POLICY BRIEF SUMMARY

WHAT IS POLITICAL UNION?

Sebastian Dullien and Jos Ignacio Torreblanca

Much discussion about political union has been framed as a simple choice between two options: federalism or intergovernmentalism. In fact, the choice facing Europe is much more complicated. European leaders must decide how far to go in creating a genuine economic federation involving debt mutualisation, how much policy space to create at the European level, and whether to legitimise political union through national governments and parliaments or through developing existing EU institutions such as the European Parliament or creating new EU institutions. However, some combinations of answers to these three questions might prove unsustainable and lead to new crises in the future. In particular, a very ambitious economic federation combined with a rules-based approach to policymaking and indirect legitimacy, as proposed by some in Germany, will likely be unsustainable. Equally, it would be risky to introduce more political competition in a limited economic federation working on very narrow rules, which might lead to political and social unrest and instability at the national level. Nor can the German model of constitutional democracy simply be exported to the whole of the EU. The wrong approach to political union could lead to a failure to stabilise and legitimise monetary union or a split at the core of the eurozone. Thus an attempt to overcome the crisis could push the EU off a political cliff.

For much of the history of European integration, the final goal of political union the famous finalit politique was seen as a distant one. Even when attempts were made to define it for example, in the European Convention and the Constitutional Treaty they failed completely. But the euro crisis has led to a massive transfer of power to the EU level and made political union a real possibility. Political initiatives by European Council President Herman Van Rompuy and German Foreign Minister Guido Westerwelle, together with the rulings of the German Constitutional Court and European Commission President Jos Manuel Barrosos recent call for a federation of nation states have kicked off a new debate about political union. But while many proEuropeans now agree that political union is necessary to save the euro, they often have in mind very different things. In particular, European leaders must make three choices about what type of political union they want. The first choice is between a limited economic federation aimed at stabilising the euro and a full economic federation taking on traditional nation-state tasks such as taxation, social welfare, and redistribution. The second choice is between a rules-based federation with a very small margin for policy innovation and flexibility and one with ample discretionary powers and policy instruments. The third choice is between a political system that relies on indirect legitimacy and is governed mostly through intergovernmental mechanisms and one that draws on direct legitimacy instruments and confers ample executive authority to supranational institutions such as the European Commission.

A failure to adequately balance these three dimensions could create havoc in Europe. In particular, a very ambitious economic federation with only a rules-based approach and either direct or indirect legitimacy will be unsustainable. It is already clear that bold moves towards political union will create a three-tier Europe consisting of a highly integrated political core, a second tier including those who want to join the first group but cannot, and a third tier comprising those who do not want to join the core. While the EU can and may have to live with such a three-tier Europe, it cannot live with a split core or a failure to stabilise and legitimise monetary union. There is a danger that, in creating political union in order to overcome an existential crisis, the EU could paradoxically create another existential crisis and push the EU off a political cliff.

WHAT IS POLITICAL UNION?

for Spain and Italy.1 The Deauville agreement between French President Nicolas Sarkozy and German Chancellor Angela Merkel unilaterally changed the terms of the Greek bailout, sidelining European institutions and creating havoc in Europe and beyond. There is still more to come: the EU is currently discussing plans for economic, fiscal, and banking union. Firstly, the European Council is discussing what is euphemistically called an integrated financial framework euro-jargon for a banking union which means that the EU will be able to directly supervise, sanction, intervene, recapitalise, bail out, or close national banks and, at the same time, guarantee the deposits of savers across all of the eurozone. Secondly, the European Council is also discussing an integrated budgetary framework, which, if adopted, would mean that the EU would become a fiscal union that would be able to coordinate national taxation and, most likely, levy European taxes or establish redistribution or compensation mechanisms among different member states. Thirdly, there is discussion of an integrated economic policy framework, which would effectively mean an economic union in which key macroeconomic policies (labour market, pensions, unemployment) would be jointly adopted, harmonised, and supervised. Should these proposals be adopted, the EU would have taken a giant step towards completing its economic integration: the EU would not only have a common currency but also a common financial, fiscal, and economic framework and, equally importantly, institutions with the right amount of authority for making this economic union work properly. For supporters of European integration, this would obviously be progress. But despite this massive shift of power to the EU level, the EUs political and democratic structures have remained almost completely unchanged. Worries have emerged that the existing legitimacy of the EU would be too thin to support such a massive transfer of power, especially as these go deeply into the bone of political representation and legitimacy. Ever since the dawn of the modern state, conflicts about taxation and representation have been central to political life. The fear now is that European leaders might end up sitting at the top of an economic federation without the political structures that would democratically legitimise it. These difficult issues are the background to the proposals brought forward in June 2012 by Van Rompuys paper, in September by a group of foreign ministers at the initiative of Westerwelle, and in November with the European Commissions blueprint for a deep and genuine economic and monetary union. Whereas the Van Rompuy paper recognises that decisions on national budgets are at the

Integration and legitimacy

Since the onset of the euro crisis, we have witnessed a massive transfer of powers to the EU level: the European Semester (2010) gave the European Commission an exante capacity to monitor and eventually veto national budgets before they are approved by national parliaments; the Euro Plus Pact (2011) established new commitments for community supervision of key national policies such as labour markets, pensions, and taxation; the Six-Pack (2011) strengthened both the preventive and corrective arm of Commission and Eurogroup powers to monitor fiscal deficits and macroeconomic imbalances in member states; the Two-Pack (2012) further strengthened the European Commissions capacity to monitor national budgets; and finally the Treaty on Stability, Coordination and Governance in the Economic and Monetary Union (2012), the so-called fiscal compact, a treaty of intergovernmental nature which has not been approved by the European Parliament, obliged member states to change their national constitutions to introduce debt-brake provisions and, in parallel, accept monitoring and sanctions by the European Court of Justice (ECJ) should they fail to comply with the new provisions. The shift does not stop there: access to support from the eurozones rescue mechanisms, the European Financial Stability Facility (EFSF) and its successor, the European Stability Mechanism (ESM), also include severe macroeconomic conditionality programmes, jointly implemented by the so-called troika of the European Commission, the European Central Bank (ECB), and the International Monetary Fund (IMF). These programmes cut to the bone of extremely sensitive national issues such as pensions, the labour market, taxation, and welfare provisions. On top of this visible conditionality, there is also a great degree of invisible or implicit governance. The letters sent by then ECB President Jean-Claude Trichet to Spanish Prime Minister Jos Luis Rodrguez Zapatero in 2011 and to Italian Prime Minister Silvio Berlusconi in 2010, asking them to reform pension laws or labour markets, revealed the extent to which the ECB was acting as a shadow government

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1 The letter was leaked and has been translated into English. See Trichet e Draghi: unazione pressante per ristabilire la fiducia degli investitori, Corriere della Sera, 29 September 2011, available at http://www.corriere.it/economia/11_settembre_29/ trichet_draghi_inglese_304a5f1e-ea59-11e0-ae06-4da866778017.shtml. The ECB not only suggested the measures to be adopted but also recommended their adoption by decree, i.e. without going through national parliaments.

heart of Europes parliamentary democracies and therefore acknowledges that moving towards more integrated fiscal and economic decision-making between countries will therefore require strong mechanisms for legitimate and accountable joint decision-making, the Westerwelle group specifically calls for a streamlined and efficient system for the separation of powers in Europe which has full democratic legitimacy.2 The Commission is even more specific: The European Parliament that primarily needs to ensure democratic accountability for any decisions taken at EU level.3

exercised the third dimension concerns the procedures and roadmap that would eventually lead the EU to political union.

