The Reform of the European Union
How to square the Circle!

My latest article, written on the morrow of the British Referendum, insisted on the need to distinguish between negotiations of a consensual “divorce” and those concerning the inescapable reform of a 27 Member Union. I also postulated that we face a binary choice between an architecture built from bottom up, privileging the national sovereignty of Member States within an intergovernmental management structure (Confederalism), or built from top down, providing a clear hierarchy among levels of power by transferring major elements of national sovereignty to a supranational Authority, in accordance with the principles of subsidiarity (Federalism). The current state of affairs, in which the center of power resides within the European Council sandwiched between the Member States and the supranational bodies of the Union, has clearly outlived its effectiveness.
Several eminent voices, among which Baron Bernard Snoy in the Libre Belgique and George Soros in his testimony to the European Parliament, have made excellent suggestions concerning practical reforms needed to surmount the current impasse and reconcile the citizen with the EU. Similarly, senior politicians of different persuasions including President Hollande, Chancellor Merkel, Prime Minister Renzi, and Nicolas Sarkozy, among many others, are unanimously – though often without specifying further details - calling for a “Refoundation” of the EU.
I firmly believe that reforms - whatever their purpose – will not prove successful unless they are accompanied by a clarification/modification of the institutional architecture within which they are supposed to operate. Failing to do so will prolong the myth that the exercise of independent “national sovereignties” is compatible with a fully democratic Union. It will lead, sooner or later, to its disintegration for which “Brexit” could turn out to be a powerful accelerator.
Indeed, over time, in the name of pragmatism (not to say expediency), a succession of compromises, derogations, exonerations and side agreements, as well as a sometimes  blatantly partisan enforcement of the “acquis communautaire”, have led to the paralysis of the Union. That has spread the image of an elitist and technocratic Union, reinforcing the citizen’s feelings of incomprehension, injustice and lack of democratic accountability. This situation is largely responsible for delivering the Brexit vote, the Referendum campaign having left the field wide open to those who preach shamelessly their poisonous “nationalist” credo.
The numerous voices who recommend today dissociating the discussion of institutional reforms from dealing with specific practical urgent matters are, under the guise of a “false pragmatism”, simply looking for an alibi to duck inevitable hard choices. They are delaying if not abetting the inevitable decomposition of the Union which is bound to occur when, once again, Europeans will feel they have been misled. Insofar as a clear objective is defined in a “political agreement” the citizen is perfectly able to understand that an in depth reform of the Treaties needs a lengthy preparation as well as sufficient time for its implementation. In the interval, the urgent matters must be dealt with in coherence with the structural objectives defined in the political accord.
An approach, already sketched by the Thomas More Institute in July 2012, would envisage establishing a Confederation of Member States, the “European Union (E.U.)”, within which a new Federal State, the “European Community, (E.C.)” would be the central pillar. This structure might reconcile the diverging and largely incompatible visions prevailing currently among Member States.
The structure of the E.C. would seek inspiration from the Swiss – Belgian – German and American federal models, providing for a significant devolution of competencies to the lower levels of executive and legislative power. In principle, members of the EMU, who have already pooled their monetary sovereignty, should participate from the outset, as their decision seems difficult to reverse without risking the implosion of the Euro and the E.U. itself. The entire body of the “acquis communautaire” would be applicable to all its Members without any derogations whatsoever. However, a careful review of competencies should be undertaken in order to limit strictly those to be exercised at federal level while restoring the remainder to the lower levels of power.
The Federal Government would administer its own budget, financed by own resources which, in turn, would underpin an autonomous debt issuance capability (see proposals by George Soros). It would also act as the privileged interlocutor of the ECB, correcting thereby one of the major flaws in the current institutional architecture.
The Government would be accountable to a Federal Parliament, elected by universal suffrage according to a common “electoral code”. The option of instituting a second Chamber, representing Member States on the German (Bundesrat) or American (Senate) models in replacement for the European Council, should be carefully considered. A choice should also be made between a “presidential” regime such as in France and a “parliamentary” regime such as in Germany, for designating the head of State and/or its Chief Executive.
The E.U. would be a Confederation of independent Member States (including the E.C.), governed by the terms of a new “simplified” international Treaty. Admission of new Members would no longer require the laborious negotiation of the 35 chapters of the “acquis” but would be essentially a political decision. Reflecting the preponderance of Federation in this setup, the operating budget of the E.U., which should be limited in size, would be entirely paid for by the E.C.
Most of the provisions of the TEU, as well as the policies, Directives and Regulations that constitute at present the 35 chapters of the “acquis” would be transferred to the E.C. either within a new “Constitutional Treaty” or directly to the legislation governing the new Federal State.
Members of the E.U. would have the option to adhere selectively to the chapters of their choice (or parts thereof), on the model of the Banking Union whose membership is compulsory for EMU members but open to other Member States. Joining would necessarily require adopting and respecting all the rules concerned without any restriction, as well as providing a commensurate budgetary contribution. This would allow, for instance, joining the single market (implying the adherence to the four freedoms etc.), the CAP, the Community Research Program or a future common immigration or defense policy, etc. Joining a specific program would carry the right to participate in deliberations on the subject with a consultative voice; E.U. Members would, on the other hand, have the privilege to withdraw from any program, given a suitable notice.
Members of the E.U. could solicit at any time their admission to the E.C. insofar as they are ready – and capable – of abiding by all its rules (including membership of EMU). Such an adhesion would be ratified by the appropriate legislative organs of the E.C. but would avoid the current protracted negotiations, considering that no exemptions or derogations would be tolerated. “Transition” mechanisms would be replaced by adopting progressively E.C. policies (corresponding to today’s “chapters”), as described above, on a timescale and in an order that would suit the applicant. Adopting such a framework could, incidentally, provide an elegant way out of the current conundrum created by Brexit by offering the United Kingdom continued membership of the reformed E.U. while withdrawing from the E.C. Controversies surrounding Turkish membership might also be overcome.
Whatever the appeal of such an approach, one should not underestimate delicate questions that several Members will have to confront, for instance in matters of foreign policy or defense : would France, for example, be prepared to transfer its seat on the Security Council to the E.C. or share decisions concerning the use of its nuclear armament? If there is no political will to deal squarely with these highly sensitive matters by elaborating solutions that would preserve the legitimate aspirations of the partners, it would simply be a waste of time to engage in negotiations that could only deliver a reformed Union on the cheap.
Better then to face as soon as possible the dismantlement of the EU, in the full knowledge that the economic, financial, social and political consequences will be infinitely more painful than those that the United Kingdom must now confront.   
Brussels 3rd July 2016
Paul N. Goldschmidt
Director, European Commission (ret.); Member of the Steering Committee of the Thomas More Institute.