Comparative European Politics

https://doi.org/10.1057/s41295-019-00164-7

ORIGINAL ARTICLE

The future of differentiated integration: a ‘soft‑core,’

multi‑clustered Europe of overlapping policy communities

Vivien A. Schmidt1

© Springer Nature Limited 2019

Abstract
In lieu of a conclusion to the Special Issue, this article discusses the future of
Europe as one of differentiated integration. It argues that this future takes the form
of member-states’ overlapping participation in the EU’s many policy communities,
making for a soft-core Europe, as an alternative option to the hard-core around the
Eurozone. The article contends that this multi-clustered Europe is the only feasi-
ble future, given the challenges facing the EU from its many crises, its problems of
governance, and the difficulties of decision-making against a background of increas-
ing politicization. But such differentiation is not without its problems, given EU
decision-rules, the interconnectedness of policy arenas that can spell problems of
spillover, and the need for deeper integration in some policy areas (e.g., migration)
while others may benefit from less or more highly differentiated integration (e.g.,
Eurozone). Institutional reforms would also be necessary to ensure a positive future
of differentiated integration: While the EU would continue to require a single set of
institutions, it would need modified decision-rules to allow for more (and less) dif-
ferentiation depending upon the area.

Keywords European integration · Differentiated integration · European Union ·

Politicization · Populism · Europe in crisis

Introduction

The future of Europe will be one of differentiated integration. The question is not
whether but how that differentiation will develop, since the EU is already differenti-
ated. Alongside an ideal of uniformity, in which all member-states were expected to
deepen integration in the same ways at the same speed, has long been the practice of
differentiated integration, in which member-states’ differing needs and preferences

* Vivien A. Schmidt
vschmidt@bu.edu
1
Pardee School of Global Studies, Boston University, 154 Bay State Road, Boston, MA 02215,
USA

Vol.:(0123456789)
 V. A. Schmidt

have largely been accommodated (Schmidt 2009). Recently, EU leaders themselves

have implicitly acknowledged both the reality and the continued necessity of differ-
entiated integration, stating in the ‘Rome declaration’ of March 25, 2017 that: ‘We
will act together, at different paces and intensity where necessary, while moving in
the same direction, as we have done in the past, in line with the Treaties and keeping
the door open to those who want to join later.’1 Moreover, in the European Com-
mission’s White Paper on the Future of Europe published earlier that same month,
on March 1, 2017, the most likely scenario among the five elaborated was made up
of ‘coalitions of the willing’ that would carry forward new cooperation projects in
areas such as defense and security, justice, taxation, and social policy, with other
member-states joining those projects later, once ready or willing (Commission
2017).
Differentiated integration is generally taken to mean that, beyond the Single Mar-
ket, to which all member-states naturally belong, and assuming the non-negotiable
requirements that members be democracies that respect the rule of law and accept
the acquis communautaires, member-states need not all proceed together at the
same rate with a uniform set of institutions to converge on the same single array
of policies. Within these parameters, many possible differentiated futures have been
debated over the years, including a two-speed Europe, a hard-core Europe around
the Eurozone, a Europe of variable geometry, and more (e.g., Stubb 1996; Piris
2012; Tocci 2014; Jensen and Slapin 2015; Leruth and Lord 2015; Leuffen et al.
2012; Thym 2016). This paper steers a middle course through such debates, argu-
ing that the future is likely to consist of a soft-core Europe made up of the multiple
clusters of member-states that overlap in their participation in the EU’s many policy
communities. The idea behind this soft-core is that a large majority of member-states
will continue to belong to a plurality of policy communities, including the Euro-
zone, security and defense, and Schengen, in addition to more specialized coopera-
tive arrangements. Such overlapping memberships should make for a more cohesive
European Union even though countries will not all belong to all policy communi-
ties beyond the Single Market. For this to work, however, a single set of institutions
remains a key requirement, even if the decision-rules would require some modifica-
tion for such differentiated integration to operate effectively and legitimately.
The EU now has too many members with too many diverging interests and ideas
to be able to reach optimal agreements on deeper integration among all member-
states within the current institutional/legal setup. Although many such divergences
may have long existed, the problems have become more acute as a result of the con-
catenating crises in key areas such as money (euro crisis), borders (migrant crisis),
security (terrorism and the neighborhood), and the continuing integrity of the EU
itself (Brexit) (e.g., Börzel and Risse 2018; Caporaso 2018; Rosamund 2016). In
conjunction with these crises has come an overarching political crisis. It results from
the failures of EU governance to resolve its multiple crises and manifests itself in the

1
‘The Rome Declaration: Declaration of the leaders of 27 member states and of the European Council,
the European Parliament and the European Commission’, http://www.consi​lium.europ​a.eu/en/press​/press​
-relea​ses/2017/03/25-romed​eclar​ation​/.
The future of differentiated integration: a ‘soft‑core,’…

increasing politicization of the EU at national and supranational levels. At the bot-