Dimension 1: Limited versus full economic federalism There are two visions of which powers to attribute to the EU level: a minimalist vision and a great leap vision. In the minimalist vision, member states would only transfer to the EU level those powers that are strictly necessary to end the crisis and prevent a breakup of the currency union. This would include the existing powers to regulate the single market, the recently agreed transfer of fiscal policy supervision as embodied in the fiscal compact, the Six-Pack and Two-Pack, and a limited banking union, including the common financial oversight by the ECB (but not necessarily a common bank resolution regime or Eurobonds, as proposed by the European Commission, since this would entail fiscal transfers from one member state to the other). The assumption behind this approach is that the euro crisis was largely created by debtor countries, who therefore have to adopt and enforce the right reforms. The EU would need powers to police the adoption of these reforms by member states and thus ensure that agreements on debt, deficits, and macroeconomic imbalances are correctly enforced. Germans like to quote Lenin: Trust is good, control is better. Others, however, argue that the euro crisis originated in the incomplete and defective design of monetary union. They argue that what is now needed is a great leap towards economic federalism that would complete monetary union by creating a full banking, fiscal, and economic union and set up new, strengthened, and centralised governance structures. This approach is based on the theory of fiscal federalism and follows the basic idea that all policy decisions that have a potential significant positive or negative external effect on other countries should be transferred to the EU level. Those in favour of a great leap would thus think from scratch which economic policy powers could be more efficiently transferred to the central level and would allow for endogenous mechanisms for the central government to pull certain competencies to the centre should the need arise. In the beginning, this would of course mean a real banking union comprising a unified regulatory, oversight, and resolution mechanism for all European banks and a stronger macroeconomic stabilisation policy through the EU level, either through Eurobonds in whatever guise (for example, a redemption fund), project bonds, or shock absorption funds levied through contributions from member states. Later on, this might entail moves towards more ambitious proposals such as European unemployment insurance, poverty eradication programmes, common labour market regulations, or massive infrastructure investment funds. This would only be viable if the EU were also given the power to levy some taxes, for example a European corporate tax or its own VAT surcharge. With a larger budget of 45 percent

Three dimensions of political union

It is of utmost importance that political union is sustainable that is, that it is set up in such a way that it does not lead inexorably to further economic and political crises in the future. Without the transfer of key regulatory and fiscal powers to the EU level, the crisis will continue and could destroy the eurozone and potentially even the EU as we know it. Yet, as crucial as it is, the EU is in unchartered waters in its attempts to complement the emerging economic federation with an adequate political structure. Historically, democracy has existed only at the city and nation-state level, and there are no historical precedents of how to build a supranational democracy. Unlike proposals on fiscal or banking union, which are based on a clear set of assumptions about how a monetary and economic union should work and which institutions, competencies, and level of authority are needed to make it work, there is no existing model for political union that would fit the EUs idiosyncrasies. Were it a simple choice between federalism or intergovernmentalism, things would be relatively easy. In fact, the choice facing Europe is much more complicated. European leaders must decide how far to go in terms of creating a genuine economic federation involving debt mutualisation, how much policy space to create at the European level, and whether to legitimise political union through national governments and parliaments or through developing existing EU institutions such as the European Parliament or creating new EU institutions. In other words, there are three distinct dimensions of political union: limited versus full economic federalism; rules versus discretion; and direct versus indirect legitimation. While the first two dimensions concern the substance of an economic and political union that is, which powers are attributed to which level of government and to which degree they can be

2 Foreign Ministers Group on the Future of Europe: Chairmans Statement for an Interim Report, 15 June 2012, available at http://www.auswaertiges-amt.de/EN/ Europa/Aktuell/120620_Zwischenbericht_Zukunftsgruppe.html?nn=479786; Towards a genuine economic and monetary union, Report by President of the European Council Herman Van Rompuy, Brussels, 26 June 2012, available at http:// ec.europa.eu/economy_finance/focuson/crisis/documents/131201_en.pdf. 3 European Commission, A blueprint for a deep and genuine economic and monetary union:Launching a European Debate, Brussels, 30 November 2012, available at http://ec.europa.eu/commission_2010-2014/president/news/archives/2012/11/pdf/ blueprint_en.pdf.

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of GDP, the EU would effectively become a transfer union in practice, an economic federation with the resources to make a real impact on the business cycle or in certain structural areas, and some type of joint and federal debt. Of the recent contributions to the debate about political union, Barrosos remarks and the European Commissions blueprint go the furthest towards economic federalism, even if not all of the details are spelled out. Barroso called not only for a banking and fiscal union, but also for much closer coordination of national economic policies, a credible community fiscal capacity (which could mean taxation power) and genuine mutualisation of debt redemption and debt issuance.4 Moreover, he demanded that the EU set economic policy priorities, for example in making Europe less dependent on energy imports. Many of these elements have been further specified in the Commissions blueprint, which would go a long way into turning the eurozone into a true economic federation. The Westerwelle group, on the other hand, is more minimalist. While it envisions a European army in the long run, it is less federalist in economic terms. The paper produced by the group talks about the importance of developing and adopting a legal framework for the restructuring and orderly winding-up of ailing banks, but does not go further, and does not explicitly ask for common funds or even common oversight of banks. When it comes to additional economic powers, the Westerwelle group is not going much beyond making the Euro Plus Pact binding. Bundesbank President Jens Weidmann has not produced a vision as such but his remarks on this issue suggest that he is even more minimalist. He is, in principle, in favour of common banking supervision but opposes European action to resolve legacy problems in the banking sector and is a staunch opponent of Eurobonds. Both visions have dangers. The minimalist approach creates greater danger of economic and institutional instability. Settling for what is perceived to be the absolute minimum to stabilise the eurozone now might, as in the past, prove to be too little. If this were the case, the economic crisis might once again become acute and create renewed economic upheaval and lead to a new recession, a break-up of the euro, and political instability at the national level. Full economic federalism, on the other hand, would mean the transfer of more powers to the EU level and therefore make political questions more pressing, both for reasons of legitimacy and to fulfil the German Constitutional Courts demand on the need to match transfers of powers with adequate democratic accountability mechanisms. A great leap might lead to an improvement in economic performance: if it were designed well, a centrally defined

economic policy could boost economic growth and help deepen the single market, which in turn would increase the EUs legitimacy. It would also offer strong incentives to move on to a truly common external and defence policy, which would give the EU much more leverage in the global arena. However, if it were badly designed, full economic federalism could worsen overall economic performance for example, if it turns out later that while powers have been transferred, they cannot be employed effectively to meet economic needs. Legitimacy will also be crucial to prevent a permanent paralysis of European policies and a deep political crisis as powers are taken away from national governments.

