Tuesday 7 June 2016

The Future of Greater European Union

I have very mixed feelings about the EU and the referendum on UK membership.  I feel that we don't really want 'In' or 'Out' of the EU. We want co-operation with other European countries without getting dragged into Brussels' incompetent empire building.  We neither want to be dragged into the Eurozone, or the Schengen agreement, or an EU army, or a banking union, or any other of myriad EU schemes for closer union. Neither do we want to end up entirely outside the European community, unable to engage in academic co-operation, free-trade, law enforcement co-operation, visa-free travel, or lose all say on a wide-range of technical standards.

The Leave campaign wants to persuade us that we could retain the good things we want while losing the bad things we don't want. The Remain campaigns wants to pesuade us we don't have that option and if we want the good bits we have to take the bad as well. I don't know which is right. But a better, more long-term question is, firstly, why isn't there a better option than either?  Why can't we be in a European Community, with some limited say over how it works, without constantly having to fight to avoid being dragged into an 'ever closer union'? This question is intimately tied up with another important question. Where will the EU itself be in twenty or thirty years time? And where should it be? How can we make a long-term decision to stay if we don't know what we're getting in to.

Frankly, nobody answers these question because the EU basically has an unofficial plan of not having a long-term plan. The EU's model for european unity has always been deliberately one-step-at-a-time. Looking where you're going might just terrify you, and lead to an almighty argument about the choice of destination, but if you concentrate on taking each step you get there eventually. Closer union does not advance with any big bang, but with a directive here, an agreement there, power after power, slowly standardised and shifted to Brussels. This approach has its advantages but the chaos of the Eurozone crisis and the refugee crisis, not to mention the risk of Brexit, and eurosceptic sentiment in countries like France, the Netherlands and Denmark, suggests it is no longer up to the job, to say the least. Obviously the future is uncertain, especially the future of the EU, but there are some things we can be reasonably sure of. And that offers an answer to the first question as well as the second.

This is the EU and Eurozone as it stands. The Eurozone in dark blue, the rest of the EU in light blue.

The European Union has expanded since 1953 when it was just France, Germany, Italy and the Benelux countries. From 6 countries it has now expanded to 28 and it is clear what further expansion plans there are. The remaining Yugolsav countries are only still outside the EU because of their low political and economic development, largely a result of the terrifying wars of the early 90's. Slovenia and Croatia have already been absorbed, and the rest almost certainly will. As will, eventually, the bits of Ukraine that Russia can't detach. In ten to twenty years the EU will most likely look like this.

At this point EU expansion hits a block though. It runs out of small European countries to swallow up. The only ones left on its borders are either vast and foreign (Russia and its satellites, Turkey) or have already said no (Switzerland, Norway, etc). All the east-european countries have signed up to join the euro so I'm assuming they will eventually, though this part of the picture is more uncertain. The EU will not just be geographically larger, it will be more integrated as well. 'Ever Closer Union' is the EU's one creed and it will work out its inevitable logic, slowly but surely. Even the EU's most serious troubles, the Eurozone and migration crises, have only fuelled the calls and need for ever closer union. Within twenty years we will probably have, and I would say, should have, the workings of a fully fledged European Superstate.

Not a strong federal state, a United States of Europe, it will never be that centralised or constitutionally uniform, its central government will still be weak compared to the member states. More like a European Confederacy, a diverse multi-lingual block with a central government whose brief is purely to manage cross-state relations and issues and represent their interests to the wider world, not to take precise and detailed control over everyone's lives and money. It will be more like a giant Switzerland than a European US, though still with its own common currency, banking system, central bank, scientific program, space agency, external border, trade policy, legislature, technical standards, immigration and asylum policy, army, agricultural policy, limited fiscal transfers, etc. More than enough to be getting on with.

And, for most European countries, this would be a good thing. Most of them are small, recent inventions, who are entirely surrounded by fellow EU neighbours and have neither the need nor the expertise, nor any interest in running their own currency, or their own foreign policy, or even their own armed forces. The 21st century will increasingly be dominated large states: America, China, India, Russia. These are many tens of times the size of Slovenia, or Belgium. On their own they'll get squashed but together the European Confederacy can stand toe-to-toe with the other great powers of the world.

