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The Economist, UK,
27 March 2017

Can Europe be saved?

If it is to survive, the European Union must become a lot more flexible

On March 25th 1957, with the shadow of the second world war still hanging over them, six European countries signed the founding treaty of a new sort of international club. The European Union, as the club came to be called, achieved success on a scale its founders could barely have imagined, not only underpinning peace on the continent but creating a single market as well as a single currency, and bringing into its fold ex-dictatorships to the south and ex-communist countries to the east, as it expanded from six members to 28. Yet even as today`s European leaders gather in Rome this weekend to celebrate the 60th anniversary, they know their project is in big trouble.

The threats are both external and internal. Internally, the flaws that became glaringly evident in the euro crisis have yet to be fixed. Prolonged economic pain has contributed to a plunge in support for the EU. Populist, anti-European parties are attacking the EU`s very existence-not least in France, where Marine Le Pen is doing uncomfortably well in the presidential campaign, even if the National Front leader is unlikely to win in May. The most dramatic result of the anti-EU backlash so far is Brexit. Britain`s prime minister, Theresa May, will not be in Rome for the birthday party; on March 29th she plans to invoke Article 50 of the EU treaty to start the Brexit process. Negotiations over Britain`s departure will consume much time and energy for the next two years; losing such a big member is also a huge blow to the club`s influence and credibility.

The external pressures are equally serious. The refugee crisis has abated, but mainly thanks to a dodgy deal with Turkey. A newly aggressive Russia under Vladimir Putin and, in Donald Trump, an American president who is unenthusiastic about both the EU and NATO, make this a terrible time for Europe to be weak and divided. That a project set up to underpin Europe`s post-war security should falter at the very moment when that security is under threat is a bitter irony. It is also a reminder of how much is at stake if Europe fails to fix itself.

Never-closer union

The traditional response of EU-enthusiasts to such challenges is to press for a bold leap towards closer union. The euro needs this if it is to succeed, they argue. Equally, they say, more powers ought to shift to the centre to allow the EU to strengthen its external borders and ensure that it speaks with one loud voice to the likes of Mr Putin and Mr Trump. Yet the evidence is that neither European voters nor their elected governments want this. If anything, public opinion favours the reverse.

If ever-closer union is not possible, another Brussels tradition is simply to muddle through. The euro crisis is past its worst, immigration has peaked and Brexit will be managed somehow. If, after this year`s elections, Emmanuel Macron is France`s president alongside either Angela Merkel or Martin Schulz as Germany`s chancellor, the club would be under staunchly pro-EU leadership. Yet muddling along has risks of its own. A renewed financial crisis that upset the euro again, or the election of another government committed to a referendum on EU or euro membership, could tear the union apart.

Is there a better alternative? The answer, as our special report argues, is to pursue, more formally than now, an EU that is far more flexible. In Euro-speak, this means embracing a "multi-tier" system, with the countries of a much wider Europe taking part to different degrees in its policies-and able to move from one tier to another with relative ease.

The great British break-off

There has recently been a flurry of interest in the notion of a "multi-speed" Europe. But what most EU leaders mean by the term is that core members should be able to pursue common policies in areas like defence, fiscal or welfare policy; it implies that all countries are moving towards the same destination. A broader, "multi-tier" Europe would find a place for non-members as well. The continent consists of 48 countries and 750m people, not just the 28 countries and 510m people in the union, still less the 19 and 340m in the euro.

The core of Europe will be those countries that share the single currency. To solve the euro`s ills, they need more integration and shared institutions-from a proper banking union to a common debt instrument. The next tier would comprise a looser group than now of EU members that are not ready to accept the sacrifice of sovereignty needed to join the euro, which some will not do for many years, and may never.

Beyond that a multi-tier Europe should accommodate widely differing countries. That means a changed mindset more than changed treaties: in the language of Eurocrats, accepting a menu that is a la carte, not prix fixe. This is anathema in Brussels, where the idea that you can pick and choose the bits of the EU that you like is frowned upon, but it is what Europeans increasingly want. Countries like Norway or Switzerland may wish to be closely bound to the European single market. Others such as Britain may not be ready to accept the single market`s rules, but still wish to trade as freely as possible with the EU. They might seek a bigger role in other areas such as defence and security. And places like Turkey, the western Balkans, Ukraine and Georgia might prefer a similar associated status instead of today`s unsatisfactory situation, where they are told they are eligible to be full members but know they will never be allowed to join.

To work, a multi-tier Europe should be pragmatic about the rules that each tier entails. Those in the outer group might not accept fully free movement of people, for instance, but that is no reason to wall off their access to the EU`s single market. Nor should there be a stigma of second-class status for those outside the core: after all, they include Denmark and Sweden, two of Europe`s most successful countries. Ways should be found for countries with military or diplomatic clout (eg, post-Brexit Britain) to join in foreign and defence policies.

For the European project to survive another 60 years, the key is flexibility, in both directions. Just as Britain is leaving the EU, another country might one day leave the euro. Any such step will be hard to manage. But if the union cannot embrace differentiation, it faces the risk of disintegration instead.


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