By Jean Pisani-Ferry
The first six months of 2007 have been momentous ones for the European Union. In January, the accession of Bulgaria and Romania completed its eastern enlargement. In March, it set itself ambitious targets for a common energy and climate change strategy. And in June it reached agreement on a new draft treaty. José Manuel Barroso, European Commission president, and Angela Merkel, the German chancellor whose country then held the rotating presidency of the European Council, deserve their holidays: there could have been worse ways to mark the 50th anniversary of the Treaty of Rome.
The EU, however, needs more than a series of successful deals to redefine itself in a fast-changing environment. It needs a purpose and an agenda. The question, therefore, is how those three achievements relate to each other, and whether they jointly contribute to defining a path forward.
Let us start with enlargement. The addition of 12 new members that jointly account for one-fifth of its population but less than one-15th of its gross domestic product has changed the nature of the EU. However the challenge is frequently underestimated. In a nutshell, a more diverse membership calls for decentralisation but a larger membership also means that the transaction costs involved in tailor-made approaches easily become excessive.
Jean Pisani-Ferry is this week’s guest commenter while Martin Wolf is on holidays. The full column can be read here (FT.com subscribers only). Comment from our guest economists is free.