With the constitutional treaty stuck in limbo and enlargement apparently stalled by xenophobia and populist opposition to an expanding union, it is time to consider new ways forward for Europe. To do that, identifying the success stories of the past 50 years of integration and building on them seems like a good idea.

But that is not what the greatest minds in Brussels seem to be interested in. Instead, enlargement is largely
seen as a linear extrapolation
of present efforts to build a stronger political union, however much opposition those efforts meet within member countries. After the French and
Dutch referendums, securing a popular vote in favour of south-eastern
enlargement appears rather a distant possibility.

Yet, ensuring stability and economic growth in Turkey and other candidate countries is of paramount importance, not only for the European agenda,
but for the larger effort to ensure a peaceful dialogue between the Christian and the Muslim worlds as well. My Turkish friends frequently remind me of the crucial role played by the promise of European Union membership in providing an incentive for further social and economic progress in their country.

The fate of the constitutional treaty and the widespread euroscepticism
in the UK and parts of Scandinavia bear witness to the fact that neither the move towards stronger political union, nor the birth of European
governance can be considered the great success story in European integration. As evidenced by low voter turnout
in elections for the European parliament, politically we are not much
more European than we were two
decades ago.

However, where political integration has failed to achieve its goals,
economic integration has created a wholly new environment for European business. Although the archaic policies of several continental European countries prevent their citizens from enjoying the full benefits of the common market, its open architecture and level playing field have provided a near-perfect infrastructure for economies and companies that have chosen to adapt. Those of us who have also joined the euro have seen it produce a clean break with a past of ill-advised and frequently incompetently administered monetary policies.

When looking for a success story on which to build the future of integration and enlargement, the European Commission should acknowledge this fact. Yet, in the present enlargement agenda – in contrast to the establishment of the European Economic Area in the early 1990s – real participation and a share in the benefits of economic integration is made conditional on membership of the union. This contradicts socio-economic theory, which holds that stable markets and economic growth are a prerequisite for democratic development, and the experience of most developing economies.

Resurrecting the EEA as an entrance hall to the EU might, therefore, make sense. Virtually all of its original members have joined the union and the fact that oil-rich Norway, with its ultra-nationalistic electorate, benefits from the arrangement while avoiding the full consequences of membership should not be taken as evidence of failure. By allowing free markets to strengthen human rights, democracy and the rule of law in candidate countries, the EU would break the stalemate in enlargement while benefiting the citizens of those countries.

But there is an even more powerful option open to the EU. Because not
all member countries chose to join the euro at its inception, the common currency has become a symbol for a “hard core” of Europe, membership in which is contingent upon financial
criteria that might have made sense in the run-up to the euro, but that
have now lost most of their economic rationale. As individual central banks and governments have, at best, only a marginal influence on the supply
of money in the euro area, and the risk of monetising public debt therefore has become remote, it makes little sense for the monetary authority to monitor closely the state of their
public finances.

The same goes for member state inflation. Measuring inflation in Finland or Austria for purposes of the conduct of monetary policy makes about as much sense as doing it in Tuscany or Bavaria. It is not economic logic, but the wish to see the euro-club as an integrationist avant-garde that has suggested a restrictive membership policy where financial theory would have called for a different approach.

To the astonishment of its critics – of which I was one – the euro has become one of the most important currencies in the world, second only to the US dollar. More than perhaps any other
of the euro countries, my home country of Finland has experienced the benefits of surrendering its monetary autonomy to the European Central Bank and thus ending five decades of ill-advised interventionist monetary policies producing a recurrent inflation-devaluation cycle.

By permitting Turkey and other candidate countries to switch to the euro prior to full membership, the EU would simultaneously achieve two objectives. First, it would create a halfway house on the road to membership, which would allow it to restart a realistic process of enlargement. Second, it would provide the candidate countries with stable money. That would eliminate the risk of currency crises that in the past have posed the greatest threat to stable economic development and government. Use of the euro would, moreover, become a symbol of progress and allegiance to European values, further strengthening democracy and the rule of law.

The writer is chief executive of Sampo, the largest insurance group in the ­Nordic region

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