In a Europe preparing for war, entering the market means entering the battlefield where the great battle will take place.

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Sovereignty built by subtraction

On October 19, 2026, at the Berlaymont Building, Secretary of State for Foreign Affairs Luca Beccari and Commission Vice-President Maroš Šefčovič signed the agreement establishing an association between the European Union and its member states, on the one hand, and the Republic of San Marino and the Principality of Andorra, on the other. On Mount Titano, the ceremony was watched live at the Kursaal, and the tone of the day was one of celebration: 11 years of negotiations, 4 governments, a “historic turning point” hailed by the majority parties, the Emilia-Romagna Region, and the Italian Ministry of Foreign Affairs. Almost no one asked the question that such a transition inevitably raises for a republic that has built its survival on seventeen centuries of exceptional status: what does San Marino cease to be the moment it enters the single market?

The argument put forward in these pages is that the agreement, whatever commercial advantages it may bring, brings an era to a close. San Marino’s uniqueness – political, legal, and strategic – was not a folkloric relic. It was a source of power, the only one available to a state of sixty-one square kilometers. Exchanging it for market access means transforming San Marino from a space sheltered from conflict into a periphery of a bloc that wages those very conflicts: on the economic front today, and with increasing likelihood on the military front tomorrow.

San Marino’s longevity can be explained by a simple rule: never become part of what could destroy it. In 1797, the Republic declined Napoleon’s offer of territorial expansion, aware that a larger territory would merely be a larger target. In 1849, it granted refuge to Garibaldi without being drawn into the Risorgimento, and in 1862, it regulated its relations with the new Kingdom of Italy through a friendship treaty rather than annexation. In the 20th century, its neutrality held firm – at great cost – even when, in June 1944, Allied bombers struck a territory teeming with displaced persons.

This policy of withdrawal has produced a form of state that classical geopolitics struggles to classify. San Marino has no strategic depth, no resources, and no armed forces in the strict sense; yet it does have a position – that of an entity that no one has an interest in involving because it belongs to no camp. Its sovereignty is measured not by capability but by distance. It is a sovereignty by statute, which holds as long as the rules of Mount Titano remain Mount Titano’s own, as long as its foreign policy choices are not dictated elsewhere, and as long as its law does not become a reflection of an external legal system.

Until recently, even relations with Brussels adhered to this framework. The customs union and the monetary convention were sector-specific instruments: they regulated goods and currency while leaving the political architecture of the state intact. The agreement on cooperation and a customs union with the European Economic Community dates back to 1991 and entered into force in 2002; the Monetary Agreement with the European Union dates from 2012 and makes the use of the euro contingent upon the transposition of the banking acquis. When, in 2013, the people of San Marino were called upon to vote on the application for EU membership, the referendum did not even reach the quorum. The agreement signed in Brussels circumvents that limit: it does not bring San Marino into the EU, but brings the EU into San Marino.

The document marking the end of the privilege

When read in its entirety, the text refutes the notion that this is merely a trade agreement. The framework agreement consists of 112 articles, plus 7 protocols, a country-specific protocol with 6 appendices, and 25 annexes that list, act by act, the European law that the Republic will be required to apply. It is also a mixed agreement: in addition to the Great and General Council, it requires the consent of the European Parliament and ratification by the 27 national parliaments, while the San Marinese government aims for provisional application as early as the beginning of 2027. Three elements define the Republic’s new status.

The first is dynamic alignment. The annexes capture the acquis as it stood at the beginning of 2023; anything Brussels has produced since then – from crypto-assets to artificial intelligence to the new anti-money laundering package – will be incorporated through the Joint Committee, which is required to decide within six months of a proposal, failing which a dispute resolution procedure will be initiated. San Marino will sit on the councils of European authorities without voting rights and will be consulted by the Commission on the same basis as Member States. In the literature on differentiated integration, this condition has a specific name: “rule taker.” The associated state receives rules it did not draft, within timeframes it does not control, on matters that expand every time the Union broadens its own competences.

The second aspect is the transfer of decision-making authority. With regard to state aid, San Marino’s new regimes cannot take effect before the Commission’s decision – and the Commission may directly refer the matter to the Court of Justice – and the entire inventory of existing incentives must be brought into line with European criteria within two years. In the financial sector, European supervisory authorities will be granted direct powers, including the authority to request the suspension of an intermediary’s license – with decisions enforceable without San Marino’s approval – and market access will be subject to a binding bilateral agreement with Italy on supervision. The two levers with which San Marino has negotiated its autonomy for decades – favorable tax treatment and its financial center – are thus brought under control residing in Brussels, Frankfurt, and Rome.

