Juncker’s great leap forwards risks setting the EU on a dangerous path

New measures for both the euro and the refugee crisis look likely to sow division rather than promote unity

We’ve been predicting its demise for nearly 60 years, and yet the EU keeps going. With Britain leaving and the continent’s economy growing, its federalists are now taking the chance to push for a big leap forwards. It is the EU’S own half-finished schemes that are creating this momentum. The euro and borderless Schengen travel area require the EU to introduce reforms to avoid repeats of the crises of the past decade. Both projects have created problems that can only be solved either by their abolition or by a massive increase in EU power. Since their abolition carries enormous costs, European elites tend to favour the latter. This is, of course, the intended effect.

The strategy in each case is different, however. To save Schengen, the EU is using a mix of carrot and stick. The carrot consists of extra resources for an EU border force – though still not nearly enough – and the EU’S dubious agreements with its neighbours, Turkey and Libya, to control the migration flow. The stick involves forcing unwilling countries, like Poland and Hungary, to take in and settle a share of the refugees arriving in Europe. If they refuse, they can be punished financially.

The approach for the euro is different. The single currency is still on life support, in a zombie state while its devotees try to create the legal structures that would stabilise it in the long term. Risks have abated due to a revival of economic growth and the European Central Bank’s ongoing support for dodgy sovereign bonds, namely Italy’s, but the problem has not gone away.

There is a still an enormous gap in competitiveness between the euro’s members. Since this cannot be absorbed by currency revaluations, the only lever available is government spending. Either Germany becomes the euro’s piggy bank, or the uncompetitive euro economies have to spend less and reform more. We all know which side is more likely to lose that argument, and it’s not Germany. To that end, European Commission president Jean-claude Juncker outlined a blueprint last week. He wants an EU finance minister and a European Monetary Fund to “promote” reforms and enforce fiscal rules.

The question is whether member states will go along with this. The EU is winning on migration policy. Despite talking tough, Hungary seems ready to fall into line with Brussels’s refugee plan after losing its case in the courts. Migration is still high, but has fallen to much more manageable levels than it was before. If the EU can maintain that via the dirty deals it has struck with its neighbours to control flows, it can keep a lid on this crisis for now.

The real test, however, is whether it can persuade its members to fund a border force properly when Britain leaves. Currently, as Mr Juncker put it, “Italy is saving Europe’s honour in the Mediterranean” by paying for border patrols and striking rather dubious deals with militias in Libya. Greece has come under similar pressure and migration numbers to Spain are rising. If the EU cannot put substantial resources behind policing its borders, its southern states will be entitled to ask what on Earth it is there for.

The euro presents a greater challenge. Putting it on a stable basis requires its members to make a permanent and substantial sacrifice of sovereignty, allowing their fiscal policies to be policed and perhaps even set by Brussels.

In March, it looked as though the EU might adopt a new approach when Mr Juncker suggested that it could become a “multi-speed union”. This meant that the EU might, for the first time, formally give all its members the chance to opt out from further integration. This could have presaged the creation of an EU with two or more spheres: a core superstate and a zone around it whose members co-operated just on trade. This might have delivered legal protections for those countries that didn’t want to join the superstate, ensuring they could not be out-voted by a permanent majority of federalist countries. Unfortunately, Mr Juncker’s speech last week moved firmly away from that idea. Instead, he wants all countries to join the euro and sign up to an intense integrationist programme.

That, of course, won’t happen. What it means, though, is that the countries that decide not to sign up to Mr Juncker’s agenda will be left behind. The EU’S institutions will become increasingly tailored towards serving the interests of the most federalist countries. If you don’t sign up to a new initiatives, like the European Monetary Fund, it won’t have to take your particular needs into account. Without Britain there fighting the corner of noneuro states, they will be steamrolled.

The risk here should be obvious. It will create a gulf between the EU’S core and its more sceptical members. What the federalists miss is that this is what helped turn British Euroscepticism into an electoral force. Britain began to feel increasingly marginalised in the EU, despite its opt-outs. The UK engaged less with decision-makers in Brussels and became more of a passenger than a driver. That fed resentment.

When I raised this prospect at an event held by the Bruegel Institute in Brussels recently, I was given two answers. The first, by Italian Europe minister Sandro Gozi, was that it was the EU’S absence in, for example, protecting its borders that drove Euroscepticism, rather than its presence. The second, by Left-wing MEP Pervenche Berès, dismissed Euroscepticism as a “Tory spat” fed by a “backlash against openness”.

Mr Gozi might have been right when it comes to policing Italy’s borders, but Ms Berès’ answer worried me. She, and many federalists, still fundamentally take belief in the EU project for granted. Those states that don’t sign up to Mr Juncker’s great leap forwards in integration should, in her view, have little cause for complaint so long as the door is always open for them to join in the EU’S projects at a later date.

Geopolitics, though, doesn’t work like that. If the EU presents its members with two unpalatable choices – either cede sovereignty formally or be marginalised – it will, in the end, be blamed either way.

Unfortunately, the EU is following the inexorable logic of its unfinished projects. It cannot stay still, it refuses to let anyone go backwards, and it can’t take everyone with it if it goes forwards. Rather than submit to its limitations, it plans to forge ahead. It is setting a dangerous course.