SUBGROUPS IN THE EU-27: HELPFUL OR HARMFUL?

ALESSANDRO D’ONOFRIO SENIOR RESEARCH FELLOW, ANTALL JÓZSEF KNOWLEDGE CENTRE

Even if the relations between the UK and the EU entered a new phase Brexit has shown that the economic, political and cultural ties between the two parts are very rooted and can hardly be wiped out by a unilateral pronouncement. Surely, some of them have already been altered, but most of these links will endure. The UK will recognise that, due to geography, any post-Brexit strategy should concentrate on cooperating with the EU and its member. Contrarily to the common belief, in the long-term Brexit could make the British more aware of their European character and turn them into active (external) players in setting the European agenda.1 But in the immediate the UK is determined to strengthen bilateral ties with single EU countries on single issues, cutting out the EU. This aims at reducing intra-EU coordination between Member States and reducing UK’s isolation. However, because of Brexit EU Member States are more conscious of the value of their membership and of the importance of intra-EU cooperation. As, the British withdrawal changed the balance in the EU concentrating more power on larger Member States, some countries increased their efforts to cooperate with each other and form coalitions in order to bring forward political initiatives.

BALANCE SHIFTS IN THE EU Brexit, as an exceptional political and economic upheaval, shocked the EU and raised questions about the future of the European construction itself. Pro-European thinkers, federalists among them, after the initial pain of seeing departing the country where the federalist ideas spread, eventually agreed in seeing Brexit as an opportunity to reform the EU and make it stronger. This is true if we consider that the strengthening of the FrancoGerman axis, the creation of the revolutionary NGEU and the Commission’s ambitious plans are unlikely to have happened with the British still in the EU. On the other hand, many were actually convinced that the UK’s departure would have reinforced centrifugal forces and led to the EU’s disintegration. But, apart some cases, these forces never gained enough political power to bring forward Brexit-like initiatives and some of them even softened their anti-EU claims once they realised what a break-up entails.2

At the institutional level, Brexit excluded the UK from the EU decision-making process and left the Union without its third largest country and second largest economy. This led to a reorganisation of the European constitutional and financial set-up. On the one side, the EU had to cope with the loss of a crucial net contributor to the budget. On the other, Brexit meant a notable change of the balance of power in the Council. In fact, without the UK the voting weight of the larger remaining Member States, especially Germany and France, notably increased. Currently, Germany, France, Italy and Spain together represent more than 57% of the EU population, and the

1  Georgina Wright–Alex Stojanovic–David Klemperer: Influencing the EU after Brexit. Institute for Government. January 2020. <https://www.instituteforgovernment.org.uk/sites/default/files/publications/influencing-EUafter-brexit_2.pdf > Accessed: 29 July 2021. 2  Ulrike Franke–Jana Puglierin: The big engine that might: How France and Germany can build a geopolitical Europe. European Council on Foreign Relations. 14 July 2021. <https://ecfr.eu/publication/the_big_engine_that_ might_how_france_and_germany_can_build_a_geopolitical_e/ > Accessed: 30 July 2020.

presence of one of them in a coalition can determine the outcome of any initiative.3 When in the EU the UK usually acted as a warrantor of the balance of power and of the status quo. British activities mostly concentrated on subjects related to budgetary matters, economic policy choices, digitalisation, the consolidation of the internal market, global free trade, and security. Smaller EU countries, and especially the northern countries, had in the UK an ally on many of these issues but now, without their powerful partner, are seeking new alliances in order to shape the decision-making process. According to them, larger states’ predominance in the Council can be detrimental to the interest of the medium and smaller ones and could hamper the role of the Commission as well as the Community method.4 In their eyes the ability of the EU executive to act as a balance between larger and smaller Member States and its autonomy in proposing own legislative initiatives will be reduced by a stronger Franco-German coordination. Some of this criticism might be well-founded, but it is also true that, historically, only big states’ activism stimulated the intra-EU debate and helped the Commission to adopt crucial initiatives which would have otherwise failed.5

