The Opportunity and Danger of a “Multi-speed Europe”

Jean-Claude Juncker, president of the European Commission (copyright European Parliament)

A new consensus seems to be emerging around the idea of “multi-speed” Europe. The idea has a long history 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 a “multi-speed Europe” 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. Earlier this month European Commission President Jean-Claude Juncker published a white paper on the future of Europe, which 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. A few days later, a “Big Four” of Germany, France, Italy, and Spain endorsed the concept 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.

Even critics of EU policy over the last seven years since the euro crisis began have also endorsed the idea of a “multi-speed Europe” as a solution. For example, Wolfgang Münchau wrote in his column in the Financial Times earlier this week that a “multi-speed Europe” was a solution to the trap in which Europe currently finds itself: more integration is necessary, particularly in the eurozone, but is at the same time impossible because it would require treaty change, which no one wants, not least because it would require referendums in several EU member states. But “Europe’s dilemmas are solvable if one opens up the institutional fabric.”

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 Euroskepticism. 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. Differentiated integration would remove the incentive to reach a grand bargain.

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 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.

Europe’s problems cannot be fixed by the idea of a “multi-speed Europe.” The main challenge is still to define the terms of a grand bargain in the “core” – ultimately, that is, between France and Germany. There are some hopes that if Emmanuel Macron were to become French president in May and Martin Schulz were to become German chancellor in September, a breakthrough might be possible. But it remains to be seen whether either or both of them will be successful and, even if they both are, whether a deal between them is possible and what it might look like. In any case, it is on the feasibility of such deal at the “core,” not on an institutional fix, that the future of Europe depends.