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Avoiding a Shrinking EU in an Expanding Planet: A Turkish Contribution to the Debate on Europe’s Future

Avoiding a Shrinking EU in an Expanding Planet: A Turkish Contribution to the Debate on Europe’s Future

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This policy brief offers suggestions for how Europe can regain it's pre-Great Recession status as a world leader.
This policy brief offers suggestions for how Europe can regain it's pre-Great Recession status as a world leader.

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Published by: German Marshall Fund of the United States on Feb 28, 2013
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05/14/2014

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Summary:
Global challengesare pushing the EU toward anunavoidable dilemma. The EUought to expand to include newcountries and reach a criticalsize that will let it weather the21st century. However, the EUhas to also be a stronger, more
unied political system whose
functional feasibility depends ona limited number of countries inadvanced economic and mone-tary convergence. The viciouscircle of “a globally competitive,wider Europe” versus an “institu-
tionally efcient deeper euro
-zone, with a limited number of countries” can only be broken byan innovative institutional engi-neering in adopting a progres-sive approach.
Foreign Policy Program
Policy Brie 
 Avoiding a Shrinking EU in an Expanding Planet: A Turkish Contribution to the Debateon Europe’s Future
by Dr. Bahadır Kaleağası
1744 R Street NWWashington, DC 200091 202 745 3950F 1 202 265 1662E ino@gmus.org
February 2013
Introduction
Te eects o the global chal-lenges dening Europe’s uture areexpanding exponentially. Asia’sreemergence is now an ever-sophis-ticated process and not a mereeconomic growth story. Te agingEuropean demography is correlatedwith a wide range o policy issuesrom the competitiveness o the Euro-pean single market to the viability o the social security system. In the ageo the inormation society, the raceor new technologies in telecommu-nications, satellites, biotechnologies,articial intelligence, nanotechnology,and green energy is probably thekey actor shaping the 21
st
century.Freely circulating viruses o all kinds— biological, digital, carbonic, andterrorist — are worrying. Te rule o law and liberties are not yet ully solidachievements o the human civiliza-tion’s laboratory o democracy.Meanwhile the euro crisis continues.It is not exactly a classic monetary crisis, not the kind where the euro islosing value and causing markets tocollapse. Aside rom some countries’shockingly weak economic discipline,the undamental crisis is actually oneo governance. From the epicenter o this crisis, waves o uncertainty havebeen spreading to nancial marketsor the past ve years.Beyond the long list o tasks to bettertackle with so many elds o action,these global challenges push the EUtoward an unavoidable dilemma.Te EU ought to expand to includenew countries and reach a criticalsize that will let it weather the 21
st
 century. However, the EU has to alsobe a stronger, more unied politicalsystem whose unctional easibility depends on a limited number o countries in advanced economic andmonetary convergence. Enlargement versus deepening, an old dilemmacoming back with stronger pres-sure. Te vicious circle o “a globally competitive, wider Europe” versusan “institutionally ecient deepereurozone, with a limited number o countries” can only be broken by aninnovative institutional engineeringin adopting a progressive approach.
Europe’s Plan X
An important actor in any successulenlargement o the EU is the EU itsel.Te uture evolution o the EU as apolitical actor on the world scenewill naturally determine the exten-sion o its power through enlarge-ment. Unlike the popular perceptionin many EU societies, especially 
 
Foreign Policy Program
Policy Brief 
2
Will the EU be still attractive for acandidate country to join?
those that received immigrant workers some generationsago, new members to the EU will not necessarily meanparties in an already crowded space. Enlargement is liter-ally widening the European geography o democracy, law, values, economic interests, and security. Tis happens only when a candidate country is ready to assume the rightsand obligations o membership, and only when problemsthat may provoke ears on the part o European citizens arealready solved through the now well-disciplined accessionprocess dictated by the European Commission, supervisedby the European Parliament, and governed by the memberstates.At the point when a candidate country is ready or ull-membership and it becomes certain that that enlargementwill be benecial or Europe and its citizens, the questionturns to the EU’s readiness. Will the EU be still attractiveor a candidate country to join? Europe has a great chanceto demonstrate once more its capacity to come back tobusiness with enhanced institutions and so power tools.Four major scenarios, or narrative concepts, can mark thepresent analysis.
Europa Mercãtus
Te single market, together with regional peace andstability, has been the greatest achievement o the Euro-pean integration process. Notwithstanding the eurozone’smanagement troubles, in many elds with direct relevanceto the citizens’ daily lie and the economy, major decisionsare taken at the EU level: competition rules, social poli-cies, consumer protection, environmental standards, oodsaety, and regional development. Tis is world’s largesteconomy with a GDP o €12.6 trillion, a hal billion people,and 20 percent o the global trade. Yet the single market isar rom an accomplished task. Despite 6 million peopleworking abroad in another member country and 2.5million Erasmus exchange students so ar, internal mobility is not yet a parameter o a social cohesion among dierentnations.On a more technical level, the principle o mutual recog-nition (when a product is sold legally in one Europeancountry, it should be likewise allowed in other markets)is well established, but national technical regulations andcertications may have the eect o excluding new prod-ucts rom the EU market and limiting the ree movemento goods. Even more than manuactured goods, servicesare crucial or urther growth, job creation, and innova-tion. In 2011, nine out o ten new jobs were created inEuropes service sectors. However, the European servicesmarket remains ragmented. Te European services direc-tive is not well implemented, national rules and proceduresare burdensome, and an eective recognition o nationalproessional qualications and stringent rules or regulatedproessions require more eorts by the member states. Teree access to public markets, too, is still a challenge. Teintroduction o e-procurement can improve eciency,market openness, transparency, and competition, resultingin less public spending.Moreover, the EU could gain 4 percent o GDP by creatinga true single digital market by 2020. Tis corresponds toa gain o €500 billion and means that the digital singlemarket alone could have an impact similar to the 1992single market program. But signicant eorts need to bemade to unleash the digital single market’s great potential.While e-commerce is rapidly taking o at national levels,its cross-border development is lagging ar behind.
Europa Nostrum
Tere is no doubt that, rom the beginning, the oundingathers’ vision was that o a ederal political union. Teunctionalist approach was adopted to pave the way towarda political union, through the successul steps o the coaland steel community, the common market, the social area,and the monetary union. For a long time, the parallelprocesses o deepening and widening o the Europeanproject were coupled to create the dynamics that enhanceand justiy each other. Nevertheless, the ederalist visionhas also developed an instinct o preserving the coherenceo the existing Union, which could have otherwise beendiluted by including too many new member states.As a leading ounding ather o second generation, JacquesDelors, proposed an answer to the end o cold war in 1989in the rapid creation o a ederal union as the core o thewider Europe dened as “common European home” by thelast Soviet leader, Mikhail Gorbachov. Tis ederal Europe’sbasic design would correspond to a strong common body o supranational institutions armed with ederal powers
 