A future in the European Confederacy is not for everyone though. Britain, whether it votes Leave or Remain on 23rd June, will not be in the European Confederacy. We're already outside the Euro and Schengen zones, and between the renegotiation, and the referendum lock the distance between us and the core of EU countries is only going to grow. It is likely that more and more decisions will be taken within the EU core and we will be increasingly side-lined. If we vote Remain we'll end up a semi-detached formal member of the EU, but outside the European Confederacy including almost the entire rest of the EU, a leviathan stretching from the Channel to Ukraine with the Euro as its currency. If we leave we'll most likely end up in the EEA or EFTA, in a very similar position, with a modicum more freedom to act outside the EU and a modicum less ability to influence policy inside the EU. This will leave the European Confederacy ringed by states to whom it is closely linked but either, to its north have chosen not to join 'ever closer union' (Britain, Norway, Iceland, Switzerland, possibly Denmark and Sweden), or, to its East, are too large and alien to be satisfactorily integrated (Russia, Turkey).

Turkey, for example, has been inching towards EU membership since the 1960s, first formally applied for membership in 1987, and is currently in the customs union with the EU. I consider it very unlikely that Turkey will become a full EU member any time in the next twenty years or more. Turkey is no poorer than Bulgaria or Romania, but it has 80 million people compared to 26 million between the two of them, all of whom would be eligible for free-movement across a continent that has become paranoid about immigration. Turkey has a border that stretches into Northern Iraq and Syria about which the less said the better. It has a conservative Muslim population with cultural views predominating very different to that in the rest of the EU, a problem with military influence on the government, a repressive policy towards its large Kurdish minority, which responds in turn with a terrorist insurgency. Its sheer size and poverty means that it would immediately become the largest EU country and the poorest, making it eligible for a huge portion of the EU budget, draining money away from every other country, and the most powerful country in the EU parliament, as well as the Council of Ministers, etc.

All of these are good reasons why giving Turkey full membership of the EU would be a bad idea, and more prosaically, why it will be blocked by other EU states at any point in the foreseeable future. Similar considerations apply to Russia, even if at some point in the next generation they drop their antagonistic stance to Europe. But that doesn't mean that the EU shouldn't have close, friendly relations and co-operation with both Britain, Turkey, EFTA and possibly others. It should, for both our and their interests. It's just that none of these states, for very different reasons, is going to be part of Euroschengenland.

The obvious answer to this problem is a two-speed European community. There should be an inner core, a very large one, of states continuing 'ever closer union', moving towards a sort of European Confederacy, and an outlier of states semi-connected to the European Confederacy, forming a wider European Community. This already kind of exists. It's kind of like the relation between the EU and EFTA, and it's kind of like the relation between the Eurozone and the non-euro EU (like us). But formally it's neither. Formally the EU has opposed any idea of a two-tier Europe in the hope that everyone would move inexorably towards the same goal. That's why the EU requires all new members to eventually join the Euro, even if they have no wish to do so. That's why they talk in terms of Turkey eventually becoming just another EU country, even though for obvious practical reasons they've been blocking it for thirty and more years. That's why people in Brussels still hope we'll eventually join the Euro even though that will obviously never happen.

Accepting a two-tier Europe would be, in a very limited sense, accepting defeat, and so they are psychologically resistant to it. But the time when that has been a useful response has long since passed. Greater European Union can no longer be built on sheer stubborn insistence but must accept that certain countries cannot or do not want to fit into one size fits all. It would have obvious advantages for both the Euro-core and the European periphery. Instead of having different legal and institutional bases for relations with each of Britain, Norway & Iceland, Switzerland, Turkey, it would simplify and unify relations between the European core and periphery on a stable permanent basis, while allowing a degree of flexibility and independence. This map shows the countries that may be involved in such a system, with the European Confederacy in dark blue and the states around its borders with close semi-linked relations in light blue.

But how could a two tier Europe work? Issues and policy areas would be divided into two groups. There would be a cluster of policy and governance areas that would be bound together and form the province of the European Confederacy. These would include the following areas: currency, banking system, central bank, external border, trade policy, legislature, cabinet, free-movement zone, immigration and asylum policy, army, agricultural policy, fishing policy, structural support grants. These areas would be under supranational control under whatever rules the European Confederacy wanted to use, presumably with strengthened versions of current EU institutions: EU parliament, EU commission, EU Councils, civil service, court, etc. Brussels would be its sole capital and parliament seat, Commissioners could be democratically elected from each country to increase EU legitimacy. The EU confederacy would be recognised globally as a single sovereign state, with a single UN seat, probably a permanent security council one. It would be in NATO, and would generally have a role commensurate with its status as one of the largest, wealthiest and most powerful countries in the world.

