Scenarios for the future of the European Union

(Leena Saarinen, CC BY-NC)

Debate on the future of a unified Europe and the White Paper on the European Union after Brexit is supposed to last at least a year and take place in all member states.

In recent years, the discussion about the European Union was dominated by the word “crisis”. Initially this referred to the financial crisis, and later to the banking and the migrant crisis. Europeans heard more about the problems plaguing united Europe than about the benefits of unification. This has largely contributed to the decision of the British voters on Brexit and the rise of Eurosceptic sentiment in other countries.

Since the last year, however, the European leaders have been trying to reverse this trend. They keep reminding that the EU is a success story, and without it the lasting peace in Europe would not have been possible. Some of them also speak a lot about the future (read more). They argue that no member state on its own could cope with current and new challenges as successfully as the united Community.

But only in the years 2004-2015 the participation of the EU-28 countries (with the United Kingdom) in the global GDP decreased from 31% to 26% and this trend continues. During this period China has tripled the contribution of its economy to global GDP (from 5% to 15%). The decreasing importance of Europe in the world is visible even more clearly in demographic statistics. While at the beginning of the 20th century every fourth person in the world was European, in the 1950s this figure had decreased by half, and at present stands at about 6% (and continues to decrease). According to the forecasts of Eurostat, in 2060 in none of the present member states of the EU the number of inhabitants will exceed 1% of the world's population.

Because of this diagnosis of the situation, while speaking at the European Parliament in September 2016, the President of the European Commission Jean-Claude Juncker promised MEPs that he would deliver a special report which would enable the European Union to prepare for appropriate activities in the future.

Plans for the European Union in a White Paper

Juncker kept his word and the European Commission presented a White Paper concerning the future of the European Union (White Paper on the future of Europe: Avenues for unity for the EU at 27). The document describes five scenarios for the 27 member states (now without the United Kingdom) until 2025. These are:

  1. Nothing changes in the EU;
  2. The EU is only concerned with the single market;
  3. Interested groups of countries deepen their cooperation in selected fields;
  4. The EU limits its activities to just several areas and executes its policies better than right now;
  5. The EU gains more new competences.

Carrying on

The EU27 focuses on delivering its positive reform agenda in the spirit of the Commission's New Start for Europe from 2014 and of the Bratislava Declaration agreed by all 27 Member States in 2016.

Nothing but the single market

The EU27 is gradually re-centered on the single market as the 27 Member States are not able to find common ground on an increasing number of policy areas.

Those who want more do more

The EU27 proceeds as today but allows willing Member States to do more together in specific areas such as defense, internal security or social matters. One or several “coalitions of the willing” emerge.

Doing less more efficiently

The EU27 focuses on delivering more and faster in selected policy areas, while doing less where it is perceived not to have an added value. Attention and limited resources are focused on selected policy areas.

Doing much more together

Member States decide to share more power, resources and decision-making across the board. Decisions are agreed faster at European level and rapidly enforced.

This last scenario means the implementation of the federalist idea, according to which the member states will delegate additional competencies to the EU institutions. Consequently, this would lead to the further harmonization of the single market, including fiscal policy and social standards.

The opposite extreme is represented by the second scenario which would ensure the free movement of goods and capital, but would lead to the deepening of social differences between the member states. According to the European Commission, in the long term this would mean restrictions on the free movement of persons and services.

Between these two extremes there is the third scenario which allows willing countries to pursue more intensive cooperation in selected fields. Such a European Union would guarantee the functioning of the single market and the Schengen area for all members, but at the same time it would permit interested states to harmonize taxes and social standards and to undertake deeper cooperation in the field of security. In other words this would be the so-called Europe of multiple speeds.

Consequences for the budget

Each of these options carries different consequences for the European Union budget. The fifth scenario (federalization) means a significant increase of the budget and providing the EU with its own revenue sources – perhaps even in the form of a European tax. According to the European Commission, the other variants would also entail changes. They would be the most limited in the first scenario, where the shared budget would be “partly modernized to reflect the reform agenda agreed at 27”.

The selection of one of the other options would lead to changes in the goals on which the common funds would be spent. It is possible that instead of supporting the poorer regions, the European Union would subsidize advanced technological companies or the development of a fibre-optic and road network. If the third scenario is selected, i.e. “Europe of multiple speeds”, countries willing to pursue deeper cooperation in some fields would have to allocate additional funds for this purpose.