THE COUNCIL’S VOTING SYSTEM In the last decades the EU decision-making process has changed several times, with the extension and modification of EU responsibilities and the policy areas where the EU is acting. This is mostly visible observing the Council and its voting system. The Council is one of the most important European institutions and takes part in the main decisionmaking procedures in the EU, it establishes the priorities of its policies, can propose changes to the Treaties, has a role in nominating and appointing the EU’s highest posts (the candidate for the President of the Commission and the High Representative of the Union among them), addresses the EU’S foreign policy and common security policy, etc.6 Lisbon notably changed the EU decision-process and redefined the role of the Council by extending the amount of decisions to be taken by a qualified majority. There is a qualified majority, when 55% of the Member States (15 out of 27), representing at least the 65% of the EU’s population vote favourably. A blocking minority, on the contrary, must include at least four members representing more than 35% of the EU’s population. Even if there is a tacit rule that decisions in the Council are to be taken by consensus, currently, about 80% of all EU legislation is adopted with qualified majority.7 However, the unanimity vote is still present

3  EU population in 2020: almost 448 million. Eurostat, Newsrelease 111/2020. 10 July 2020. <https://ec.europa.eu/eurostat/documents/2995521/11081093/3-10072020-AP-EN.pdf/d2f799bf-4412-05cca357-7b49b93615f1 > Accessed: 30 July 2021. 4  The Community method is characterised by the Commission’s monopoly of legislative initiative and legislative co-decisional power of the Council and the European parliament on Commission’s proposals. 5  Adriano Bosoni: How a Brexit Would Undermine Europe’s Balance of Power. Stratfor. 21 June 2016. <https://worldview.stratfor.com/article/how-brexit-would-undermine-europes-balance-power > Accessed: 15 July 2021. 6  European Council. European Union. <https://europa.eu/european-union/about-eu/institutions-bodies/ european-council > Accessed: 15 July 2021. 7  Qualfied majority. European Council, Council of the European Union. Last updated on 23 March 2020 <https://www.consilium.europa.eu/en/council-eu/voting-system/qualified-majority/ > Accessed: 15 July 2021.

and related to issues such as common foreign and security policy, EU finances (MFF), etc. Essentially, the importance of the Council lies in the fact that it represents the main forum where Member States can bring forward their interests by creating coalitions supporting the same idea.8

Before Brexit, the UK, Germany, France, Italy and Spain represented the countries shaping the EU’s political agenda. A cluster of smaller like-minded states, interested in preserving the status quo and having a less centralised EU, usually pooled around the British. Now things have changed and it will be more difficult for them to contrast the initiatives of the largest countries without the support of the UK. In order to be effective, a coalition of states aimed at blocking an initiative coming from Germany or France—accounting for the 33.2% of the EU’s population—needs, not just the participation of at least one of the remaining big states, but also additional 8-10 countries.9

COALITION-BUILDING AS THE MAIN GAME IN THE EU Coalition-building is the main tool Member States have to create consensus around issues that are central for them and strengthen their own position in negotiations. In a mostly intergovernmental EU, finding “allies” is a key aspect for a country since it is only by developing relations that it could act as driving force in the community. In a EU composed of twenty-seven countries, the need for informal consensus-building among governments has grown and following Brexit some readjustments were required. The EU Member States’ strong collective action as a reaction of Brexit is a good example of it and it reversed the main narrative of the last decades which saw fragmentation and conflict rather than cooperation.10 Moreover, being part of a coalition gives Member States more flexibility to vary their degree of integration by choosing partners sharing the same interest on determinate areas—considering that it would not be always possible to involve all the Member States to support an initiative. In fact, flexible models of cooperation allow European policies to evolve further, preventing that the veto of some states could detain the integration of others.11 Coalition-building is often referred in its negative aspect and perceived as essentially designed to block policies and divide countries. However, this assumption takes into account only the competitive nature of sovereign states without considering that cooperation and compromise are processes inherent to any federal, confederal or multilevel system.12

8  Mikko Mattila: Voting and Coalitions in the Council after the Enlargement. In: Unveiling the Council of the European Union. Games Governments Play in Brussels, edited by Daniel Naurin–Helen Wallace. Palgrave Macmillan, London, 2008. 23–35. 9  The Council of the European Union: Voting System: Voting Calculator. European Council. 2020. <https://www. consilium.europa.eu/en/council-eu/voting-system/voting-calculator/ > Accessed: 16 July 2021. 10  Frank M. Häge: Coalition Building and Consensus in the Council of the European Union. British Journal of Political Science. 2013/3. 481–504. 11  Mark A. Pollack: Theorizing the European Union: International Organization, Domestic Polity, or Experiment in New Governance? Annual Review of Political Science. 2005/8. 357–398. 12  Maurice J. C. Vile: Federation and Confederation: The Experience of the United States and the British Commonwealth. In: Political Co-operation in Divided Societies. A Series of Papers Relevant to the Conflict in Northern Ireland, edited by Desmond Rea. Gill and Macmillan, Dublin, 1982. 216–228.

