European Integration: Some stylised facts

represents the establishment of institutional bodies for monitoring the
development and decision making at the Union level.

EU integration has progressed in all three dimensions in the past. Increasingly
more areas have been submitted to decision making at the EU level. The
formation of the customs union and the EMU constituted significant steps
towards increased integration in functional scope as each country transferred its
national sovereignty in trade policy and monetary policy to the EU level.
Integration in space has taken place as the number of Member States has
increased from 6 in 1958 to 15 in 1995. Also institutional capacity has been
increased. Especially the adoption of the Maastricht and the Amsterdam Treaty,
have delegated more decision-making powers to the Council by limiting the
cases requiring unanimous decisions. A new powerful institution has also
appeared by the establishment of the European Central Bank.

The simultaneous integration in all three dimensions is hardly erratic but
reflects linkages in the integration process, which may also appear in future.
Integration of functional scope may lead to integration in the geographical
domain. When the Internal Market was established, countries outside the EU
got a stronger incentive to seek membership of the EU to get full access to this
market. Similarly, if the euro project develops successfully, more countries will
want to participate. A widening of the EU with more members creates a
demand for efficient decision making, which points to the need of establishing
more powerful, federal institutions instead of relying on intergovernmental co-
operation. Enlargement without securing an efficient decision making
mechanism through a strengthening of the federal institutions may bring the
integration process to a stalemate.

In a Union with many Member States, there may be opposing views on the
future course of the Union, and especially disagreement on the degree of
federalism. If the stalemate scenario should be avoided, a possibility would be
to open up for membership at different layers, where some Member States are
allowed to proceed into deeper stages of integration without committing all
members to be involved. However, allowing for such flexibility has its costs, as
it will contribute to a weakening of the EU institutions and confuse the decision
making process.

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