Europe Must Expand and Deepen, or Else

, by Carlo Altomonte - professore di politica economica europea
On the one hand, it will have to be able to finance the huge amount of investment to remain at the forefront; on the other hand, it will have to think about enlargement into the Mediterranean and toward the Caucasus ridge, perhaps thinking about a system based on a Confederation of States

Step by step, in the decade immediately following the end of the Cold War, the European Union was able to reshape itself in a way apt to restore peace and stability on the Continent, as well as gaining competitive traction in the emerging new global equilibrium. This was done through the creation of novel institutions. On the one hand, through a deepening of the process of economic integration from the Single Market to the Single Currency, thus developing the larger economies of scale needed in a market that was becoming increasingly globalized. And on the other hand, with procedures able to absorb the Central and Eastern European countries that had been freed by the dissolution of the Soviet regime, guaranteeing the build-up and preservation of democratic institutions, the market and the rule of law, through an orderly widening of the same Union.

Such an institutional setup has enabled the EU to navigate through a number of crises, notably the financial crisis of 2008 and its aftermath, and later the Covid-19 pandemic, with mixed results, less spectacular during the financial crisis, much more successful during the pandemic. Importantly, however, the EU responses have always been sought within the same global political framework, and the general conditions of economic and political stability in the Continent.

The new disorder emerging from the Russian invasion of Ukraine, however, is creating a number of tectonic fissures in the state of world affairs that put into question the viability of the current EU institutional setup.

Making a parallel with the situation that the EU faced at the end of the Cold War, a number of elements point to the idea that a novel combination of deepening and widening in the process of European integration will be required to face the new situation.
As for deepening, the EU needs to develop a common financial capability able to finance the sheer volume of investment needed to remain at the forefront of the digital and green transition, a figure estimated at some €500 billion per year. To these areas the EU also needs to add investments to guarantee the security of energy supplies, as well as the development of a defense policy able to project itself beyond EU borders to geographically close allied countries, through a strategy coordinated with, but functionally autonomous from, the US. The latter two issues, energy and military, require significant steps forward not only financially, but also in the decision-making procedures of the 27 Member States, bypassing the unanimity rule.

When it comes to widening, the concept of EU strategic autonomy must acquire greater centrality. The latter implies the capacity to project power to protect European interests over an area necessarily wider than that of the EU-27, to include all the Balkans and the countries of the Caucasian ridge from Ukraine to Turkey, as well as the southern Mediterranean, with respect to which the problem of immigration must be managed in a common way. Hence the idea of a broad Confederation of countries, geographically linked to Europe, which can participate in an economically integrated market area.

Various proposals have already been made in this direction, and some institutional elements of this possible Confederation already exist today, by virtue of the network of bilateral association agreements that the European Union already has with almost all of these countries. Each of these agreements provides for an 'Association Council' between the EU and the partner country. Hence, a first step towards a European Confederation could be the creation of an Assembly body that brings together all the Association Councils, in order to determine a common strategy of this enlarged trading area.

Without these further steps in our integration process, both on the internal and external fronts, there is a real risk that for the first time in the postwar period Member States could fail to adapt to new geopolitical developments, such as the one determined by the Ukrainian conflict. In this context, the EU-27 appears to be at the same time too small, because it is geographically limited, and too large, because it is politically heterogeneous, with respect to the ability to satisfy the demand coming from its citizens for new European public goods in terms of energy, military and economic security.

But when an institution fails to efficiently respond to the needs of its citizens, sooner or later it is handed over to the history books.