Dimension 2: Rules versus discretion Closely related to the question of which powers are attributed to the European level is the question of how much discretion political institutions, whether governments or parliaments, have to approve new policies or change existing ones. At one end of the spectrum are those who envision a Europe in which the centre sets some binding rules (as in the fiscal compact) that prevent national and sub-national governments from adopting certain policies. This rule-setting might be far-reaching and touch upon central elements of sovereignty such as the power to decide on a public budget. This approach can also be seen as an extension of the Maastricht vision of macroeconomic policymaking, which limited the ECBs objective to price stability and tried through the Stability and Growth Pact (SGP) to curtail activist national fiscal policies. This is what many Germans such as Merkel have in mind when they link the fiscal compact to the idea of Wirtschaftsregierung, or economic government. At the other end of the spectrum are those who believe that a political union needs a government that is able to take discretionary decisions on economic policy issues. They argue that reality is too complex to be catered to by simple rules and that a real European government must therefore have the discretionary power traditionally enjoyed by national governments. Those in favour of rulesbased policymaking see rules as public goods that benefit all members by guaranteeing stable and sound finances. To those in favour of discretion, however, the rules embodied in the Euro Plus Pact, the fiscal compact, and the debt brakes are not neutral but ideologically biased: they reflect a set of economic doctrines (ordoliberalism or monetarism, as opposed to Keynesianism), which heavily penalise some policies at the expense of others. The result is a yoke that limits the role of the public sector and prevents it from playing an active role in economic growth. As in the first dimension of political union, the Barroso proposals are at one end of the spectrum while Weidmann is at the other, with the proposals of the Westerwelle group somewhere in between. Barroso wants EU institutions to be able to set certain policy priorities and his call for a bigger

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4 Jos Manuel Duro Barroso, State of the Union 2012 Address, Plenary session of the European Parliament, Strasbourg, 12 September 2012, available at http://europa.eu/ rapid/press-release_SPEECH-12-596_en.htm.

budget is supposed to provide the means for it. However, his remarks on the coordination of national economic policies through the Six-Pack still show that he does not want institutions that have as much discretion as US ones. The Westerwelle group proposes giving existing rulesbased coordination mechanisms such as the Euro Plus Pact more teeth. Weidmann always insists on existing rules and underlines that the German constitution prohibits further transfer of powers to the European level. One example of this debate about rules versus discretion is the current debate between austerity and growth. What happens when the rules fail to promote growth, or even make it harder, as is currently the case? Should the rules be changed? Or should alternative policies be discussed? With the current configuration of the debate, the answer to both questions is no: while the austerity targets are considered untouchable, no growth policies are approved to complement for the lack of growth. How this austerity trap is working at present provides the best warning for the future. Does it make sense to further lock and constitutionalise this very rigid system or should the discussions on economic union include a debate on discretion, i.e. when and how existing rules can be relaxed or alternative policies applied. Imagine a scenario in which elections were held for the position of European Commission President in 2014, as Barroso and the G11/G9 propose. If the Socialists won the election and the European Parliament named Martin Schulz as Commission President, how much discretion would he have? Would he be able to promote growth using the EU budget? Would he be able to propose a pan-European employment insurance programme, a new infrastructure or research and development policy, or a poverty eradication policy? In reality, without the power to raise taxes and with a tiny budget at 1 percent of GDP, there would be little he could do. In fact, at present, it is the ECB rather than the Commission that has the power to approve stimulus packages and take growth- and jobs-oriented measures. However, unlike the Federal Reserve, whose mandate includes jobs and growth, the mandate of the ECB prevents it from being responsive to demands for jobs and growth policies. Thus increasing the powers and raising the political profile of the European Commission and the European Parliament without also endowing them with the instruments to agree policies that respond to citizens demands would aggravate rather than alleviate disaffection. The EU could be an economic federation without a real government because the European Commission would still be more of an implementing agency than a political actor. Another example of tension between the rules-based approach and the discretion-based approach, and its constitutional implications, is the debate about the ECBs Outright Monetary Transactions (OMT) programme. Many in Europe support the attempt by ECB President Mario Draghi to introduce flexibility and discretion to the system in order to preserve it. However, the Bundesbank sees it as a threat to the system and a breach of the rules, and

Weidmann voted against it in the ECB board. The German Parliament and Constitutional Court may also object to this move. Thus the OMT has triggered a debate about rules and discretion of profound political, democratic, and legitimacy implications. This is a debate about economic policy rather than federalism. The US federal system confers de facto independent institutions such as the Federal Reserve, representative institutions such as Congress, and executive institutions such as the Presidency, wide and discretionary powers. Some of them have to be exercised in agreement, such as the Troubled Asset Relief Program (TARP), but the Fed can approve three rounds of quantitative easing at its discretion. The German federal model, in contrast, is formally more on the rules side, and seeks to limit discretion. For obvious reasons, given the power of Germany, any move towards political integration in Europe is more likely to import German rather than US institutions, which means that some EU institutions will be legally prevented from being responsive to citizens preferences. But although the strict rules-based approach is favoured in the economic academic literature, it has not yet been proven in reality. In fact, attempts to implement strict rules such as the Argentine currency board, the SGP, or the no bailout clause of the Maastricht Treaty have failed. The German constitutions own debt brake has only been in place since 2009 much too short a period to judge its long-term stability.

Dimension 3: Direct versus indirect legitimacy The various proposals for political union currently on the table have one thing in common: the belief that current plans under discussion to complete monetary union with a fiscal, banking, or economic union imply such a massive transfer of sovereignty from the national capitals to the European institutions that they make strengthening the legitimacy of the EU upon European citizens unavoidable. But this is the only point in agreement. In fact, there are two opposing visions about how to do this: a minimalistintergovernmentalist one and a maximalist-federalist one. The minimalist-intergovernmentalists believe that member states are the ultimate repositories of legitimacy and democracy, and that the transfer of sovereignty implied by political union would require a parallel upgrading and strengthening of the presence of member states in the EU decision-making process. This translates into a preference for mechanisms such as the fiscal compact or the ESM that fall outside the treaties, for unanimity (except to prevent debtors breaking the rules or failing to fulfil their austerity commitments), for European Council summitry, and for keeping the European Commission and the European Parliament at arms length when it comes to setting the direction and policies to move the EU forward. This does not necessarily mean abolishing the community method, but it does mean at least maintaining and perhaps enhancing or formalising the current division of labour, in which the

