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The answer is to replace the existing EU with a new two-layered structure. The outer layer would be an overarching, less intrusive and more inclusive framework for European cooperation: a European Area of Freedom, Security and Prosperity (EFSP). This would comprise all EU and EFTA Member States, as well as all existing EU candidate countries including Turkey. It could be expanded eastward to all European countries, one day even up to and including Russia, if and when the Copenhagen accession criteria (or similar) are met.
EFSP would be a free trade area with a common foreign and security policy. It would operate on the basis of the existing internal market rules, although the creation of EFSP would be used as an opportunity to review and if necessary amend existing rules. It would cooperate on physical cross-border issues such as transport and the environment, but it would have no role in policy areas where public resistance to EU co-operation and fear of further enlargement is greatest, such as education, social and taxation policy and justice and home affairs.
All decisions in this area would be taken by unanimity, under the control of national parliaments, in recognition of the fact that many European countries aren’t ready to give up their veto or their policy-making powers in areas perceived to be of vital national or political importance. This will reduce the area’s firepower but enhance its legitimacy. EFSP would eventually be merged with the Council of Europe and would take over the role of the OSCE. The European Court of Human Rights would be modernised to increase its legitimacy.
The inner core would be a European Political and Economic Union (EPEU), comprising a smaller group of Member States without internal borders, all members of EFSP, a single market with a single currency and an integrated system of economic governance, with full political and fiscal union and democratic accountability at the EPEU level for decisions taken at that level. Schengen would be subsumed into this inner core.
Legislation governing the internal market would apply in this area over and above the free trade rules agreed within EFSP. To avoid gridlock and to ensure progress in making the necessary political and economic reforms, all decisions within EPEU would be taken by qualified majority. Membership of EPEU would be open to all members of EFSP, but the accession of new Member States would be subject, as now, to the unanimous agreement of existing Member States.
Such a new architecture would be inclusive, accommodating the increasing eurosceptic sentiment in several Member States while at the same time bringing more countries into the European fold. But it would also allow countries that wish to do so to push ahead farther and faster with the integration of their political and economic systems. To get there we need to say goodbye to the EU as we know it. To build the Europe of the future we need to start from scratch.