Abstract: Differentiated integration, e.g. arising out of the flexibility provisions of the Amsterdam Treaty, is a special instance of functional asymmetry within compound political systems such as federal states or the EU. Functional asymmetry exists when central decision-making applies unevenly across the system; the system is asymmetrical in that some of the participants (provinces, member states) exercise greater powers than others. This chapter explores when and why such an arrangement may be acceptable to participants or may even be imposed (as with admission rules for EMU). It argues that states’ attitudes towards asymmetry may be shaped (1) by economic calculation (cost/benefit), (2) by possible tendency to link economic issues with non-economic ones (democracy, human rights), or (3) by institutional design, which may permit matching of functional asymmetries with political ones (uneven participation in central decision-making). In all three respects, the question arises, what is fair, or reasonable? Judgements on such matters are inherently subjective, but still may be the focus of reasoned discussion identifying two possible abuses of asymmetry: privilege and exclusion.

Keywords: Amsterdam Treaty, decision-making, differentiated integration, economic calculation, European Monetary Union, European Union, exclusion, functional asymmetry, institutional design, privilege,