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Commission, the Parliament, and the ECJ are left to deal with the day-to-day policies, while the European Council acts as the true government of the EU. The maximalist-federalists, on the other hand, want to strengthen the policy capacity and democratic legitimacy of existing European institutions, especially the European Parliament and the European Commission. Their proposals usually revolve around the election of the European Commission President in the 2014 European elections. They propose streamlining the Commission by reducing the number of members and by dividing them into senior and junior Commissioners, and allowing the Commission President to freely pick the Commissioners and thus introduce a more partisan bias in its proposals so as to please the parties supporting him/her in the European Parliament. In short, they aim to replicate at the EU level the national system of government and opposition, left and right, incumbent and challenger. If these measures came together with new powers for the European Parliament in particular to raise new taxes, increase the size of the EU budget, or approve new expenditure programmes the EU would take a giant step towards the creation of a true political union. Under the Van Rompuy proposals, which are based on the minimalist-intergovernmentalist vision, the three building blocks (fiscal, banking, and economic union) would lead to a de facto economic federation which would be governed from a reinforced Eurogroup, acting as the Cabinet of the eurozone. This Eurogroup would rely on the authority provided by a reduced version of the European Council, the Euro Council (where heads of state and chiefs of government of the 17 eurozone countries would gather) and, as said, on the implementation capacity of regular EU institutions. In parallel to this, some such as German Finance Minister Wolfgang Schuble have proposed that a Commissioner act as super-economic tsar with powers of oversight of fiscal, banking, and macroeconomic policies equivalent to those that the current Competition Commissioner enjoys. Many of the other recent contributions to the debate, including those by Barroso and the Westerwelle group, are closer to the maximalist-federalist vision. The advantage of the minimalist-intergovernmentalist approach is that though there would be a core (made of the 17 eurozone countries) and a periphery (made of pre-ins and opt-outs), the EU would at least preserve a common institutional framework in the form of a common European Commission and European Parliament. The disadvantage is that it would create a further legitimacy problem: MEPs from countries outside the eurozone could vote in arrangements for eurozone countries and MEPs from eurozone countries could impose legislation on countries outside the eurozone. Were this arrangement to be mismanaged, it could create major tensions and lead to the definitive splitting into two of the EU: not a two-speed Europe but two Europes.

A related problem with this type of institutional set-up is that its democratic legitimacy would be mostly indirect because it relies on the legitimacy provided by national governments acting through intergovernmental institutions. Those who support this view are not willing to beef up the European Parliament with new powers, but also recognise that the set of measures adopted to overcome the euro crisis have exacted a high toll on national parliaments. Thus they regularly toy with the idea of setting up a third chamber made up of members of national parliaments, which would play a role in legislation on sovereignty-sensitive issues such as taxation. Such a chamber could grow out of the current Conference of Community and European Affairs Committees of Parliaments of the European Union (COSAC) and also include national parliaments budgetary affairs committees. Needless to say, the European Parliament considers this move a casus belli and will fiercely oppose it, preferring to consider ways of more closely involving national parliaments which would not diminish its power or undermine its legitimacy and capacity as the only EU institution in which its members are directly elected by citizens. The minimalist-intergovernmentalist approach might also perpetuate the current opaque and unaccountable way of managing the euro and could therefore further erode the EUs legitimacy. The idea of a third chamber made of national parliamentarians is also problematic. The French and Spanish parliaments have never wanted to have an active European role and are unlikely to treat the new chamber as a place for real debate and policymaking. In contrast, Germanys parliament would likely take parliamentary control of EU affairs very seriously and might use the new chamber to exert substantial influence over, and even block, EU policies. In short, the minimalist-intergovernmentalist approach would not really solve existing problems. If it were adopted in conjunction with a strict rules-based economic union with very few discretionary powers in short, the German vision of political union it might actually exacerbate existing tensions and problems. On the other hand, the maximalist-federalist approach would require clear and solid backing from member states, whether through national parliaments or referendums. Some constitutional courts are also likely to object to it unless national constitutions are adapted, which again would require a lengthy, costly, and risky consultation procedure which might well fail. In the last decade, citizens in various countries rejected a European Constitution despite the decent economic performance of the euro area. Thus, while the maximalist-federalist approach may be desirable, European leaders should first clearly establish how ratification would proceed and what would happen if some member states rejected it. The question of sequencing will be crucial.

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A sustainable political union

In each of the three dimensions of political union, European leaders face difficult choices. In each case, there are two extreme positions: in the first dimension, limited and full economic federalism; in the second dimension, an approach to policymaking based on the enforcement of rules and an approach based on the creation of space for discretionary policymaking at the EU level; and, in the third dimension, indirect legitimacy through member-state governments and parliaments and direct legitimacy through a reform of the EU institutions. The three dimensions are illustrated in Figure 1.

other hand, if such an economic federation based on a rulesbased system were combined with direct legitimation for example, through the election of the European Commission President citizens might revolt when they discovered that the EU government they elected had no real powers to introduce new policies or change the rules. In other words, thinking about the three dimensions of political union shows that the stereotypical German vision as represented, for example, by Bundesbank President Jens Weidmann will not work. Because it is a rules-based system with very little policy space and room for innovative policymaking, it will be inefficient and unable to adapt to a changing environment. At the same time, the idea of simply exporting the German model of constitutional democracy to the whole of the EU is so demanding (and potentially incompatible with other member states understanding of democracy) that it will be all but impossible for the EU to accept it. In other words, the German vision might push the EU off a political cliff. One must wonder whether all members of the German elite who have this version of political union in mind are really sincere or whether their demands are just a way of derailing European integration.

Three dimensions of political union

Dimension 1 Model 1 Limited economic federalism Full economic federalism Dimension 2 Rules-based Dimension 3 Indirectly legitimised

Figure 1

Model 2

Discretionary

Directly legitimised

A model based on limited economic federalism, a rulesbased approach to policymaking, and indirect legitimisation through member-state governments and parliaments (Model 1) would represent the point of minimum departure from the existing status quo. The most ambitious approach, on the other hand, would be to create a full-fledged economic federation, ample powers for discretionary policymaking, and direct legitimisation through reformed EU institutions (Model 2). This would be an economic federation that would also be a full-fledged political union, with something very much like a European government and a parliamentary democracy with two chambers, the European Parliament and the Council of Ministers. Of course, there could also be combinations of other choices in each of the three dimensions. However, it is not a matter of picking and choosing freely from the three different options: some combinations are unsustainable and could lead to new political and economic crises. In particular, an economic federation based on a rules-based system and relying on mostly indirect legitimation strategies would likely be unsustainable. It would likely come under pressure from two sides. First, the rules might prove as inadequate for dealing with economic needs in the future and lead to a new economic crisis. Second, this approach would likely suffer from a lack of direct legitimacy, causing political upheaval at the member-state level. Thus it might lead to a new crisis that would force a further move to greater discretion at the EU level and full direct legitimation. On the

WHAT IS POLITICAL UNION?

