A manifesto for Europe

20 steps to relaunchthe EU

I N S T I T U T M O N TA I G N E — C O N T R I B U T I N G T O P U B L I C D E B AT EOCTOBER 2005 BRIEFING PAPER

Amicus Curiae

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AVEC

What is wrong with the EU?

Institut Montaigne took the initiative in teaming up with a UK think tank,the Centre for European Reform, to identify ways to help European integration regain momentum. The manifesto below sets out concrete proposals endorsed by both partners — each an independent and highly respectedorganisation in its own right, albeitwith traditionally different approaches.It is now up to public policy-makersin Brussels, Paris, London,and throughout the European Unionto review these options.

For about 50 years, the EU has successfully brought peace, stability and prosperity to a continent that hadbeen ravaged by national strife andwars for centuries. At the same time,the Union has grown from six to 25 member-states. It has survivedcountless internal splits, angry summits, “empty chairs” and years of “eurosclerosis”. The political turmoilcaused by the French and Dutch rejections of the EU constitutionaltreaty in mid-2005 is hardly

unprecedented. Yet in some ways, the EU is at the crossroads. Criticshave called into question some fundamental EU policies, such as theeuro and the common agriculturalpolicy (CAP). Politicians ask whetherthe Union is really capable of makingEurope stronger and more competitive. Many voters across the EU seem tohave lost faith in the European project. So it is no wonder that the EUis having a pretty fierce debate aboutwhat to do next: more integration?

More enlargement? Both? Or a “pausefor reflection”? But the fact that the EUis asking itself such questions doesnot mean that it is in a “crisis”. Onthe contrary, the current situationoffers a valuable opportunity for deliberation and discussion, for exploring new ideas and for makingsome much-needed improvements.

We – the Centre for European Reformand the Institut Montaigne – think thatthe constitutional treaty cannot and

should not be revived. Instead, we wouldlike to put forward some new ideas andconcrete proposals that could help theEU to regain momentum. Our proposalsare based on our conviction that the EUcurrently suffers from two inter-relatedproblems:

The EU has lost its sense of purpose,and with that, its popularity. The Unionhas helped to bring peace across the continent and wealth for most of its inhabitants. But citizens are hardlyaware of these benefits. Most EU policies directly benefit only a smallnumber of people, such as farmers or exchange students. For many others,the EU has become a problem, rather than a solution: it appears cumbersome and opaque; it adds layers of bureaucracy; it seems to make competition for jobs fiercer by embracing low-cost countries. National governments add to theUnion’s unpopularity by blaming“Brussels” for unpopular decisions,which they themselves have often supported, or for developments that neither the EU nor national governments can easily influence, such as job losses in uncompetitiveindustries.

There is a notable absence of political leadership. The Franco-German alliance has becomemainly defensive. No single country, or grouping, has replaced the duo as Europe’s “motor of integration”. The EuropeanCommission now rarely takes the initiative and it does not have the support of some larger member-states.A lack of leadership also weakens the EU’s external leverage in crucialareas such as climate change, the Middle East peace process, relations with Russia or the challenge of rising powers such as China.

In this atmosphere of confusion and drift, it appears tempting to advocate pragmatism and piecemeal

progress. We agree that the EU shouldconcentrate on areas where progress is possible. It should issuefewer ambitious declarations and focus more on delivering concrete benefits for the people. To regainmomentum, the EU needs to

explore new, more flexible ways of co-operation and integration. However,we must not forget that the EU is much more than the sum of its policies or its Brussels administration.The Union is defined by a set of shared values. It should draw strength

A M A N I F E S T O F O R Institut Montaigne

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IrelandUnited

Kingdom

PortugalSpain

France

Italy

BelgiumLuxembourg

Netherlands

Germany

Denmark

Sweden

Czech RepublicSlo

Austria HuSlovenia

Croatia

Malta

Pol

KEY STEPS IN EUROPEAN INTEGRATION

1957

1973

1981

1986

1995

2004

Candidate countries

from some of these values, such as cohesion and diversity, to improve itsinternal functioning and legitimacy.Others, such as democracy and freedom, it should promote actively, both within Europe and around the world.