Foreign Policy Program
Policy Brief 
3
The fact that the pressure cookerof thesovereign debt crisishascrippled the eurozone providesa unique chance to push for a
deeper scal and political union.
to govern the European economy, internal security, andoreign policy. Western European countries moved quiterapidly to negotiate a new “European architecture,” in 1992signing the reaty o Maastricht, which had deviated romthe original idea o a ederal Europe to an institutionaldesign o a Greek temple with an economic and monetary pillar, enhancing the single market and opening the way toward the single currency, and two other pillars internalaairs and external relations based on inter-governmentalprocedures. Te European Union was introduced to bethe roo on the top o these pillars. Te EU’s ederal char-acteristics have been reinorced since then thanks to a seto reorming treaties and despite the ailed attempt at aEuropean Constitution. But the basic ideas or a smallerand more coherent political union are still pertinent: morepowers to the European Parliament, less recourse to therule o unanimity in voting at the Council o Ministers,transorming the Council to a kind o senate o states,a second chamber o the Parliament, redesigning theCommission as a real executive power, and more.Meanwhile, a large number o member states, havingalready reached an agreement or a “scal pact,” arecontemplating a stronger Brussels to supervise and lead themacro-economic policies, banking system, and interna-tional representation. Te uture o the EU is linked to thesuccess o the euro. Te act that the pressure cooker o thesovereign debt crisis has crippled the eurozone providesa unique chance to push or a deeper scal and politicalunion.
Europa Progressio
Te idea o a European ederal model is well propelledby the 21
st
century’s international pressures on Europe’seconomic interests, which need to be deended by astronger political identity. Some pressures are also trans-lated to challenges, which warn Europe against the risk o shrinking while the global context is widening in every sense. Consequently, Europe should enlarge toward new countries to enhance its demography, single market,economic competitiveness, and security. However, theexperience o the last ew decades demonstrate that withso many member states as stakeholders in the arena o European policymaking, decisions to launch a comprehen-sive ederal union cannot even be on the agenda. Both thequantity and the quality matter. Some countries are notwilling to be part o a deeper monetary and political union.Others are not ready or it. Moreover, the EU itsel is notyet a mature enough structure to unction swily withmore than 25 members.Tis vicious circle can only be broken by innovative insti-tutional engineering with a progressive approach. A legalinstrument exists already in the present governing treaties:enhanced cooperation (art.20). Tose member states thatare willing and able to go urther in a eld o integrationshould be allowed to do it without the others. A Europe o  variable geometry is emerging on the basis o an already existing reality o eurozone, Schengen area, deense coop-eration, and social policy opt-outs. Tis is a Europe o dierentiated integration as already endorsed by severalEuropean leaders and opinion leaders. Tis is also whatmany others, led by the British government, describe astwo-speed Europe.Tis scenario that can combine both Europa Mercãtus andEuropa Nostrum may be great success i it is orchestratedto avoid a Europe a la carte. On one hand, the actual EUo 28, and soon 35, countries must be integrated in anenhanced single market supported by strong institutions,cooperation programs, social development targets, andtrans-European inrastructures o transport, telecommu-nications, and energy. Tis would be the wide EU withinwhich a smaller group o states may create a more ederal“Euro core.” Te enlargement would also be easier ornational political public debate since it would be morecourageous to argue or new membership, thereore or“enlargement o Europe’s powers,” in the ace o the globalchallenges, while well emphasizing that the core Europe,Europa Nostrum, is not aected by this development.
Europa Et Cetera
Tis scenario is business as usual, a Europe that evolveswithout deepening, nor enlarging, which is permanently struggling to renovate its anachronistic system with small

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