Could the EU be replaced?
Helsinki Times

Utrikespolitiska institutets direktör Teija Tiilikainen analyserade i sin artikel i tidningen Helsinki Times följderna av EU:s eventuella sönderfall.    

A breakdown of European integration would lead to a drastic realignment of the entire region, writes Teija Tiilikainen.

Dr. Teija Tiilikainen is the director of the Finnish Institute of International Affairs. Previously she has functioned in various positions at the University of Helsinki. In 2007-2008 she had the position of state secretary in the Finnish Ministry for Foreign Affairs. She has published a lot on European integration and Finland’s foreign and security policy.

In the context of European economic and financial crises, a possible breakdown of European integration has been referred to. What would happen if this materialized, and what would Europe without the EU look like? What would the policy options for a single EU member state like Finland be in such a situation?

In particular, the opponents of the EU have suggested that a loose economic union such as the European economic area (EEA) could stand as an alternative to the current EU. The internal market forms the core of the EEA. This market, with its four freedoms (freedom of movement of goods, persons, services and capital), is seen to provide its member countries with an enormous advantage in the global economic competition. Also, the UK, which is skeptical about political integration, recognizes the obvious value of the internal market.

The internal market, however, cannot function without the corresponding system of supervision and regulation it is currently connected with. Without strong rules, and supranational supervision and control, markets would not operate properly. The member states would be weakly committed to the opening of their markets, in particular in policy-fields characterized by firm national interests. Economic conjunctures would also distort the functioning of the market.

Another problem would emerge from subordinating markets to political goals, such as sustainable development or social justice. In a system of cooperation dominated by an intergovernmental mode of governance, commitment to these principles would depend on economic and political conjunctures.

In case one didn’t want to continue with any supranational law or decision-making, one would have to return to an EFTA (European Free Trade Association) type of loose free trade arrangement. Returning to such an arrangement would bring borders back to the movement of goods, capitals and peoples between the current EU countries. The risk of these countries starting to protect their own markets would grow; they would probably go back to old practices concerning work permits and border controls, restricting the traffic of both goods and people. A number of smaller communities with some type of an internal market, such as the Nordic region, would be likely to emerge in Europe. Tightening economic competition would, however, be apt to increase tensions between them.

If the current EU didn’t exist, its members would need to think about how to reorganize their mutual cooperation in security policy. European integration was once established in order to bind Germany to tight European cooperation and there is no willingness yet in Central Europe to return to national defence systems. A return to the old setting would increase distrust and economic costs. The key security factors would most likely keep the historical core of the EU together, even in the case of a fatal political crisis facing the rest of the EU. One of the regional systems of cooperation replacing the EU would thus emerge around the original EC countries: Germany, France, Italy and the Benelux countries. It would represent a more far-reaching model of integration than the other regional blocs just on the basis of its security policy logic. This would provide its members with clear competitive advantages with respect to the other regional groups.

For Finland, a disintegration of the EU would mean dramatic changes in its political and economic surroundings. Nordic cooperation would, in such a situation, form the key framework for Finland’s international engagement. In a tightened competition, it might be more willing to deepen the economic and security policy components of this cooperation.

A key question would be how interested Denmark and Norway in particular would be in building a Nordic union in such a new situation. Nato membership meets the security policy requirements for them and their key economic interests are mainly protected through other means than Nordic cooperation. Like the other Nordic countries, Finland would participate in a European free trade area that would bring its foreign trade policy back to its bilateral agenda. The same applies to its foreign and security policy, which would form the channel of conducting relations with other European countries, including Russia. The current daily contacts between the administrations of EU countries, linked with the preparation of EU level meetings and common legislation, would fade away and relations between European countries would again be dominated by foreign ministries.

In this world of intergovernmental relations, the currently active interaction between European civil societies would slow down, as the need to prepare for joint decisions at the EU level would no longer exist. Contacts between European parties would develop in the same direction without the direct European elections. Nationalism and other state-centric political narratives would flourish and it is quite likely that the political atmosphere would not be favorable for a new pan-European cooperative construction after the severe blow the EU had suffered.

Europe would thus become essentially a Europe of nations where key disagreements between states would deal with issues more severe than shares of the common budget or numbers of votes in the EU decision-making. An economic race would make its return to Europe and disagreements about territories, borders or political minorities would be settled bilaterally when the multilateral framework currently provided by the EU institutions and law ceased to exist.