20 stepstowards a moreeffective andpopular Union

Flexible integration

1 – The 25 EU governments shouldacknowledge that the EU’s traditionalmodel of treaty-based integration hasreached its limits, at least for the timebeing. The referendums on accession and on the constitutional treaty set an important precedent: many if notmost EU countries would now have tohold a referendum on any significantchange of existing EU treaties or theadoption of a new one, in addition tohaving it ratified by parliament. The likelihood that at least one country willvote No is extremely high. Therefore,the chances of achieving further integration on the basis of treaty change are so slim that the EU should– for now – not even waste time andeffort trying. Instead, the EU shoulddeclare a moratorium on significanttreaty change for say, five years. The EU should now focus on projects andpolicies that can deliver tangible results for its citizens and on strengthening its role in its neighbourhood and in the wider world.

2 – A Union of 27 member-states or more needs more flexibility if it wants to avoid gridlock. A subset ofmember-states should be able to deepen their co-operation or integrationin a policy area that they all agree on. It would be in the EU’s best interest ifsuch flexible integration proceededwithin the EU treaties. However, currentprovisions on “enhanced co-operation”(in article 40 of the Treaty on theEuropean Union) are so cumbersomethat EU countries have never usedthem. EU countries wishing to launch aproject should try to work on the basisof the existing treaties as far as possible. If they act outside the treaties,they should make sure that their reinforced co-operation does not contradict existing EU law and theyshould commit to keeping the dooropen to other EU countries that maywant to join the initiative at a later point in time.

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Finland

Estonia

Lithuania

covakia

ungaryRomania

Bulgaria

Greece

Cyprus

Turkey

and

Latvia

EUROPEAN UNION

Population GDP per capita*in million of in PPS** (as %

Country inhabitants on of 25-member EU1 January 2003 averange)

Germany 82,5 108%Austria 8,1 122%Belgium 10,4 118%Cyprus 0,7 83%Denmark 5,4 123%Spain 41,6 98%Estonia 1,4 53%Finland 5,2 116%France 59,6 110%Greece 11 82%Hungary 10,1 62%Ireland 4 143%Italy 57,3 104%Latvia 2,3 45%Lithuania 3,5 50%Luxembourg 0,4 224%Malta 0,4 70%The Netherlands 16,2 124%Poland 38,2 48%Portugal 10,4 76%Czech Republic 10,2 72%United Kingdom 59,3 119%Slovakia 5,4 54%Slovenia 2 80%Sweden 8,9 117%

Sources : Eurostat

* In 2005 (forecast).** The volume index of GDP per capita in PurchasingPower Standards (PPS) is expressed in relation to theEuropean Union (EU-25) average set to equal 100. Basicfigures are expressed in PPS, i.e. a common currency thateliminates the differences in price levels between coun-tries allowing meaningful volume comparisons of GDPbetween countries.

Amicus Curiae

More co-operation in key areas

3 – The EU is facing growing threats from cross-border crime andinternational terrorism, as illustrated bythe London and Madrid bomb attacks.These threats urgently require the EUcountries to co-operate more in justiceand home affairs (JHA). More and better JHA co-operation would alsoshow to the people that the EU is working hard to protect them. However,the EU’s record in this area has so farbeen mixed at best. Take the case of the “European arrest warrant” – theEU’s first big attempt to align nationallaws in the JHA area. AlthoughSeptember 11th propelled EU governments to finally agree on thearrest warrant, it was implementedbadly and with further delays.Reinforced co-operation is already becoming more frequent in JHA. In2003, Britain, France, Germany, Spain and Italy (the G-5) started working together more closely on counter-terrorism; and in 2005 sevenEU countries signed the Prüm treaty on police exchanges and border co-operation (France, Germany, Spain,Austria and the Benelux three). Bothinitiatives are compatible with existingEU laws and are open for other countries to join in the future. Theypoint the way forward.

4 – In the negotiations on the constitutional treaty, EU countriesagreed to merge JHA into the EU’s “first pillar” (the set of rules that governmost EU business, including the single market). Existing EU law (article 42 ofthe TEU) already allows EU countries to move some JHA areas, such as police and judicial co-operation, into the first pillar. Such a move would allow for faster decision-making and the involvement of EU institutions (theParliament, the Court and theCommission) in JHA. Had this beendone earlier, the Commission could, for example, have started infringementproceedings against those countries

that badly implemented the Europeanarrest warrant.

5 – Reinforced co-operation could also be the way forward in economicsand finance. The members of the eurozone share a common currency and a common interest rate so it wouldmake sense for them to better co-ordinate their budget and reformpolicies. The eurozone countries should try once again to produce a better set of fiscal rules: the watered-down stability and growth pact is both weak and incomprehensible. Moreover, the eurozone countries should have a reinforced dialogue on structural reformsat the level of heads of state andgovernment, not only finance ministers,who lack the political clout to makecontroversial reform decisions.

