A long way gone. Wikimedia Commons/Wojskowa Agencja Fotograficzna. Public domain.

Explaining the Nobel Committee’s decision to grant the Peace Price to the EU, its Chairman Thorbjoern Jagland argued that European unification has transformed Europe “from a continent of wars to a continent of peace”. It has been objected that the prize for this shouldn’t go to the EU but to NATO. There is some truth to this claim. During the Cold War, NATO has indeed protected western Europe from falling into the Soviet sphere of influence, and it has replaced a fragile balance between roughly equal European powers with a largely benevolent hegemony. And Washington has encouraged the project of European unification from its very inception.

But under the umbrella of NATO’s “outer peace”, European leaders have built something larger and deeper - a structure that promotes “inner peace” in Europe: the EU and its predecessors. European unification has created a partly integrated European society. Together NATO and EU have achieved something that failed between World War I and II: turning Europe into a safe homeland for a market economy and liberal democracy, a bastion of freedom, security, and prosperity.

The EU and its predecessors can claim four major geopolitical achievements: transforming centuries-old Franco-German hostility into friendship; stabilizing democracy in Greece, Portugal, and Spain after their transition away from autocracy; easing the process of German unification and making the country’s unification palatable to its neighbours; guiding the transition to democracy of central and eastern Europe following the demise of the Soviet Union.

Today the EU is weaving a dense net of relationships and interactions across borders. Governments communicate every day and on every level. Officials are used to cooperating and coordinating with Brussels and other member states. Companies operate in a giant single market. People travel and relocate with unprecedented ease. A cosmopolitan elite deeply attached to the EU has emerged. Borders are not barriers anymore. The daily experience of being embedded in a larger pan-European context makes war look like a strange, incomprehensible evil belonging to a distant past. A dream has come true.

But these fundamental achievements are at risk today. The euro crisis has made the EU look clumsy and inefficient. Euroskepticism has become fashionable. In the UK it is even mainstream now.

The biggest threat is disintegration. A Greek exit has been prevented - governments have looked into the abyss and decided that Greece must stay, whatever the costs. But now Britain is considering leaving, and a majority of Brits actually want the UK out. Britain has always been a reluctant participant in what it has seen as a mainly continental project, built around French-German reconciliation. The eurozone troubles have led many in the UK to conclude that the whole enterprise is doomed.

A British exit could be the first step towards the unravelling of the EU. It might lead to a chain reaction. Other countries that feel close to Britain, in northern and eastern Europe could also reconsider their relations with the EU. The EU would lose its attraction and relevance. An EU reduced to a frustrated, weakening France and a needy South with Germany as the unwilling paymaster would not hold together for long. Moreover, Britain’s active participation in the EU is essential, as it belongs in the centre of decision-making. London must be the tireless advocate of liberalism and build a counterweight to French and German statist and bureaucratic instincts. The EU relies on a specific cocktail of political ideas, traditions, and cultures; Britain represents an essential part of the mix. And without the UK, the EU could give up on the hope of becoming a global player. Britain has assets, experience, and know-how that are vital to a serious foreign and security policy. And only if Paris and London team up, can they move an inward-looking, reluctant, strongly pacifist Germany toward a more activist foreign policy approach.

In order to keep the UK in, EU leaders should stop talking the federalist talk. Whenever German chancellor Angela Merkel speaks about “more Europe” and “political union”, a British audience hears “superstate” and feels a strong inclination to hurry to the exit. And there is no need to scare the Brits off. In reality, not even the Germans want to take a “great leap” towards a federal state. Merkel has always been a proponent of De Gaulle’s “Europe of the fatherlands” and she regularly sidelines Brussels. And it is Berlin that is now delaying and watering down the “banking union”.

Germany has no roadmap towards a federal Europe. Merkel is using the federalist rhetoric as a tactic. The “more Europe” buzz phrase is directed towards several audiences. It is meant to regain the trust of investors and partners around the world: trust us, we’re going to bring our house in order, you can buy European bonds and count on us. Secondly, euro-federalism has been an essential part of Germany’s political culture since its first post-war chancellor, Konrad Adenauer. Embedding Germany in Europe was always a way to recover from the Nazi past and make sure that history wouldn’t repeat itself; “more Europe” simply sounds reassuring to German ears. And thirdly, in today’s political debate in Germany, “more Europe” is often translated into “more control for Germany over debtor countries”. Which is of course an illusion. In a federalist eurozone of 332 million people, 82 million Germans would be easily outvoted. Berlin’s power in the EU today is not only based on the fact that it is an economic powerhouse, but also on the fact that it is a sovereign nation state. A federalist eurozone would probably have introduced Eurobonds long ago - something that Germany strongly opposes.