tom, we find increasingly polarized national debates, divided electorates, declining
pro-EU mainstream parties, and the rise of Euroskeptic populist challengers (e.g.,
Hooghe and Marks 2009; Kriesi 2014; Hutter and Kriesi 2018). From the bottom-
up, we see national politics increasingly affecting member-states’ decisions in the
Council (Schimmelfennig 2015). And at the top, we see an intensified politicized
dynamics of interaction among EU actors (Schmidt 2018, 2019). All of this taken
together challenges the gains of European integration and could even threaten to
bring disintegration (Jones 2018).
The question is whether and/or how member-states can stay together even as
some may go further than others more quickly and in different directions. For this,
we need to consider not only the possibilities for differentiated integration in key
policy areas but also the institutional consequences of such arrangements, to ensure
that they would work in any given policy area without undermining the common
institutions so necessary to continued EU integration. We equally have to recognize
that some areas may be more amenable to differentiation, with member-states opt-
ing in or out, as in security and defense (Howorth, this volume), whereas others may
be less amenable, whether due to normative principles, the case of asylum policies
(d’Appollonia, this volume), or legal necessity, the case of rule of law (Kelemen,
this volume). Yet other areas may allow for differentiation with regard to initial par-
ticipation, such as the British and Danish opt-outs on the euro, but not to opting out
once in, due to the high costs of exit, clearly the situation for Greece (Matthijs et al.,
this volume).
The potential reasons for these different modalities of differentiation are many.
They may stem from the technical requirements of the policy area, the legal con-
straints of the rules, the political judgments of EU actors (Matthijs et al., this vol-
ume), and/or the bargaining logics of intergovernmental leaders (Schimmelfennig,
this volume). Alternatively, differentiated integration may be a consequence not just
of EU decisions or constraints but also of their differential impact on member-states’
economic and institutional configurations. This is best illustrated by the impact of
the Single Market’s freedom of movement on the UK’s labor market institutions and
the resulting disintegrative dynamics coming from its knock-on political effects, as
seen in the vote for Brexit (Bickerton, this volume).
In short, even differentiated integration is highly differentiated. In this concluding
article of the Symposium Issue, rather than theorizing such differentiated integration
by building on any of the ‘grand theories’ of integration, whether along the lines
of intergovernmentalism (see Schimmelfennig, this volume), supranationalism, or
post-functionalism (see, e.g., Hooghe and Marks 2019), we discuss the more empiri-
cal questions related to future integration.
In order to explain why the future direction of Europe is necessarily one of dif-
ferentiated integration and to consider how this could best be realized, the article
begins with the challenges posed by the many crises the EU currently faces. These
include the policy challenges coming from the Eurozone, refugee, security, and
Brexit crises, but also the political challenges resulting from the increasing politici-
zation of the EU at the bottom, in national politics, from the bottom-up, as political
pressures on EU actors, and at the top, in the interrelationships among EU actors.
 V. A. Schmidt

The article then considers the current state of what is already a highly differentiated
EU. It ends with a discussion of the future possibilities and proposes ways for the
EU to move forward productively through greater differentiated integration.

Crisis challenges to EU integration

The European Union has been in the midst of a cascading series of crises over the
past decade, including the Eurozone crisis, the refugee crisis, and Brexit, not to men-
tion security crises after terrorist attacks or new conflicts on the borders. Each of
these crises represents a potentially existential challenge for the EU and exacerbates
the underlying political crisis. All demand concerted EU responses, greater coor-
dination, and deeper EU integration. But only in one case, the Eurozone crisis, has
deeper integration been successfully pursued, and it has not been a great success.

Policy challenges

Although the euro was indeed saved, the Eurozone lives with the lingering threat
of deflation, low growth, rising poverty, and high unemployment, particularly in
Southern Europe. Much of this can be attributed to the suboptimal policies linked
to deeper integration through the austerity and structural reforms of ‘governing by
rules and ruling by numbers’ in the Eurozone (Schmidt 2015, 2016). In response to
the crisis, rather than providing some form of debt forgiveness or debt mutualiza-
tion accompanied by greater investment stimulus, the EU reinforced macroeconomic
austerity rules mandating low inflation, low deficits, and low debt while agree-
ing to greater oversight over member-state governments’ budgets (Blyth 2013; De
Grauwe 2013). These policies have led to greater divergence among EU economies
rather than the expected convergence, as Northern Europe has continued to flourish
while Southern European countries have struggled to recover (Tooze 2018). Spillo-
ver effects on the politics, moreover, have increased the split between the Northern
‘saints’—where mainstream parties resist any ‘transfer union’ while populist parties
call for a more restricted Eurozone—and the Southern ‘sinners’—where mainstream
parties ask for more solidarity while populist parties call for an end to austerity or
even to the euro (Matthijs and McNamara 2015; Scharpf 2014; Kriesi 2014).
In the refugee crisis, the EU response has, in contrast with the Eurozone,
involved a lack of coordination and increasing fragmentation. Member-states
have long divided over what to do and how. While they made progress on the cre-
ation of hard security in external border controls via supranational governance,
refugee policy remained weak, suffering from a lack of harmonization and at the
mercy of intergovernmental (lack of) agreement (Goodman and Schilde 2018;
Börzel and Risse 2018). EU Common Asylum policy itself, under the commonly
agreed Dublin regime, allowed for tremendous differentiation in the modalities
of implementation, with major divergences in acceptance rates and conditions of
reception (d’Appollonia, this volume). During the refugee crisis, the EU retreated
even from the integration already in place, suffering from a lack of solidarity
The future of differentiated integration: a ‘soft‑core,’…

and effective implementation (Scipioni 2018). This was the case both in terms
of Schengen’s borderless Europe and the Dublin Accord rules governing asylum
seekers, ensuring even greater chaos in what d’Appollonia (this volume) found
to be an already ‘chaotic differentiation.’ The failures of the EU in this area have
been grist for the mill for the populist political leaders of the extreme right in
Central and Eastern European countries (CEECs). The Hungarian Prime Minis-
ter Victor Orban in particular has used it to rally support, with images of barbed
wire to keep out the ‘barbaric hordes’ that threaten Hungarian purity and safety
serving to focus attention away from the Orban government’s increasingly anti-
democratic institutional measures (Kelemen 2017). In Southern Europe, the two
countries most negatively affected by the Eurozone crisis—Greece and Italy—
have in contrast borne the brunt of the crisis, as refugees and migrants continue to
wash up on their shores. In Italy in particular, the election of a populist governing
majority has been due in part to the failure of the EU to find a common solution
to the refugee crisis (as well as the eurozone crisis).
In the security crisis, moreover, the failure to move toward any significant integra-
tion continues to plague the EU’s Common Security and Defense Policy (CSDP)—
and this is despite the rising risks of terrorism coming from the Middle East, the
continued threat from Russia linked to the frozen conflict in the Ukraine (Howorth
2014), and more recently fake news. Although the EU has built increasing govern-
ance capacity within the framework of the military-industrial nexus (Schilde 2017),
this has not translated into the consolidation of member-states’ military capacity as
an integrated force or for a common security strategy (Howorth 2014, this volume).
The election of Donald Trump to the US presidency only intensifies the security
crises, in particular given Trump’s initial statements supporting Russian President
Putin and questioning the value of NATO, his trashing of the Iran nuclear deal, and
his discursive skirmishes (and then engagement) with the North Korean leader.
British exit from the EU represents its own special challenge. Here, the uncer-
tainty of how and what the UK will negotiate in terms of its future relationship with
the EU opens up a whole range of questions not only about the future of the UK but
also of the EU (Diamond et al. 2018). As of January 2019, after Parliament voted
against Theresa May’s proposed deal, the questions were: Will Parliament ultimately
vote for a slightly modified government deal, will there be a second referendum, or a
‘no deal’ crash out of the EU, which all sides other than the staunchest of Brexiteers
are trying to avoid. Although the negotiation process did not split the member-states
over the terms of Brexit, it nonetheless proved frustrating and time-consuming, as
Brexit negotiators failed in meeting after meeting to find the requisite compromises
until seemingly the last minute, time and again (see the website UK in a Changing
Europe for up to date coverage http://ukand​eu.ac.uk/analy​sis/). Moreover, the poten-
tial loss of the UK, while perhaps facilitating agreements among the remaining 27,
at the same time weakens the EU economically as well militarily, unless some form
of positively differentiated integration is negotiated. But even more importantly, and
regardless of the outcome, Brexit challenges the very idea of European integration,
and raises the specter of EU disintegration—with disintegration understood as an
indeterminate process of stagnation in a suboptimal institutional equilibrium rather
than any immediate, identifiable outcome (Rosamund 2016).
 V. A. Schmidt

