The European Union is at another highly hard minute in its history. Over the past decades, it has been shaped by further crises specified as financial turmoil, migratory pressure, pandemic and geopolitical instability. From these crises, the Union came out reinforced, in line with Jean Monnet's well-known opinion, which stated in 1967 that "Europe will be created by crises and will be the sum of the solutions adopted in consequence to these crises"1.
However, the current constellation of challenges may prove more complex than ever. Today's pressures are multi-layered and interlinked: global economical shuffle, China's emergence in importance, competition for critical natural materials, war on the European continent, in the immediate vicinity of the EU, uncertainty in the transatlantic partnership and interior political fragmentation – all of which coincided at the present moment.
These issues are a challenge not only to the tools and competences of the Union, but besides to its organization architecture and political cohesion. The Union's ability to preserve the prosperity of its countries, keep safety on the European continent and keep influence in an increasingly conflicting planet is at stake.
Today's challenges facing the European Union are intertwined by many simultaneous geopolitical, economical and political tensions. Not only the pace of integration but besides its place in the planet depends on Europe uncovering a common response.
EU external and interior factors
To realize the scope of these challenges, both external and interior factors request to be taken into account. External factors change planet order in a way that weakens the conditions for European integration so far, specified as progressive globalisation, reliable alliances and predictable trade relations.
External threats have always been conducive to joint action and to strengthening European integration. This time, however, it is different due to the fact that external threats affect fresh areas where the European Union has neither competence (the Treaty bases) nor instruments that could be used. In addition, these risks affect individual associate States disproportionately and show large differences in response. External pressure, alternatively of consolidating, so favours differentiated answers.
For example, safety risks can be an example. Some encourage a extremist increase in military spending, as in the case of Poland, the Baltic countries or even Germany, while for another associate States, specified as Spain or Portugal, they do not motivate change of interior political priorities, reorientation of public spending or change of European policies. In the field of energy, risks to the supply of fossil fuels have led any countries to intensify decarbonisation of the economy and others to usage their own energy sources, specified as atomic energy. External factors so differentiate associate States' attitudes and hinder coherent decisions.
Internally, the EU faces structural constraints: divergent national interests, an open protest of joint decisions, a deficiency of leadership, legal disputes, slow decision-making processes, budgetary constraints and insufficient competitiveness. These factors affect each another in a way that increases weaknesses and hinders reform.
Although external force is significant, the interior dynamics of the EU is equally a major obstacle.The governance structure of the Union makes it hard to take decisive action. The request for consensus and organization complexity lead to delays in responding to urgent challenges. The political fragmentation in the associate States further complicates coordination. Changes in the political scenery in subsequent countries, the instability of government coalitions and the increasing popularity of extremist movements change the attitude towards European integration. This changing scenery weakens the EU's ability to form its future, as it makes it hard to agree a common position on hard matters and creates obstacles to remedial action.
Weaknesses of the current European construction
Another issue of concern in the EU is the ability to effectively identify the directions for the essential changes, namely leadership. Effective coordination frequently depends on strong political figures guiding influential political trends in crucial associate States capable of building consensus and setting a common direction for action. At the minute specified leadership is lacking, which means that political initiatives stay suspended.
The French-German Tandem present focuses on resolving the differences between the 2 countries alternatively than convincing the another members of the European Union to the solutions it considers essential and necessary. This is the consequence of both the de-synchronisation of the political scene in these countries (although the French-German motor had previously acted effectively even erstwhile there were various political forces in Germany and France) and the concentration on interior problems and, possibly above all, the uncertainty about the political improvement and the anticipation of a greater presence on the political phase of openly anti-EU forces who could play an crucial function in the governance of these countries.
Even if this is not a completely fresh phenomenon, the fact that the national priorities of individual members may conflict with collective objectives already creates obstacles to joint action. Examples include decisions on migration, fiscal policy, energy strategy or abroad relations. Solutions in these areas face opposition from any associate States – they are yet broken, but at the expense of delays or reducing the efficiency of the solutions adopted. Although specified negotiations have always reflected democratic pluralism, they now make it peculiarly hard to take fast and effective action in crisis situations.
