A Two-Speed Europe, At Last

Ann Mettler*


At last, the French “non” to the European Constitution has formalized the two-speed Europe most observers have seen coming for some time. What may today seem a fatal blow to further integration and economic reform may actually be Europe’s future salvation. Finally, those countries that have embraced the Lisbon Agenda, Europe’s ambitious program for growth and jobs, can move ahead without worrying about France and other members of “core” Europe – a club of aging industrialized economies whose prized “social model” is exemplified by high taxes, rigid labor regimes and low economic growth.

Contrary to what core Europe would have you believe, they are not the countries driving European integration forward anymore. To the contrary, integration is now being led by countries that used to be on the periphery of Europe – countries that have learned to meet the challenges, and reap the opportunities of globalization, rather than wage a futile and destructive fight against it.

In the wake of the French “Non” vote, the time has come to identify and reward those countries that are carrying the flag for European competitiveness. Instead of kowtowing to the economic laggards of core Europe, other countries should be allowed to create a “growth and employment” group, which should be given a special status in advising the European Commission on successful reform strategies, celebrated in the media and the public at large as the real carriers of a “social Europe”, and even allowed to press ahead on key policy proposals, such as the liberalization of the service sector.

Interestingly, history has shown that Europe works best not when it tries to harmonize the unharmonizable, but when it creates a club with a high standard for admission – such as the euro or the EU itself. By proactively creating the framework for a two-speed Europe, the European Commission would devise strong incentives for countries to join a group of visionary pioneers that are moving forward with an exciting and ambitious policy goal.

Be it monetary union or enlargement, forcing countries to fulfill certain criteria in order to become a member of a club they want to be associated has been the only carrot that has ever yielded tangible results. Neither the “open method of coordination” that the Lisbon Agenda has used nor the newly devised three-year national action plans will provide the necessary stimulus to turn the economic fate of core Europe around. What these economic laggards need is a policy tool with teeth – a program that will elicit popular interest and public pressure, a club of successful countries that admits members on merit and achievements, not on attitude, historical significance or geographical size.

The “growth and employment” countries should hold member-only meetings in which successful policy strategies can be shared and deepened, rather than wasting their time – as is the practice now – on ideological turf battles and restating well-known differences with core Europe. They should also be given greater discretion on how they use EU funds. While core Europe may well chose to prop up its dying industries, subsidize farmers and protect its vested interests, others should be allowed to use EU money to foster a modern knowledge- and service-based economy and channel money toward lifelong learning and entrepreneurial activities.

At this moment in time – and with the recognition that France would not be shy about pressing ahead with plans for a core Europe if its leadership were not so discredited that most countries would refuse to join such an alliance – a two-speed Europe offers the only hope to put Europe back on track. Maybe if Jacques Chirac had to explain to his voters why they are excluded from a leading-edge, forward-looking group of countries that reward their citizens with greater prosperity, jobs and opportunities, the reality would prevent him from constantly invoking preservation of l’Europe sociale as an excuse for perennially poor economic performance and blocking urgently needed reforms.

June 2005

* Ms. Mettler is executive director of the Lisbon Council, a Brussels-based reform network.

This article first appeared in the Wall Street Journal.
Reprinted by Permission of The Wall Street Journal Europe. All Rights Reserved.


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A Two-Speed Europe, At Last