Beyond Brexit: can the EU operate as a platform?

Article first published by Policy Network on 03 May 2016.

Can the concept of ‘platform’ offer a new way of thinking about how the EU can effectively operate?

Whatever the outcome on 23 June, the British referendum has already left a deep mark on the European Union (EU). The Brexit debate is taking place against the background of numerous serious crises directly questioning the EU’s relevance, with all leading to different conclusions. While British leaders have been criticising the EU for its regulatory and institutional overreach – “something that is done to people rather than acting on their behalf”, as David Cameron put it atBloomberg in January 2013 – most voices on the continent have deplored the EU’s lack of clout and ability to impact on ‘big things’ such as immigration, socioeconomic divergences and security. This very paradox is likely to cast a long shadow on the EU’s future: some nations like it as soft as possible, while others see no other way than a political union.

Yet does it make sense to hold the EU together in the presence of such diverging projects, and can it work? In this piece I argue that the concept of ‘platform’ offers some interesting insights on how the EU could operate in the future, in a digitised world where the thirst for bottom-up initiative goes alongside the need for collaboration, data-sharing and resource-pooling.

 

A world celebrating autonomy and innovation

Let us start where the leave campaign want to take us in the UK. Despite their unconvincing economic argument, advocates of Brexit have done a good job of asking essential questions about democracy and global success in the twenty first century. Michael Gove has put “democratic self-government” at the top of the Brexit rationale, a perfectly reasonable principle. The leavers often take ‘small’, agile democratic nations such as Switzerland, Israel, Canada, Australia and New Zealand as evidence of the possibility to flourish outside larger ensembles. They doubt the EU’s legal and institutional architecture is necessary for European nations to manage their interdependence. Why wouldn’t intergovernmental co-operation and free trade be enough?

Europeans have long answered this question. Back in the 1950s, creating a common market and embedding co-operation within supra-national institutions was seen as a condition for success and instrumental to installing peace. European nations voluntarily locked themselves in the same house and could not escape from the task of building it. After getting in, Britain did a lot to prevent the European house from aiming too high, or building the walls too thick. Instead, it promoted the idea of a large, open tent.

However, Margaret Thatcher had to compromise: free trade in services would not happen without some degree of regulatory convergence, the launch of economic and monetary union, and greater financial solidarity as a result of EU structural funds. A Europe merely based on ‘mutual recognition’ and emulation was never the plan.

The context is different today. Europeans may not love each other, but they are unlikely to go to civil war again. More significantly, global competition urges nations, cities and regions to act swiftly and experiment, to develop their own niche and brand. The world cries out for autonomy, self-accomplishment, decentralisation and innovation. Any organisation – whether the EU, the state, large companies or political parties – faces pressing operational questions: how to remain relevant when the digital potentially breaks down barriers and monopolies, and allows for personalised trajectories and solutions? How to avoid stifling individual ownership, tailor-made services, and remain a relevant platform that makes the most of its members?

A more differentiated EU: from the exception to the norm?

The discontent about the EU may still be attributable to a rigid institutional set-up inherited from the 1950s and lacking the flexibility to accommodate various member state expectations. Yet, differentiation is not a particularly new feature of EU integration. The number of country-based exceptions and special provisions burgeoned in the 1990s, when the European Economic Community (EEC) decided to move forward. Concepts such as ‘differentiated integration’, ‘Europe à la carte’, and ‘multi-speed Europe’ were born in that context.

Differentiation takes the shape of overlapping perimeters, a varying degree of integration and multiple legal frameworks. The Eurozone (EMU) is a treaty-based obligation from which three countries have opted out, either de jure or de facto, and which six member states are yet to fulfil. The Schengen area, originally an intergovernmental agreement and today embedded in EU treaties comprises 27 member states, including three non-EU countries. Enhanced co-operations are another form of treaty-based differentiation. Only three co-operations have emerged so far, on a unified EU patent, divorce law and in the area of financial transaction tax (still under discussion). What the maps do not mention are all EU-related intergovernmental treaties such as the Treaty on Stability, Coordination and Governance (so-called ‘Fiscal compact’, 25 member states), the European Stability Mechanism (ESM, 19 euro countries) and the Prüm convention (co-operation on cross-border crime, 14 member states).

 

Until recently, differentiation had a predominantly negative connotation. It openly contradicted the ‘non-discrimination’ principle of EU law, and sent the wrong signals to EU newcomers. Yet the enduring reality of exceptions and opt-outs shows that differentiation has become a permanent EU feature. Leuffen, Rittberger and Schimmelfennig (Palgrave Macmillian, 2013) stress that the EU was not about several parallel Europes. Rather, they argued that Europe is an “organisational and member state core [the EU-28] with a level of centralisation and territorial extension that vary by functions”. Differentiation happened when further integration was seen as having too high ‘autonomy’ or ‘identity’ costs in some member states. Because it resolved the ‘widening’ versus ‘deepening’ dilemma, it was probably here to stay.

Does it make sense? The EU as a platform

Such institutional complexity and diverging expectations, nevertheless, raise questions about the EU’s relevance in the future. Why does the EU still need to bind together 28 member states in a web of rules and institutions? If differentiation has, de facto, become the norm, why not push it to its full logic and give the EU, in Cameron’s words, “the flexibility of a network, not the rigidity of a block”? Why would the Single Market not become a free trade zone based on ‘mutual recognition’ and the EU become a simple intergovernmental organisation?

