Can Europe's present group of leaders pilot their countries successfully through the Political Reformation? Or will they drive the EU over a cliff? If they avoid disaster, we will have a European Union mark II, very much more deeply integrated politically than mark I, with reformed institutions charged with managing common economic and fiscal policies. There is no chance of all Member States ratifying a new leap forward to political integration.
The only possible way forward to a new treaty-based system of governance for the euro is through a ‘grand bargain' between the eurozone and some outsiders. These Member States certainly want to avoid the economic chaos that would result from a collapse of the euro, but they also want to claw back powers and authority lost to Brussels through the sequence of treaty changes of the past 20 years.
The UK is the natural leader of this group and its current Conservative foreign secretary, William Hague, is clearly very interested in breaking free of EU regulation on a range of social, employment and financial activities. London would expect to be joined by the Czech Republic, Denmark, Sweden and, quite possibly, Hungary. Latvia and Lithuania might remain in the euro waiting room, while Bulgaria and Romania could aspire to ‘core Europe' and never actually make it.
Negotiating, ratifying and applying fundamental changes to the treaties will be riddled with obstacles that will take years to overcome. It would be an extremely high-risk enterprise that could further undermine the euro if it went badly. Conduct of the Union's normal business may grind to a halt. Deeper integration would be unlikely to surf on a wave of popular support in the eurozone and would struggle for approval in some countries.
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