6 – If some West European countrieswanted to work together to harmonisetheir tax systems, they should be able to do so, provided this does not harmthe functioning of the single market.Many large companies in the EU would welcome a harmonisation of taxbases (the rules that determine on what the tax is levied). A subset of EUcountries could also abolish the preferential tax treatment that they grant wealthy citizens from other member-states who live within theirborders.

7 – Education and innovation are the keys to building the kind of “knowledge economy” that will allowEurope to compete in a globalised economy. Currently, Europe hosts onlytwo of the world’s top 20 universities(both in the UK). The EU should usemoney from its common budget toconvert half a dozen universities into “centres of excellence”. Only universities with well-respected researchdepartments, an interdisciplinaryapproach and strong business linkswould be eligible. And for continuedEU funding, they would have to

attract a large share of foreign studentsand professors; forge alliances withother top universities around the world and reach certain targets on teaching and research, for example on the number of patents filed. The EU’s “Erasmus” programme hasbenefited thousands of students byallowing them to spend a limited period of time studying in another EU country. The EU should widen its exchange programme to thosewishing to study for an entire degree in another EU country.

8 – The EU’s procedures for giving outmoney for research and development (R&D) are opaque, cumbersome and inflexible. We therefore welcome theEU’s recent decision to establish a“European research council” to distribute funds on the basis of objective criteria and peer review. The new council needs to be independent from EU institutions, itshould have a budget of at least €2 billion a year and it should gradually take over the management of EU R&D funds from the EuropeanCommission. Moreover, the EU should finally adopt the long-overdue“community patent”, to enable companies to file a single patentacross 25 countries. The EU should allow companies to file patents in English only, and during a 3-year period pay for the translationcosts in non-English speaking countries.

9 – One challenge that most EU countries share is that their work forces will start to shrink over comingdecades. Ageing populations will notonly undermine the EU’s publicfinances, they will also reduce its overall economic dynamism and its political clout in the world (by theend of the century, no more than 5% of the world’s population will live in the EU). EU countries should compare their policies on child care,flexible working hours, housing,

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immigration and figure out why somecountries have higher birth rates than others. The EU should establish a “European demographic institute” to gather information and commissionresearch on demographic trends, as well as promoting best practice for policies to mitigate demographicdecline and its impact on the EU economy.

A stronger role in the world

10 – Enlargement has been theUnion’s most successful foreign policytool, and the EU should not give it up.However, the EU needs to take intoaccount people’s concerns about further enlargement by restating that it will only admit European countries and only if further enlargement does not threaten its own internal functioning and cohesion.

11 – The EU needs to streamline its foreign policy machinery to speed up decision-making and maximise the impact of its scarce resources.Therefore, the EU’s leaders (in theEuropean Council) should agree to delegate the chairing of the EU’s council of foreign ministers to the High Representative for Foreign Policy,currently Javier Solana. The heads ofgovernment should also make clear that the Commissioner for ExternalRelations, currently Benita Ferrero-Waldner, is an important deputy to the High Representative, with the particular task of mobilisingCommission resources to support and sustain the EU’s common foreignand security policy. EU leaders should also insist that the relevantdepartments of the Council and theCommission work together moresmoothly and efficiently on foreign policies. In practice, the Commissionand Council officials involved need toform a single team. Moreover, some EU countries could deepen the co-operation between their

diplomatic services and ensure thattheir citizens have worldwide consular protection.

12 – More effective EU foreign policy requires a stronger EU defencepolicy. Given how much the EU governments spend on defence – some €180 billion a year – they havevery little military capability to showfor it. They would get more value formoney if they opened up protecteddefence markets, agreed on more common procurement of defenceequipment, and co-ordinated spendingon military R&D. The “European defence agency” should take a lead in cajoling governments to achievethose objectives. Given that securitycrises cannot be managed with military means alone, EU governments shouldalso develop the capability to deploy aid workers, judges, engineers, medical staff and police forces toconflict zones.