It might help to draw an analogy between the EU and what makes digital platforms indispensable and workable. Digital platforms such as Facebook, Google, Twitter and Uber provide basic, user-friendly and empowering infrastructures. They are embedded in society rather than functioning as separate entities delivering services and goods to passive costumers or clients. As a blog piece from the Harvard Business Review put it in 2013:

In construction, a platform is something that lifts you up and on which others can stand. The same is true in business. By building a digital platform, other businesses can easily connect their business with yours, build products and services on top of it, and co-create value. This ability to “plug-and-play” is a defining characteristic of Platform Thinking.

Digital platforms also aggregate data from their users and make them widely available, usually in exchange for a contribution, and they tend to extend in all areas of the economy. This results in accusations of overreach and intrusion.

Applying the concept of platform to the EU can help to understand why keeping such a large organisation makes sense, and how it can operate with 28 very diverse member states. First, by joining the EU, member states (users) seek to access a number of exclusive goods (which has led some leads EU scholars to talk about the EU as a ‘club’ following James Buchanan’s 1965 economic theory of clubs). The internal market’s single rulebook, and the possibility to share and exploit data collectively, for instance through Eurostat, the Single Supervisory Mechanism, Europol and Eurojust, are assets which would be much more costly if accessed on a bilateral basis. In exchange for these goods, member states have some duties and responsibilities, and they all contribute to a common budget.

A second feature of the EU platform is that all member states have been invited to join a number of optional collaborations over time. The Schengen area, the Economic and Monetary Union (EMU), the Common Security and Defence Policy (CSDP), coordination in the field of employment and social policy and enhanced co-operations have all been added to core market policies over time. Some member states are more active than others and successfully ‘upload’ their preferences to the EU level. Others ‘download’ best practices and seek to increase their domestic power.

A third key feature of the EU platform is its legal personality, and its capacity to pursue a number of common values, goals and interests across the world. To use President Obama’s recent words, the EU “magnifies” the power of member states. It provides a form of collective sovereignty which is much more powerful than the sum of its parts. The collective power of the platform comes from the very fact that it remains one entity vis-à-vis third actors despite the relative internal fragmentation of is activities.

The EU is therefore likely to stay relevant if it manages to remain a platform combining these three features: a number of privileges accessible to the members of the club in exchange for a contribution; the flexibility to experiment with building on the platform’s core infrastructure and activities; and legal personality – the ability to speak as one in the relationship with external organisations. Crucially, the 19 February agreement between the UK and the EU reflects this endeavour to let member states take different paths as long as the EU’s core strengths and basic principles are respected, especially in the field of economic governance:

The Union institutions, together with the Member States, will facilitate the coexistence between different perspectives within the single institutional framework ensuring consistency, the effective operability of Union mechanisms and the equality of Member States before the Treaties, as well as the level-playing field and the integrity of the internal market. (European Council meeting conclusions, p. 13).

 Can it work? The limits of ‘live and let live’

Politics, nevertheless, is as much about crude power relations and geopolitical realities as about rule- and value-based governance. This raises the question whether an EU platform can, indeed, escape the tragedy of conflict and power politics and operate according to the ‘live-and let live’ principle championed in Britain.

Recent episodes have taught us that this might not be as straightforward as it seems. When it comes to Eurozone integration, the UK and a number of non-euro countries have been nervous to see others outvote them as a bloc. In defence matters, the UK has systematically opposed the creation of an EU operations headquarters. If the ten member states having launched an enhanced co-operation on the Financial Transaction Tax (FTT) eventually agree, the UK government stands ready to take the new scheme to the EU Court of Justice. Even if the 19 February deal means that member states have agreed on broad principles and procedural mechanisms to settle their differences, this does not herald the end of tensions and disputes.

The UK and like-minded countries will need to accept the full implications of the presence of a small group of countries more committed to political union, and who might not use the traditional means of EU integration. Whether in the Eurozone or Schengen Area, supra-nationalism is set to remain the exception, in case of a member state’s significant collapse (what some have called‘federalism by exception’). However, an increasing intensification of co-operation, the pooling of financial and human resources (such as through the European Stability Mechanism), and the socialisation that goes along with it is already changing the face of EU co-operation for a number of countries. The main treaty-based provision for differentiation – ‘enhanced co-operation’ – is very costly to use as it remains a ‘last resort’ option of EU policy-making and requires a qualified majority. Instead, we can expect more intergovernmental agreements such as the ESM Treaty and the ‘Fiscal Treaty’ (on Stability, Coordination and Governance in the Economic and Monetary Union). This does not mean that traditional EU institutions would be side-lined: these treaties rely on the European Commission, the Court of Justice and the ECB. However, it gives voluntary member states more room for manoeuvre.

It is too early to predict how fast integration will go, and how many countries will be part of it. A plausible scenario could be that more crises and external shocks will prompt an avant-garde of member states to suggest some steps forward, and others to join the bandwagon. Indeed, the logic of self-government, autonomy and identity may be severely challenged by the return of geopolitics, violence, borders and the need to confront external threats as a block, not as a loose network. European nations would have few alternatives but using the EU for that purpose. Risk- and burden-sharing, mutual assistance and the readiness to “die for one another” (as Emmanuel Macron recently suggested) may well define future generations of Europeans in the long run. Ultimately, the UK and countries adverse to the logic of political union might sigh at the costs of being left out.

In the mid-term, however, the direction of travel of the EU will remain indeterminate and we are likely to see more differentiation and experimentation. The EU will continue to operate as a ‘plug-and-play’ platform for its member states very much as digital platforms provide a basic infrastructure and privileged goods to its users, leave them the flexibility to build upon them, and occasionally speak in their name when common values, goals and interests are at stake. Even if Brexit happens, expect the UK to stay plugged in.

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