Political challenges

These crises not only pose major policy challenges for the EU. They also represent
significant political challenges in a EU that has become increasingly politicized at
national and supranational levels. At the national level, politicization is a complex
phenomenon in which growing electoral divides between citizens whose vision of
Europe is more open, universalist, liberal, and cosmopolitan and those with more
closed, communitarian, xenophobic, and nationalist (or even EU-regionalist) orien-
tations (Hooghe and Marks 2009, 2019; Kriesi et al. 2012; Zürn 2012). These divi-
sions find expression in increasingly polarized national debates, often led by popu-
list challenger parties to which mainstream parties struggle to respond (Kriesi et al.
2008; Kriesi and Hutter 2016); in the increasing volatility of national elections; and
in the loss of trust in EU and national level politicians (Hobolt 2015; Hix and Høy-
land 2013).
Such politicization at the bottom has many different sources. These include the
economics of people feeling ‘left behind’ (e.g., Rodrik 2018; Bickerton, this vol-
ume) and the social discontents of those fearing a loss of social status and concerned
about immigration changing the ‘face’ of the nation (e.g., Inglehart and Norris
2017). But there are also purely political sources of dissatisfaction directly related to
deepening European integration. These have to do with the dilemmas of EU govern-
ance, in which citizens elect leaders at the national level while policy in increasing
numbers of areas is made at the supranational level, where the familiar left–right
politics appears displaced by technocratic decision-making (Schmidt 2006; Mair
2013; Caramani 2017). While this problem has been building over time, the EU’s
successive crises have served as triggers for a sea change in anti-system attitudes,
with populists’ messages about out-of-touch, self-serving, corrupt, and incompe-
tent elites mustering growing public support for views that contest EU authority and
activities in increasingly polarized public debates (Kriesi 2014, 2016; Hutter and
Kriesi 2019).
The election of populist governments, combined with growing citizen dissat-
isfaction more generally, ensures that the politicization at the bottom has also had
bottom-up effects at the supranational level. (Schmidt 2018, 2019). As the long-
standing ‘permissive consensus’ has increasingly given way to the ‘constraining dis-
sensus’ (Hooghe and Marks 2009), EU actors have all become more ‘political.’ In
the European Council in particular, we see the growing influence of national politics
on member-state leaders’ positions (e.g., Schimmelfennig 2015; Hodson and Puet-
ter 2019). In the Eurozone crisis, the Council’s suboptimal ‘solutions’ may be seen
as the result of a coercive bargaining process dictated by Germany following its
rational interests (e.g., Schimmelfennig 2015) or as a consensus-seeking delibera-
tion (Puetter 2012), but ‘in the shadow of Germany’ (Schmidt 2015, 2016). In the
migration crisis, instead, the lack of agreement can also be seen either in terms of
rationalist bargaining in which no solution would fit member-states’ divergent inter-
ests within the given institutional context (Schimmelfennig 2018, this volume) or as
a ‘destructive dissensus’ in which Council consensus-seeking led mainstream mem-
ber-state leaders to accommodate extreme right populist challenger governments, to
the detriment of EU norms and values (Hodson and Puetter 2019).
The future of differentiated integration: a ‘soft‑core,’…

Politicization is not just at the bottom or bottom-up, however. It is equally at

the top, in the increasingly politicized interrelationships of major EU-level actors
(Schmidt 2019). As integration has deepened, EU actors’ long-standing relations
of cooperation are now riven in many domains by greater contestation, in strug-
gles not only over interest-based power and influence but also over which policy
ideas are deemed most effective and legitimate (Schmidt 2018, 2019). But scholars
are divided over who is in charge or control. Many traditional intergovernmental-
ist scholars assume an all-encompassing role for the Council, to the detriment of
any other EU-level actors, for example, in the hard-bargaining games of chicken in
the Greek crisis, pitting German Finance Minister Wolfgang Schäuble against Greek
Finance Minister Yanis Varoufakis (Schimmelfennig 2015). In contrast, although
‘new’ intergovernmentalists also assume a primary role for the Council via consen-
sus-seeking (rather than hard-bargaining), they contend that ever since the Maas-
tricht Treaty member-state leaders have not only decided more in the European
Council but have also created de novo regulatory bodies outside the main EU insti-
tutions, in order deliberately to contain if not reduce Commission powers (Puetter
2012; Bickerton et al. 2015).
Scholars who take a supranationalist approach generally dispute (new and old)
intergovernmentalists’ views of the Council as having won the political battle for
power and authority. They argue instead that although the Council may remain ‘in
charge’ of decision-making, in particular in crisis moments, supranational EU actors
have become more ‘in control’ in a number of domains (Schmidt 2018, 2019). For
some, this is because of an increase in supranational actors’ institutional powers, in
particular in the context of the Eurozone crisis (Niemann and Ioannou 2015). For
others, it comes through the exercise of ideational leadership, for example, by devel-
oping and proposing to intergovernmental leaders the policy initiatives they were
then charged to enforce—including the European Semester by the Commission and
Banking Union by the ECB (Bauer and Becker 2014; Dehousse 2016; Epstein and
Rhodes 2016).
Even scholars concerned with the European Parliament see it too as an increas-
ingly political actor in the interinstitutional dynamics ‘at the top.’ In the EP, politici-
zation came not only from the bottom-up in the form of the larger presence of popu-
list representatives elected in the 2009 and 2014 EP elections but also appeared, and
more significantly, at the top, in the EP’s successful election push on the Spitzenkan-
didat. This was an attempt by the EP to reinforce its own political power vis-à-vis
the Council in the appointment of the Commission president, as well as an effort
to increase democratic legitimacy for the EU as a whole (Dinan 2015). Addition-
ally, the EP’s politics has entailed greater scrutiny of non-majoritarian institutions’
actions, often accompanied by scathing critiques of the other EU actors (Héritier
et al. 2016).
So what does the politicized dynamics of interaction among EU actors tell us
about the EU’s governance model and its legitimacy? It suggests that EU processes
of governance may have already taken it beyond the dual model of regionalization
identified by Fabbrini (this volume), where the governance of the Single Market is
by the co-decision method and that of new policy areas by intergovernmental lead-
ership. In Eurozone governance in particular, while intergovernmentalism without
 V. A. Schmidt

