Europe’s es­sen­tial unity

Financial Mirror (Cyprus) - - FRONT PAGE -

Over the past ten years, the Euro­pean Union has en­dured a se­ries of un­prece­dented crises, the likes of which we are un­likely to see again. But other, no less daunt­ing chal­lenges lie ahead, and we would do well to re­mem­ber the lessons learned along the way.

One les­son is that unity is not an op­tion; it is a con­di­tion sine qua non of the EU’s eco­nomic pros­per­ity and po­lit­i­cal rel­e­vance. It is re­mark­able that since 2004, when I be­came Pres­i­dent of the Euro­pean Com­mis­sion, the EU’s mem­ber­ship has nearly dou­bled, from 15 coun­tries then to 28 now.

There have been no de­fec­tions. From 2004 to 2014, we en­larged both the EU and the eu­ro­zone. Most im­por­tant, we have kept Europe united.

I fought hard for that unity, par­tic­u­larly when de­fend­ing, of­ten against the odds, Greece’s con­tin­ued mem­ber­ship in the eu­ro­zone, as well as when ar­gu­ing against split­ting the eu­ro­zone, as some peo­ple pro­posed. The Com­mis­sion re­mained at­ten­tive not only to the dra­matic im­pact of a “Grexit” on Greece, but also to its pos­si­ble fi­nan­cial, eco­nomic, and po­lit­i­cal cas­cade ef­fects. Un­like oth­ers, we never lost sight of the sys­temic ef­fects of de­ci­sions across the eu­ro­zone or the EU.

The EU is al­ready an eco­nomic and po­lit­i­cal re­al­ity. This re­quires sol­i­dar­ity and re­spon­si­bil­ity – in par­tic­u­lar, sol­i­dar­ity from the Union’s more pros­per­ous coun­tries and re­spon­si­bil­ity on the part of those coun­tries in need of re­form. The Com­mis­sion has been equally firm in de­mand­ing both.

The same logic ap­plies to another core con­cern that I faced through­out my decade at the Com­mis­sion: the need to deepen the eu­ro­zone while main­tain­ing the in­tegrity of the EU as a whole. This will re­main a crit­i­cal is­sue in the near fu­ture, if only be­cause of the un­cer­tainty sur­round­ing the United King­dom’s sta­tus in our Union.

Al­low­ing for flex­i­bil­ity while avoid­ing frag­men­ta­tion is now a well-es­tab­lished ap­proach within the EU. But it was not al­ways so. Some have long ad­vo­cated es­tab­lish­ing a com­pletely sep­a­rate in­sti­tu­tional frame­work for the eu­ro­zone. I re­main con­vinced that multi-speed Euro­pean co­op­er­a­tion has be­come a ne­ces­sity, but that a multi-tier Europe must be avoided at all costs.

While in­te­gra­tion must deepen fur­ther, es­pe­cially in the eu­ro­zone, this can and should be done in a way that pre­serves the in­tegrity of Europe’s sin­gle mar­ket. For­tu­nately, this logic has been widely ac­cepted, as demon­strated by the decision that the Euro­pean Coun­cil’s next pres­i­dent, de­spite be­ing from a coun­try (Poland) that is not yet in the eu­ro­zone, will nonethe­less pre­side over eu­ro­zone sum­mits.

A sec­ond les­son we learned is that open­ness to the world is an as­set, not a li­a­bil­ity. That think­ing – which needs to be reaf­firmed and po­lit­i­cally sup­ported – un­der­pinned our ac­tive trade agenda. In­deed, it put the EU at the fore­front of ef­forts to lib­er­alise and reg­u­late in­ter­na­tional trade, en­abling us to reap the full ben­e­fits of glob­al­i­sa­tion.

