Introduction

Given the many actual or possible changes in Liechtenstein’s strategic environment, as sketched in chapter 4, the present chapter discusses nine options, several with sub-options. The various options are not always exclusive: in some instances, (sub)options can be applicable simultaneously. The aim of analysing so many options is mainly to facilitate strategic thinking on the part of Liechtenstein’s political leaders, the public administration, public opinion and opinion leaders with respect to the Principality’s positioning in European integration in the near and mid-term future. We venture to add that the present analysis might also help to structure, and perhaps clarify, the ongoing debates in the ‘EU circuit’ in Brussels and national capitals. In this sense, it can also be regarded as a contribution to the EEA Review, which the Commission and the EEAS initiated in December 2012.

For Liechtenstein as a country and the few non-Liechtenstein observers who are knowledgeable about the country’s positioning in European integration, a considerable part of the following scenario-based analysis is not entirely new, or, at least, it could be retrieved from the work of scholars or documents. Indeed, the prospect of the Oslo Process of EU-EFTA negotiations (24 years ago) and the emergence of the EEA already prompted three government reports discussing several strategic choices for the Principality (Government of Liechtenstein, 1989; 1992a about the EEA;

1992b about EU membership). Because more than a generation has passed since those days, it seems worthwhile to re-iterate the main points against the backdrop of the current accomplishments and the dynamics of Liechtenstein’s strategic environment. In addition, the present chapter is based on a much wider spectrum of options. The authors also wish to refer to a recent contribution of two authoritative Liechtenstein scholars in a rich paper [Frommelt & Gstoehl, 2011] requested by the Norway EEA Review

Committee. This study is most helpful in many ways. It also contains lots of little known data and analysis on e.g. the backlog and some other aspects of the EEA-3, with an emphasis on Liechtenstein. Our strategic approach is considerably wider, however. Another important difference is that the European Commission has meanwhile issued critical papers on the AMS and on the EEA (European Commission, 2012c and European Commission 2012a) whilst the Council of Ministers of the EU has also expressed its (still prudent) view.

A central problem of any strategic analysis of this kind is whether and to what extent one considers options as relatively limited changes of the status quo, or, more daringly, one is also willing to explore politically more radical scenarios. When it comes to relatively limited changes of the status quo, it is reasonable to expect a broadly accommodating attitude of countries and/or the EU, possibly with some frictions about special derogations or the opposite, extra ‘opt-ins’. This seems reasonable because the homogeneity of internal market rules, rights and obligations is essentially a functional concern, and because the hegemon, anchor and magnet functions of the EU (and its internal market) remain attractive for all European countries and even slightly beyond. If selective issues arising from the internal market acquis are truly sensitive, some kind of accommodation will eventually have to be found, perhaps at a price. The same goes for institutional extension to include for example Switzerland.

But more radical or ‘unwelcome’ scenarios should not be excluded a priori, if one wishes to ‘think strategy’. As illustrations, it is worth considering less and not only more EEA, a modest degree of splintering of the EU (with Britain – not Scotland – exiting the EU and renegotiating some kind of market access agreement; also, what about potential independence movements of Catalonia and Flanders, although – if ever they would become ‘countries’ and separate states – they would wish to remain or indeed ‘become’ EU members), a withdrawal of the Turkish candidacy for EU membership (hence, alternative ways to access the EU internal market) and, increasing tensions between the eurozone and the ‘outs’, the non-euro countries of the EU. What these far-fetched and very different scenarios have in common is ‘high politics’ rather than a functional approach of problem-solving given the lure of major economic benefits. For Liechtenstein, the functional approach and the reliance on treaties and the rule of law is much to be preferred. The more radical scenarios might be seen as ‘out of the box’ and disturbing. However, as long as the EEA would remain, Liechtenstein could afford to remain an innocent bystander, watching the political turbulence from afar. This could work in the case of

Turkey’s withdrawal from pre-accession as long as it would opt for a weak bilateral instead and not for an attempt to join the EEA. It is also likely to happen if the EU might fragment by some regions going independent, yet wishing to stay inside the EU anyway. In the case of a British exit, implausible as it would seem today, Liechtenstein might simply join the EU response on a new market access agreement. Its experience and good performance in the EEA might be of help in case Britain would wish to accede an enlarged EEA. However, one cannot take for granted that, were Britain to accede the EEA, the EEA would not be transformed de jure or de facto, and whether such a change would be beneficial for Liechtenstein is impossible to judge at the moment. The scenarios of ‘less EEA’ and frictions between the eurozone and the ‘outs’ (at least, if these would result in adverse effects for the proper functioning of the single market) might be worrying for Liechtenstein. At the moment, it is in particular the construction of the ‘banking union’ that should ensure better (European) supervision of banks all over the single market and – in the supposedly rare occasion of a bank failure – the EU supervisor (the ECB) would act both instantaneously and with direct intervention powers to solve the consequences (i.e. bank resolution) with the help of EU rescue funds and without adverse implications for taxpayers, savers and/or systemic risks.

But the details of this sound idea turn out to be difficult to agree inside the eurozone as well as between EU eurozone and (at least, some) non-eurozone countries. Both the options of ‘less EEA’ and ‘more EEA’ may or may not be worrisome, depending on the form and substance of each one of them.

In Table 2 we summarise the nine scenarios/options and sub-options that we consider important enough to reflect upon: status quo, more EEA, enlarging the EEA, EEA-bis and EEA-tris, less EEA, bilateralism, more EU, less EU via core and ‘others’ as well as exit, and Liechtenstein joining the EU.

Table 2. Scenarios/options for Liechtenstein’s integration strategy No. Scenario Requirements

1. Status quo EEA Status quo, no change necessary

1.a Status quo-plus EEA No treaty change; better managing the EEA (reduce backlog); address specific items (e.g. EEA relevance)

2. ‘More EEA’ (treaty

change) Extension of scope/substance; tighter procedures

3. (Non-EU) EEA enlargement

Switzerland (no treaty change); other new members via EEA Treaty change (or, possibly, EFTA Treaty)

4. EEA-bis, or, more

parallel EEA look-alikes 4.A for Switzerland; 4.B for AMS countries;

4.C for Turkey; 4.D for advanced neighbourhood; 4.E for the UK minus Scotland

5. Less EEA Scope of EEA reduced (via Art. 102 or treaty change)

EEA-2 (after Icelandic accession to the EU) 6. Bilaterals on

single-market-minus

For the UK, minus Scotland; perhaps EEA-3 countries, Switzerland, Turkey, AMS and neighbourhood. The key question is: what differences with 4?

7. More EU deepening Especially Single Market, its governance, including the banking union – Can the EEA absorb this change?

8. Less, or differentiated, EU

Reducing scope of substance (opposite of

‘widening’) or ‘variable geometry’ (e.g.

euro ‘ins’ vs ‘outs’)

EU countries exiting (opposite of

‘enlargement’); corollary >> options 4 or 6 for ex-EU country?

9. Liechtenstein joining EU Although not current policy, adverse scenarios might prompt a U-turn – Can the EU accommodate a small-sized country?

And can Liechtenstein handle it?