Analysis: How much Europe is too much Europe?

By Luke Baker

BRUSSELS | Sun Sep 1, 2013 2:03pm EDT

(Reuters) - In the dark days of Europe's debt crisis in 2012, when it seemed Greece might be forced out of the euro and the single currency could implode, leaders believed "more Europe" was the only answer.

Only deeper integration can bolster the region to withstand future crises, they said. A more united Europe will punch its weight in the world, not collapse on the ropes.

Among the more fervent voices in support was German Chancellor Angela Merkel, whose declaration that "we need more Europe; we need more cooperation" prompted policymakers to draft plans for a banking union, closer fiscal ties and, in time, a more complete political integration of the union's 28 countries.

How times have changed.

A year on, banking union - the idea of providing a single backstop for all the region's banks - stumbles ahead but only as a shadow of its original self. Fiscal union is barely mentioned, while the steps that would have come after are long forgotten.

Instead of "more Europe", the more common phrase in Brussels these days might be "EU-lite". Rather than the relentless logic of "ever closer union" - the guiding principle of Europe's federalists for 60 years - the attitude among some member states is better described as "only as much Europe as we really need".

Perhaps unsurprisingly, the most determined advocate of "EU-lite" is Britain. Prime Minister David Cameron, with his promise to voters of a referendum on Britain's EU membership by 2017, has made it abundantly clear that Britain wants a looser association with Brussels after four decades in the club.

In its review of "the balance of EU competences" - Britain's phrase for totting up the pros and cons of membership - the findings so far have suggested that while Europe may not be as bad as some think, there are areas where EU legislation is too burdensome or the influence of Brussels is too stifling.

Instead, Britain's vision for the EU - which Cameron wants to remain part of - is a union focused on its strengths as a trading bloc, the world's largest, and as a single market of 500 million developed-world consumers.

Rather than Brussels determining how many hours someone should work a week or how baby formula should be labeled, Britain wants it to act on a higher level, dealing with international trade, investment, commerce and security policy.

"LEANER AND MEANER"

When Britain first raised the possibility of a renegotiation of its ties earlier this year, it was a lonely voice. Opponents, including France and the European Commission, said nobody should be allowed to "pick and choose" the terms of their membership.

But the Netherlands, one of the six founder members of the EU, has conducted its own review of its relationship with Brussels and also sees room for improvement. A commerce-minded trading nation like Britain, it also wants EU policy to sweat less of the small stuff and focus on the bigger picture.

"The time for an 'ever closer union' in every possible policy areas is behind us," Foreign Minister Frans Timmermans wrote in a letter to the Dutch parliament in June. His prime minister, Mark Rutte, was even more succinct, saying Europe needed to become "smaller, leaner and meaner".

No less a European stateswoman than Merkel invited Cameron for private talks in April and said afterwards she agreed with many of his ideas for reforming the union.

In a radio interview last month, she said that if she was re-elected as chancellor following elections on September 22, she would look at whether some powers should be repatriated from the European Commission to member states.

"We don't have to do everything in Brussels... We can also consider whether we can give something back," she said, a line the EU-skeptic British press took as support for Cameron.

"EVERYTHING COLLAPSES"

All that has raised expectations that at some point soon, probably in 2015, there could be an agreement among member states to revise the EU's governing treaty, with everyone getting a chance to negotiate a new deal with Brussels.

That would be no small matter. If it does take place, it would also come shortly after elections to the European Parliament, set for next May, when there is likely to be a rise in the anti-EU vote across the continent, reflecting growing disquiet about the direction Europe is going in.

The problem, of course, is that one country's vision for a better, less burdensome EU is not everyone else's. Britain's taste for "EU-lite" is not France's cup of tea. Far from it.

"It's like playing Jenga," said Hugo Brady, a senior research fellow at the Centre for European Reform, referring to a game that involves carefully removing wooden blocks from a tower and stacking them on top. "Eventually someone pulls out the wrong block and the whole thing collapses."

While Brady agrees the federalist dream of a "country called Europe" may have vanished, the European project remains alive and its momentum is still towards deeper integration. Membership of the euro, the biggest symbol of unity, is growing.

The factor that will determine whether "more Europe" or "EU-lite" wins the day will be the economic crisis, says Brady.

For the moment, the financial and economic chaos that has stalked the EU for the past three years is in abeyance, removing much of the immediate pressure for closer union.

But if the debt crisis returns - and very serious problems remain in Greece, Cyprus, Spain and Portugal that could blow up at any time - the "more Europe" and "closer union" mantra will quickly resound again, whether Britain likes it or not.

(Writing by Luke Baker; Editing by Toby Chopra)