About the authors

Jos Ignacio Torreblanca is a Senior Policy Fellow and the Head of the Madrid Office at the European Council on Foreign Relations. A professor of political science at UNED University in Madrid, a former Fulbright Scholar and Fellow of the Juan March Institute for Advanced Studies in Madrid, he has published extensively on the politics of EU integration, including institutional reforms, eastern enlargement and EU foreign policy, as well as on Spanish foreign policy. Since 2008, he has also been a regular columnist for El Pas. His publications for ECFR include Spain after the elections: the Germany of the South? (with Mark Leonard, November 2011). Sebastian Dullien is a Senior Policy Fellow at the European Council on Foreign Relations and a professor of International Economics at HTW Berlin, the University of Applied Sciences. From 2000 to 2007 he worked as a journalist for the Financial Times Deutschland, first as a leader writer and then on the economics desk. He writes a monthly column in the German magazine Capital and is a regular contributor to Spiegel Online. His publications for ECFR include Why the euro crisis threatens the European Single Market (October 2012).

Acknowledgements
We would like to thank our editor, Hans Kundnani, who was able to find, save and give new life to the (presumably) good ideas buried in the original text. Thanks too to all our colleagues at ECFR, and especially to Jonas Parello-Plesner and Ulrike Gurot, for their comments and suggestions to an earlier version of the text. Jos Ignacio Torreblanca would also like to thank Jos M. de Areilza, Secretary General of Aspen Institute in Madrid and Professor at ESADE Business School, with whom he has discussed these ideas time and again over the last year.

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Among members of the European Council on Foreign Relations are former prime ministers, presidents, European commissioners, current and former parliamentarians and ministers, public intellectuals, business leaders, activists and cultural figures from the EU member states and candidate countries.

John Bruton (Ireland)

Former European Commission Ambassador to the USA; former Prime Minister (Taoiseach)

Hanzade Dog an Boyner (Turkey)

Hans Hkkerup (Denmark) Heidi Hautala (Finland) Sasha Havlicek (United Kingdom)

Chair, Dog an Gazetecilik and Dog an On-line

Former Chairman, Defence Commission; former Defence Minister Minister for International Development

Ian Buruma (The Netherlands)

Writer and academic

Andrew Duff (United Kingdom)

Member of the European Parliament

Erhard Busek (Austria) Jerzy Buzek (Poland)

Asger Aamund (Denmark) Urban Ahlin (Sweden)

Chairman of the Institute for the Danube and Central Europe Member of the European Parliament; former President of the European Parliament; former Prime Minister

Mikul Dzurinda (Slovakia)

Former Foreign Minister

President and CEO, A. J. Aamund A/S and Chairman of Bavarian Nordic A/S Deputy Chairman of the Foreign Affairs Committee and foreign policy spokesperson for the Social Democratic Party

Hans Eichel (Germany)

Former Finance Minister

Executive Director, Institute for Strategic Dialogue (ISD)

Connie Hedegaard (Denmark)

Commissioner for Climate Action

Rolf Ekeus (Sweden)

Gunilla Carlsson (Sweden) Maria Livanos Cattaui (Switzerland)

Minister for International Development Cooperation

Martti Ahtisaari (Finland)

Former Executive Chairman, United Nations Special Commission on Iraq; former OSCE High Commissioner on National Minorities; former Chairman Stockholm International Peace Research Institute, SIPRI

Steven Heinz (Austria)

Co-Founder & Co-Chairman, Lansdowne Partners Ltd

Annette Heuser (Germany)

Executive Director, Bertelsmann Foundation Washington DC

Chairman of the Board, Crisis Management Initiative; former President

Giuliano Amato (Italy)

Former Secretary General of the International Chamber of Commerce

Uffe Ellemann-Jensen (Denmark)

Diego Hidalgo (Spain)

Former Prime Minister; Chairman, Scuola Superiore SantAnna; Chairman, Istituto della Enciclopedia Italiana Treccani; Chairman, Centro Studi Americani

Ipek Cem Taha (Turkey)

Chairman, Baltic Development Forum; former Foreign Minister

Director of Melak Investments/ Journalist

Steven Everts (The Netherlands)

Co-founder of Spanish newspaper El Pas; Founder and Honorary President, FRIDE

Carmen Chacn (Spain)

Former Minister of Defence

Gustavo de Aristegui (Spain)

Diplomat; former Member of Parliament

Adviser to the Vice President of the European Commission and EU High Representative for Foreign and Security Policy

Jaap de Hoop Scheffer (The Netherlands)

Former NATO Secretary General

Charles Clarke (United Kingdom)

Tanja Fajon (Slovenia) Gianfranco Fini (Italy)

Danuta Hbner (Poland) Anna Ibrisagic (Sweden)

Member of the European Parliament President, Chamber of Deputies; former Foreign Minister

Member of the European Parliament; former European Commissioner Member of the European Parliament

Viveca Ax:son Johnson (Sweden)

Former Prime Minister

Visiting Professor of Politics, University of East Anglia; former Home Secretary

Chairman of Nordstjernan AB

Nicola Clase (Sweden)

Gordon Bajnai (Hungary) Dora Bakoyannis (Greece)

Member of Parliament; former Foreign Minister

Ambassador to the United Kingdom; former State Secretary

Joschka Fischer (Germany)

Jaakko Iloniemi (Finland) Toomas Ilves (Estonia)

President

Daniel Cohn-Bendit (Germany)

Member of the European Parliament

Former Foreign Minister and viceChancellor

Former Ambassador; former Executive Director, Crisis Management Initiative

Leszek Balcerowicz (Poland)

Robert Cooper (United Kingdom)

Karin Forseke (Sweden/USA)

Chairman, Alliance Trust Plc

Professor of Economics at the Warsaw School of Economics; former Deputy Prime Minister

Counsellor of the European External Action Service

Lykke Friis (Denmark)

Wolfgang Ischinger (Germany)

Chairman, Munich Security Conference; Global Head of Government Affairs Allianz SE

Member of Parliament; former Minister for Climate, Energy and Gender Equality

Gerhard Cromme (Germany) Maria Cuffaro (Italy)

Llus Bassets (Spain)

Deputy Director, El Pas

Chairman of the Supervisory Board, ThyssenKrupp Anchorwoman, TG3, RAI

Jaime Gama (Portugal) Timothy Garton Ash (United Kingdom)

Minna Jrvenp (Finland/US)

Former Speaker of the Parliament; former Foreign Minister

International Advocacy Director, Open Society Foundation

Marek Belka (Poland)

Mary Kaldor (United Kingdom) Ibrahim Kalin (Turkey)

Governor, National Bank of Poland; former Prime Minister

Professor, London School of Economics Senior Advisor to the Prime Minister of Turkey on foreign policy and public diplomacy

Daniel Daianu (Romania)

Roland Berger (Germany)

Founder and Honorary Chairman, Roland Berger Strategy Consultants GmbH

Professor of Economics, National School of Political and Administrative Studies (SNSPA); former Finance Minister

Professor of European Studies, Oxford University

Carlos Gaspar (Portugal) Teresa Patricio Gouveia (Portugal)

Erik Berglf (Sweden)

Massimo DAlema (Italy)

Chairman of the Portuguese Institute of International Relations (IPRI)

Sylvie Kauffmann (France)

Editorial Director, Le Monde

Chief Economist, European Bank for Reconstruction and Development

Jan Krzysztof Bielecki (Poland) Carl Bildt (Sweden)