The EU was built as a transnational task that combines shared sovereignty with the sovereignty of the associate States. This organization structure requires constant negotiations, compromises and consensus between associate States' governments. The increasing divergences in national responses to external factors and national difficulties make tensions and delays erstwhile the EU should act rapidly and decisively.
This model has dealt with akin challenges in the past, but enlargement to 27 countries has importantly increased the diversity of political priorities, making it hard to scope unanimity or broad consensus in many policy areas. The possible of extending the EU to more than 30 or possibly 35 members is further hampering decision-making in an increasingly diverse community.
The difficulty in taking decisions at EU level is besides due to the hybrid nature of the EU. It is neither a national state which could impose binding decisions by a majority in all areas, nor only an intergovernmental organisation based on voluntary coordination. The Union's governance strategy combines transnational and intergovernmental elements, and different legislative procedures are in place depending on the area.
In delicate areas specified as taxation, abroad policy or certain elements of social policy, unanimity or a very broad consensus are inactive required. It is not possible to abandon these rules without amending the Treaties, and this requires the approval of all associate States. Unanimity even requires the application of the alleged "stack" procedure provided for in the Lisbon Treaty.
The EU's decision-making weakness is so not a simple organization defect that can be addressed by a one-off reform. It follows from the very essence of an integration task based on Treaty-defined integration mechanisms, common institutions and legal and financial instruments which require consistent, compromise-based cooperation between sovereign states.
Programme and organization separation
These tensions lead to a fragmented approach to European integration, as any issues are not acceptable to all EU members. Individual governments argue any initiatives for reasons solely related to their interior policies, narrowly understood economical interests or simple financial calculations, even erstwhile most countries see common benefits.
Institutional plan provides the EU with a balance between national sovereignty and joint action, but at the same time makes it hard to make fast decisions. In times of expanding crises, this balance is becoming 1 of the biggest challenges for the effectiveness of European policy.
This is accompanied by a simultaneous distortion of assurance in existing military safety mechanisms and existing alliance agreements. Member States are full aware of the request to take steps to strengthen defence, build resilience to crises, increase economical competitiveness, accelerate digital and climate transformation, guarantee energy security, prepare for further enlargements, including reconstruction of Ukraine, or modernise agriculture and wellness systems. However, there is no agreement on what circumstantial steps the EU should take.
As joint decisions become increasingly hard to achieve, European integration begins to take more different forms. Paradoxically, it is the different pace of integration that can be a way of maintaining its dynamics.
The most commonly identified problem is the impact of enlargement on EU decision-making. Today, with 27 associate States, it is hard to scope a consensus in many areas. In areas specified as abroad policy, safety or any taxation issues, the rule of unanimity inactive applies, which gives each country the chance to block decisions. In a Union of 30 or more countries, the hazard of decision-making paralysis may be even greater.
It is so increasingly pointed out that enlargement must be linked to organization reform, including in peculiar the extension of the usage of qualified majority voting in the EU Council and the simplification of areas requiring unanimity. This improvement may require Treaty changes, as the current treaties in many cases clearly specify the decision-making procedure. However, the discussion on Treaty improvement is controversial among the associate States. Some of them fear losing influence on decisions taken at European level, while others believe that without organization changes further enlargement will become impossible. There are besides proposals for partial solutions, specified as more frequent usage of alleged mechanisms. ‘bridge clause’, which allows the transition from unanimity to majority voting without a formal revision of the Treaties.
In consequence to these challenges, with respect to further enlargement and the increasing diversity of the EU, there has been a gradual integration concept, sometimes referred to as reverse entry. It provides for the anticipation of including candidate countries in selected EU policies and instruments before formal membership, while delaying their participation in another areas and in the process of taking certain decisions. These countries could participate in the single market, investigation programmes, energy policies or infrastructure initiatives, gaining part of the benefits of integration but without full membership status.
Such an approach would let economical and political integration to be accelerated without the immediate request to extend all EU institutions. This would at the same time mean organization differentiation across the Union, in which for an indefinite period any countries would only participate in part of the policies, only part of the instruments, including financial instruments, and would participate in the limited decision-making process.