This is not just about Europe’s eco­nomic wealth, but also about its po­lit­i­cal rel­e­vance on the global stage. One pre­sup­poses the other, re­quir­ing vig­or­ous de­fense of the EU’s in­ter­ests and views in bi­lat­eral re­la­tion­ships with strate­gic part­ners and in mul­ti­lat­eral fora, such as the United Na­tions, the World Trade Or­gan­i­sa­tion, the G-20 and the G-8/G-7. If the EU as a whole en­gages in­ter­na­tion­ally, it can help to shape the in­ter­na­tional or­der.

Our cur­rent en­gage­ment in Ukraine is a case in point, as were our ef­forts to lead a global re­sponse to the 2008-2009 fi­nan­cial cri­sis, namely by col­lec­tively re­sist­ing the allure of pro­tec­tion­ism. It was on the EU’s ini­tia­tive that the world acted in a con­certed and con­vinc­ing way by es­tab­lish­ing the G-20 Lead­ers’ Sum­mit, com­pris­ing heads of state or gov­ern­ment.

Since then, the G-20 has be­come the premier fo­rum for eco­nomic pol­icy co­or­di­na­tion among its mem­bers, giv­ing con­crete form to many of the ideas – for ex­am­ple, on a frame­work for bal­anced and sus­tain­able growth, on fi­nan­cial reg­u­la­tion and su­per­vi­sion, and on ac­tion against tax eva­sion and fraud – that the EU pro­posed. The emer­gence of the G-20 has trans­formed the global sys­tem, and cer­tainly helped to pre­vent the re­al­i­sa­tion of worst-case sce­nar­ios in the af­ter­math of the cri­sis.

The third les­son is that mak­ing Europe stronger – in­sti­tu­tion­ally, po­lit­i­cally, and eco­nom­i­cally – de­mands con­tin­ued re­form. Cred­i­bly de­liv­er­ing on im­por­tant EU-level re­forms en­abled Europe to put the most ex­is­ten­tial phase of the cri­sis be­hind it. The sys­tem of eco­nomic gov­er­nance that we put in place guar­an­tees that EU mem­bers put their pub­lic fi­nances in or­der, in­crease their com­pet­i­tive­ness, and tackle their macroe­co­nomic im­bal­ances. We cre­ated the in­stru­ments needed to as­sist dis­tressed coun­tries, and the en­su­ing adjustment pro­grammes are de­liv­er­ing re­sults.

In short, we seized the mo­men­tum of the cri­sis to pro­vide a struc­tural re­sponse to the chal­lenges we faced, in par­tic­u­lar by es­tab­lish­ing a Euro­pean bank­ing union. Step by step, de­spite strong re­sis­tance, we have changed the rules that gov­ern fi­nan­cial in­sti­tu­tions, the in­sti­tu­tions that over­see bank­ing op­er­a­tions, and the mech­a­nisms to co­or­di­nate res­o­lu­tion of failed banks.

Taken to­gether, the re­forms adopted since the start of the cri­sis have changed the way that Europe’s economies and fi­nan­cial sec­tor are leg­is­lated, su­per­vised, and reg­u­lated. The frame­work has been cre­ated. Now we need to im­ple­ment it fully.

But we also need to go fur­ther in ad­vanc­ing struc­tural re­forms at the na­tional level. We can see that the coun­tries that have done the most in this re­spect now have bet­ter eco­nomic prospects. We must not re­lax th­ese ef­forts. After all, the eco­nomic cri­sis has not yet been fully over­come. We must not take for granted the progress that has been made. Po­lit­i­cal de­ci­sions mat­ter – and mis­takes have con­se­quences.

At the end of a ten-year roller­coaster ride as Com­mis­sion Pres­i­dent, I can con­fi­dently de­clare that Europe has shown great re­silience. We have shown that the forces of in­te­gra­tion are stronger than the forces of frag­men­ta­tion. De­spite all of the chal­lenges we had to face – in­deed, partly be­cause of them – Europe re­mains united and open, and is now stronger and bet­ter able to face glob­al­i­sa­tion.

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