The core problem of the EU

_ Jürgen Stehn, Dr. Sc., Head of Economic Policy Coordination, Kiel Institute for the World Economy (IfW Kiel). Kiel, March 2017.

In this policy brief the IfW Kiel economist Jürgen Stehn asks, in how far the White Paper on the Future of Europe of the European Commission sketches promising scenarios for a future European integration process. It shows that the EU-Commission fails at the task to define and justify European core competencies on basis of an appropriate reference system. To solve this problem, eight nucleus competencies and a special case are derived on basis of the economic principle of subsidiarity. The analysis shows that the freedom of trade, capital and establishment, merger and aid monitoring as well as asylum, security and environmental policies should build the thematic core of the future European integration process

Eight core competencies of the EU can be defined on the basis of the efficiency criteria of the economic subsidiarity principle: freedom of trade, capital and freedom of establishment, merger and state aid supervision as well as asylum, security and environmental policy. The common monetary policy is a special case. A future thematic orientation of European integration along these core competencies promises considerable welfare gains for the participating countries. The more countries are willing to place these core competencies in the hands of the EU, the greater the gains. Therefore, the aim of European politics should be to win over all of the currently (still) 28 member states for this core project. However, solving the core problem also allows the formation of concentric rings around the thematic core. With the core in view, individual scenarios of the EU White Paper can also play a role here. For example, the outermost ring in an EU of concentric rings could be formed by freedom of trade, capital and freedom of establishment supplemented by merger and state aid controls. With increasing proximity to the core, asylum, security and environmental policy could gradually be added as European core competencies. However, the member states that are further away from the core would forego possible efficiency gains. If concentric rings are formed, the EU as a whole will also lose efficiency compared to a Europe in which all members are prepared to leave the eight core competencies to the EU.


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