From differentiated to deeper integration

A. Phenomenon of differentiated integration

European integration is not a coherent process. Starting with the creation of the Schengen area and the Eurozone the integration has become more and more differentiated.

Seriously challenged by the current economic crisis Member States increased their efforts to deepen integration within the EU. The adopted measures particularly aim at strengthening the coordination among Member States whose currency is the Euro, thus intensifying the phenomenon of differentiated integration.

The current practice within the EU institutional system is characterised by informal Eurozone meetings within the European Council (e.g. Art. 12 I Fiscal Compact Treaty) and the Council of Ministers (e.g. Art. 1 Protocol Nr. 14 to the Lisbon Treaty) and differentiated voting rights within the Council of Ministers (e.g. Art. 136 II and 138 III Treaty on the Functioning of the EU (TFEU)).

The process of differentiated integration continues with proposals to reform the institutional system regarding the Eurozone and the Conclusions of the European Council meeting in June 2014 that the concept of an ever closer union allows different paths of integration for different countries. Thus, European integration can currently be considered as a multi-speed process.

B. From differentiated to deeper integration – chances for the EU as a whole

I. Deeper integration as a need and chance

The focus of the debate about deeper integration rightly is on the Eurozone. The single currency has to be considered as a major achievement of the EU. The crisis, however, particularly shook the Member States whose currency is the Euro in a way that threatened the whole integration process in the EU.

Challenges the Eurozone is confronted with are structural and thus need to be encountered by significant reforms. The current crisis has proven that a common currency area cannot properly function without common economic and fiscal policy. Member States whose currency is the Euro thus urgently need to strengthen their economic and fiscal coordination to ensure cohesion and stability of the Eurozone. Priority currently granted to cooperation among these Member States can thus be justified by exceptional historic circumstances.

Integration is a process that leads to constant changes. The differentiated integration as it is today, thus, can most probably be deemed as a temporary situation. The slow but steady enlargement of the Eurozone illustrates these changes.

In EU history crises have always accelerated the process of integration. The current efforts to strengthen integration among Member States whose currency is the Euro should thus be welcomed as a contribution to promote an ever closer union. The Eurozone should be considered as a federalist vanguard, road-testing further steps of integration for the benefit of the whole EU, thus inspiring other Member States to do alike and join the Eurozone.

The current dynamic points out to a level of integration that goes beyond a mere economic approach. One can observe that efforts are being made to create a genuine political union that is characterised by solidarity among all Member States and particular attentiveness towards the needs of citizens. This development should be welcomed as another step towards a European Federation.

II. Shaping deeper integration

1. Developing the four unions and strengthening cohesion within the EU

Deeper integration should aim first of all at further developing the banking, economic, fiscal and political union, according to the “Blueprint for a deep and genuine Economic and Monetary Union" presented by the European Commission in 2012, for the benefit of all EU citizens and Member States.

According to our federalist ideals, deeper integration should lead to supranational governance in certain policy fields, e.g. foreign, economic and environmental policy, while leaving sufficient autonomy to Member States, in line with the principle of subsidiarity, to shape policy on the appropriate level.

Deeper integration should be the aim for the EU as a whole. The current dynamic within the Eurozone should, thus, not detach from the development in Member States whose currency is not the Euro, particularly central and eastern European Member States. These Member States should be encouraged to increase their efforts in order to meet the Maastricht criteria. EU measures particularly addressed to the Eurozone must not affect cohesion among all Member States.

Even though some flexibility might be needed to overcome the current crisis, the process to deepen integration has to be open to and involve all willing Member States. The Fiscal Compact Treaty, ratified by 25 Member States, illustrates how an instrument that, above all, aims at strengthening the financial stability of Member States whose currency is the Euro can involve nearly all Member States.

Above, to ensure economic and social cohesion in the whole EU it is important to strengthen the internal market and enable all citizens to benefit from the four freedoms, namely the free movement of persons.

Member States should withdraw their opt-outs from the Lisbon Treaty, particularly from the Charter of Fundamental Rights to ensure equal rights for all EU citizens.

Solidarity is founding value of Federalism and the EU. Thus, close ties among Member States should be strengthened, including forms of financial support, to ensure social cohesion, particularly regarding Member States where people seriously suffer the economic crisis or other exceptional circumstances. In this regard, one should recall that all Member States sometimes undergo periods when the might need consideration and solidarity from other Member States.

2. Ensuring a balanced institutional system

One aim of the Economic and Monetary Union is to introduce the Euro as the single currency for all Member States. Any policy related to the Euro, thus, has to be considered as a matter of common interest for all Member States.

Council of Ministers’ meetings on the Eurozone like the corresponding European Council meetings have to involve Council members from all Member States. Council members representing Member States whose currency is not the Euro must have the right to participate in the debate in all meetings to ensure that their interests are also represented in the Council. The right to vote may, according to the provisions in Art. 136 II and 138 III TFEU, be reserved to Eurozone Council members.