The future EU budget will also be clearly impacted by the coming departure of the United Kingdom, which was the second largest net payer after Germany. In 2015, the British paid EUR11.5bn more into the common budget than they received, while Poland, as the largest net beneficiary, gained EUR9.5bn. Because the current EU financial framework is set until 2020, debates will soon begin. In June this year, the European Commission is supposed to publish a special report on the future finances of the European Union.

An Europe-wide debate

According to the European Commission's plan, the discussion on the future of a unified Europe and the presented proposals is supposed to last at least a year and take place in all member states.

One of the most important events in the Europe-wide debate will be the Social Summit for Fair Jobs and Growth, which will be held in November 2017 in Gothenburg. In addition to political leaders, the summit will also be attended by the representatives of employers and trade unions. The results of their talks will be vital for the possible future EU regulations concerning the labor market and the social security network.

According to the road map, the debate on the future of the European Union will find its conclusion in the European Parliament elections in 2019. They may not only indicate the party preferences of the Europeans, but also largely determine which of the models for EU integration is most widely supported by its citizens.

For and against a two-speed Europe

Many leading European politicians have already indirectly responded to the proposals of the European Commission. During the summit of the largest countries of the EU in Versailles on 6 March 2017, the leaders of France, Germany, Italy and Spain clearly supported the deepening of cooperation of willing member states of the European Union.

“We must have the courage for some countries to go ahead if not everyone wants to participate. A Europe of different speeds is necessary otherwise we will probably get stuck. It needs to always be open for everyone - no one should be excluded but not everyone needs to be forced to participate in every project,” said the German chancellor Angela Merkel on the joint press conference of the four heads of state in Versailles.

The opinion of French, German, Italian and Spanish politicians is crucial as these four member states, even in the EU of 28 countries, represent more than half the population of the present European Union, and more than half of its GDP.

But the idea of various “unions within the Union” has also many opponents among the European leaders. It is criticized, among others, by the President of the European Council Donald Tusk. “Unity has to be the highest priority of the European Union following Brexit,” he said.

This opinion is also shared by the heads of governments of the Visegrad Group, who called for unity in a joint declaration adopted during a summit in Warsaw on March.

“We emphasize that maintaining the unity of the European Union is of crucial importance. Any model for future cooperation must guarantee the integrity and cohesion of the single market, the Schengen area and the European Union itself. We don't agree to divisions in the European Union, because this is the quickest way to make Europe weaker,” said Poland’s Prime Minister Beata Szydło at the joint conference of the heads of government of Central Europe.

EU political chess

In 2015, while serving as the minister of economy, Emmanuel Macron, the winner of presidential elections in France, and his counterpart from Germany, Sigmar Gabriel, who is now leading Germany's Ministry of Foreign Affairs, presented the idea of  further integration of Europe, and in particular the Eurozone member states. Their proposals included, among others, the harmonization of corporate taxes and minimum wages. They also proposed the appointment of a special Commissioner for the euro-zone and its separate budget and parliament. In other words it was one of the Franco-German versions of the “Europe of many speeds”.

The German Social Democrat Martin Schulz, who may become the Chancellor of Germany in the autumn, also has far reaching ideas for changes in Europe. He published them while still serving as the President of the European Parliament in June 2016, i.e. immediately after the Brexit referendum in the United Kingdom. In this case too, the co-author of the presented ideas was Sigmar Gabriel.

The two leaders of the German Social Democrats presented a 10-point plan, which is supposed to reinvigorate the European Union. Although they called for the EU to focus on key principles, at the same time they proposed for the European Commission to become a real government for the entire European Union, which would report to the European Parliament and a second Chamber composed of the representatives of the national parliaments.

The essence of their plan was also a change in the rules concerning the spending of EU funds. A larger part of the EU funds would be spent from the level of the EU as a whole, among others, on a pan-European digital infrastructure which would facilitate the transnational activity of innovative companies. In the event of an election victory, Martin Schulz will attempt to change not only Germany, but also Europe as well.

It is still impossible to determine which direction of thinking about Europe will prevail but the option of maintaining the status quo seems to be the least popular.

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