An intergovernmental agreement of this kind would allow member states to avoid the pain of ratification in the 27 member states and prevent the 17 from being blackmailed by the renegotiation demands of British Eurosceptics. Even some Eurozone countries such as Slovakia and Finland could be excluded if their parliaments refused to ratify the agreement. However, the paradox of this idea of a “euro-core” is that it could be a kind of federalism without the federalists: it could exclude EU institutions such as the European Commission, the European Parliament and the European Court of Justice (ECJ). Moreover, many of the most pro-European member states — including Poland (which currently holds the presidency), Latvia and Lithuania — would also be left in the slow lane of European integration.
Angela Merkel has said that the fragmentation of the euro would lead to the end of the EU. But, as Wolfgang Munchau has argued, saving the euro could also lead to the destruction of the EU. This danger is in part an institutional question: the inner core that is emerging is breaking some of the elements of the consensus that has allowed the EU to function in recent years. It has sidelined the European Commission, empowered and co-opted the European Council by appointing Jean-Claude Juncker as chair of the group, and has acted through a Franco-German core that does not fully reflect the interests of small member states or the deficit countries.
At the same time, the danger of a two-speed Europe is a policy question. It is inevitable that the “euro-core” will increasingly speak with one voice within the EU as well as outside it. For example, in negotiations on the single market in financial services it is quite likely that the “euro-core” would agree a single position and only then negotiate with the 10 states outside the Eurozone. If an inner core of European states moves forward, the excluded states will be very nervous about ensuring that control of key policy areas such as the single market, common trade policy and the common budget remain with the 27 rather than being decided by the “euro-core”.
Unit III. EU at the Crossroads
There are also big questions about the effects of a two-speed Europe on the other two big integration projects: the common judicial space and common foreign policy. For example, it will be hard for the EU to rise to its potential on the world stage if geopolitically powerful countries such as Britain and Poland are excluded from the core. The implications for justice and legal affairs could be equally profound. Some of the Schengen countries could be excluded from the “eurocore”, but it is possible that countries that have entered a fiscal union with each other might want to unite their migration policies. As David Miliband has argued, a two-speed Europe would be unbalanced on economic issues such as free trade and the single market and foreign-policy issues such as Russia.