Coalition-building practise usually follows historical patterns. Even before the 2008 financial crisis, the main intra-EU groups were born mostly along the North-South divide. The accession of a large group of former communist countries opened up the way to new political and economic models which in turn resulted in new differing visions of European integration.13 Currently, new issues, such as environment, security, health, human rights, created new alignments and new partnerships outside the traditional ones. Differently from larger Member States, the smaller ones represent a less homogenous group. In fact, smaller countries in the EU are geographically dispersed, in different regions, they have different political and economic traditions, and their interests are very diverse.14 Therefore, considering their characteristics, it is more complicate for smaller countries to band together. However, the size alone is not enough to obtain success in negotiations, as a country’s ambitions and willingness to engage are equally important to develop a strategy and to influence the others. Currently, the Franco-German tandem remains the most connected in the EU, but smaller countries like the Netherlands and Sweden are very effective and are among the most contacted by other Member States.15

Traditionally, the UK represented a strong partner for the more liberal and economically open Member States, that now find themselves at disadvantage in a more “centralistic” EU. The UK’s position was, in fact, crucial for the small but open economies of the Scandinavian and Baltic states, for Ireland or the Netherlands. The latter, is actively trying to replace the UK and set itself as the leader of the so-called “frugal” countries consisting also of Austria, Sweden and Finland, interested in a smaller but more modern budget. The Netherlands’ pivotal role was particularly evident during the 2021-2027 MFF negotiates where the Dutch government unsuccessfully opposed a budget’s increase and the NGEU’s introduction. In a context where QMV is required, a coalition of likeminded countries including the “frugals,” the rest of Benelux, the Nordic countries and Ireland, will fall way short of the minimum requirements to form a blocking minority.16 Brexit also brought about the prospect of a power shift in favour of Eurozone countries, potentially pushing the outsiders further to the side. Divergences between non-euro and euro countries are expected to emerge more frequently than before. In fact, when the UK was in the EU, the countries not belonging to the Eurozone represented more than 33% of the EU population. Now this group comprises just 23% of the EU population,17 which

13  Ivan Krastev–Mark Leonard: Europe’s pandemic politics: How the virus has changed the public’s worldview. European Council on Foreign Relations. 24 June 2020. <https://ecfr.eu/publication/europes_pandemic_politics_ how_the_virus_has_changed_the_publics_worldview/ > Accessed: 28 July 2021. 14  Gunta Pastore: Small New Member States in the EU Foreign Policy: Toward ‘Small State Smart Strategy’? Baltic Journal of Political Science. 2013/2. 64–87. <https://doi.org/10.15388/BJPS.2013.2.2818 > 15  Josef Janning–Almut Möller: Untapped potential: How new alliances can strengthen the EU. European Council on Foreign Relations. July 2019. <https://ecfr.eu/wp-content/uploads/ECFR_290_Untapped_potential_ How_new_alliances_can_strengthen_the_EU_-_double_pages.pdf > Accessed: 21 July 2021. 16  Claire Busse [et al.]: EU Coalition Explorer. European Council on Foreign Relations. 8 July 2020. <https://ecfr. eu/special/eucoalitionexplorer/ > Accessed: 23 July 2021. 17  This number is destined to reduce since Croatia will soon adopt euro as its currency while also Bulgaria and Romania took steps in this direction.

increases the leverage of the Eurogroup for what concerns economic and financial matters.18