supranational legitimacy may describe the initial fast-burning phase of the crisis
(Fabbrini 2013), once the crisis slowed Eurozone governance came closer to the co-
decision method, in which legitimacy emerges from the discursive dynamics of con-
testation and deliberation among EU actors (Schmidt 2018, 2019). In so doing, we
could even suggest that in this area the EU could be moving toward some prelimi-
nary form of federal union (Fabbrini, this volume). Intergovernmental leadership,
in contrast, may still characterize migration and security policy. By the same token,
club governance (Majone 2014) is nowhere in evidence.

The current State of EU differentiation

The complicated political dynamics of current EU governance helps explain why

the EU is already in a state of differentiated integration. This can be seen not only
in the member-states’ differential participation in the EU’s many policy communi-
ties but also in the increasing differentiation within and across the member-states.
European integration has not only led to a ‘process of nation-state boundary tran-
scendence’ (Bartolini 2005). It also has an impact on subnational regions, which
have become spaces for the further differentiation of the nation-state ‘from below’
(Keating 2013).
The scholarly literature has long debated the question of the EU’s differentiated
integration. Some argued early on that the EU constituted a ‘plurality of different
polities at different levels of aggregation’ (Schmitter 2000, p. 21), while others have
more recently contended that the EU consists of separate ‘Unions’ related to differ-
ent policy arenas (Fabbrini 2015, and this volume—see further discussion in Leruth
and Lord 2015, pp. 754–56). The literature has generally identified two basic forms
of internal EU differentiation: territorial, often described as ‘horizontal’ differentia-
tion, involving states opting in or out of EU action (Adler-Nissen 2014), and ‘verti-
cal,’ characterizing the distribution of power between the EU and the member-states
in different policy sectors (Jensen and Slapin 2015; Schimmelfennig et al. 2015).
But internal differentiation could also be seen as the product of different actions by
different institutional bodies (Leuffen et al. 2012; Dehousse and Thompson 2012).
Beyond this is the question of which neighboring countries are to be admitted as
members, or only as participants in specific policy areas. And here, ‘external differ-
entiation’ is also a reality, in particular through the access third-country regulators
have to a range of EU technical committees and regulatory agencies (Lavenex 2015).
Internal differentiation is most in evidence, however, in terms of member-state
participation in different policy areas. While all member-states are part of the Sin-
gle Market, the ‘community of communities,’ membership in other policy areas is
highly variable. Such variable geometry includes Schengen borders (minus the UK
and Ireland but with non-EU members Norway, Iceland, and Switzerland), Common
Security and Defense Policy (without Denmark and with all members being able to
opt in or out of missions), the Charter of Fundamental Rights (with opt-outs for the
UK and Poland). And then there is the Single Currency, which includes 19 out of 27
member-states, the rest of which have either permanent opt-outs (UK and DK), are
The future of differentiated integration: a ‘soft‑core,’…

resistant but without opt-out (Sweden) or are eager but not yet ready to opt in (the
other CEECs).
But even in the Single Market, of which all members-state are a part, and in which
member-states are highly constrained by EU law to participate (Matthijs et al., this
volume), integration may nonetheless be differentiated. The most usual—and least
problematic—are the negotiated exemptions to commonly agreed rules for individ-
ual countries. Such ‘informal governance’ has been a normal part of a process of
negotiated agreement in the Single Market since the very beginning, as a way to
avoid the political fallout from domestic groups’ objections that could jeopardize
consensual EU-level politics or national political stability (Kleine 2013). But other
policy areas within the Single Market remain highly differentiated, without common
rules, such as the differentiated tax regimes characterized by ‘beggar thy neighbor’
policy. The most egregious cases include Ireland with its low 12 percent corporate
tax and its special tax deals for the likes of Apple and Google (recently fined for
violating competition rules), Luxembourg with similar such deals as reported in
Luxleaks, the Netherlands with its low 15 percent tax, not to mention various Brit-
ish offshore island tax havens. Here, high differentiation allows free riding of an
egregious kind, to the great detriment of the socioeconomic health of other member-
states, and the politics of the EU as a whole.
Beyond the Single Market, the treaties specifically provide for particular modali-
ties of further differentiated integration. The Lisbon Treaty agreement for ‘perma-
nent structured cooperation’ in the security and defense arena, for example, permits
the greatest of variability, since it enables any number of EU member-states to agree
to deeper integration of their military capabilities and engage in joint military opera-
tions subject, of course, to their obligations under the various EU and NATO Trea-
ties (Biscop 2008; Howorth 2014). What we see currently is a proliferation of differ-
entiation. The very recent initiative focused on PESCO, expected to deepen security
integration with a large number of member-states, comes alongside other initiatives,
including the ‘Framework Nation Concept’ and the ‘European Intervention Initia-
tive’ (Howorth, this volume).
‘Enhanced cooperation’ has also begun to work, despite the fact that it requires
at least nine participant member-states, with authorization by the Council to be ‘a
last resort’ decision when the Union as a whole cannot attain those same objectives
within a reasonable period (Treaty of Lisbon, 2007/C 306/22/2). Enhanced coopera-
tion has already been deployed in the areas of divorce of cross-border couples and
in patents. It is additionally in process with regard to the financial transaction tax.
The fact that enhanced cooperation was even agreed in the Lisbon Treaty signals
member-states’ acknowledgement that a high degree of differentiation without inte-
gration—even fragmentation—remains the norm in a wide range of policy areas.
Defense and security is not the only area characterized by continued un-integrated
differentiation. Transport, communications, and infrastructure have also seen mini-
mal integration or forward movement, while energy and the environment are subject
to fragmentation and the risk of disintegration (Tocci 2014). Moreover, although
migrant and refugee policy does have a minimal measure of integration through the
Dublin Regulations, this only makes matters worse for member-states on the front-
lines of migration flows, left to do much of the hard work, in particular when other
 V. A. Schmidt

