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Opinion

The danger of “flexibility”

Hans Kundnani / Dec 2017

Photo: European Union

 

The idea of a “flexible” Europe has been around for a long time and is to some extent already a reality within the European Union. More than two decades ago, Denmark and the United Kingdom negotiated “opt-outs” from the European single currency, while other member states such as Sweden and Poland that are obligated to join the eurozone eventually are in no hurry to do so. The Schengen Agreement, which created a border-free area within Europe, was initially outside the EU Treaties and did not (and still does not) include all member states. Groups of EU member states have also used the principle of “enhanced cooperation,” first codified in the Amsterdam Treaty 20 years ago, to move ahead with integration in areas such as a Financial Transactions Tax (though in this case they gave up).

Now the idea of “flexibility” is increasingly being seen as a way for the EU to move ahead with further integration – and many seem to be fixating on it as a panacea for the Europe’s problems. The white paper on the future of Europe published by European Commission President Jean-Claude Juncker earlier this year included the idea of a multi-speed Europe – the paper calls it “Those Who Want More Do More” – as one of five “scenarios” for the future of the EU in 2025 (though Juncker has subsequently made it clear that he rejects this scenario). Shortly afterwards, a “Big Four” of Germany, France, Italy, and Spain endorsed the concept of a “multi-speed Europe” at a summit in Versailles. “We should have the courage to allow some countries to advance more quickly than others,” German Chancellor Angela Merkel said.

It is true that the idea of “multi-speed Europe” could allow a new “core” Europe to move ahead with integration – particularly on economic and refugee policy, the two areas that are driving the growth of Euroscepticism. In particular, as I have argued previously, the group of countries that are part of the euro and Schengen areas need to make the idea of a “solidarity union,” based on a set of rights and responsibilities towards each other, a reality. Countries like Poland and Hungary look increasingly unlikely to join the single currency any time soon and also oppose the redistribution of refugees within the EU. Differentiated integration could allow them to opt out of the new “core” without preventing it from moving ahead – which it needs to.

However, rather than facilitating such integration in this new “core” consisting of the euro and Schengen areas, the idea of a “multi-speed Europe” – or “differentiated” or “flexible” integration – could actually prevent it. This is because differentiated integration makes it even more difficult to reach the kind of grand bargain in the “core” that is needed. In effect, member states would able to pick and choose the areas in which they want to integrate and the areas in which they wanted to retain national sovereignty on a case-by-case basis. France might choose to integrate economic policy but not refugee policy – in other words to “mutualize” debt but not refugees. Conversely, Germany might want to integrate refugee policy but not economic policy – in other words to “mutualize” refugees but not debt.

This illustrates the central problem of European integration. Each member state inevitably seeks to turn its own problems into European problems and is prepared to pool sovereignty in these areas, but at the same time resists turning other member states’ problems into European problems and therefore seeks to retain sovereignty in these areas. The only way to break the stalemate is through a grand bargain – which is how European integration has always worked. Member states recognized that, taken as a whole, the benefits of European integration outweighed the costs – but this was only possible because one could not get the benefits in one area unless one accepted the costs in other areas. “Flexibility” would remove the incentive to reach the new grand bargain that is urgently needed.

Ironically, the idea of a “multi-speed Europe” is a kind of generalization of the British approach to the EU at exactly the moment the UK is leaving the EU. It was the UK that promoted the idea of “flexibility” as a constructive way to avoid taking part in integration in areas in which it wanted to retain sovereignty without blocking integration altogether. It was British opposition to the Fiscal Compact in 2011 that forced the EU to replicate the approach previously taken with the Schengen Agreement – from which the UK had also opted out. For a long time it seemed as if the UK was an exception. But now it seems that even the “Big Four” have internalized the British approach.

The crucial point is that there cannot be multiple speeds within the “core” of the EU, only between “core” and “periphery”. But this distinction is not clear in much of the current debate – which is why “flexibility” is such a risk for the EU. In particular, the danger is that Germany may seek to use the idea of “flexibility” to achieve further integration in areas in which it stands to benefit, such as refugee and security policy, while at the same time avoiding further debt mutualization in the eurozone. In short, “flexible” integration would allow it get benefits without costs. Other EU member states, in particular France, should be aware of this risk and reject the idea of “flexibility” within the “core” of the EU.

 

Hans Kundnani

Hans Kundnani

December 2017

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