Foreign Minister

President, Italianieuropei Foundation; President, Foundation for European Progressive Studies; former Prime Minister and Foreign Minister

Chairman, Prime Minister's Economic Council; former Prime Minister

Marta Dass (Italy)

Trustee to the Board of the Calouste Gulbenkian Foundation; former Foreign Minister

Olli Kivinen (Finland)

Writer and columnist

Ben Knapen (The Netherlands)

Former Minister for European Affairs and International Cooperation

Under Secretary of State for Foreign Affairs

Heather Grabbe (United Kingdom)

Ahmet Davutoglu (Turkey)

Foreign Minister

Henryka Bochniarz (Poland)

President, Polish Confederation of Private Employers Lewiatan

Executive Director, Open Society Institute Brussels

Gerald Knaus (Austria)

Ale Debeljak (Slovenia)

Poet and Cultural Critic

Charles Grant (United Kingdom)

Director, Centre for European Reform

Chairman, European Stability Initiative; Carr Center Fellow

Caio Koch-Weser (Germany) Bassma Kodmani (France)

Executive Director, Arab Reform Initiative

Svetoslav Bojilov (Bulgaria) Ingrid Bonde (Sweden) Emma Bonino (Italy)

Founder, Communitas Foundation and President of Venture Equity Bulgaria Ltd. CFO & Deputy CEO, Vattenfall AB Vice President of the Senate; former EU Commissioner

Jean-Luc Dehaene (Belgium) Gianfranco Dell'Alba (Italy)

Jean-Marie Guhenno (France)

Director of the Center for International Conflict Resolution, Columbia University; former Deputy Joint Special Envoy of the United Nations and the League of Arab States on Syria

Vice Chairman, Deutsche Bank Group; former State Secretary

Member of the European Parliament; former Prime Minister Director, Confindustria Delegation to Brussels; former Member of the European Parliament

Elisabeth Guigou (France)

Rem Koolhaas (The Netherlands)

Pavol Deme (Slovakia)

Member of Parliament and President of the Foreign Affairs Committee

Stine Bosse (Denmark)

Chairman and Non-Executive Board Member

Senior Transatlantic Fellow, German Marshall Fund of the United States (Bratislava)

Fernando Andresen Guimares (Portugal)

Head of the US and Canada Division, European External Action Service

Architect and urbanist; Professor at the Graduate School of Design, Harvard University

David Koranyi (Hungary)

Franziska Brantner (Germany) Han ten Broeke (The Netherlands)

Kemal Dervis (Turkey)

Member of the European Parliament

Vice-President and Director of Global Economy and Development, Brookings.

Karl-Theodor zu Guttenberg (Germany)

Former Defence Minister

Deputy Director, Dinu Patriciu Eurasia Center of the Atlantic Council of the United States

Bernard Kouchner (France) Ivan Krastev (Bulgaria)

Chair of Board, Centre for Liberal Strategies

Former Minister of Foreign Affairs

Member of Parliament and spokesperson for foreign affairs and defence

Tibor Dessewffy (Hungary)

President, DEMOS Hungary

Istvn Gyarmati (Hungary)

President and CEO, International Centre for Democratic Transition

WHAT IS POLITICAL UNION?

Aleksander Kwas niewski (Poland)

Former President

Daithi O'Ceallaigh (Ireland)

Director-General, Institute of International and European Affairs

Stefano Sannino (Italy) Javier Santiso (Spain) Marietje Schaake (The Netherlands)

Director General for Enlargement, European Commission Director, Office of the CEO of Telefnica Europe

Vaira Vike-Freiberga (Latvia)

Former President

Mart Laar (Estonia)

Christine Ockrent (Belgium)

Editorialist

Antonio Vitorino (Portugal) Andre Wilkens (Germany)

Lawyer; former EU Commissioner Director Mercator Centre Berlin and Director Strategy, Stiftung Mercator

Minister of Defence; former Prime Minister

Miroslav Lajc k (Slovakia)

Andrzej Olechowski (Poland)

Former Foreign Minister

Deputy Prime Minister and Foreign Minister

Dick Oosting (The Netherlands)

CEO, European Council on Foreign Relations; former Europe Director, Amnesty International

Member of the European Parliament

Carlos Alonso Zaldvar (Spain)

Former Ambassador to Brazil

Alexander Graf Lambsdorff (Germany) Pascal Lamy (France)

Klaus Scharioth (Germany)

Member of the European Parliament Honorary President, Notre Europe and Director-General of WTO; former EU Commissioner

Mabel van Oranje (The Netherlands)

Senior Advisor, The Elders

Dean of the Mercator Fellowship on International Affairs; former Ambassador of the Federal Republic of Germany to the US

Stelios Zavvos (Greece)

CEO, Zeus Capital Managers Ltd

Samuel bogar (Slovenia)

Marcelino Oreja Aguirre (Spain)

Pierre Schori (Sweden)

EU Representative to Kosovo; former Foreign Minister

Bruno Le Maire (France)

Former Minister for Food, Agriculture & Fishing

Member of the Board, Fomento de Construcciones y Contratas; former EU Commissioner

Chair, Olof Palme Memorial Fund; former Director General, FRIDE; former SRSG to Cote dIvoire

Mark Leonard (United Kingdom)

Director, European Council on Foreign Relations

Monica Oriol (Spain)

CEO, Seguriber

Wolfgang Schssel (Austria)

Member of Parliament; former Chancellor

Cem zdemir (Germany) Ana Palacio (Spain)

Jean-David Lvitte (France)

Leader, Bndnis90/Die Grnen (Green Party) Member of the Council of State; former Foreign Minister; former Senior Vice President and General Counsel of the World Bank Group

Karel Schwarzenberg (Czech Republic)

Foreign Minister

Former Senior Diplomatic Advisor and former Sherpa to the President of the French Republic; former Ambassador to the United States

Giuseppe Scognamiglio (Italy) Narcs Serra (Spain)

Executive Vice President, Head of Public Affairs Department, UniCredit S.p.A Chair of CIDOB Foundation; former Vice President of the Spanish Government

Sonia Licht (Serbia)

President, Belgrade Fund for Political Excellence

Simon Panek (Czech Republic)

Juan Fernando Lpez Aguilar (Spain) Adam Lury (United Kingdom)

CEO, Menemsha Ltd

Chairman, People in Need Foundation

Chris Patten (United Kingdom)

Radosaw Sikorski (Poland)

Foreign Minister

Member of the European Parliament; former Minister of Justice

Chancellor of Oxford University and cochair of the International Crisis Group; former EU Commissioner

Aleksander Smolar (Poland) Javier Solana (Spain)

Diana Pinto (France)

Historian and author

Chairman of the Board, Stefan Batory Foundation Former EU High Representative for the Common Foreign and Security Policy & Secretary-General of the Council of the EU; former Secretary General of NATO

Monica Macovei (Romania) Emma Marcegaglia (Italy)

CEO of Marcegalia S.p.A; former President, Confindustria

Member of the European Parliament

Jean Pisani-Ferry (France)

