Post-Brexit EU Paths Sketched Out in Prod to Bloc's Leaders

(Bloomberg) -- Jean-Claude Juncker outlined five scenarios for the possible development of the European Union without Britain, highlighting the political and economic questions hanging over the bloc as it faces a surge in populism.

The president of the European Commission, the EU executive arm, sketched out medium-term options ranging from a focus purely on the single market to a move toward a federal entity on all fronts.

The other scenarios: carrying on in current fashion; creating a two-speed EU with a group of countries pursuing deeper integration voluntarily; and going for full federalism in some policy areas while repatriating European powers in other fields. The time span for all five options is until 2025.

“It's time for leadership, unity and common resolve,” Juncker said in an emailed statement on Wednesday in Brussels. “I hope that now an honest and wide-ranging debate will take place.”

Juncker is offering 27 of the EU's 28 national leaders a road map for when they gather in Rome on March 25 to celebrate the bloc's 60th anniversary and weigh its future after Britain departs in 2019. U.K. Prime Minister Theresa May isn't scheduled to attend the Rome event.

“This will not simply be a birthday celebration,” Juncker told the European Parliament in a speech in which he presented the scenarios. “It should also be the birth moment of the European Union at 27.”

Brexit Negotiations

The leaders' more pressing concerns will be gearing up for Brexit negotiations, gauging U.S. President Donald Trump's protectionist stance and assessing the threat posed by anti-establishment forces running in elections this year in the Netherlands, France and Germany -- three founding EU members.

While the policy ambitions of Europe have often clashed with the domestic political constraints of its leaders, the fault lines are more marked after several years of struggles to rescue financially strapped euro-area nations such as Greece, stem an influx of Mideast refugees, manage a Brexit threat and confront Russian meddling in eastern Europe.

As a result, Juncker argues, the EU countries excluding the U.K. need to kick-start a debate about the way forward. This exercise is supposed to feed into the mid-2019 elections to the European Parliament and the choice later that year of a new leadership team at the commission, which proposes EU laws, acts as the bloc's antitrust authority, administers its 140 billion-euro ($148 billion) budget, negotiates trade accords and runs a foreign service.

Juncker's Scenarios

EU governments may end up as divided over Juncker's scenarios as they have been over the crises that produced his brainstorming initiative. Alliances in the bloc cut across national boundaries and parties, reflecting history, commerce and culture.

Juncker, a committed EU federalist from Luxembourg who has faced criticism for being out of touch with the current political mood in Europe, declined to say which of the five scenarios he favored. He revealed a preference of sorts by excluding a scenario without the 19-nation euro, which French presidential candidate Marine Le Pen of the National Front wants to break apart.

Juncker said his least favorite scenario was the one the commission dubbed “Nothing but the Single Market” -- a model long favored by U.K. political forces that helped produce the Brexit result in last June's referendum.

“I'm not going to give a preference to one option over the other, but I would exclude the option according to which the European Union would just turn into a single market and nothing else,” he told reporters after his speech in the EU Parliament.

Juncker said that, whatever the EU's challenges this year are, they won't compare to the sufferings of Europeans in the continent's wars.

“Our darkest day in 2017 will still be far brighter than any spent by our forefathers on the battlefield,” he said.

To contact the reporter on this story: Jonathan Stearns in Brussels at jstearns2@bloomberg.net.

To contact the editors responsible for this story: Alan Crawford at acrawford6@bloomberg.net, Jones Hayden, Richard Bravo