To enlarge or not to enlarge?
But also — Inflation, Revision of Treaties, People
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The Briefing
"We must be ready for enlargement by 2030," declared Charles Michel, the President of the European Council, at the Bled Strategy Forum in Slovenia on August 28. These words were enough to kindle the debate on EU enlargement, a subject that has seen renewed interest since the start of the war in Ukraine. While there is now a consensus on the geopolitical necessity of enlarging the EU, the institutional and economic consequences of enlargement are testing the adaptability of European institutions.
MERIT-BASED • The European Commission was quick to nuance Charles Michel’s speech. "We are not focused on a date, but focused on working very closely with candidate countries to get ready for joining the European Union", said a Commission spokesperson, in response to Charles Michel's 2030 announcement.
Here, the Commission is referring to the Copenhagen criteria (1993), which are the essential conditions that states must meet if they hope to join the EU. These are based on political and economic criteria linked to democracy, the market economy and the institutional capacity of states wishing to apply.
As a reminder, there are currently eight candidates for EU-membership: Albania, Moldova, Montenegro, Northern Macedonia, Serbia, Bosnia-Herzegovina, Turkey and Ukraine. Georgia and Kosovo are potential candidates, meaning that their application must still be formally approved by Member States before negotiations can begin. The accession of candidate countries must be approved unanimously by the member states.
While the Commission remains cautious, Charles Michel's political impetus is indicative of a desire within the Council to speed up discussions on EU enlargement. During a visit to Bratislava in June, Emmanuel Macron said he was in favor of integrating the Western Balkans into the EU "as soon as possible". Similar remarks were made by German Chancellor Olaf Scholz at the European Parliament. Informal meetings of European heads of state on the subject are multiplying.
UKRAINE • Since Croatia's accession in 2013, progress on enlargement has been very limited. Between 2014 and 2019, European Commission President Jean-Claude Junker essentially made it a non-issue, citing weariness among EU citizens.
The war in Ukraine has considerably revived — and changed — the debate on EU enlargement.
European leaders now see enlargement as a geopolitical necessity to counter Russian and Chinese influence in Western Europe. Since the start of the war in Ukraine, the EU has granted candidate status to Ukraine and Moldova, not least to send a positive signal about European intentions in the region. European leaders emphasized Ukraine's significant progress in aligning itself with EU recommendations, despite the current context.
For their part, several Western Balkan countries are frustrated by the lack of progress on their applications. Albania, Montenegro and Serbia did not appreciate Charles Michel's statements, as they believe that the bloc is not doing enough to make their accession possible.
DILEMMAS • Enlargement raises a number of existential questions for European leaders. The key issue here is the EU's "absorption capacity" — a notion now commonly used in Brussels to designate the institutions' ability to welcome new members without upsetting the institutional, economic and political balance. The idea that Europe must reform before accepting new members is now omnipresent.
The ability of the European decision-making process to accommodate new member states is just one example of the challenges presented by enlargement. In a union of more than 30+ members, unanimous decisions would be even more difficult to take. Unanimity has already shown its limits, notably when Poland and Hungary opposed certain sanctions against Russia.
Several member states are favourable to a more extensive use of qualified majority voting within the Council, particularly on Common Foreign and Security Policy (CFSP) issues. While these arguments seem to be gaining ground, unanimity is still seen as an important guarantee for many states — including those in favour of greater flexibility on the subject, notes Martin Sandbu for the FT.
Enlargement could also have unprecedented consequences for the Parliament, whose seats are distributed in proportion to population. The 8 candidate countries’ accession would represent a one-third increase in the EU's population.
Economic and budgetary upheavals are also to be expected in the event of further accessions. Most candidate countries have a lower GDP per capita than Bulgaria, which already ranks last among the member states. This means that a significant proportion of cohesion funds — the EU's largest expenditure item, along with the Common Agricultural Policy — would be redirected to these new members, with the result that some net beneficiaries could become net contributors.
The same applies to the Common Agricultural Policy (CAP). Ukraine's accession to the EU could make the country the biggest recipient of CAP funds. As a result, other member states would be forced to accept less funding, unless funding is increased in absolute terms.
The entry of agricultural exporter such as Ukraine into the EU could also disrupt the internal market. Since May, five Central European member states — Bulgaria, Hungary, Poland, Romania and Slovakia — have banned certain Ukrainian agricultural exports in order to protect their domestic producers. On September 1, Ukraine threatened to take the EU to the WTO over the issue.
The challenges posed by enlargement are therefore manifold. Decisions made by Member States on these challenges will partly define what the EU will look like in ten to twenty years.
PERSPECTIVES • Previous accessions can provide an insight into the possibilities open to European leaders today. In 1999, for example, to prepare for further enlargements, member states adopted Agenda 2000 which contained major reforms of budget and agricultural policy. As the European Council on Foreign Relations (ECFR) notes, these reforms had been preceded by an impact study and proposals from the Commission two years earlier.
