Strengthening the Core or Splitting Europe? Prospects and Pitfalls of a Strategy of Differentiated Integration

Differentiated integration has become the de facto method for the EU during the European debt crisis. Fuelled by the pressure to find agreements for closer cooperation of the Euro Member States, new measures like the Fiscal Compact, the Euro-Plus-Pact or Enhanced Cooperation for the financial transaction tax have been adopted only by subgroups of member states. In practice, the EU is therefore splitting into three groups – the Euro-17, the pre-ins like Poland who are committing to joining the common currency and the permanent outsiders like the UK. As a result, the EU has already arrived at a "core Europe" changing the governance, balance of power and cohesion in the EU.

With further deepening of the economic and monetary union on the agenda, the EU now has to address the consequences of differentiated integration and formulate possible strategies for its future use. This conversation must begin with the understanding that deeper integration, intended as a strategy for overcoming the European debt crisis, can only be achieved by means of differentiated integration. In this context, this research paper explores the overall impacts of differentiated integration on the EU to date and examines how its uses have affected EU structures during the European debt crisis. The analysis will provide the basis for a set of recommendations on how the EU and the Eurozone can take the integration steps that are necessary to strengthen the Union's capacity for action while avoiding the fragmentation and unravelling of the EU as a whole.