The European Union faces difficult challenges: to go on with further enlargement; to reconcile radically different views on the appropriate scope and depth of integration; and to close the democratic deficit and revive public support for the Union. Written by a distinguished team of academics from six countries to inform public opinion before the 1996 Intergovernmental Conference, CEPR's sixth Monitoring European Integration Report argues for significant economic, political and legal reforms of the Union to meet these challenges. Flexible Integration is a model of reform designed to overcome the current stalemate between federalists and anti-federalists. It introduces more flexibility to accommodate the heterogeneous interests in Europe without risking the gains achieved through past integration. Flexible integration combines firm commitment by all members to a supranational common baseincluding a well-defined set of competences related to the Single Market - with optional integration in other areas through,open partnerships. Within this framework, the report discusses a number of specific reforms, including: how to improve enforcement of the Single Market, making the four freedoms a reality; how to achieve macroeconomic coordination without the tarnished exchange rate mechanism, while accommodating the different views on the single currency; how to introduce a hierarchy of European Law, making the Union's legal structure more flexible and transparent; and how to make political decision-making more efficient and legitimate, representing and balancing different European interests and making decision-makers more directly accountable to the citizens of Europe.