COALITIONS: THE VISEGRÁD FOUR EU Coalitions generally represents three main categories according to their degree of institutionalisation: lead groups, ad-hoc coalitions and alliances. A lead group is a fairly loose partnership resulting from an intergovernmental bargaining process aimed primarily at introducing some initiatives in the Council. Ad-hoc coalitions are more political in nature but focus just on a single issue. Differently, alliances emerge at the political level, are structural in nature and are usually targeting more subjects.19 While the first categories is usually asymmetric, with bigger states in a clear position of leadership, the latter two show a more balanced power relationship and more institutionalised coordination on a regional basis. There are several interesting examples of alliances today in the EU, like the Benelux, the Nordic Cooperation, the Baltic group, and, in some way, the Visegrad Four.20

The Visegrad Four, or V4, received particular attention during the 2015 migration crisis. This non-formalised alliance between four former communist countries which joined the EU in 2004, namely Hungary, Poland, Czech Republic and Slovakia, is functioning today mostly as a “vetoing” minority in the Council. The V4, which represents about 14% of the EU population, has opposed some EU initiatives requiring unanimity, such as the Commission’s quota proposal to tackle the massive arrive of migrants to Europe or the introduction of a mechanism which would have linked the allocation of the NGEU to the respect of rule of law criteria.

The V4, created soon after the fall of the Iron Curtain, aimed at coordinating the efforts of its members in order to facilitate their integration into Euro-Atlantic structures, NATO and the EU. Despite a low level of institutionalisation (the International Visegrad Fund is the only institutional office in the V4) and with a yearly rotating presidency, cooperation among its members is very intense and mostly happens at an informal level.21 After achieving its primary goal, the V4 is now aiming at preserving the status quo in the EU, building of a looser Union and repatriating some of the EU competences to Member States. Brexit surely deprived the V4 of a strategic partner since the UK was an ally on many issues, including EU foreign and security policy, relations with the Eastern partnership, or policies related to the single market’s regulation and competition. 22 For this reason, the V4 is now mostly reacting to initiatives taken

18  Caroline de Gruyter: There Is Life for the EU After Brexit. European Council on Foreign Relations. 28 March 2018. <https://ecfr.eu/article/commentary_there_is_life_for_the_eu_after_brexit/ > Accessed: 28 July 2021. 19  Gavrilov Doina: Coalition of states for influence in the European Council. Brexit - a step towards decisional balance in the European Council? Open Political Science. 1/2018. 124–130. <https://doi.org/10.1515/ openps-2018-0009 > 20  Daniel F. Schulz–Thomas Henökl: New Alliances in Post-Brexit Europe: Does the New Hanseatic League. Revive Nordic Political Cooperation? Politics and Governance. 2020/4. 78–88. <https://doi.org/10.17645/pag. v8i4.3359 > Accessed: 21 July 2021. 21  About the Visegrad Four. Visegrad Group. <https://www.visegradgroup.eu/about > Accessed: 28 July 2021. 22  Vít Beneš [et al.]: Brexit, Post-Brexit Europe and the V4. Potential Impacts, Interests, and Perceptions. Aston Centre for Europe. February 2018. <https://worldeconomy.hu/wp-content/uploads/2017/11/V4_brexit_report.pdf > Accessed: 28 July 2021.

by other Member States lacking the political power to bring forward any relevant initiative at the EU level. Moreover, the confrontational attitude of the group made the other EU members wary and, if we exclude some cooperation on single issues, the group is struggling to find strategic partners.23 One of the last intra-EU formats involving the V4 was “Friends of cohesion,” which also included Estonia, Croatia, Malta, Slovenia, Bulgaria, Cyprus, Lithuania, Latvia, Romania, Italy, Portugal and Greece. During the MFF negotiations the group aimed to maintain a high-level of funding for the Cohesion Policy which, following Brexit, had to be reduced.24 The current economic status of the V4 countries makes them natural supporters of cohesion policy, of which they are the largest beneficiaries. Despite the potential of an alliance like the “Friends of Cohesion,” the divergences between its members and the outbreak of the coronavirus pandemic, caused a change within the ranks of these states which focused on new issues (like the health crisis and the post-pandemic recovery). Eventually, differently from the group’s original purpose, the fight against the pandemic took the priority over the fight against regional disparities. The V4 countries, have been quite fortunate in terms of COVID-19 impact and therefore their share of NGEU funds was lower. However, V4 countries’ interests are not always aligned and they have often spoken with different voices on several EU matters.25 For instance, Hungary and Poland, are currently in open conflict with the EU institutions over concerns regarding the rule of law and are building a national model that hardly espouses the EU principles. On the contrary, Czech Republic and Slovakia are more pragmatic and are particularly keen in nurturing a strong and working relationship with Germany, their main trading partner. Currently, the fate of the V4 lies in the ability of its states in building new adhoc coalitions and strengthening cooperation with Germany or other larger countries. These will be not an easy task given Hungary and Poland growing isolation.26

