria for advancing to the final stage of Economic and Monetary Union. The euro thus present us with two different types of European integration operating simultaneously:

  • a Europe of multiple speeds, where all are moving towards the same target at a different pace;
  • a Europe of many dimensions, where there are those willing to proceed while others remain at the previous phase of inter-state cooperation.

The countries that have to adopt the euro but still do not meet the criteria are examples of the multi-speed phenomenon, often referred to as “two-speed Europe”. The formal opt-outs of the UK and Denmark are instances of the latter, where integration becomes a matter of picking and choosing whatever legal-institutional arrangement is appropriate under the circumstances.

In more recent times, the tendency to rely on differentiated integration, in either of its variants, as a means for overcoming political deadlock or adapting to rapidly evolving states of affairs, has been reinforced. As a reaction to the euro crisis, a series of reforms were introduced on issues of economic governance and coordination, fiscal policy, banking regulation and macroprudential oversight, with the effect of further widening the gap between euro and non-euro countries. A couple of inter-state treaties were signed and ratified in that regard, without the inclusion of all EU Member States.

The euro and related policies are not a special case. Exceptions to the rule or the expected normality can also be found on matters of justice, home affairs and police cooperation, as well as visa-free travel (the Schengen Area). It would not be surprising if similar solutions were found for major issues such as migration from third countries, asylum policy, security and defence.

Complexity is bad for everyone

Understood holistically, the EU is a complex, multifaceted system of institutional arrangements, ad hoc political agreements, and inter-state pacts that unfold in various domains of policy-making. The task of “communicating Europe” is not a simple one, especially when precision is needed. One can proceed to outline the functions of each institution, or explain the ordinary legislative procedure. But that would not be enough to describe the role and overall impact of European politics. The exceptions to the norm are not matters of minor significance, technical details that only specialists should worry about. They have far reaching implications on European politics and the quotidian life of those affected.

Differentiated integration can be useful for temporarily circumventing whatever rigidities in the current EU architecture. But every context-specific ‘fix’ poses major challenges on established processes, as well as for those trying to move things forward. The financing of the EU is one front where the Union suffers from such inventiveness.

Take a look at the euro. The euro area is fast becoming a de facto state. It is readily apparent that it needs a fully fledged Treasury as a counter-party institution to the European Central Bank. It also requires a government that can be held directly accountable for macroeconomic coordination and system-wide stabilisation. These imply a fiscal capacity to tax, spend, run deficits, raise debt, and generally conduct economic policy in line with cyclical fluctuations. It also means that a bespoke legislature must be set in place, to perform the vital function of checking on that government, passing euro-area-specific legislation, approving the budget, and so on. Yet such plans are hampered by the fact that the budget of the EU, the Multiannual Financial Framework, is designed primarily for the system as a whole. It is virtually impossible to stretch it enough in order to satisfactorily cover the needs of whatever new form of differentiated integration.

The technical constraints on implementation, maintenance, execution, and further development, are immediately discernible, as are the limitations on the normative front, in particular as pertains to matters of accountability. A system that is difficult to explain is at the same time one that is hard to keep track of and, hence, to scrutinise effectively. Citizens may not be immediately aware of the impact of a multi-speed-multi-dimensional Europe and, therefore, are unlikely to expect from their representatives to be active and transparent in that regard. Important issues of European integration are scarcely considered by the public at-large, which is to the detriment of our democracy.

Clarity as a public good

The Treaty of Maastricht set the tone and overall direction of 25 years of European politics. It introduced the European Union and paved the way for Europe’s single currency: the euro. Yet it also unequivocally legitimised and reaffirmed an arguably useful though potentially pernicious practice: the politics of expedience and ad hoc decision-making. We witnessed them prior to the introduction of the euro, among other issues, as well as during the recent (and ongoing) reform of the Economic and Monetary Union.

The more complex the EU becomes, the greater the challenge of preserving its integrity and overall public appeal. Differentiated integration is integration done wrong. It lacks foresight and long term planning. It is reactive rather than proactive. It is inefficient, cumbersome, and seemingly irrational at first sight.

If there is one lesson to be learned from the Treaty of Maastricht, it is that clarity is a public good: a necessary feature of a well functioning democracy. It does a major service for the community of citizens, in that they can both monitor and participate in the deliberations that affect their lives. It also is of great value for policy-makers and everyone tasked with running the day-to-day affairs of governance.

Whereas the EU has not drawn that lesson. Instead, it is taking the Maastricht paradigm to a whole new level of complexity and obscurity. Decisions can be justified in the name of a crisis of sorts (the euro crisis, the refugee crisis, etc.). Ultimately though there comes a point where things need to streamlined, consolidated, and cleaned up. What we now get is a hodgepodge of political convenience that only serves the short to medium term interests of some governments that happen to enjoy a favourable balance of power.

Differentiated integration will continue to be the norm. Everything points in that direction. Nevertheless, that does not detract from the fact that the complexity of a multi-speed and multi-dimensional Europe is ultimately to the detriment of democracy as well as the longer term prospects of the EU itself.