Inadequate financial resources
Financial issues are an crucial aspect of the limitations and effectiveness of EU action. Although the request to improvement the EU budget, both its increase and the change in the structure of expenditure, is increasingly stressed, the current negotiations on the financial position for the coming years only relate to proposals somewhat changing the approach to date.
Regardless of the cost of enlargement, which is not peculiarly hard to finance, the EU has a full scope of another objectives requiring crucial public funding, both by the associate States themselves and at Union level. However, with ambitious targets, reliable assessments of how they are to be financed are seldom made.
The current EU budget, limited to about 1% of the full GDP of the associate States, is disproportionate to the scope of the EU's tasks and should be implemented. Moreover, this budget is based primarily on the rule of solidarity between associate States which contribute in proportion to their gross national income. This model was appropriate in the era erstwhile integration focused mainly on the common marketplace and agricultural policy, and the Union did not play specified a broad function in security, energy transformation or industrial policy.
Today, however, maintaining the backing of European policies almost exclusively on the basis of transfers between countries masks the actual scale of expenditure related to EU law. A large part of the regulation adopted at EU level generates costs which are mainly borne by national budgets. If it is accepted that 60-70% of the law in the associate States comes from EU regulation, it should be consistently recognised that a crucial proportion of public spending besides has its origin in decisions taken in Brussels.
Climate transformation, digitalisation of administration, adaptation to fresh environmental standards or implementation of cybersecurity standards are mainly financed by associate States or private entities subject to regulation. The Union budget only complements, frequently covering only a tiny part of the actual costs.
This further creates an expanding diversity between countries. Countries with stronger public finances can afford more support for businesses and investment in transformation, while weaker economies face budgetary constraints. As a result, the single marketplace is fragmented and the pace of implementation of EU law becomes uneven. Unwinding the State aid rules, although it facilitates the financing of transformations in the short term, deepens asymmetries in the long word as it favours more resource-intensive countries.
Expectations towards the European Union are increasing much faster than their financial capacity. Even the best-designed strategies will stay only declarations if the EU fails to find a fresh model for financing ambitious targets.
In this situation, it is not only adequate to increase the current EU budget, although specified a decision is undoubtedly needed. An effort to finance all fresh policies only by expanding the conventional budget would lead to endless disputes. A parallel search is needed for fresh financing models that go beyond the conventional logic of redistribution between countries.
It should be considered that the future Union, possibly with a crucial number of more than 30 countries, cannot trust solely on the logic of redistribution between ‘net contributors’ and ‘net beneficiaries’. Such a model promotes reasoning in terms of a balance sheet account alternatively than looking at the budget as a tool for achieving common objectives.
It may be essential to separate 2 financial arrangements. On the 1 hand, a solidarity budget should stay to fund redistributive policies – cohesion and agriculture – based on the logic of equalising improvement differences. On the another hand, a new, parallel financing strategy for strategical projects should be established, which would not depend either on the unanimity of all countries or on the conventional mechanics of national contributions.
Without a fresh approach to financing European policies, even the most convincing reports and strategies will stay a directory of wishes. Mario Draghi's study pointed out the scale of competitiveness challenges, estimating the essential expenditures at around EUR 800 billion per year. However, even this awesome amount concerns only a cut of the problems facing the Union.
Reforms are besides essential in defence policy, in building strategical resilience, in digital, energy and climate policy, in financing enlargement and reconstruction of Ukraine, in upgrading agriculture, as well as in preparing for future pandemics or natural disasters. The scale of challenges present is greater than ever, and expectations for the Union are increasing much faster than its financial capacity.
Areas of fresh layers of EU integration
Answers to these challenges can be sought in redefining European integration processes. Since there are large discrepancies in the priorities of the associate States, there is simply a increasing request to find ways and approaches to tackle fresh challenges even if any countries are ready to tackle this.
The concept of the alleged variable geometry of European integration has already been discussed, in which any countries could adopt solutions which go further than can be agreed among all members. This would mean that any countries would benefit from more ambitious and cooperative integration mechanisms, while others would stay at the current level of integration. There has been no agreement on specified far-reaching solutions to variable geometry, but this is the approach that has become the reason for the alleged enhanced cooperation mechanics in the Lisbon Treaty.