Director, Bruegel; Professor, Universit Paris-Dauphine

Ruprecht Polenz (Germany)

Katharina Mathernova (Slovakia) Bundestag Foreign Affairs Committee Senior Advisor, World Bank Lydie Polfer (Luxembourg) Member of Parliament; former Foreign Iigo Mndez de Vigo (Spain) Minister
Secretary of State for the European Union

Member of Parliament; Chairman of the

George Soros (Hungary/USA) Teresa de Sousa (Portugal)

Journalist

Founder and Chairman, Open Society Foundations

David Miliband (United Kingdom)

Charles Powell (Spain/United Kingdom)

Director, Real Instituto Elcano

Goran Stefanovski (Macedonia)

Playwright and Academic Member of Parliament

Rory Stewart (United Kingdom) Alexander Stubb (Finland)

Minister for Foreign Trade and European Affairs; former Foreign Minister

Member of Parliament; Former Secretary of State for Foreign and Commonwealth Affairs

Andrew Puddephatt (United Kingdom) Vesna Pusic (Croatia)

Foreign Minister

Alain Minc (France)

Director, Global Partners & Associated Ltd.

President of AM Conseil; former chairman, Le Monde

Michael Strmer (Germany)

Chief Correspondent, Die Welt

Nickolay Mladenov (Bulgaria)

Foreign Minister; former Defence Minister; former Member of the European Parliament

Robert Reibestein (The Netherlands)

Ion Sturza (Romania)

Director, McKinsey & Company

Dominique Mosi (France)

Senior Adviser, IFRI

George Robertson (United Kingdom)

President, GreenLight Invest; former Prime Minister of the Republic of Moldova

www.ecfr.eu

Pierre Moscovici (France) Nils Muiznieks (Latvia)

Former Secretary General of NATO

wieboda (Poland) Pawe S

Finance Minister; former Minister for European Affairs Council of Europe Commissioner for Human Rights

Albert Rohan (Austria)

President, Demos EUROPA - Centre for European Strategy

Former Secretary General for Foreign Affairs

Vessela Tcherneva (Bulgaria) Teija Tiilikainen (Finland)

Director, Finnish Institute for International Relations

Adam D. Rotfeld (Poland)

Spokesperson and advisor, Ministry of Foreign Affairs

Hildegard Mller (Germany) December 2012

Chairwoman, BDEW Bundesverband der Energie- und Wasserwirtschaft

Former Minister of Foreign Affairs; Co-Chairman of Polish-Russian Group on Difficult Matters, Commissioner of Euro-Atlantic Security Initiative

Wolfgang Mnchau (Germany)

President, Eurointelligence ASBL

Norbert Rttgen (Germany)

Minister for the Environment, Conservation and Nuclear Safety

Luisa Todini (Italy)

Chair, Todini Finanziaria S.p.A; Member of the Board of Directors, RAI

Alina Mungiu-Pippidi (Romania) Kalypso Nicoladis (Greece/France)

Professor of Democracy Studies, Hertie School of Governance

Olivier Roy (France)

Loukas Tsoukalis (Greece) Erkki Tuomioja (Finland)

Foreign Minister

Professor, European University Institute, Florence

Professor, University of Athens and President, ELIAMEP

ECFR/70

Daniel Sachs (Sweden)

CEO, Proventus

Professor of International Relations, University of Oxford

Pasquale Salzano (Italy)

Daniel Valtchev, (Bulgaria)

10

Vice President for International Governmental Affairs, ENI

Former Deputy PM and Minister of Education

Also available from ECFR New World Order: The Balance of Soft Power and the Rise of Herbivorous Powers Ivan Krastev and Mark Leonard, October 2007 (ECFR/01) A Power Audit of EU-Russia Relations Mark Leonard and Nicu Popescu, November 2007 (ECFR/02) Polands second return to Europe? Pawe Swieboda, December 2007 (ECFR/03) Afghanistan: Europes forgotten war Daniel Korski, January 2008 (ECFR/04) Meeting Medvedev: The Politics of the Putin Succession Andrew Wilson, February 2008 (ECFR/05) Re-energising Europes Security and Defence Policy Nick Witney, July 2008 (ECFR/06) Can the EU win the Peace in Georgia? Nicu Popescu, Mark Leonard and Andrew Wilson, August 2008 (ECFR/07) A Global Force for Human Rights? An Audit of European Power at the UN Richard Gowan and Franziska Brantner, September 2008 (ECFR/08) Beyond Dependence: How to deal with Russian Gas Pierre Noel, November 2008 (ECFR/09) Re-wiring the US-EU relationship Daniel Korski, Ulrike Guerot and Mark Leonard, December 2008 (ECFR/10) Shaping Europes Afghan Surge Daniel Korski, March 2009 (ECFR/11) A Power Audit of EU-China Relations John Fox and Francois Godement, April 2009 (ECFR/12) Beyond the War on Terror: Towards a New Transatlantic Framework for Counterterrorism Anthony Dworkin, May 2009 (ECFR/13) The Limits of Enlargement-lite: European and Russian Power in the Troubled Neighbourhood Nicu Popescu and Andrew Wilson, June 2009 (ECFR/14) The EU and human rights at the UN: 2009 annual review Richard Gowan and Franziska Brantner, September 2009 (ECFR/15) What does Russia think? edited by Ivan Krastev, Mark Leonard and Andrew Wilson, September 2009 (ECFR/16) Supporting Moldovas Democratic Transition Nicu Popescu, October 2009 (ECFR/17) Can the EU rebuild failing states? A review of Europes Civilian Capacities Daniel Korski and Richard Gowan, October 2009 (ECFR/18) Towards a Post-American Europe: A Power Audit of EU-US Relations Jeremy Shapiro and Nick Witney, October 2009 (ECFR/19) Dealing with Yanukovychs Ukraine Andrew Wilson, March 2010 (ECFR/20) Beyond Wait-and-See: The Way Forward for EU Balkan Policy Heather Grabbe, Gerald Knaus and Daniel Korski, May 2010 (ECFR/21)