It would sit on a second layer, that of the European Community, including the Euro-Confederacy and all the states around it I've discussed. This would share a free-trade area, a scientific programme, a wide range of technical standards, a space agency, crime and terrorism co-operation, minimum environmental standards and co-operation, the European Convention of Human Rights, Eurovision, etc. It would make a modest contribution to the Euro-Confederacy budget, or some formally separate budget to fund these activities but would not be financially on the hook for Euro-confederacy policy areas or issues. Community decisions would be taken inter-governmentally by councils of the relevant government ministers. Decisions could then be taken unaninmously, or by some super-majority of both the Confederacy and Community states, or whatever. Community states would be represented by their own governments and not have either parliament or commission representation in Community decision-making. The Euro-confederacy would lead for the whole Community on limited international issues with the approval of those governments and Community nations that wanted to integrate further in specific areas, such as Switzerland's membership of Schengen, could do so on an individual, negotiated basis.

Community to Confederacy relations would then be a cross between Norway's current relation to the EU and Britain's current relation to the EU core. The obvious question then is why would the much larger Euro-Confederacy choose to negotiate with the Community fringe, rather than just dictating terms as we are told they do to Norway?  Well partly because the Community would be much larger than Norway, including all the EFTA states, Britain, Turkey, and possibly Sweden, Denmark and others. These would be a relatively formidable block on its own, and thus harder to dictate to than little Norway. Largely though because the Euro-confederacy would gain little from treating the Community badly, but would gain from agreed co-operation. The areas I've mentioning as community areas are largely uncontroversial, and the Euro-confederacy would make its own economic and political surrounds more secure and productive by formally co-operating with the states around it under one system, which allowed it to concentrate on internal integration and its problems, and would gain little, and just annoy its neighbours, by bullying them or pushing them around.

Community countries would gain a sustainable, formal relationship with the Euro-confederacy that combined limited control and input on community issues with wide sovereignty on everything else, but hopefully also maximise the benefit they gain from access to European markets and scientific and other co-operation. Perhaps the other objection that might be raised then is what incentive would this leave to actually join the Euro-confederacy if countries could have such a relationship? Well, because they genuinely want and would benefit from the closer co-operation and integration that the Euro-confederacy provides. Particularly, it would be necessary if they wanted the Euro. The EU cannot and should not operate by trying to keep states inside by blackmailing them with threats of terrible revenge if they leave or choose to stay outside. The euro-confederacy can only work in the long-term, like any state, if all its parts are happy to be inside. The EU would probably operate better by moderately increasing the distance to its most eurosceptic and awkward members like Britain, thus allowing it to focus EU institutions on making closer integration work, as well as having a formal, permanent semi-status for countries it does not want to fully integrate like Turkey.        

It's impossible to tell what countries will choose to fully integrate into the Euro-confederacy and which will not in the next 30 or so years. Maybe Russia will join the Community or maybe not. Maybe Sweden and Denmark will join the Euro-confederacy, or maybe Euro membership will be the dividing line, and like Britain they will find themselves moving increasingly away from the EU-core as integration centres around establishing the necessary governance institutions to support the Euro. The exact borders of each group don't really matter. But I think a formal two-tiered Europe is inevitable and beneficial, and it would be better to formalise close links with states outside the EU-core (Britain, Norway, Switzerland, Turkey, at least) rather than engage in a self-defeating all-or-nothing mentality that will eventually drive them further away.

It is possible that if Britain votes Leave, the EU will cut off ties as far as possible to punish us, and it is possible that if we vote Remain they will take this as the best chance to force us into closer integration.  Both would be foolish and counter-productive approaches: the geo-political equivalent of cutting off their nose to spite their face. Given that there is going to be further integration in the EU core, and that Britain is not going to be involved with this, and both EFTA and Turkey will still exist as well, if not other non-Euro countries, then some kind of two tier Europe will exist and deepen anyway, better to approach the problem explicitly and create the separate governance institutions that will allow such a relationship to continue sustainably for the decades to come.


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