The fundamental advantage of enhanced cooperation is the dynamics it introduces into the integration process. It is not about excluding anyone, but about enabling them to start activities that may attract more participants over time. Experience shows that many initiatives that vary over time become more common erstwhile political and economical conditions change.
However, this mechanics is not risk-free. Diversified participation can complicate the organization structure, lead to overlapping of different formats of cooperation and make a sense of marginalisation among non-participating countries. Funding limited to participants can further increase budgetary complexity.
The possible areas for future application of this mechanics include defence cooperation, energy policy, critical infrastructure development, investment in digital technologies, artificial intelligence or semiconductor industry. In the field of migration, judicial cooperation or any aspects of taxation policy, it would besides be possible to launch action among countries ready for deeper integration.
As joint decisions become increasingly hard to achieve, European integration can make through the cooperation of those countries that are ready to decision forward. A differentiated pace of integration does not necessarily mean a weakening of the Union – it can become a way to preserve its ability to act.
A newer and politically crucial example is the participation of twenty-four countries in the financial mechanics related to Ukraine's support. This initiative is an effort to apply the logic of "enhanced cooperation" not only in method matters but besides in strategical and geopolitical areas. Although this mechanics does not burden all associate States, the adoption of the decision itself required full unanimity. This shows restrictions on the usage of enhanced cooperation rules. The Treaty requirements mean that, although the adopted mechanics does not cover all countries, everyone must agree to launch it.
Overcoming this regulation would mean going outside the EU Treaties and concluding a separate agreement on a case only between the EU associate States afraid and even outside the EU framework, as was the case for the Schengen area. In this context, the challenge is to identify the relation between the fresh mechanics and the Union institutions and instruments and to address organization and financial issues.
Europe cannot choose between unity and effectiveness present - it must find a way to preserve both. If the full agreement of all countries proves impossible, the ability to act can supply new, flexible forms of cooperation.
A separate treaty would require a separate organization and financial base. Since specified a mechanics does not cover all EU associate States, it does not require all countries to participate in the decision-making process or to jointly cover the costs of its operation. At the same time, differentiated participation can complicate the organization structure, lead to overlapping of different formats of cooperation and make a sense of marginalisation among non-participating countries.
The euro area, which presently includes twenty-one countries, is an example of deeper integration in a circumstantial area without all members. Although it is not formally based on the enhanced cooperation procedure, it reflects the rule that participation in certain policies may be differentiated without affecting the integrity of the Union as a whole.
Conclusion
The Union is so faced with a dilemma: how to keep the coherence of the structure, its ability to respond to challenges and solidarity, while not allowing paralysis caused by number opposition. Especially erstwhile a full-scale war has been going on for respective years on the outskirts of the Union requires the safety of both individual countries and the full community.
Decision-making blocks have real consequences. They hold reforms, weaken the EU's negotiating position internationally and make frustration among countries ready to deepen integration. In the context of expanding global competition and safety challenges, the deficiency of fast decisions can put Europe at a disadvantage. The Union is so faced with the question of how to keep inclusiveness and solidarity while not allowing paralysis caused by number opposition.
The consequence to these challenges may be hybrid. The EU has achieved besides much to throw this away, and all existing forms of cooperation should be continued and developed. At the same time, it can be more effective and faster to address fresh challenges if action is taken in a narrower group of European countries – not just EU members – which are willing to work together.
This does not necessarily mean a classical model of variable geometry of European integration or concepts of concentric integration circles. New layers of integration mechanisms beyond existing EU structures can be more appropriate. They do not request to cover all existing associate States and may besides include countries inactive outside the Union.
It is vital that participating countries are prepared to search a common consequence to fresh threats and scope agreement on the essential steps, cooperation mechanisms, financial resources and organization frameworks to address these challenges.
1I’ve always thought that Europe would be made in crisis, and what would be the sum of the solutions we would bring to these crises, see. Jean Monnet Institute [access online].