A Global China Policy Franois Godement, June 2010 (ECFR/22) Towards an EU Human Rights Strategy for a Post-Western World Susi Dennison and Anthony Dworkin, September 2010 (ECFR/23) The EU and Human Rights at the UN: 2010 Review Richard Gowan and Franziska Brantner, September 2010 (ECFR/24) The Spectre of a Multipolar Europe Ivan Krastev & Mark Leonard with Dimitar Bechev, Jana Kobzova & Andrew Wilson, October 2010 (ECFR/25) Beyond Maastricht: a New Deal for the Eurozone Thomas Klau and Franois Godement, December 2010 (ECFR/26) The EU and Belarus after the Election Balzs Jarbik, Jana Kobzova and Andrew Wilson, January 2011 (ECFR/27) After the Revolution: Europe and the Transition in Tunisia Susi Dennison, Anthony Dworkin, Nicu Popescu and Nick Witney, March 2011 (ECFR/28) European Foreign Policy Scorecard 2010 March 2011 (ECFR/29) The New German Question: How Europe can get the Germany it needs Ulrike Gurot and Mark Leonard, April 2011 (ECFR/30) Turning Presence into Power: Lessons from the Eastern Neighbourhood Nicu Popescu and Andrew Wilson, May 2011 (ECFR/31) Egypts Hybrid Revolution: a Bolder EU Approach Anthony Dworkin, Daniel Korski and Nick Witney, May 2011 (ECFR/32) A Chance to Reform: How the EU can support Democratic Evolution in Morocco Susi Dennison, Nicu Popescu and Jos Ignacio Torreblanca, May 2011 (ECFR/33) Chinas Janus-faced Response to the Arab Revolutions Jonas Parello-Plesner and Raffaello Pantucci, June 2011 (ECFR/34) What does Turkey think? Edited by Dimitar Bechev, June 2011 (ECFR/35) What does Germany think about Europe? Edited by Ulrike Gurot and Jacqueline Hnard, June 2011 (ECFR/36) The Scramble for Europe Franois Godement and Jonas Parello-Plesner with Alice Richard, July 2011 (ECFR/37) Palestinian Statehood at the UN: Why Europeans Should Vote Yes Daniel Levy and Nick Witney, September 2011 (ECFR/38) The EU and Human Rights at the UN: 2011 Review Richard Gowan and Franziska Brantner, September 2011 (ECFR/39) How to Stop the Demilitarisation of Europe Nick Witney, November 2011 (ECFR/40)

Europe and the Arab Revolutions: A New Vision for Democracy and Human Rights Susi Dennison and Anthony Dworkin, November 2011 (ECFR/41) Spain after the Elections: the Germany of the South? Jos Ignacio Torreblanca and Mark Leonard, November 2011 (ECFR/42) Four Scenarios for the Reinvention of Europe Mark Leonard, November 2011 (ECFR/43) Dealing with a Post-Bric Russia Ben Judah, Jana Kobzova and Nicu Popescu, November 2011 (ECFR/44) Rescuing the euro: what is Chinas price? Franois Godement, November 2011 (ECFR/45) A Reset with Algeria: the Russia to the EUs South Hakim Darbouche and Susi Dennison, December 2011 (ECFR/46) Ukraine after the Tymoshenko verdict Andrew Wilson, December 2011 (ECFR/47) European Foreign Policy Scorecard 2012 February 2012 (ECFR/48) The Long Shadow of Ordoliberalism: Germanys Approach to the Euro Crisis Sebastian Dullien and Ulrike Gurot, February 2012 (ECFR/49) The End of the Putin Consensus Ben Judah and Andrew Wilson, March 2012 (ECFR/50) Syria: Towards a Political Solution Julien Barnes-Dacey, March 2012 (ECFR/51) How the EU Can Support Reform in Burma Jonas Parello-Plesner, March 2012 (ECFR/52) China at the crossroads Franois Godement, April 2012 (ECFR/53) Europe and Jordan: Reform before its too late Julien Barnes-Dacey, April 2012 (ECFR/54) China and Germany: Why the Emerging Special Relationship Matters for Europe Hans Kundnani and Jonas ParelloPlesner, May 2012 (ECFR/55) After Merkozy: How France and Germany Can Make Europe Work Ulrike Gurot and Thomas Klau, May 2012 (ECFR/56) The EU and Azerbaijan: Beyond Oil Jana Kobzova and Leila Alieva, May 2012 (ECFR/57) A Europe of Incentives: How to Regain the Trust of Citizens and Markets Mark Leonard and Jan Zielonka, June 2012 (ECFR/58) The Case for Co-operation in Crisis Management Richard Gowan, June 2012 (ECFR/59) The Periphery of the Periphery: The Western Balkans and the Euro Crisis Dimitar Bechev, August 2012 (ECFR/60) Lebanon: Containing Spillover from Syria Julien Barnes-Dacey, September 2012 (ECFR/61)

A Power Audit of EU-North Africa Relations Nick Witney and Anthony Dworkin, September 2012 (ECFR/62) Transnistria: A Bottom-up Solution Nicu Popescu and Leonid Litra, September 2012 (ECFR/63) Why the Euro Crisis Threatens the European Single Market Sebastian Dullien, October 2012 (ECFR/64) The EU and Ukraine after the 2012 Elections Andrew Wilson, November 2012 (ECFR/65) China 3.0 Edited by Mark Leonard, November 2012 (ECFR/66) Time to grow up: what Obamas re-election means for Europe Dimitar Bechev, Anthony Dworkin, Franois Godement, Richard Gowan, Hans Kundnani, Mark Leonard, Daniel Levy, Kadri Liik and Nick Witney, November 2012 (ECFR/67) Jordan Tremors: Elusive consensus, deepening discontent Julien Barnes-Dacey, November 2012 (ECFR/68) The EU, Algeria and the Northern Mali Question Susi Dennison, December 2012 (ECFR/69)

11

ABOUT ECFR The European Council on Foreign Relations (ECFR) is the first pan-European think-tank. Launched in October 2007, its objective is to conduct research and promote informed debate across Europe on the development of coherent, effective and values-based European foreign policy. ECFR has developed a strategy with three distinctive elements that define its activities:  A pan-European Council. ECFR has brought together a distinguished Council of over one hundred Members politicians, decision makers, thinkers and business people from the EUs member states and candidate countries - which meets once a year as a full body. Through geographical and thematic task forces, members provide ECFR staff with advice and feedback on policy ideas and help with ECFRs activities within their own countries. The Council is chaired by Martti Ahtisaari, Joschka Fischer and Mabel van Oranje.  A physical presence in the main EU member states. ECFR, uniquely among European think-tanks, has offices in Berlin, London, Madrid, Paris, Rome, Sofia and Warsaw. In the future ECFR plans to open an office in Brussels. Our offices are platforms for research, debate, advocacy and communications.  A distinctive research and policy development process. ECFR has brought together a team of distinguished researchers and practitioners from all over Europe to advance its objectives through innovative projects with a pan-European focus. ECFRs activities include primary research, publication of policy reports, private meetings and public debates, friends of ECFR gatherings in EU capitals and outreach to strategic media outlets. ECFR is backed by the Soros Foundations Network, the Spanish foundation FRIDE (La Fundacin para las Relaciones Internacionales y el Dilogo Exterior), the Bulgarian Communitas Foundation, the Italian UniCredit group, the Stiftung Mercator and Steven Heinz. ECFR works in partnership with other organisations but does not make grants to individuals or institutions. www.ecfr.eu
The European Council on Foreign Relations does not take collective positions. This paper, like all publications of the European Council on Foreign Relations, represents only the views of its authors. Copyright of this publication is held by the European Council on Foreign Relations. You may not copy, reproduce, republish or circulate in any way the content from this publication except for your own personal and non-commercial use. Any other use requires the prior written permission of the European Council on Foreign Relations ECFR December 2012. ISBN: 978-1-906538-70-5 Published by the European Council on Foreign Relations (ECFR), 35 Old Queen Street, London, SW1H 9JA, United Kingdom london@ecfr.eu

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