Two Europes in one? Part One OpenEuropeBlog

The two-part series of articles examine the issue of European integration in light of separate state practice, with special regard to that of the British.
Today's writing about the concept of "two Europes in one"
approaches they question with introducing the "Cameron paradox"

Two Europes in one, first part

The direction of the European system seems pretty clear towards closer integration, but there is a flaw. For critics, the political project is going too far, while some governments want to have a bigger say. Some fear, the idea of More Europe is a threat to their national interest, hence, they want to get more involved in the process. Precisely, this was one of the principles in Cameron’s speech, who hopes to find allies for his claims of exceptionalism. The British challenge has a lot to do with the idea that it may be easier to negotiate the repatriation of some powers if the negotiations have impact on other Member States as well.

While most members were able to agree, one year ago, a roadmap for moving towards a deeper Economic and Monetary Union, critics point to the issue of legitimacy of political integration, which created a new dilemma.
To what extent the citizens like the EU intrusions into the important national issues? T
he latest Eurobarometer survey showed that 29% of the European population had a negative view about the EU, a double proportion, comparing to the pre-crisis period. This reinforces the need for further EU reforms to strengthen democratic accountability. Paradoxically, the political will for further integration may be declining. Distrust is growing in some countries, where EU-involvement is not progressing at the same pace. The appeal of the political project may be at stake again. The idea of a multi-speed Europe is not new, the Schengen Treaty and the Economic and Monetary Union are the best examples. Back in 1997, in the Treaty of Amsterdam, the issue of the formation of a sub-union within the Union gave light to the enhanced cooperation agreement, i.e. an agreement among a subset of at least 9 Member States, which may allow them to benefit from cooperation, changing the status quo on a particular issue.

But how and for how long can the EU deal with sub-unions?

Let’s take the Eurozone. Considering this is a sub-union, the euro countries should be allowed to choose their own common policies with no interference from the rest of the EU countries. Otherwise, the other countries may bargain for political compensations for externalities. In the EU it is assumed that in the long term, all the Member States will become members of the Eurozone. This is the idea under the Fiscal Compact, suggesting the optimal criteria for countries to join the euro in the future.

This is what the theory tells us, but facts are quite different. The threat of division within the EU is not a minor challenge. The principle of multi-speed EU could send the wrong message to the citizens, while the heterogeneity among Member States is becoming visible.
To start with, the Czech Republic and the United Kingdom decided to opt-out of the Fiscal Compact. The British are very fond of intergovernmental agreements in an ad hoc way. However, we know that this strategy has failed many times and fall way short of what the EU needs to become an efficient policy-making organization. It is indeed desirable to overcome the unanimity requirement for the adoption of the most important policies, but simultaneously this may stress the formation of a two-speed Europe.

In this context, we see the re-negotiation of powers, on which David Cameron is determined, particularly the idea of preserving de single market, while leaving most other areas, a model other countries may support, notably the Czech Republic or even Denmark and Sweden, fond of a looser political union.
It remains to be seen, whether the EU leaders will let the UK stay in the common market, while opting out of the legal provisions that guarantee that all Member States are subject to the same conditions and standards. This would be a hard blow for the integration process and the Community acquis. In his famous “EU speech”, Mr Cameron, while asking for a better deal to the UK, spelled out that Europe is no longer a single project. To what extent is this true?

Cameron’s paradoxes

The main paradox is that Cameron has shown a will to remain within the EU, considering membership as an advantage for the UK, but at the same time, claims that the EU lacks efficiency. To eurosceptics and part of the British public, EU membership is the main obstacle to the country’s prosperity, due to regulatory costs. This discourse has forced the Prime Minister to ask for loosened relations with the EU or perhaps leave the club in order to develop better trading relations with other economies outside the EU. However, if you look carefully beneath the surface, Cameron seems to support the cause of leaving the EU in order to win next election (the referendum would force Labour and Liberal-Democrats to spell out their European vision), though he may also be attempting to win some concessions from his European partners, or to seek more influence over the European policies.

If Cameron gets concessions from Brussels, he will be able to neutralize his backbenchers. So far, he has spelled out his wish to negotiate a new EU settlement, and then to hold a UK referendum with a choice between staying within the EU on new terms or a complete exit.
This strategy is risky, for discussing the terms of the relationship within the single market may affect foreign investment into the UK, as uncertainty could expose the country debts to credit downgrades and other volatility.
Not to mention that Obama administration has signalled that the United Kingdom should remain inside the European Union.
It is quite remarkable that Cameron’s speech drew no specific demands, further than the “special treatment”. He has stated that the new EU arrangement should include some vague principles: cutting the red tape and open up trade in the single market, embracing flexibility, putting into practice the Subsidiarity Principle and giving a bigger role for national parliaments.

European leaders will surely dismiss British demands for special treatment, although they will not be prone to let the UK leave the common project, not when Cameron demands to expand the single market to services, energy and the digital economy, something most Member states would agree on.
Paradoxically, the PM is not against further integration within the euro area. A strong euro would be good for the British interest, being aware that Europe is an open society, where capital flows. Moreover, British economy is at stake, with spending cuts for fiscal consolidation and where the central bank is reluctant to provide more monetary stimulus.

But this is not the only paradox in Cameron’s position. Britain looks set to pull out of most European crime and police actions cooperation next year; the UK will leave most EU legislation covering how police and courts across the Union cooperate to investigate crime, organise extraditions, share criminal records and exchange evidence. Precisely, the EU has improved the fight against cross-border crime (European arrest warrant), but leaving EU police and justice cooperation may backfire on Cameron politically. How come? Many Tories insist that Britain should leave the European arrest warrant in favour of a policy of deporting EU nationals with a criminal record. But this is illegal under single market rules and other EU countries would refuse to co-operate.
Cameron is determined to hold a referendum on Britain’s EU membership before 2018. Recently, polls have shown a rise in pro-Europe sentiment but the EU’s impact on Britain has been so gradual as to be barely perceptible. Some argue that it is hard to separate the influence of the EU from the general process of internationalisation. To what extent is there a European consciousness? Is British identity perceived by the outside world as European?

To see what the writer thinks about the questions raised above, come back tomorrow and read the second part of the article, which will deal with the fragmentation risks of EU and with the scenario of a federal Europe.