countries flout the rules, as in the case of Central and Eastern European Countries at
the height of the refugee crisis in 2015 (D’Appollonia, this volume).
In contrast, European Monetary Union (EMU), with its unified monetary policy
and constraining rules of fiscal discipline, represents an area of exceedingly deep
and arguably excessive integration (Schmidt 2015, 2016; Matthijs et al., this vol-
ume). But even here, there is significant differentiation among EU member-states,
with non-euro members opting into institutions established for euro members, and
some euro and non-euro members joining into enhanced cooperation mechanisms
applying to the Single Market (see Table 1). With regard to the Single Currency,
for example, all EU member-states signed up to the Stability and Growth Pact, the
European Semester, and the Six Pack, requiring members exceeding a 60 percent
debt level to be subject to the Macroeconomic Imbalance Procedure. In contrast,
the Treaty on Stability, Coordination and Governance (TSCG), known as the Fiscal
Compact, in which countries agreed to abide by the ‘Golden Rule’ of low deficits
and debt, applies to all EU member-states except the UK and the Czech Republic.
Beyond this, the Euro Plus Pact, focused on improving competitiveness, employ-
ment, and fiscal consolidation applies to the 19 Eurozone members plus Bulgaria,
Denmark, Poland, and Romania, while the Two Pack that strengthens provisions of
the European Semester is valid only for the Eurozone. In addition, the European
Stability Mechanism (ESM) is available only to the 19 Eurozone members, while
Banking Union remains open to any other member-states interested in joining, but
currently includes only Eurozone members. Just to complicate matters further,
enhanced cooperation in the Single Market includes the Financial Transaction Tax
(FTT), to which 11 EU member-states have signed up, and the Unitary Patent Pro-
tection, in which 26 EU member-states participate (see Table 1).
Differentiated integration is also increased by the presence in the EU of ‘outside
insiders’ like Norway, Iceland, and Switzerland that participate in the Single Market
as well as in a range of other EU policy communities such as Schengen and CSDP
but don’t have a vote. It is complicated by initiatives like the Bologna process for
higher education harmonization, which was set up outside the EU by EU member-
states, includes most member-states as well as many non-EU states across Europe,
and was aided financially and administratively by the Commission (Ravinet 2008).
Differentiated integration was only further extended by ‘Neighborhood’ policies
involving deep and comprehensive free trade agreements, gradual integration into
the EU economy, ‘mobility and security pacts,’ and the promotion of democracy and
good governance. Moreover, the EU’s finalité remains to be decided.
The one area in which differentiation is not acceptable is in the EU’s core com-
mitment to the rule of law (Kelemen, this volume). But even here, differentiation has
nevertheless been occurring, as governments in Central and Eastern Europe, espe-
cially in Hungary and Poland, have sought to curb the independence of the judi-
ciary and freedom of the press while claiming that this was a matter of national
competence (Kelemen 2017, this volume). Problematically, the EU at least initially
turned a blind eye to this drift toward so-called ‘illiberal democracy,’ in particular in
the case of Orban’s Hungary, although more recently the EU triggered the Article 7
sanctions procedure against Poland (in December 2017) and then against Hungary
(in September 2018).
Table 1  European Economic Governance
EU Members Single Market Eurozone Banking Union
Member FTT Patent Member ESM 6 Pack 2 Pack TSCG Euro Plus Member

Austria + + + + + + + + + +
Belgium + + + + + + + + + +
Bulgaria + + + + +
Croatia + + + +
Cyprus + + + + + + + + +
Czech Rep + + +
Denmark + + + + +
Estonia + + + + + + + + + +
Finland + + + + + + + + +
The future of differentiated integration: a ‘soft‑core,’…

France + + + + + + + + + +
Germany + + + + + + + + + +
Greece + + + + + + + + + +
Hungary + + + +
Ireland + + + + + + + + +
Italy + + + + + + + + +
Latvia + + + + + + + + +
Lithuania + + + + + + + + +
Luxembourg + + + + + + + + +
Malta + + + + + + + + +
Netherlands + + + + + + + + +
Poland + + + + + +
Portugal + + + + + + + + +
Romania + + + + + +
Table 1  (continued)
EU Members Single Market Eurozone Banking Union
Member FTT Patent Member ESM 6 Pack 2 Pack TSCG Euro Plus Member

Slovakia + + + + + + + + + +
Slovenia + + + + + + + + + +
Spain + + + + + + + + +
Sweden + + + +
UK + + +
V. A. Schmidt
The future of differentiated integration: a ‘soft‑core,’…

What future for the EU?

