David Cameron’s European Spaghetti Bowl

British Prime Minister David Cameron’s “Europe” speech, delivered on January 23, was powerful, polished, contained a bold vision, and offered good arguments. In particular, he got three things right. But translating those arguments into institutional reality will be a nearly impossible challenge.

First, Cameron is correct to emphasize the urgent need for a renewal of popular support for the European Union. The percentage of Europeans who believe that the EU is “a good thing” is dropping steadily.

Democracies require real debate. Yet too many decisions about the future of Europe and the eurozone are made in highly technocratic settings, with most citizens not really understanding what is going on, let alone feeling that policymakers care. One can debate whether a referendum is the most appropriate vehicle for asking for their consent, but ask one must.

As Cameron put it: “There is a gap between the EU and its citizens which has grown dramatically in recent years and which represents a lack of democratic accountability and consent that is – yes – felt particularly acutely in Britain.” Addressing the political challenge head on is much better than trying to evade the debate.

Second, Cameron was right to say that “the European Union that emerges from the eurozone crisis … will be transformed beyond recognition by the measures needed to save the eurozone.” He did not disagree that the eurozone needs more integration, but correctly noted that the required degree of political integration is beyond the comfort zone of British citizens and of others in the EU.

Finally, Cameron argues that the EU is not an end in itself. Rather, it must deliver better economic performance for its citizens by emphasizing the challenge of competitiveness, particularly with respect to the new emerging countries. His speech stressed the economic weakness of many EU members (though some – such as Germany and the Nordic countries – are actually doing reasonably well in the global marketplace).

As a conservative, Cameron lays the blame for economic weakness on the size of the state and a high degree of market regulation, though some Nordic countries with large government spending and strong financial and environmental regulations are in better shape than the UK, which has had less of both. But he is right that a debate on economic performance is needed, and that it will be crucial to reform Europe in a way that maximizes its prospects in global competition.

It is normal for conservatives to argue for less government and to place greater trust in free markets, and for social democrats and greens to argue for public policies that deliver less income inequality, more public goods (such as a clean environment and public transport), and more regulation to help markets function with greater stability and distribute benefits more evenly. The competitiveness debate should indeed be part of the debate about Europe’s renewal.

But Cameron’s vision for Europe’s institutional future is difficult to translate into workable specifics. He argues for a Europe “à la carte,” at least for those outside the eurozone. He entertains the possibility that the UK and other EU countries that have opted out of the eurozone could each negotiate a specific and special “deal” with the EU, picking and choosing among its various dimensions those that suit them best and cost them the least.

Thinking about the consequences that such a Europe would have on EU institutions, one must ask how the European Commission, the European Parliament, and the Council of Ministers would function. Would there be one set of sub-institutions for every country that has made a special deal with the Union – say, a Commission for the eurozone and Sweden, and another for the eurozone and the UK?

And would the European Parliament become fragmented in similar fashion? Would the European Council have a diverse set of memberships? How many temporary or permanent opt-outs can there be? How will Europe’s citizens, who already have enough trouble with the complexities of European governance, be able to comprehend such a “spaghetti bowl” structure?

And yet Cameron is right to believe that not all EU members will want or be able to be part of a more integrated eurozone. There will have to be some flexibility if the EU is not to shrink, becoming a smaller eurozone. British membership is important to many in Europe.

One way to overcome the dilemma might be to articulate an institutional future in which there would be essentially just two types of countries within the EU and the single market: those in the eurozone and those with national currencies. There would have to be two sets of EU institutions, one for the eurozone and another for non-eurozone countries, although they would overlap.

This is already the case in some areas: consider the EU-wide Ecofin and the eurozone-only Eurogroup of Finance Ministers. Something similar could be created for the European Parliament, and so on. It would be complex, but it could be made manageable; we should discuss how.

A new European treaty would not allow cherry-picking, but would give each member state a chance to join, or commit to, either the politically more integrated eurozone or the less integrated second group. There would be clear rules and decision-making mechanisms for both sets of countries, subject to democratic votes by a two-tier European Parliament.

Many details would have to be worked out. But this may be a vision that gives Europe a chance to remain big and inclusive, while retaining the politically integrated core that the eurozone needs.