As challenges mount, a two-speed Europe emerges as a way out

Industrial decline. Disruptive technologies. Sluggish investment. Regulatory barriers. Punitive tariffs. Unfair competition. Climate change. Demographic crisis.

The formidable challenges besetting the European Union have triggered a desperate search for bold, ingenious solutions that can deliver the much-needed big bang. But just how big are leaders willing to go?

“Our ambition should always be to reach an agreement among all 27 member states,” Commission President Ursula von der Leyen said in a letter to leaders ahead of an informal summit on Thursday.

“However, where a lack of progress or ambition risks undermining Europe’s competitiveness or capacity to act, we should not shy away from using the possibilities foreseen in the Treaties on enhanced cooperation.”

The suggestion was striking for a president of the European Commission, whose job consists of setting the policy direction for the whole bloc and ensuring the uniform application of EU rules among all member states.

However, it did not come out of nowhere.

Two weeks earlier, the finance ministers of Germany, France, Italy, the Netherlands, Poland and Spain launched a new coalition, dubbed the E6, to push for “decisive action and swift progress” in four strategic areas, including defence and supply chains.

“We are providing the impetus, and other countries are welcome to join us,” said German Finance Minister Lars Klingbeil, extending an open invitation.

Back in December, EU leaders agreed to issue €90 billion in joint debt to meet Ukraine’s financial and military needs for 2026 and 2027. The decision at a high-stakes summit in Brussels was hailed as a feat of European unity – except for the fact that Hungary, Slovakia and the Czech Republic completely opted out of the scheme.

The backdoor agreement to provide Kyiv with life-saving support was only possible thanks to enhanced cooperation, the legal tool referenced by von der Leyen in her letter. It was the first time that the obscure mechanism had been used to accomplish a foreign policy goal of such magnitude at such a high price tag.

Now, as EU leaders turn inwards to devise urgent ways to revive the bloc’s stagnant economy and prevent the United States and China from wiping their domestic industries out of existence, the prospect of a two-speed Europe has come to the fore.

“The first try always needs to involve the 27 member states, but we’re not going to tie our hands down,” said a senior EU official, using the Ukraine loan as an example.

“If we see there’s a critical mass of countries willing to move forward, without putting the Union at stake, I think that should be looked at in the same pragmatic way.”

Going our separate ways

In practical terms, a two-speed Europe already exists.

The eurozone is the most visible and tangible case of a group of member states choosing to adopt an ambitious policy – in this case, a single currency – while others prefer to exclude themselves. Related financial initiatives, such as the European Stability Mechanism and the Single Resolution Fund, were set up under the same logic.

The passport-free Schengen Area started on an intergovernmental basis, with five countries (France, West Germany, Belgium, the Netherlands and Luxembourg) signing an agreement in 1985 separate from the EU institutions. Over time, the Schengen Area grew its membership and was absorbed into the formal EU framework; today, it encompasses all member states barring Cyprus and Ireland.

Meanwhile, enhanced cooperation has been deployed to create the European Public Prosecutor’s Office (EPPO), introduce a unitary patent and harmonise divorce law.

The mechanism, enshrined in Article 20 of the Lisbon Treaty, requires a minimum of nine member states and leaves the door open for others to join if they wish. For example, the Netherlands, Malta, Sweden and Poland signed up to the EPPO at a later stage.

Besides these structures, which are underpinned by legal statutes, European countries regularly team up in informal groupings to defend common interests, such as the “Frugal Four” and the “Friends of Cohesion” during budget talks. The Weimar Triangle, the MED9, the Visegrád group and the Nordic-Baltic Eight are other examples.

The E6 alliance, spearheaded by Berlin and Paris, is the most recent addition.

These ad-hoc formations, however, pose a problem for Brussels because they escape its oversight, complicate internal coordination and aggravate political cacophony.

This is why von der Leyen prefers enhanced cooperation, which is anchored in the treaties and gives the institutions a role to play, says Nicolai von Ondarza, a senior researcher at the German Institute for International and Security Affairs (SWP).

“On the one hand, current EU procedures move too slowly in the high-pressure geopolitical and economic environment, so that smaller groups of coalitions of the willing may move faster,” von Ondarza told Euronews.

“On the other hand, there is an apprehension within EU institutions that member states may just go for flexible coalitions outside of the EU framework.”

Federalist dreams

Behind all these formations lies the desire to overcome the EU’s notoriously complex decision-making – often bound by the “shackles of unanimity”, as von der Leyen once said – and move forward with greater speed, ambition and scope.

The idea is particularly enticing in the current bleak environment of multiplying challenges, where groundbreaking solutions are in high demand. But the bolder the idea, the harder its achievement.

The bloc’s intense focus on reaching a consensus through long-winded negotiations has been criticised for producing the lowest common denominator, or producing no denominator at all. Mario Draghi, the former president of the European Central Bank, who authored a highly influential report on competitiveness, recently introduced the concept of “pragmatic federalism” to advance integration among willing-and-able member states.

“This approach breaks the impasse we face today, and it does so without subordinating anyone. Member states opt in. The door remains open to others, but not to those who would undermine common purpose,” Draghi said in a speech.

“We do not have to sacrifice our values to achieve power.”

Von der Leyen, whose policies have been credited by defenders and detractors alike with deepening integration and strengthening power in Brussels, seems to have concluded that the time is right to test enhanced cooperation on a wider scale.

Still, a two-speed Europe can be costly and risky. After all, the EU is a project designed to bring nation-states together under the same laws and principles; if some capitals begin to advance while others stay behind, the gap could widen to the point that the foundational objective is rendered obsolete.

“If you need to have everybody on board, you can no longer reach the speed, scale and scope of the policy response that is needed,” said Fabian Zuleeg, the chief executive of the European Policy Centre. “But this will need to be approached differently depending on the policy area in question.”

“We should make clear commitments to the goals we need to reach and then find the right method to deliver them rather than starting with methods and processes.”