The bloc has learned the wrong lessons from 2004.
The bloc has learned the wrong lessons from 2004.
T he European Union is preparing to expand by potentially adding Moldova, Montenegro, Albania, and Ukraine — though the latter remains unlikely — as new members over the coming years. The priority for Brussels, however, is not simply to grow the club, but to ensure that growth does not weaken the establishment that runs it. Newly released plans would accomplish this by seriously curtailing the power of member states. Clearly, Brussels has learned the wrong lessons from the 2004 eastward expansion of the EU.
Decision-making in the European Union is a slow process. The European Commission, its executive branch, initiates almost all legislation, which is then submitted to the European Parliament, its legislative assembly. While the Commission sometimes struggles to get bills past Parliament, the real hurdle is the Council of the European Union, where each member state has equal representation. In the Council, members can frequently exert veto power, as decisions in many areas require unanimity. Even when this is not the case, a qualified majority — meaning 55 percent of members representing at least 65 percent of the EU’s population — is typically required. The more members the EU has, the greater the likelihood that at least one of them will object to something European Commission President Ursula von der Leyen and her allies propose.
To prevent political gridlock, the EU seeks to drop the unanimity requirement for matters such as defense, human rights, tax evasion, and sanctions against countries, organizations, or individuals. This was prompted by Hungary’s efforts to block and weaken EU sanctions against Russia following the invasion of Ukraine. Hungary no longer poses a problem now that Viktor Orbán is out of office, but the EU wants to ensure that no country can ever again hold sanctions or aid packages hostage.
It may seem reasonable that one member state should not be able to prevent the other 26 from acting. But sanctions inherently have a disparate impact. When Europe sanctioned Russia, countries with heavier energy ties to Russia — such as Hungary and Slovakia — were hurt far more than countries in Southern Europe. Likewise, sanctioning an organization or an individual may hurt member states with whom they have good relations.
As much as Brussels likes to forget this, the EU is made up of independent countries. The unanimity requirement ensures that larger countries cannot use EU-wide sanctions to settle scores with foreign countries — Israel, for instance — or policymakers who have upset them.
EU leaders also want to remove the unanimity requirement for laws aimed at combating tax evasion. The problem is that the EU has historically struggled to distinguish between tax evasion, tax competition, and tax avoidance. Ireland raised its 12.5 percent corporate tax rate to 15 percent for the largest corporate groups after decades of pressure from the EU and the OECD. The EU also forced Ireland to collect an additional €13 billion in taxes from Apple, ruling that Ireland’s preferential tax treatment of the company amounted to an illegal state subsidy. If the EU gains further power over taxation, such cases are bound to multiply.
In the European Commission, each member state is represented by one commissioner, who holds a distinct portfolio. While the EU has fallen short of actually calling for a reform, it has hinted at changing this, recognizing in its new proposal that existing treaties allow for only two-thirds of members to have a commissioner at any one time. One-third of member states would then take turns sitting out each five-year term.
As with the lack of veto powers, this would reduce the influence of smaller member states. Larger countries could potentially forgo a commissioner because their large delegations in the European Parliament ensure that they cannot be ignored, but smaller members, such as the Baltic states, do not have the same influence.
Perhaps the strangest of the EU’s proposed rules would limit the influence of the new members. Despite its outward enthusiasm for expansion, Brussels appears to have some misgivings about the candidates: Upon joining, new members could be subject to safeguard clauses for up to 15 years. They would be asked to refrain, at least temporarily, from using their national veto in areas where the unanimity requirement still applies. The Council could suspend a new member’s voting rights by qualified majority, rather than the normal Article 7 process, which requires unanimity. The EU could also cut the member’s funding if Brussels judged that it had backslid on democratic or judicial standards.
As with ending the sanctions veto, this measure is a response to what the EU views as shortcomings of the last expansion. In 2004, the EU added ten new member states, eight of which had previously been behind the Iron Curtain. Economically, this has been a massive success. These countries have enjoyed far higher growth than the average EU member state, which has helped keep the union from complete stagnation.
Yet between Hungary objecting to sanctions, Poland objecting to the EU’s rapid coal phase-out, the Czech Republic objecting to the EU’s efforts to outsource its auto industry to China through EV mandates, and all of the Eastern member states objecting to the EU’s lax border enforcement, the new members have often been a political headache.
The problem was largely one of expectations. The Eastern member states believed that they were primarily joining an economic union, while Brussels assumed that those states would also adopt its preferred values on matters ranging from the environment and immigration to social rights. By ensuring that it can suspend the voting rights of future members, the EU seeks to prevent them from becoming troublemakers like the last bunch.
Meanwhile, the reforms aimed at removing the unanimity requirement in certain areas and restricting the number of commissioners are intended to streamline the EU’s work. It is true, of course, that the need for unanimity slows down the political work of the EU and that adding more members will make this problem worse. The bigger problem, though, is that the EU has simply assumed responsibility for too many policy areas. Most disagreements stem from newer policy areas, in which the EU never needed a common regulatory policy in the first place beyond perhaps a basic level of harmonization.
EU leaders can’t see an issue with expanding the bloc’s power. Instead, they view the veto as the problem. As Sweden Democrat MEP Charlie Weimers told me, “Enlargement must not become a pretext for stripping the people of their right to say no.” Yet that is exactly how Brussels is now using it.
Since Germany and France will never agree to a broader rollback of the EU’s powers, the most obvious solution is a two-tiered union. Countries in the lower tier would participate in the single market and likely the customs union, benefiting from the free movement of goods, services, capital, and people — albeit perhaps with some restrictions — across the EU. Such countries would agree to basic restrictions on unreasonable state aid, and possibly some baseline standards for regulatory policy.
This tier would not involve cooperation on security or foreign policy, a common currency, a fiscal or banking union, or checkpoint-free travel. Countries at this level would have no influence over policy areas that do not apply to them. They would still pay membership fees. This would be similar to, yet looser than, the arrangement Norway and Iceland currently have with the EU. Both countries are in the Schengen Area, and both must adopt most new regulations without having a formal role in EU decision-making. A lower tier would not include such a regulatory alignment requirement, would leave Schengen membership optional, and give members influence over whatever rules still applied to them.
Countries in the higher tier would continue the march toward an ever-closer union, as envisioned in the EU’s founding treaty, eventually likely sharing a common military force and broadly harmonized levels of taxation. The high-tier members would still be able to travel freely between and trade freely with low-tier members, but they would not, for example, be able to impose climate or labor-market regulations on the lower tier.
By creating a lower tier, the EU could help satisfy the demands of existing members who wish to get off Mrs. von der Leyen’s Wild Ride to a federal Europe. And it could require new members to join the lower tier first before eventually being allowed into the higher tier.
More members will indeed make unanimity harder. That, however, is a reason for member states to do less together, not to abolish the veto and put new members on probation. The honest alternative is to let countries that want only the market have it, while countries that want a federation are allowed to build one among themselves.