The report analyses and assesses different alternatives for the development of the European Union as well as their implications for both the EU itself and Finland. The analysis is based on different political and economic scenarios. At the heart of the first scenario are the various measures the EU has already undertaken in order to combat the eurozone crisis and to strengthen the EMU. We call this scenario the “Banking Union EMU” because its central innovation is the banking union. The second scenario is built on the assumption that the EMU will be deepened by extending mutual liability and by reinforcing the established rules for responsible budgeting. These reforms will, however, be implemented without radically altering the current political and institutional set-up of the EU. An important step in this scenario is the establishment of mechanisms for counter-cyclical fiscal policy in the eurozone. This requires the creation of a euro area fiscal capacity. A further possible step is the introduction of a system of mutual debt. We label this scenario the “Fiscal Union EMU” because the crucial reforms in this scenario revolve around the EU’s fiscal policy. The scenario requires amending the EU’s current treaties and institutional architecture. The third scenario looks at the possibility of building the eurozone into a constitutional federation. This scenario would mean a vast expansion of the EU budget as well as the transfer of new powers to the federal level particularly in the area of economic and fiscal policy as well as in the field of foreign and security policy. This scenario would involve a thorough overhaul of the EU’s current legal and institutional framework. The EU’s treaties would be replaced with a constitution that would make the Union a sovereign actor. We call this scenario the “Federal EMU”. In the end, we also briefly discuss the possibility of disintegration in the euro area. Some form of disintegration could take place simultaneously with one of the three above-mentioned scenarios.