The third element, the most political one, is Article 103, which obligates San Marino to prevent the rights arising from the agreement from being used to circumvent the Union’s restrictive measures. On paper, it is an anti-circumvention clause. In essence, it is the gateway through which European foreign policy – which San Marino has never endorsed – enters its legal system via the market. To put it simply, this marks the end of San Marino itself, not just the end of its privileges.

From active neutrality to the sanctions framework

To gauge the scope of Article 103, we must go back to March 2022. With Decree-Law No. 27 of March 4, the Republic adopted restrictive measures for the first time that differed from those decided by the United Nations, implementing the European sanctions regime against the Russian Federation. After the Crimea crisis in 2014, San Marino had chosen not to follow Brussels’ lead and, over the following decade, maintained close economic and diplomatic ties with Moscow, even resorting to the Sputnik V vaccine in 2021 while doses expected via Italy were slow to arrive. The 2022 shift was presented as “active neutrality,” but in the chamber, some acknowledged that part of that neutrality had been lost by adhering to the sanctions. Moscow, for its part, added San Marino to its list of hostile countries.

However, the 2022 decision was a sovereign and revocable choice, made through acts of the Great and General Council. The Association Agreement transforms it into an international obligation, and the EU’s sanctions regime effectively extends to San Marino. Furthermore, that regime no longer concerns Russia alone. European restrictive regimes cover Iran, Belarus, North Korea, human rights violations, and cyberattacks, and the Commission has equipped itself with anti-coercion tools designed for trade disputes with major powers, including China. Every new regime decided in Brussels – by states among which San Marino has no vote – will become a constraint on San Marinese banks, businesses, and professionals.

This is where the loss of uniqueness becomes vulnerability. A small state uninvolved in economic conflicts is not a target for retaliation; a small state integrated into the market of a bloc that imposes sanctions becomes one. Countermeasures by Moscow, Beijing, or Tehran do not distinguish between members and associates; they target the jurisdiction that enforces the measures. The same applies to transatlantic trade wars: with the new customs union – where customs clearance takes place at Italian offices and duties are collected on behalf of the Republic – San Marino’s tariff policy remains aligned with that of the European Union. The Titano is relinquishing the neutrality that once made it a partner to all.

The union arms itself

The most sensitive aspect remains the military one. The agreement contains no defense clauses or mutual assistance commitments, and it would be incorrect to attribute such provisions to it. The problem lies elsewhere. Through dynamic alignment, San Marino is linking itself to a legal framework that is changing in nature. Since 2022, the Union has progressively transformed the internal market into a security instrument: programs supporting the defense industry, joint loans for arms purchases, control of foreign investments, dual-use goods regimes, and rearmament plans presented as a condition for European competitiveness. It is likely that the single market of the coming decade will resemble a low-intensity war economy, and that the law called upon to regulate it will bear the marks of this reality.

An associated state that transposes that acquis does not thereby become a belligerent, but it ceases to be an outsider. Its companies can enter European defense supply chains, its intermediaries can join rearmament financing networks, and its territory can be incorporated into export control systems. In a hybrid conflict, where financial and IT infrastructure are considered legitimate targets, the distinction between member states and associated states narrows until it disappears. Over the next ten years, it is likely that external actors will treat San Marino as part of the European framework, without the Republic having access to the protections or voting rights reserved for member states.

Andorra and San Marino assume the obligations of membership without the powers that come with it: they remain outside the Council, the Parliament, and the Commission, but within the scope of the decisions those institutions make. It is no coincidence that the Principality of Monaco, which was negotiating within the same framework, suspended talks as early as 2023, and in Andorra, a labor union withdrew from the national pact on Europe, objecting to the lack of a referendum.

What remains to be decided

If we wish to maintain a positive outlook, the signing does not mean the matter is settled. The agreement must still be ratified by the Great and General Council. The key indicators to watch are concrete: the timing and procedures for ratification, any request for a referendum, the content of the bilateral agreement with Italy on financial supervision, and, above all, the first implementation – through a joint committee – of a sanctions regime adopted after the signing. That step will reveal how much of its autonomy of judgment the Republic has retained, even though rumors suggest there is boisterous enthusiasm within the halls of the small city-state.

San Marino has weathered the Roman Empire, the Papal States, Napoleon, the Risorgimento, and two world wars while remaining true to itself – and it has done so by refusing, time and again, to become part of something larger. On October 19, it made the opposite choice. Opportunities for businesses exist. The price – which the press releases deliberately omit – is the surrender of the exceptional status that for seventeen centuries has been its sole defense.

In a Europe preparing for war, entering the market means entering the battlefield where the great battle will take place.