Microstates and the European Union




There are a number of microstates in Europe. While there is no clear consensus on which political units qualify as "microstates", most scholars view Andorra, Liechtenstein, Monaco, San Marino and the Vatican City as examples of such states. At the same time, some academics dispute even qualifying Vatican as a true state arguing that it does not meet the "traditional criteria of statehood" and that the "special status of the Vatican City is probably best regarded as a means of ensuring that the Pope can freely exercise his spiritual functions, and in this respect is loosely analogous to that of the headquarters of international organisations." According to the qualitative definition of microstates suggested by Dumienski, microstates can also be viewed as "modern protected states, i.e. sovereign states that have been able to unilaterally depute certain attributes of sovereignty to larger powers in exchange for benign protection of their political and economic viability against their geographic or demographic constraints." And indeed, all of the European microstates are sovereign states that function in a close association with their respective larger neighbour. Currently, all of the European microstates have some form of relations with the European Union.
Andorra, Liechtenstein, Monaco, San Marino, and the Vatican City remain outside the Union, because the EU has not been designed with microstates in mind. Andorra is, by population, the largest of the five microstates with 78,115 according to a census taken in 2011. Two other small countries, Luxembourg and Malta, are full members of the EU and both inhabited by populations over 400,000. Iceland is considered a microstate by some, because of its small population of 320,060 as of April 2012. It is a member of the European Economic Area, and is recognized as an official candidate for accession to the Union, though the negotiations have been suspended. If Iceland accedes to become an EU member state, it would enter as the smallest EU state measured by population, although twelfth largest by geographical size.

Status of relations

Andorra, Monaco, San Marino, and the Vatican City use the euro through monetary agreements with the EU, and have been granted the right to issue a limited number of euro coins. They were allowed to do so as they had used or been tied to the old eurozone currencies. Liechtenstein, on the other hand, uses the Swiss franc.
Liechtenstein is a full member of the Schengen Agreement, EFTA and Dublin Regulation on asylum and is negotiating an agreement to participate in the Prüm Decisions, while Monaco has an open border with France and Schengen laws are administered as if it were a part of France. San Marino and the Vatican City have an open border with their neighbouring Schengen Area state Italy. No microstates can issue Schengen visas. None of them have any airport, but all have heliports. Monaco has the only seaport; the others are landlocked. Arrival from outside the Schengen Area is allowed in Monaco, but not in San Marino and the Vatican City as they have no border controls.
Monaco is a part of the EU customs territory through an agreement with France, and is administered as part of France. San Marino and Andorra are in a customs union with the bloc. Liechtenstein, as a member of the EEA, is within the EU internal market and applies certain EU laws. All of the microstates are also part of other organisations such as the Council of Europe and the Organisation for Security and Co-operation in Europe.
Andorra, Monaco, and San Marino have all stated their desire to deepen relations with the EU. San Marino had considered joining the EEA in the past, and held a referendum on submitting an application for EU membership, which was approved by its electorate; however, not enough votes were cast for the result to be considered valid.

Future of relations

In November 2012, after the Council of the European Union had called for an evaluation of the EU's relations with these microstates, which they described as "fragmented", the European Commission published a report outlining options for their further integration into the EU. Unlike Liechtenstein, which is a member of the EEA via the European Free Trade Association a Sectoral Approach with separate agreements with each state covering an entire policy area, 2) a comprehensive, multilateral Framework Association Agreement EEA membership, and 4) EU membership. The Commission argued that the sectoral approach did not address the major issues and was still needlessly complicated, while EU membership was dismissed in the near future because "the EU institutions are currently not adapted to the accession of such small-sized countries." The remaining options, EEA membership and a FAA with the states, were found to be viable and were recommended by the Commission. In response, the Council requested that negotiations with the three microstates on further integration continue, and that a report be prepared by the end of 2013 detailing the implications of the two viable alternatives and recommendations on how to proceed.
As EEA membership is currently only open to EFTA or EU members, the consent of existing EFTA member states is required for the microstates to join the EEA without becoming members of the EU. In 2011, Jonas Gahr Støre, the then Foreign Minister of Norway which is an EFTA member state, said that EFTA/EEA membership for the microstates was not the appropriate mechanism for their integration into the internal market due to their different requirements than large countries such as Norway, and suggested that a simplified association would be better suited for them. Espen Barth Eide, Støre's successor, responded to the Commission's report in late 2012 by questioning whether the microstates have sufficient administrative capabilities to meet the obligations of EEA membership. However, he stated that Norway was open to the possibility of EFTA membership for the microstates if they decide to submit an application, and that the country had not made a final decision on the matter. Pascal Schafhauser, the Counsellor of the Liechtenstein Mission to the EU, said that Liechtenstein, another EFTA member state, was willing to discuss EEA membership for the microstates provided their joining did not impede the functioning of the organization. However, he suggested that the option direct membership in the EEA for the microstates, outside of both the EFTA and the EU, should be given consideration.
On 18 November 2013 the EU Commission published their report which concluded that "the participation of the small-sized countries in the EEA is not judged to be a viable option at present due to the political and institutional reasons", but that Association Agreements were a more feasible mechanism to integrate the microstates into the internal market, preferably via a single multilateral agreement with all three states. In December 2014 the Council of the European Union approved negotiations being launched with Andorra, Monaco and San Marino on such an agreement, and they began in March 2015. Andorran ambassador to Spain Jaume Gaytán has said that he hopes that the agreement will include provisions to make the states associate members of the Schengen Agreement. In January 2016, Andorran minister of foreign affairs Gilbert Saboya stated that he believes the agreement could be signed by 2018.

Summary

Integration level

This table summarises the various components of EU laws applied in the microstates. Some territories of EU member states also have a special status in regard to EU laws applied as is the case with some European Free Trade Association members and their sovereign territories.
MicrostatesAssociation AgreementEurozoneSchengen AreaEU single marketEU customs territoryEU VAT areaDublin RegulationPrüm Decisions

Size comparison

This table provides a comparison between major statistics of the microstates to the smallest EU member states.
MicrostatesRelationshipPopulationArea GDP HDI
Agreements85,458467$4.510 billion0.845
EEA State37,340160$5.155 billion0.908
EU State562,9582,586$57.9 billion0.892
EU State445,426316$10.582 billion0.839
Agreements37,8002$5.424 billionn/a
Agreements32,57661$1.44 billionn/a
Agreements8420.44n/an/a