WHAT TO EXPECT? Divergences between Member States usually forces the Commission to aim at the lowest common denominator when it comes to formulate its policies, especially in more sensitive areas. In addition, the expansion of the EU competences into new areas and the prospect of future enlargements changed substantially the EU and increased divergences between Member States. Some of them are resorting to their power of veto, which goes anyway against the spirit of the EU which aims at finding consensus. This also impedes the more willing Member States to deepen integration, endangering at the same time the EU’s capacity to pursue its goals.

23  Adéla Denková [et al.]: Future EU: Does Visegrád have a plan? Euractiv. 16 February 2017. <https://www. euractiv.com/section/economy-jobs/news/future-eu-does-visegrad-have-a-plan/ > Accessed: 28 July 2021. 24  Friends of Cohesion. Joint Declaration on the Multiannual Financial Framework 2021–2027. República Portuguesa, XII Governo. 1 February 2020. <https://www.portugal.gov.pt/download-ficheiros/ficheiro. aspx?v=%3D%3DBQAAAB%2BLCAAAAAAABAAzNDA2NwcAeMDfpAUAAAA%3D > Accessed: 27 July 2021. 25  Zuzana Stuchlíková: The Role and Status of the Visegrad Countries after Brexit: the Czech Republic. Friedrich Ebert Stiftung, CENS 2017 Paper Series. November 2017. <http://archive.ceu.hu/sites/default/files/publications/ oct9stuchlikova.pdf > Accessed: 27 July 2021. 26  Nikolett Garrai: Challenges faced by the Visegrad Group in the “European dimension” of cooperation. International Issues & Slovak Foreign Policy Affairs. 2018/1–2. 24–42.

To avoid legislative inertia, the EU treaties provide the possibility for a limited number of Member States (at least nine) to develop forms of enhanced cooperation. This approach allows Member States, to move at a greater pace towards integration in more fields and overcome the stalemate. More specifically, “coalitions of the willing” are legitimate if their aim is “to deepen their cooperation in chosen domains” while “the status of other Member States is preserved, and they retain the possibility to join those doing more over time.”27 However, smaller Member States usually oppose the idea of a multispeed Europe fearing that this would create an elite club and a periphery within the EU, increasing fragmentation and the bigger countries dominating integration.28 The EU today already incorporates flexible examples of cooperation. For example, the Eurozone, Schengen and even PESCO are some of the most visible forms of differentiation. In fact, despite the smaller states’ concerns a multispeed EU should not be intended as exclusively negative. One of the main political implications of differentiated integration is the creation of new balances in the EU. Therefore, the use of enhanced cooperation could therefore be useful especially also for the latter that, by forming a coalition in support of a specific issue, would sustain policies the big states would not consider and influence them.29 Surely, it is also necessary to regulate within a legal framework any form of flexible cooperation to ensure equal opportunities to all Member States to participate. It is undeniable that differentiation in an enlarging EU will help to respond to immediate as well as long-term challenges, create a more resilient Union, and offer a functional answer to the dilemma between deepening and widening.30

27 White paper on the future of Europe. Reflections and scenarios for the EU27 by 2025. European Commission, Brussels, 2017. <doi.org/10.2775/66626 > 28  Stefan Telle–Claudia Badulescu–Daniel Fernandes: Differentiated integration in the EU – What do the Member States ‘think’ about it? Robert Schuman Centre for Advanced Studies, Research Paper No. RSC 2021/50.<https://poseidon01.ssrn.com > Accessed: 28 July 2021. 29 Norberto Nuno Gomes de Andrade: Enhanced Cooperation: the Ultimate Challenge of Managing Diversity in Europe. New Perspectives on the European Integration Process. Intereconomics. 2005/4. 201–216. 30  Norberto Nuno Gomes de Andrade: Enhanced Cooperation: the Ultimate Challenge of Managing Diversity in Europe. New Perspectives on the European Integration Process. Intereconomics. 2005/4. 201–216.