Two speeds are too scary in a two-tier Europe

Depending where you sit, the phrase ‘two-speed Europe’ is either tempting or terrifying.

For the people who run many of the continent’s old democracies, it’s tempting. Get rid of the prickly Poles, hapless Hungarians, sleazy Slovaks, chattering Czechs and baffling Balts. Get together with the other nice sensible countries and push right ahead with full integration. Get back to a small, manageable club of like-minded chums who know the rules and stick by them - just like the old European Union used to be before all this nonsense started with including countries that are, frankly speaking, not really mature enough to live in a grown-up world.

The natural boundary for such a high-speed Europe, as Toomas Hendrick Ilves, Estonia’s thoughtful president has argued, is the eurozone, which includes most of old Europe and excludes most of the new democracies (including his). So what happens to them? It would be nice to think that the single market will survive without political backing, and that the dozen or so countries of slow-lane Europe would be happy to trundle along on the powerless periphery, much as Norway and Switzerland do now.

But that looks unlikely. It is already a huge effort to make the Poles, for example, abide by European competition law. Without a seat at the top table in Brussels, no government in Warsaw is going to allow foreigners to buy the country’s big companies. Worse, the already rather withered carrot of enlargement would look even less appealing. It is still, just, possible to tempt the politicians of the western Balkans away from war by offering the chance of membership of the ‘real’ EU if they behave. The chance of an eternal place in the slow lane counts for a lot less.

Next, the high-speed Europe’s Russia policy is likely to be dreadful for the ex-communist countries. The UK is unlikely to be part of the new grouping. Instead it will be dominated by the big countries of old Europe, chiefly France, Germany and Italy, that reckon that they can bargain effectively on energy with Russia, and see rows with the Kremlin as costly distractions. For now, their stance is partly balanced by the combined weight of many smaller countries, all nominally equal in the EU. But the new grouping would be dominated by the interests of French and German industry, and their political chums at home and abroad.

It would therefore strike bargains with Russia over the heads of the countries in-between. The Russian-German gas pipeline along the Baltic seabed is just a harbinger of what countries like Poland can expect if two-speed Europe really happens.

That should be scary for the new democracies. They should therefore strive to adopt the euro, burnish their reputation as reformers, and help to bring the wrangles over the EU constitutional treaty to a speedy close.

But they are not doing so. The euro is slipping out of sight. The EU’s monetary bosses are cooking up refined criteria that will stop any ex-communist country adopting it in the forseeable future: Slovakia, for example - the only country with a chance of joining soon - is likely to be told that its low inflation is unsustainable because it is based on currency appreciation, which cannot continue once it joins the euro.

And that is the scariest prospect of all, for the ex-communist states’ wobbly finances are propped up by the financial markets’ confidence that they are going to join the euro eventually. If that belief weakens, the ‘halo effect’ of proximity to rich stable Europe evaporates. Slow-lane Europe’s bad government, backwardness and weakness will stand starkly revealed. And who will pay then?

• The writer is central and eastern Europe correspondent of The Economist.

Depending where you sit, the phrase ‘two-speed Europe’ is either tempting or terrifying.