David Miliband

This article first appeared in the Financial Times

As European leaders gather once again in Brussels to discuss the eurozone crisis, a shift to an anti austerity stance is urgently required. Yet whatever the fate of the single currency, the current crisis is set to transform the European Union. If the euro is kept intact, it will be because of a shift to more federal structures within the eurozone. If it fractures, there will need to be a serious redesign, in a federal direction, if what’s left of the euro is to be saved.

In either case, we will need new thinking about the way the European Union works.

For fifty years the European Economic Community, and then the EU, have steered by the star of ‘ever closer union’. By any historical standard, it has been a dramatically successful navigation. The idea of a Europe whole and free has actually happened. What is more, Europe is more integrated and in many areas interdependent, than ever before.

But the political and institutional ambiguity inherent in ever closer union has been exposed by the idea of a “two-speed” Europe. The fiction was that opt outs, transitional arrangements and other legal innovations recognised different speeds of travel but not different destinations. That metaphor must now be given a decent burial. The question is what is the alternative to a two-speed vision?

One answer is to say that the future is a ‘two-tier’ Europe. Joschka Fischer, former German Foreign Minister, describes a vanguard Euro group and a rearguard of the rest. David Owen, one of my predecessors as UK Foreign Secretary, argues for a top tier of countries who merge their governance arrangements into a “single government”. A second tier, including Norway and Turkey, would embrace a “restructured single market”, along with a set of norms associated with social and environmental policy.

The Owen plan founders on a number of points. One is practical: I don’t see other countries embracing this vision. A second is more substantive: requiring countries to chose between a minimalist European Economic Area and a fully integrated European Union is a recipe for decline not renewal. It would simply deepen the divide between the euro ins and outs.

Instead the diversity of the EU’s membership, and the breadth of areas of policy cooperation, require flexibility not rigidity.

There is an alternative to two-speed and two-tier. In 1994 two parliamentary leaders of Germany’s conservative Christian Democratic Union, Wolfgang Schäuble (now Finance Minister) and Karl Lamers, produced a paper that reiterated the traditional German commitment to a federal state structure, but also embraced ‘elasticity and flexibility’.

“Those countries which are willing and in a position to go further than others in their cooperation and integration should not be blocked by the vetoes of other Members” they wrote.

In English, or at least diplomatic English, we call this “variable geometry”. In the European Treaties it is called enhanced cooperation. In plain English, it is the idea that the EU is a club of clubs.

It means that the European Union has a group of founding rules – from the single market, which is decided by qualified majority voting, to foreign policy cooperation, where each nation has a veto. On that foundation, further integration is possible – on currency, on defence, on migration and the like.

There are two major objections to this vision. One is that the euro is such a big exercise that its members will inevitably overrun the rest of the EU. But this is to forget that on issues such as the single market, the most important member of the eurozone, Germany, may have more in common with countries like Britain or Poland than with euro members such as Italy or even France.

A club of clubs solution accepts that membership of the euro, or a eurozone hard core, is not the end game for all EU members. But it avoids imposing second-class status on those countries outside the euro, which is not in the interest either of the eurozone or the wider EU.

But the second objection is that a club of clubs does not resolve the democratic deficit. That is true, but is an argument for developing more transparent political structures – whether formalising the role of national parliamentarians or directly electing the President of the Commission – rather than ditching the idea.

Time is now of the essence in this debate for Britain, but also for countries like Sweden, Denmark and Poland.

The key for my own country, and our interests in the development of the EU, is to ensure that being out of the euro does not become a prelude to being out of influence in Europe, and then out of the European Union altogether.

Unfortunately that is now a serious danger.

David Cameron’s botched ‘veto’ of the Fiscal Pact last December, botched because the Fiscal Pact went ahead anyway, weakened Britain and weakened Europe. His plan to opt out of Justice and Home Affairs agreements, announced earlier this week, adds further distance.

The stance Mr Cameron is expected today and tomorrow at the European Council, to privilege the repatriation of powers above all other issues, is dramatically to miss the point. It is vital that we learn the right lesson: the debate about the redesign of the European Union must be conducted on broader terms than the Prime Minister’s need to appease eurosceptics (and europhobes) in his own party.

The current UK Government is chronically weakened by its inability to empathise with any vision of the European project recognisable on the continent. That cannot stop the rest of us. If we cannot make a flexible EU work then we end up locking ourselves out of Europe altogether. So we need to argue for it with vigour and urgency.