So what will the EU’s finalité be? Where is it headed? The EU was never going to
become the USA of Europe that European federalists have long envisioned. But is
it going to become a two-speed Europe (Piris 2012)? A Europe of concentric cir-
cles surrounding a compact core (e.g., Glenicker group 2013; Eiffel group 2014;
Future of Europe Initiative 2012)? A Europe with a hard-core centered around
the Eurozone (as former French President Hollande first proposed and current
French President Macron then re-launched)? A Europe of different ‘Unions’ (Fab-
brini 2015)? A Europe of different ‘clubs’ beyond the Single Market (Demertzis
et al. 2018)? Or, failing these, a Europe completely à la carte, with ‘club govern-
ance’ (Majone 2014; see also Fabbrini, this volume)—as many fear?
Rather than a small hard-core of member-states engaged together in deepen-
ing across policy areas or member-states going forward in many different direc-
tions, it is possible to think about the EU’s future organization in terms of a soft-
core Europe. This is a Europe made up of overlapping clusters of member-states
participating in the EU’s many different policy communities, all administered
by a single set of EU institutions, with most member-states being involved in
most areas (beyond the Single Market, to which all belong by definition), even
if some will have more limited involvement. Within this soft-core Europe, some
policy areas still require deeper integration, such as security and defense policy
as well as migration and refugee policy, while others arguably require less. The
Eurozone, I argue below, demands greater deconcentration and decentralization,
to give back to the member-states control over their economic policies, which
alone could combat the deteriorating politics ‘at the bottom’ in which citizens
vote for populists out of frustration for their lack of voice and choice. Thinking
of the future of the EU in this way is best adapted to the already high level of
EU differentiation. It is also perhaps the only way to improve the EU’s problems
with regard to democratic legitimacy while dealing with the EU’s many faceted
politicizations.

Toward a Soft‑Core Europe

The problem with a two-speed Europe is that it doesn’t reflect the realities of
what is already a multi-speed Europe, with different member-states participating
in different policy communities. The problem with a hard-core Europe is that it
might be difficult to make it work, given diverging ideas and interests among the
main countries expected to coalesce.
As we have seen, the EU is already moving at many speeds. Such country-
based policy-related variability is likely to increase over time given the possi-
bilities for even more differentiation allowed by the Lisbon Treaty through ‘per-
manent structured cooperation’ and ‘enhanced cooperation.’ Were there to be
another economic crisis, even the Eurozone could see renewed discussion of the
 V. A. Schmidt

possibility that euro members in trouble could exit or even be part of a second
level currency (Scharpf 2014, 2017). Brexit adds yet another level of complex-
ity to the EU. If we think about the EU as running at two speeds, the question is
whether the UK would be at the outer limits of the second speed, in a third speed
all its own, with additional opt-outs—or outside with occasional opt-ins.
The EU, in short, is already multi-speed. Many therefore argue that there is even
greater need for it to coalesce around a small group of countries. The problem with
a hard-core Europe, especially one in which the Eurozone sits at the core, is that it
assumes that France and Germany will be able to reach productive agreement on a
wide range of future policies. This is open to question. Even on economic policy,
despite the historic compromise on Eurozone policy that made for ‘Merkozy’ in the
first year and a half of the crisis, the two countries remain far apart: Germany stands
for restrictive budgetary policy to maintain stability and France for more expan-
sionary policy to promote growth (Blesse et al. 2016). Were such a hard-core to
be established, it would most likely be dominated by Germany in economic policy
(but probably not in security policy, where France has a clear advantage). And for
the moment at least, French President Macron’s ambitious proposals for institutional
reforms (such as a Eurozone Finance Minister) and fiscal capacity (worth several
percentage points of GDP) have not borne fruit, receiving lukewarm responses at
best from German leaders.
The creation of a smaller hard-core around Germany and France seems not only
unrealistic because of difficulties of agreement between the two key players, but also
because it could create a deep rift between the smaller core and the rest (Emman-
ouilidis 2017) that would trigger resistance to the project. Furthermore, why assume
that a cluster of member-states that takes the lead in one policy area (i.e., the Euro-
zone) would have the ability, let alone the will or imagination, to lead in the others
(e.g., in security or migration)? In fact, deeper integration in one area could instead
produce an even higher degree of differentiation in other policy areas (Tocci 2014).
Moreover, any such deeper integration could fully alienate the post-Brexit UK. The
British might ask, ‘why deal with the EU at all?’ if the Eurozone were to become the
central focus of EU integration as a whole.
However, the EU could retain its appeal—for the UK as well as other member-
states resisting membership in the Euro (i.e., Sweden) or on the outside looking in
(e.g., Norway and Switzerland)—if the Eurozone were to be seen as just one of the
EU’s many policy ‘communities,’ and if the EU as a whole were seen as consist-
ing of a soft-core of multiple clusters of member-states, in which any duo or trio
of member-states would take leadership in any given policy community. Differ-
ent ‘leadership constellations,’ in other words, would allow for forward movement
in different policy communities without the existence of a hard-core (Balfour and
Kirch 2017). While the UK may continue to stand aside with regard to the Eurozone,
it could reclaim a leadership role in CSDP, as one of two European nuclear powers.
As for migration policy, given the problems of reaching a common policy during the
migrant crisis, this might be an area where deeper integration involving EU wide
agreement on principles of treatment could be accompanied by more differenti-
ated integration regarding the modalities of implementation (see D’Appollonia, this
volume)—with for example positive incentives in place of imposed quotas. Such a
The future of differentiated integration: a ‘soft‑core,’…

‘soft-core’ vision of the EU is not far from the conceptualization of the EU as made
up of ‘clubs’ in areas such as EMU, migration, asylum and Schengen, and Security
and Foreign Policy beyond a bare-bones common base largely co-terminus with the
Single Market, common rules regarding respect for democracy and social rights, and
a common set of institutions including legal system (Demertzis et al. 2018). The
main difference is that my soft-core vision sees members of all such policy commu-
nities involved in ongoing processes of interaction and sees differential possibilities
for ‘club’ integration with regard to EMU.
Seeing the future of EU integration as a differentiated process of member-state
participation in different policy communities beyond the Single Market would allow
for each ‘community’ to develop further while constituting its own special system of
governance. In migration and security, the EU has so far done very little in terms of
the institution building and law-making required for deeper integration. The ques-
tion for these areas is: how they can move forward to deepen integration either dif-
ferentially, most likely the case for security, or all together, as must be the case for
refugee policy, while allowing for solutions adapted to the differences among coun-
try hosts? The Eurozone is different.