Further accessions are likely to take place during the period of the next Multiannual Financial Framework (MFF), which will provide for the Union's annual budget between 2028 and 2034. Additional expenditure associated with the integration process should be taken into account in its adoption, argue Piotr Buras and Engjellushe Marina of ECFR.
WHAT NEXT • European heads of state are expected to discuss enlargement at an informal meeting in Spain before the European Council taking place at the end of October. Around the same time, the Commission is due to present its annual reports on the progress of candidate countries towards EU membership. Enlargement Commissioner Olivér Várhelyi has already announced that the Commission will present “bold” proposals for the progressive integration of new states into the bloc.
Inter alia
INFLATION • Eurozone inflation stabilised at 5.3% in August, following four consecutive months of decline. Core inflation, excluding volatile and transitory items such as energy, slowed to 6.2%. In another new development, energy, hitherto the main inflationary driver, was supplanted by the food component. This uncertain situation has rekindled the debate over whether Frankfurt should continue the monetary tightening policy it has been pursuing for over a year.
Expected on September 14, the Governing Council's decision will come up against a difficult economic climate, as well as the perennial opposition between hawks, who make the fight against inflation a priority, and doves, who point out the harmful effect of monetary tightening on growth. Thus, Germany, Austria and Latvia among others, supporters of monetary orthodoxy, would support the continuation of the tightening policy.
Others, such as the governor of the Portuguese central bank, are worried about the economic slowdown, which is partly linked to a further rise in interest rates. For his part, the governor of the Banque de France has stated that the ECB is "close or very close" to the "high point" of its interest rates, implying that a pause in interest rate rises could also be plausible.
Given Christine Lagarde's evasive remarks at the Jackson Hole conference, it is a safe bet that the anticipated break with "forward guidance" — which consists of giving indications of the future direction of monetary policy — is already taking place.
TREATIES • On August 17, a group of MEPs tabled a proposal to amend the European treaties. Politico has obtained the proposal, drafted by six members of the Constitutional Affairs Committee (AFCO), which would see qualified majority voting extended to matters of taxation, defense and foreign policy; the European Commission would be renamed the European Executive; and the Parliament's prerogatives would be considerably extended. Given the content of the proposals, the text is unlikely to please the Council.
PEOPLE • Frans Timmermans, Vice-President of the European Commission in charge of the Green Deal, is leaving his post to return to the Netherlands. He will lead a coalition between the Labour Party and the Greens in the November national elections, with the aim of running for the post of Dutch Prime Minister.
The Commission's Executive Vice-President in charge of the Green Deal is now Slovakia's Maroš Šefčovič, who has experience dealing with thorny issues. As vice-president of the European Commission in charge of inter-institutional affairs and foresight, he has so far been responsible for post-Brexit negotiations, including the Northern Ireland question. He also led the restructuring of gas supplies to EU countries in response to the war in Ukraine, with the aim of ending the EU's dependence on Russian gas.
Timmermans' proposed replacement as Commissioner for Climate Action is far less popular. Wopke Hoekstra, until a few days ago Minister of Foreign Affairs, is a member of the EPP group who has opposed several climate dossiers, notably the law on nature restoration. Several political groups doubt Hoekstra's ability to lead EU climate action.
Following his meeting with Ursula Von Der Leyen last Tuesday, Hoekstra will be heard by the European Parliament. The Socialists and Democrats (S&D) group, Frans Timmermans' political family, has promised a "tough hearing". If appointed, Wopke Hoekstra will work under the supervision of Maros Sefcovic, who, in addition to his Green Deal duties, will continue to lead the EU's inter-institutional relations and foresight.
With Fiona Scott Morton relinquishing the post of chief economist at DG Competition under the pressure from several European Commissioners and certain member states, including France, Margrethe Vestager is looking for a replacement. Austrian Florian Ederer, a newly naturalized American (yet another one!), seems to be the favorite.
After 10 years teaching at Yale, the Austrian-American joined Boston University this year. To date, Florian Ederer is the only economist to have publicly announced that he had been approached by DG Competition for the position of Chief Economist.
On September 5, Iliana Ivanova will appear before the European Parliament to confirm her appointment as European Commissioner for Research, Innovation, Culture, Education and Youth. Ivanova, who has held a post at the European Court of Auditors since 2013, is due to fill the empty chair of Mariya Gabriel, the former Bulgarian Commissioner who has since become Deputy Prime Minister.
On Wednesday, activity resumes at the Berlaymont with the College of Commissioners' back-to-school meeting.
What we’ve been reading
To understand why spending the 191.5 billion euros from NextGenerationEU is a challenge for the Italian government, read Amy Kazmin's article in the Financial Times.
This edition was prepared by Marwan Ben Moussa, Kimia Vaye, Maxence de La Rochère, and Augustin Bourleaud.