The EU Question: Integrate or Separate?

The handshakes were firm but non-committal and the expressions pained after European Union leaders emerged from the EU constitution summit in Brussels on Saturday to face an uncertain future after the talks ended in acrimony and failure.

“To look at this in apocalyptic terms is rather misguided,” said British Prime Minister Tony Blair.

Things may not be apocalyptic just yet, but rather than being set on the road to agreement and togetherness, the EU now seems to be progressing down the road to fragmentation, as member states position themselves for retribution.

The inability to reach agreement on the constitution and sign off on the redistribution of voting rights has thrown a number of ominous phrases and ideas into the European ether. Where once, the bloc wished to present itself as “One Europe,” there are now talks of a “two-speed” EU, the formation of “pioneer groups” made up of like-minded member states and even dark rumors of retribution aimed at those perceived to be the architects of failure.

German veiled threats of financial revenge

Spain and Poland, the countries who stubbornly held their position on the allocation of votes, have now positioned themselves in the sights of a wounded Germany which had failed to secure more voting power for itself. By refusing to adopt the proposed EU voting system that would have sealed a deal on the new constitution, José María Aznar (picture), the Spanish prime minister, and Leszek Miller, his Polish counterpart, now face the possibility of German financial retribution.

This may come as early as the start of next year when member states start discussing the next EU budget round. After the divisive talks ended, German Chancellor Gerhard Schröder warned there were "certain parallels" between the treaty negotiations and the seven-year EU budget period, which starts in 2007. This statement hinted at a possible budgetary squeeze on Spain and Poland in an attempt to force them to back down on the voting issue.

Germany is the biggest net contributor to the EU budget, and has said it wants to keep spending pegged to just 1 percent of the EU's GDP, or roughly €100 billion ($117 billion) a year. That figure is about €25 billion a year less than many inside the European Commission argue is needed to sustain aid to the poorest EU regions, including southern Spain and all of Poland.

Warsaw-Berlin relationship heading for rocks

Such strong-arm tactics, effectively a sanction policy on fellow member states, could cause severe divisions. “Certainly the relationship between Warsaw and Berlin has deteriorated over the past year,” Daniel Keohane at the Centre of European Reform in London told DW-WORLD, “and this won’t help.”

Germany stood up for Poland at the Nice and Copenhagen summit, Keohane said, and its behavior towards Germany now may cause lasting damage.

“Madrid has a different relationship with Berlin. They have dealt with each other before and have experience of each other," Keohane said. "That division may recover sooner but things look bleak for Poland.”

Just as many of the stances taken by leaders at the EU summit have reflected the habit of some nations to pander to domestic prejudices, the flexing of power by the larger states is also an increasingly common factor in EU malcontent. However, such mutterings could well play into the hands of some at the expense of the others.

It would appear that everyone had a motive for killing the summit. Aznar could return to Spain and imminent retirement following elections next March, as the defiant patriot while Miller could silence his nationalist critics in Poland for a few days.

For Schröder and French President Jacques Chirac, the collapse of the talks was proof that Europe could not operate with a membership of 25 nations, and provided an excuse to start talking again of a multi-speed Europe with a Franco-German core.

Pioneer groups to drive EU forward

Chirac took the opportunity to reopen his warnings that a Europe of 25 was heading for deadlock, and that "pioneer groups" would be needed to push ahead with integration. "This will provide an engine, an example that will allow Europe to go faster, further and better," he said, adding that the impasse was evidence of the need for a so-called “avant-garde,” or vanguard to push European reform in the fields of economics, defense, crime-fighting and immigration.

France, Germany, Belgium and Luxembourg are already exploring joint initiatives with a core of like-minded states, diplomats say. In much the same way as the “two-speed” concept brought about the single currency and the abolition of internal borders, those in favor of pioneer groups in the European driving seat feel that the other EU members would benefit from their direction.

Plan B could lead to real split

“This is an effective tactic,” Keohane explained. “Present an unfavorable alternative Plan B and push for compromise. However, if France and Germany go ahead -- and they’re in the kind of mood to risk something -- and others join, it would be a split.” Keohane added that the logistics were complicated. “(France and Germany) would need a separate treaty and then of course, the question is who would join them?”

Daniel Gros, director of the Centre for European Policy Studies in Brussels agrees.

"This core Europe stuff is a pipe dream," he told Reuters. Gros argues that Paris and Berlin had forfeited much trust as leaders of the European project after they trampled on EU budget rules last month to avoid disciplinary action for their excessive deficits. With that in mind, those countries considering joining with them would be keeping one careful eye on the exit door.

With these concepts and proposals floating around in the wake of the inconclusive summit, fears abound that the future of the EU is not just one that the member states cannot agree on but one where the EU itself no longer exists as they know it.