After over twenty crisis summits, it is now clear that the European house is not going to be fundamentally rebuilt - the EU will not turn into a state. The limits of integration have been reached, more or less. Peer pressure and the threat of withholding funds remain the only serious tools EU governments are going to have to enforce discipline and encourage reform. In key areas the powerful member states will always be able to cast a veto, formally or if necessary informally. Brussels will never be empowered by member states to exert central control. And Berlin cannot, even by default, play the role of an imperial centre. Germans don’t want it. And should they try to obtain it there would be a massive backlash. Smaller neighbours would immediately build coalitions against Germany and isolate Berlin.

That leaves only one way ahead: improving the efficiency of the current framework. This means better cooperation and coordination among largely sovereign states. And leaders should focus less on institutions and more on growth, by removing obstacles to the single market, by pushing for trade deals, with Asia, the United States and others, and by investing in cross-border infrastructure.

Politically the EU has always been something unique, sui generis. Now leaders must show creativity again by proving that conventional wisdom about currency unions is wrong - that the Euro can be efficiently managed by a union of sovereign states.

And it’s time to say good bye to federalism.

The historic drivers of EU integration have always been federalists. In other words, people who believed that they were building a European state - with a capital, a government, a parliament, a constitution. This vision has rarely been spelled out, but it has been implicit in many of the past “projects”. Many think that Helmut Kohl, the chancellor who oversaw German unification in 1990, has deliberately put an imperfect currency union on track in order to force the EU to become, over time, a federal union. And many of the remaining federalists, such as German finance minister Wolfgang Schäuble who worked closely with Kohl on German unification, appear to be driven by the idea that the euro crisis represents the historical moment in which a major step towards this vision could - and should - be taken.

But the past years have made it plain that member states do not really want to abdicate. Anti-EU sentiment has grown in many member states. The more “EU” equals “crisis”, the more people are becoming tired and skeptical. New political movements are gaining traction by including euro-skepticism in their portfolio. There is no pro-EU movement at the grass-roots, no large demonstrations.

The danger today is that Europeans turn their backs on an EU that is the mainstay of Europe’s geopolitical order because they are fed up with the difficulties of managing a common currency. People often take freedom, stability and prosperity for granted. That may be a mistake. Without decades of European integration and unification, Europe would probably look very different today. It might look like the Asia Pacific region, where war between great powers has become possible again, where nationalist rage over territorial disputes limits governments’ scope for compromise, and where an arms race is underway. The Asia Pacific is in dire need of something that the EU still has in abundance: trust and confidence among states, nurtured by common undertakings and institutions.

The biggest political challenge for European leaders today is therefore to keep the union intact. This includes a new deal with Britain, conceived as a forward-looking strategic engagement, not as a first step towards an exit. Secondly, they must do more so that Europeans can, in a changing world, live in peace and prosperity. The US is losing its dominance and its will to police the world is weakening: it needs partners. Europe must urgently step up its game. To become a relevant partner, the EU must become a coherent and efficient player. Foreign policy starts at home; and the world is not waiting.

Changing the focus of the Euro-debate from the economical to the political would also help to restore the EU’s image in the eyes of the citizens. If Brussels becomes the place where European leaders meet to devise strategies to secure Europe’s place in the world and to project interests and values, if the instruments put in place by the Lisbon treaties become infused with life, namely the EU’s diplomatic service, the EU’s image would fundamentally change.

In the 1950s, some European leaders worked hard to create what for many appeared impossible, a union made of states that were enemies for centuries. After the end of the Cold War, another generation of European politicians has deepened and enlarged the union, again against considerable opposition and skepticism. Today’s generation of leaders is facing a similar challenge. If they manage to do both, keeping the EU intact and turning it into a global player, they will have deserved the Nobel Peace Prize not only once, but at least twice.