13 – Instability and poverty in the EU’s neighbourhood – spanning the former Soviet Union, the Middle Eastand Northern Africa – could quickly spill over into the EU in the form of trafficking, organised crime and illegalimmigration. The new “European neighbourhood policy” is a laudable first attempt to help stabilise and reform neighbouring countries without offering the prospect of membership. However, the way theneighbourhood policy is run reduces its effectiveness. The EU needs to tailor requirements and incentivesmore closely to the needs and conditions of individual countries. Itshould make additional financial helpand further economic co-operationstrictly conditional on these countries’ respect for democratic standards andhuman rights.

14 – Europe should continue to lead the fight against global warming by spearheading efforts to devise a post-Kyoto regime on climate change.

Meanwhile, those EU countries that risk missing their national targets forcutting CO2 emissions under the Kyotoprotocol need to work harder. TheCommission should ensure they do so by organising a special meeting once a year and, if necessary, use the “naming-and-shaming” method. The EU should also use the financialaid and technology it transfers to emerging markets such as China, India and Brazil to encourage energysavings, the use of alternative sourcesof energy and the replication of the EU’s emissions caps and trading system.

Bring European citizens on board

15 – Rightly or wrongly, manyEuropeans perceive the EU as opaque and undemocratic. The EU could take some simple steps towardsmore transparency and accountabilitythrough agreements between the EUinstitutions or by amending theCouncil’s internal rules of procedure.The Council of Ministers (the EU’s main decision-making body) could decide to open its legislative work topublic scrutiny: it should meet in public whenever it discusses or votes on new EU laws. EU governmentswould then no longer be able to blame “Brussels” for measures theythemselves have supported. Moreover,one-third of the EU’s national parliaments, representing one-third of the EU population, should be ableto hold up a “red card” to theCommission if they consider that oneof its proposals does not respect theEU principle on subsidiarity (whichsays that the EU should only act if itcan do better than national or regionalgovernments). The Commission wouldthen have to withdraw the legislativeproposal in question.

16 – Many Europeans also see the EU as wasteful and as benefiting only aselect group of people. The EU budget is limited in size but its expenditure

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Amicus CuriaeIn law, the Amicus Curiae or

“friend of the court” provides additional information or arguments to assist the court

in a case to which they are not a party.

RECENT PUBLICATIONSgoes predominantly on poorer regionsand farmers. It is not relevant for theEU’s proclaimed aspirations to becomemore competitive and adopt a strongerrole in the world. So the EU budgetneeds a thorough overhaul. In themedium term, the EU should reduce its farm spending, increasingly concentrate regional aid in the poorestmember-states and refocus spending on innovation and education.

17 – A quicker – but highly effective –step would be to allow the members of the European Parliament to meet only in Brussels, rather than forcingthem to travel between there and Strasbourg (costing the EU €200 million a year even before the 2004 enlargement). TheStrasbourg parliamentary buildingcould become the EU’s first academiccentre of excellence or a researchcentre for technology. During the sum-mer months, people of all age groups from the EU could gather in theStrasbourg building to form a “citizens’ parliament” with the aim of gaining a better understanding of the EU through workshops, role-plays and debates.

18 – National parliaments should play a larger role in EU policy-making.In particular, the EU’s national parliaments should make more efforts to discuss EU draft laws before theCouncil of Ministers votes on them. And each of them should be entitled to send three to five observers to theEuropean Parliament on a rotationbasis, to take part in committee workand question MEPs during plenary sessions. Also EuropeanCommissioners should come talk totheir national parliaments at least once a year to keep them informed

and involve them better in the EU decision-making process.

19 – Most EU policies – from mutualrecognition of standards in the single market to the “open method of co-ordination” in the Lisbon reform process – acknowledge, even celebrate, the Union’s diversity. TheEU should further encourage such useful processes of comparison andbenchmarking by appointing aCommissioner for Best Practice. TheCommissioner would co-ordinate data collection and produce analysesof which policies work best under what circumstances. He or she would send this information to EUgovernments to help their decision-making and offer it to the general public in easily accessible form. Among the topics that would be of particular interest are immigration, labour markets, demographics and pension reform,healthcare, education and fighting corruption.

20 – The EU needs to make a bigger effort to “sell” the benefits of EU integration. Every May, theCommission, together with the national governments, should organise a big media campaign on “The EU and you”, to explain how the EU adds to economic prosperity, improves security, protects the environment or helps poor people around the world.Moreover, the EU should co-financeone school trip to another EU countryfor all children aged 10-15. And it should pay for language classes in poorer EU countries so that more and more EU citizens areable to take advantage of freedomsoffered by the EU.

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