The Fracturing of Europe: A Shift Towards Variable Geometry
Is the era of unified progress within the European Union drawing to a close? Recent discussions among key European leaders suggest a significant shift is underway, moving away from the principle of all member states advancing in unison. A gathering of leaders from France, Italy, Germany, and several other nations signaled support for pursuing initiatives within smaller groups, a concept increasingly referred to as “Europe of variable geometry.”
The Urgency for Change: Competitiveness and Geopolitical Realities
European leaders acknowledge the need for swift action, citing a decline in the continent’s competitiveness. Many initiatives have stalled due to indecision, and disagreements. French President Emmanuel Macron emphasized the urgency, seemingly setting aside differences with German counterparts. Both leaders now advocate for a renewed focus on policies that stimulate economic growth.
The impetus for this change stems from a series of geopolitical challenges. The EU realized its limitations in responding effectively when unanimous agreement among all 27 member states was required. Threats from former U.S. President Donald Trump – including proposals to annex Greenland and wavering support for Ukraine – alongside the influx of goods from China, served as catalysts for reassessment.
Enhanced Cooperation: A Legal Pathway to Flexibility
In March, the President of the European Commission, Ursula von der Leyen, will present a “Single Market Road Map and Action Plan.” This plan encompasses reforms aimed at reducing bureaucracy and mobilizing both private and public capital to support the growth of European startups. Leaders are expected to vote on the plan later this spring.
Even without full consensus, the EU can utilize “enhanced cooperation,” a legal provision allowing smaller groups of countries to adopt initiatives without jeopardizing common policies. While this approach has existed for years, leaders have historically avoided it due to concerns about division. However, a diplomat noted that enhanced cooperation could incentivize greater decisiveness, as “no one wants to be left out of decision-making.”
Capital Markets Union and Strategic Autonomy
One area ripe for enhanced cooperation is the Capital Markets Union, an effort to create a capital market modeled after the U.S. System. This would involve establishing an entity similar to the U.S. Securities and Exchange Commission. However, the initiative requires the support of all 27 member states, as well as approval from Dublin and Luxembourg, where many funds are located. These locations are currently hesitant to relinquish their authority.
Von der Leyen’s roadmap will outline goals in areas such as telecommunications, capital markets, and energy, with a target completion date of the end of 2027. The first proposal, to be presented on March 18th, is the “28th regime” – a unified corporate law across the EU designed to support startups, allowing for 100% online registration within 48 hours and facilitating cross-border expansion.
Areas of Agreement and Persistent Disagreements
Discussions in Belgium reportedly yielded consensus on four key areas: unlocking European savings for investment in core EU industries, addressing high energy costs, securing recent trade deals, and bolstering the “buy European” policy championed by Macron.
However, disagreements persist on crucial policies. The single market and the Mercosur trade deal remain points of contention between Paris and Berlin. Prior to the formal discussions, 19 European leaders met, excluding Spain, Ireland, the Baltic states, and Slovenia. This guest list was determined by German leadership, including Italian Prime Minister Giorgia Meloni and Belgian Prime Minister Bart De Wever, who share a commitment to reducing bureaucracy and promoting free trade.
A Pragmatic Approach to Federalism
Macron, leaving the summit in a positive mood, indicated a growing rapport with his German counterpart. He emphasized the need for a more autonomous Europe, suggesting that Washington is pursuing an “anti-European policy.” The topic of federalism, increasingly debated in light of strained U.S. Relations, too surfaced.
Macron referenced the views of former ECB chief Mario Draghi on federalism, describing it as a call for shared leadership. While cautious about the term “federalism” itself, fearing it fuels unrealistic expectations, Macron advocated for a “pragmatic federalism” – rapid integration and joint decision-making. He suggested exploring alternative cooperation models if decisions aren’t reached within six months, stating, “Our Europe fails when We see slow or divided.”
Frequently Asked Questions
Q: What is “Europe of variable geometry”?
A: It refers to a model where groups of EU member states can pursue specific initiatives together, without requiring the participation of all 27 countries.
Q: What is “enhanced cooperation”?
A: A legal provision within the EU that allows a smaller group of countries to implement policies even if not all member states agree.
Q: What is the Capital Markets Union?
A: An initiative to create a unified capital market within the EU, similar to the system in the United States.
Q: What are the main drivers behind this shift in EU policy?
A: Declining competitiveness, geopolitical challenges (like those posed by the U.S. And China), and the need for faster decision-making.
Did you know? The concept of a multi-speed Europe has been debated for decades, but recent events have given it new momentum.
Pro Tip: Keep an eye on the March European Council meeting for key developments regarding the Single Market Road Map and Action Plan.
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