European Council and the Council of Ministers meetings on the Eurozone have to be enshrined in the official institutional system of the Lisbon Treaty. The tasks and competences have to be clearly stipulated to ensure transparency and effective decision-making of these meetings.

Considering that integration is a process of constant changes and that the aim of the Economic and Monetary Union is to introduce the Euro as the single currency for all Member States, JEF assumes that differentiated Council configurations will only be a temporary state.

The Members of the European Parliament should take the lead on the debate and on the formulation of concrete proposals to ensure democratic legitimacy to all further steps to deepen integration. Such steps should regard in particular the development of the fiscal union and the establishment of a eurozone budget. The European Parliament has to ensure that EU measures particularly addressed to the eurozone do not affect cohesion among all EU Member States.

ANNEX

A. Reasons for differentiated integration

The enlargement from 6 rather homogeneous to 28 quite heterogeneous Member States accompanied by the increasing attribution of competences, touching on sensitive political fields, and the fact that Member States often pursue different interests, renders policy-making in the EU fairly difficult.

To refrain from the Schengen area and to opt-out from the Lisbon Treaty are political decisions of the regarding Member States. As the Lisbon Treaty is an international treaty, Member States are free to do agree upon certain opt-outs during treaty negotiations.

Member States can only introduce the Euro as their currency when they meet the Maastricht criteria. Weakened by the current economic crisis some Member States are far from complying with these criteria. Other Member States did not introduce the Euro yet for political reasons.

The current economic crisis seriously challenged the Eurozone in the past years. To overcome the crisis, Member States agreed on several steps to deepen integration, particularly within the Eurozone. These measures aim at a close economic and fiscal coordination between the concerned Members States.

The Lisbon Treaty provides an opportunity to deepen integration within the EU framework. The instrument of enhanced cooperation (Art. 20 Treaty on the EU (TEU), Art. 326 et. seq. TFEU) allows a group of at least nine Member States to issue common rules in all areas, which do not belong to exclusive EU competencies. It was lately applied in the fields of patent, family and tax law. The instrument of enhanced cooperation, however, might have proven to be impractical to tackle the crisis.

Faced with political deadlock in the EU, Member States decided to use the intergovernmental instead of the community method. Thus, some steps to overcome the crisis in the Eurozone and to prevent future economic crises in the EU were taken outside the framework of the Lisbon Treaty and do not involve all Member States, e.g. the European Stability Mechanism and the Fiscal Compact Treaty.

The urgent need for close coordination within the Eurozone with far reaching effects on Member States sovereignty and the will to ensure effectiveness and legitimacy of the regarding decision-making process raises the question of institutional reforms regarding the Eurozone.

B. Criticising differentiated integration

I. Political aspects

Politically speaking, the phenomenon of differentiated integration as such could be considered to be contrary to the idea of EU as an ever closer and united union. Thus, one could say that the EU should only aim at deepening its integration if it involves all Member States.

Political and economic effects of differentiated integration are difficult to measure. However, the current situation might be considered to create disadvantages. One might be concerned that particularly Member States whose currency is not the Euro could be left behind. These Member States might be discouraged from taking further steps in the integration process.

From a democratic perspective one might also be concerned that coalitions of strong Member States can take significant decisions, affecting all European citizens, however leaving other Members states to choose only between “take or leave”.

Above, one might be concerned that a group of Member States, like the Eurozone, rushing forward, threatens political cohesion among EU Member States, hinders the emergence of a common European identity among European citizens and drives euro-sceptic tendencies in the EU.

II. Institutional aspects

The current practice of separate Eurozone meetings within the European Council and the Council of Ministers can be criticised under different aspects: Firstly, these meetings lack public transparency, as, according to the regarding treaty provisions, they should be hold informally. Secondly, contrary to the mentioned European Council meetings, the Council of Ministers meetings do not involve Ministers of the Member States whose currency is not the Euro. Thirdly, these informal structures are not accountable towards the European Parliament.

Even though, on one hand, these structures are contrary to the idea of a common institutional framework within the EU, on the other hand, one could say that these structures correspond to the particular need for close coordination within the Eurozone. This being said, one can observe that, due to their informal character, these institutional structures have no formal decision-making power, thus being less effective than official institutions.

Additional to the current Council meetings with differentiated Member States participation, it was debated to introduce particular Eurozone meetings within the European Parliament. This would be contrary to the provision that Members of the European Parliament are representatives of all EU citizens (Art. 14 TEU) and the idea of transnational lists for European elections (JEF Europe Political Platform 2013).

The intense use of the intergovernmental method in the past years, aimed at overcoming political deadlock in the Council, also lead to a marginalisation of the European Parliament. Politically sensitive decisions with far reaching consequences, particularly on monetary questions, were mostly taken by the European Heads of States and Governments without involving the European Parliament. The crisis management thus lacked to a large extent sufficient democratic legitimacy.