March 24, 2017 / 11:51 AM / in 9 months

EU birthday party is moment to switch lanes

LONDON (Reuters Breakingviews) - The European Union’s big birthday party will be an awkward affair. Heads of state will gather in Rome on Saturday to mark the anniversary of a treaty, signed by the EU’s six founding members in the Italian capital in March 1957, which promised to “lay the foundations of an ever-closer union among the peoples of Europe”.

A girl attends a concert, surrounded by European Union flags, during celebrations marking the 50th anniversary of the founding Treaty of Rome at the Brussels' Atomium, March 24, 2007. REUTERS/Francois Lenoir (BELGIUM)

The achievements of the subsequent six decades surely exceed the original signatories’ best hopes. The union has largely succeeded in its aim of preserving and strengthening peace in Europe, and improving the living and working conditions of its population.

Its membership has more than quadrupled, absorbing many of the eastern European countries that in 1957 were part of a Soviet-controlled rival bloc. It has created a continent-wide market of more than 500 million where goods, capital, and people move around freely.

But the celebrations are likely to be muted. After its decision to quit the EU last year, Britain will skip the gathering and formally trigger the two-year divorce process four days later. The remaining members are squabbling over the declaration which will lay out the EU’s future. Greece and Poland have threatened not to sign it.

The union faces powerful pressures which both push its members closer together and threaten to pull them apart. Britain’s departure removes a recalcitrant member which in recent years had resisted attempts at greater integration. Meanwhile, the election of President Donald Trump has cast doubt on U.S. commitment to Europe’s military security, prompting countries to reconsider their reluctance to cooperate on defence.

Yet the forces that might prompt EU countries to huddle together are more than offset by strains which could send some other members spinning out of the club. The refugee crisis, which saw 1.2 million people enter Europe in 2015, prompted some countries to reinstate border controls and has sparked a continent-wide debate about the risks of large-scale migration.

Economic conditions are improving: a survey published on March 24 showed euro zone business activity is growing at the fastest rate in almost six years. Yet southern European countries still face questions about whether they can survive in the single currency once the European Central Bank scales back its bond purchases. Britain’s departure also looks set to hamper other initiatives, such as the plan to create a pan-European capital market.

Meanwhile, sceptical voters are flirting with anti-European politicians who blame Brussels for both being too distant and for interfering excessively in peoples’ lives. Worries about another electoral insurrection have receded: the Dutch far-right PVV party was beaten into a distant second place in elections earlier this month and anti-euro National Front leader Marine Le Pen is expected to lose the French presidential vote. Support for the single currency also remains surprisingly strong. Italy, Cyprus and Lithuania are the only members where a majority think the euro has been a bad thing for their country, according to a Eurobarometer survey published in October 2016.

Yet a surprise electoral victory for, say, Italy’s 5-Star Movement could still throw the euro – and the entire EU – into an existential crisis. Besides, anti-EU parties constrain mainstream politicians, making it harder for them to agree new reforms. As German Finance Minister Wolfgang Schaeuble admitted in an interview with the Financial Times, there is little democratic enthusiasm for transferring more powers to Brussels.

How, then, should the EU proceed? Though some might welcome a pause, the EU still needs to find ways to tackle immigration, environmental risks, and the challenge posed by an ageing workforce. Disintegration would be traumatic, particularly for members of the single currency.

The logical upshot would be for some countries push ahead with reforms that do not apply to all 27 members. The notion of a “multi-speed” Europe was one of five options suggested by the European Commission in a paper published earlier in March, and has been endorsed by leaders including German Chancellor Angela Merkel.

The suggestion upsets some countries, particularly in eastern Europe, which fear being relegated to second-tier membership. But this is already the case in practice. The euro was launched by a group of core countries rather than being adopted by all members. The Schengen Agreement, which abolished border controls, was initially implemented by just a handful of members.

A multi-tier EU can never match the vision that inspired the leaders who signed the Treaty of Rome just 12 years after the end of World War Two. In the circumstances, though, a more pragmatic approach may be the best hope of ensuring that the EU lasts for another 60 years.


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