E.U. Reform The United Cliques of Europe

Chancellor Angela Merkel has jumped back into the ring by daring to talk of E.U. reform after backing away from the idea and ceding ground to nationalist parties, writes Handelsblatt's Brussels correspondent.
Not quite talking about a revolution, nonetheless Chancellor Merkel talks change, a breath of fresh air for Europe.

Angela Merkel is once again going on the offensive for her European policy. After a long period of silence, the German chancellor has now commented not once, but twice, on the future of the European Union: A week ago at the E.U. Summit in Malta and Tuesday in Poland. Both times she argued for a “Europe of different speeds.” In other words, the 28 member states within the European Union should form closer relationships in smaller in certain areas such as defense policy.

That sounds vague but is better than nothing. Talk of E.U. reform has been notably absent for a long time. Fearing national populists from both ends of the spectrum, especially the right, leading European politicians hardly dare to paint any future for our continent’s community of nations. But when people like Geert Wilders and Marine Le Pen are allowed to mark their political territory undisturbed, the European house starts to stink. A breath of fresh air that European reform would give is urgently needed. Ms. Merkel has provided it, though winds of change would still be an exaggeration.

We need more Europe, we need not only a monetary union, but we also need a so-called fiscal union. In other words, more joint budget policy. Angela Merkel, German Chancellor

Ostensibly, the chancellor is going back to earlier comments she’s made like those in an interview on Germany’s public-service station, ARD, in June 2012. Back then, she was already speaking of a Europe at two different speeds, but added something important: “We need more Europe, we need not only a monetary union, but we also need a so-called fiscal union. In other words, more joint budget policy.”

To achieve that, the E.U. states would need to “gradually give competencies to Europe and give Europe control.”

At the time, the chancellor still believed that the European Union could strengthen as a whole. Today, she no longer speaks of that. Back then, Ms. Merkel was also still able to envision reforming the Treaty of Lisbon to do it. Now she takes a very skeptical view of the E.U. Reform Treaty, as she stressed in Warsaw on Tuesday.

What is left of the former Merkel discourse are only the different speeds at which the E.U. states will be able to, but not be forced to, move closer together in the future. She is now of the opinion that the Treaty on European Union offers sufficient possibilities for that.

That’s true - in theory. Article 86 of the treaty on the functioning of the European Union provides that a group of at least nine states are allowed to cooperate more closely if the rest of the member states don’t want to participate. But that has hardly worked in practice so far. Only twice has a small group of E.U. states successfully joined together: in a 2010 divorce law and in 2011 with unitary patent regulations. It might also succeed with the planned establishment of a European public prosecutor’s office. There are also ten states endlessly wrangling over financial transaction tax. It’s hard to believe that Article 86 could create new enthusiasm for a united Europe.

The same applies to the two most important inner circles of the European Union. There are the 19 states that share the common currency and the 23 that belong to the border-free Schengen area. Both groups of states are holding together for better or for worse. The debt crisis brought to light profound regional conflicts of interest within the euro zone. The storm of refugees has divided the West and the East of the Schengen area. In Berlin, the belief now is that the two groups of states have become too large and disparate. To be able to march forward, many smaller groups must be able to form.

However, which states should come together on economic policy remains a mystery. Germany and France are as far apart as never before when it comes to the future of the euro zone. Attempts at bilateral Franco-German cooperation, such as a common basis of assessment of corporate tax, have so far failed miserably.

New defense policy alliances within the Union seem more likely. France, Germany and Poland are all equally interested in pooling military resources. But it isn’t certain whether the tedious path of an agreement in line within E.U. law will be chosen for it. Inter-state treaties outside the E.U. treaty are simpler to be had. That is why, in the course of the debt crisis, euro zone already decided a number of times in favor of that – such as in the establishment of the European Stability Mechanism (ESM).

This doesn’t bode well for E.U. institutions. The European Commission and the European Parliament are left out of inter-state treaties. Many will applaud when Brussels suffers a loss of significance. But the European Union also stands in danger of losing it core. Small groups don’t automatically work nor do they necessarily induce centrifugal forces. To loosely quote Goethe: “That I may understand whatever binds Europe’s innermost core together.”


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