Rethinking Eurozone governance: more coordination

and decentralization

The Eurozone has already deepened its integration, with dedicated oversight pro-
cesses such as the European Semester, with institutions such as the European Stabil-
ity Mechanism (ESM) and Banking Union, and others envisioned, such as a Euro-
pean Treasury and a Finance Minister. Such deepening, when viewed not as at the
center of a hard-core Europe but the first of the developing policy communities of a
soft-core Europe, could be seen as a template for the future of EU governance.
But there is one caveat. What the Eurozone needs is not necessarily what it cur-
rently does. The Eurozone has an extraordinarily elaborate architecture of economic
coordination (via the European Semester) reaching into all the Eurozone ministries
of finance and country economic experts. Such governance appears highly central-
ized and top-down with its restrictive rules and sanction-triggering numbers (even
though the reality as we have already seen is more flexible than the appearances).
Worse, it has not been particularly effective and has added to the problematic politi-
cization at the bottom (Schmidt 2016, 2019). The question to ask is: Why not decen-
tralize the European Semester, making it more bottom-up than top-down? Why not
use the existing coordination system to ensure that countries consult on their plans
while themselves determining what works for their specific economic growth mod-
els and varieties of capitalism? Why not have the competitiveness or fiscal coun-
cils act more as industrial policy councils rather than structural adjustment hawks?
Moreover, why not use the Maastricht criteria as general guidelines for variable
yearly targets, depending upon the Eurozone’s employment as well as inflation pros-
pects? And rather than demanding that all member-states meet the same yearly defi-
cit and debt targets, why not set differential country-specific targets (depending upon
where the member-states are in their economic cycle)? Such decisions on the yearly
 V. A. Schmidt

budgetary cycle could be debated with the other member-states in the Euro-group as
well as the Commission, the EP, and the Council. All of this together would make
Eurozone governance more politically legitimate, especially if national parliaments
were also consulted. This might help counter the populist drift in many countries,
as mainstream political parties could begin again to differentiate their policies from
one another, with proposals for different pathways to economic health.
None of this will work, however, if member-states continue to have to contend
with excessive debt loads that weigh on their economies (Greece and Italy) or are
left without significant investment funds to stimulate growth (Portugal, Spain, Italy,
France). Some countries continue to have massive surpluses while failing to invest
sufficiently (Germany and other smaller Northern European countries). At a mini-
mum, Banking Union needs to be completed by a serious fiscal backstop and indi-
vidual deposit insurance. Furthermore, some extra form of solidarity is necessary,
with the European Stability Mechanism turned into a real European Monetary Fund
(EMF), some form of mutualized debt instruments such as Eurobonds or safe assets,
Europe-wide unemployment insurance or a cyclical adjustment fund, EU invest-
ment resources that dwarf the Juncker Plan (as called for by Macron), and more.
In other words, differentiated decentralization with continuing coordination for the
Eurozone would also benefit from being accompanied by deeper integration through
various ‘solidarity’ mechanisms. But in the absence of such solidarity, at the very
least member-states should be allowed to invest their own resources in infrastruc-
ture, education, and training, incurring long-term debt at low interest rates that do
not count toward the deficit.

More solidarity mechanisms across crisis areas and more resources

The other crisis areas need more, rather than less, integration, as well as solidarity
mechanisms. For the Eurozone, many have already proposed some sort of unem-
ployment fund for all countries to pay into, to use when their unemployment rises
above a certain threshold. But there also should be an intra-European ‘EU mobil-
ity adjustment fund’ to support the extra costs for social services and the retraining
needs of workers in countries with greater than usual EU migrant worker inflows.
This might have worked for the UK, with a mobility fund addressing Brexiteers’
fears about the impact of EU freedom of movement on the National Health Service.
But even more significantly, it could benefit other member-states with other kinds of
out-migration as opposed to in-migration concerns. Such a fund, for example, could
compensate Greece for the costs of educating the approximately 2000 medical doc-
tors who have gone to practice in Germany.
More integration through new solidarity mechanisms has great advantages,
especially if a EU mobility adjustment fund were accompanied not only by the oft-
proposed EU unemployment fund but also by a European fund for refugee support.
Different countries would benefit at different times from the funds, which could be
triggered when any one country finds itself overburdened by the extra costs it incurs
because of the asymmetric functioning of the Single Market and the Single Cur-
rency, or because of its openness to refugees. Different funding mechanisms are
The future of differentiated integration: a ‘soft‑core,’…

possible, including from member-state contributions, but the best would be from the
EU’s own resources, based on monetary gains of the Single Market and Single Cur-
rency. This could involve using a proportion of VAT collected in trans-border trans-
actions or of the (not yet established) Financial Transactions Tax. And what of an
EU ‘solidarity tax’ levied on all citizens and residents of the EU, which would have
the added advantage to build a sense of citizen-to-citizen solidarity (Schmidt 2009).
This might ensure that no one could claim any longer that the EU was a ‘transfer
union’ in which one or more member-states paid for the rest.
More generally, we need to emphasize the fact that to be sufficiently democratic
and legitimate, a future soft-core Europe would need to ensure that its many pol-
icy communities are governed in a manner that allows for as much decentralization
of decision-making to the benefit of the member-states as possible. But even this
would not be enough to guarantee the ultimate effectiveness of EU governance, or
its legitimacy.

