WIIW The Vienna Institute for International Economic Studies - Wiener Institut für Internationale Wirtschaftsvergleiche

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By Mario Holzner

In the eleventh century, the Byzantine Empire faced a profound financial and military crisis. Its currency had been debased and its army hollowed out, while existential threats loomed from the Seljuks in the east and the Normans in the west. What followed under the Komnenos dynasty was a comprehensive policy mix: financial deepening, heavy taxation of wealth and market expansion, as well as stronger state centralisation, far-reaching diplomacy and deep military reform. This combination stabilised the empire and allowed it to endure.

History suggests that the ingredients of renewal are remarkably consistent. Existential crises are overcome by elites willing to make sacrifices; by implementing comprehensive institutional change; and by ensuring a state capacity strong enough to sustain reform over time.

The EU today is at a similar juncture. Europeans increasingly perceive existential threats from both east and west. Strategic pressure from Russia and economic and technological dominance by the US and China are reshaping political attitudes. Not only liberal centrists but even parts of the radical right are edging towards an acceptance of deeper integration – including, implicitly, a United States of Europe – as the only viable response. The EU can adapt to crises (as we saw with the common borrowing during the pandemic), but adaptation is not enough: a dramatic acceleration is needed.

The blueprint for economic and institutional renewal already exists. At the end of 2024, Mario Draghi set out what needs to be done. Yet more than a year on, little has been implemented. Discussions on the next EU budget revolve around whether or not to increase it by a few tenths of a percentage point of the EU’s GDP. But joint European spending on energy security, defence and social resilience – essential public goods if Europe is to withstand the external and internal pressures – needs to amount to several percentage points of GDP annually.

Experience shows that the EU and its member states tend to reform only when their backs are already to the wall. However, faced with potentially existential threats from economic stagnation and great-power competition, it would be reckless to wait for the wall to start caving in. The question, therefore, is how to provoke action before the crisis turns into a catastrophe.

One answer lies in the EU deliberately grasping the nettle. As in personal life, taking on commitments beyond one’s comfort zone forces change. Politically, it would help if decision makers were to initiate the fast-track enlargement that would make institutional reform inevitable. The strong efforts invested would likely make the process irreversible.

EU history offers numerous examples where enlargement and European treaty change have coincided. The Single European Act, the Treaties of Amsterdam, Nice and Lisbon were all negotiated around the same time as the accession of new member states. Enlargement created the pressure that made deepening unavoidable.

Current debates about a ‘membership-lite’ for Ukraine already reflect the urgency of aligning enlargement with institutional reform. A more ambitious approach would be to set a fixed date for full EU membership for current candidates – including the Western Balkans, Moldova and, above all, Ukraine. Properly designed, such a deadline would strengthen, not weaken, the merit-based accession process. It would turn negotiations over the acquis communautaire into a competitive race. A regatta needs a finishing line to generate maximum speed – not only among candidate countries, but also among incumbent member states forced to reform their own institutions in parallel.

Sceptics rightly point out the obstacles. Even if negotiations succeed, ratification remains uncertain, often requiring referendums. Why, they ask, would EU voters welcome some of Europe’s poorest countries into the bloc?

The answer is to broaden the race. More-affluent European societies that have recently shown renewed interest in EU membership – such as Iceland or Norway – should be encouraged to participate. Also, Britain and Switzerland may end up too scared to remain alone and hence rethink their EU membership stance. Encouraging wealthier countries to (re)join the EU alongside poorer ones could significantly increase European voters’ acceptance of the latter. What is needed is political momentum, with a shared understanding among Europe’s citizens that rapid unification and more European public goods are essential if we are to avoid economic stagnation and political fragmentation within the territorial boundaries increasingly defined by Vladimir Putin in the east and Donald Trump in the west.

Choosing, for instance, 2031 as a target date for total European unification would kick-start the reform regatta and provide a clear narrative and credible time pressure for delivering the promised renewal – before history forces Europe’s hand once again.