Reforming the Institutional rules

For such differentiated integration to work effectively and legitimately, and for all
member-states to feel part of this soft-core EU, whatever their level of involvement,
they need to have institutional voice and vote in the sectors in which they participate.
This contradicts Prodi’s earlier promise to the EU’s neighborhood of ‘everything but
institutions,’ since policy participation needs to come with institutional engagement.
All member-states should be able to exercise voice in all areas, but vote only in
those areas in which they participate. Since all are members of the most significant
policy community, the Single Market, this ensures that they will be voting a lot. But
for the Eurozone or Schengen, only participant members should be able to vote. For
the Eurozone, this would mean envisioning that when some members in the future,
say, pledge their own resources to a EU budget, their representatives would be the
only ones to vote on the budget and its use, although everyone could discuss it. For
Schengen, this could mean that current participants that are not EU members would
have voice and vote. For such countries, it could also mean that they would vote
on Single Market issues. For the moment, they experience a major loss in political
legitimacy, since they have to follow Single Market rules and regulations as well as
contribute to the EU budget without the ability to exercise voice, let alone vote.
But to make EU governance truly workable, the institutional decision-making
rules also require revision. The unanimity rule for intergovernmental decision-mak-
ing needs to be abandoned (Schmidt 2009). The most sensible replacement would
be one setting up ‘constitutional’ treaties amendable by 2/3 or 4/5 majorities. At the
same time, many of the current treaty-based laws should become ordinary legisla-
tion, amendable by simple majority through the Community Method—as detailed
by Dieter Grimm (2015). Thus, for example, while the Lisbon Treaty would remain
a constitutional treaty, amendable however by 2/3 or 4/5 majorities, the various
treaties involving the Eurozone should become ordinary legislation. This means
that they would be open to amendment through political debates and compromise
 V. A. Schmidt

and subject to the co-decision method—all of which would enhance EU political

legitimacy.
In the case of new legislation, moreover, whether ordinary or constitutional, opt-
outs for individual member-states should be allowed for exceptional reasons, such as
where a member-state’s government, citizens, and/or parliament reject the initiative.
But as Fritz Scharpf (2014) has argued, any such opt-out could be subject to denial
by qualified majorities, in cases where the opt-out would unfairly advantage the
member-state and/or threaten the viability of the policy itself. Alternative accommo-
dations could then need to be made for the member-state in question.
The knotty problem remains the question of politics at the bottom. There can be
no differentiation in the EU’s core commitments to the rule of law and democratic
principles guaranteeing free and fair elections, independence of the judiciary, and
freedom of the press (Kelemen, this volume). And representative institutions need
to be reinforced. At the moment, the EU serves the purpose of the populists, by hol-
lowing out national representative institutions, enabling populists to claim that they
are the true representatives of the people. To change this, the EU needs to do more
to reinforce citizen representation and participation. For the Eurozone in particular,
this at the very least demands more involvement of the European Parliament in deci-
sion-making, through a return to the Community Method. Turning Eurozone trea-
ties into ordinary legislation, moreover, would help break the stalemate that makes
it impossible to change such legislation (given the unanimity rule) and make them
subject to political debate. But the EP would also need to find more ways to bring
national parliaments into EU-level decision-making. And the EU as a whole must
devise new means of encouraging citizen participation.

Conclusion

The future of EU governance remains open. Different options are on the table. Here
I developed an alternative to the option of a hard-core Europe centered around the
Eurozone, an alternative based on a soft-core of multiple overlapping clusters of
member-states in the EU’s many policy communities. In this context, increasing
flexibility in the EU’s policy processes, along with decentralization to the benefit of
the member-states, where appropriate, is the best response to the increasing national
level politicization. But soft-core differentiation also has certain common institu-
tional requirements, including one set of laws overseen by the ECJ and ensured by
national courts (Kelemen, this volume), with one set of central, overarching institu-
tions, including the Commission, Council and European Parliament. That said, any
number of specialized institutions may be established to deepen integration in any
given policy community, and is ‘made-to-purpose,’ just as in the Eurozone the ECB
is in charge of monetary policy, the ESM of providing bail-out funds, with Bank-
ing Union having its own further set of institutions. As such, in terms of institu-
tional form, the EU will continue to be sui generis or, to use Fabbrini’s (this volume)
terms, somewhere beyond a model of regional dual governance but not quite the
same as a federal union.
The future of differentiated integration: a ‘soft‑core,’…

The danger for the EU, in particular in light of its many crises, is differentiated
disintegration (Webber 2014). The best way to avoid this is planned differentiated
integration, which means that the heterogeneity of EU member-states’ economies
and polities is recognized as the basis of European integration. But this still leaves
the question of how to construct a more politically legitimate EU, in particular given
the problematic politicization of EU-related issues at the national level. My prelimi-
nary suggestion is that deeper integration must at the same time allow for greater
national differentiation and decentralization. For the Eurozone in particular, this
would mean increasing decentralization of the European Semester to the benefit of
national actors, with the governing rules and numbers treated more as guidelines in
the emerging EU-wide system of fiscal coordination. In this context, the consulta-
tive process at the national level would feed into EU-level recommendations, more
in tune with the changing realities in national and EU economies and responsive to
the heterogeneous needs of member-states’ economies. Other still-to-be-deepened
policy areas could follow suit, with general EU-level guidelines allowing for greater
differentiation among individual member-states or clusters of member-states.
In short, re-envisioning the future of the EU in terms of a soft-core multi-clus-
tered Europe might better reflect the reality of the EU and its development. To
extend a metaphor I have previously evoked, the future might offer more than one
set menu (prix fixe) for the chosen few. This is not to suggest, however, that the EU
is becoming a ‘Europe à la carte,’ where everyone orders different dishes. Rather,
the future might be an elaborate gourmet ‘menu Europe,’ with a shared main dish
(the Single Market), all member-states sitting around the table and engaging in the
conversation, and only some choosing to sit out one course or another (Schmidt
2009). Moreover, because everyone is at the table, even those joining the diners for
only particular courses may slowly over time partake of more and more dishes even
as they learn the manners of the table and the rules of the conversation.

Acknowledgements Previous versions of this paper were presented at the American Political Science
Association Meetings in Boston (Aug 30–Sept 2, 2018) and at the Special Issue workshop at the School
of Government, LUISS Guido Carli, March 19–20, 2018. I would like to thank Mark Pollack, Carlo
Bastasin, and the special issue participants for their valuable comments. Additional thanks go to the
reviewers for CEP.

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Publisher’s Note Springer Nature remains neutral with regard to jurisdictional claims in published
maps and institutional affiliations.

Vivien A. Schmidt is Jean Monnet Professor of European Integration and Professor of International Rela-
tions and Political Science in the Pardee School at Boston University. She is the author or editor of twelve
books, including the forthcoming Europe’s Crisis of Legitimacy: Governing by Rules and Ruling by
Numbers in the Eurozone (OUP 2019) and Democracy in Europe (OUP 2006).