Speech by Foreign Minister Guido Westerwelle to Leiden University students at the Societeit de Witte in The Hague: “The European stability union – a shaping force in the world”

04.10.2011 - Speech

-translation of advance text-

I’m delighted at this opportunity to speak about the future of our shared European project here at the venerable Societeit de Witte. This building has an impressive history. For more than two hundred years, it has hosted meetings in a relaxed atmosphere which transcend the boundaries between countries, professions and political parties. This is what makes it such a special place to discuss important political, economic and cultural issues. As we reflect on Europe, we should be guided by the enlightened and cosmopolitan spirit of openness in this place, Plein in The Hague.

The current debt crisis is the most difficult test Europe has faced in the past sixty years. This crisis is altering our view of Europe. It virtually compels us to look at the European project through the eyes of economists and stock brokers. We are all inevitably turning into experts in country ratings, interest spreads and haircuts.

Above all, however, the crisis has aroused deep concern among many people in Europe. We need to take these concerns seriously.

However, at this point we cannot limit our perspective to the crisis and the sacrifices it brings. This sort of tunnel vision would fail to see our fundamental interests in the unity of Europe. To us Germans, Europe remains the solid foundation of our foreign policy. Only European unity, through its peaceful inclusion of central Europe’s largest country, could provide a convincing answer to the “German question”. Here in The Hague today we’re going to celebrate the 21st anniversary of German unity, which couldn’t have been realized without European integration.

The united Europe contributes immensely to our prosperity. This holds especially true for leading exporters like the Netherlands and Germany. Not least of all, it is becoming ever more apparent – here in The Hague as well as in Berlin – that we are united by a shared European way of life, which we are able to maintain in this globalized world only by acting together.

This makes it all the more important for us to take the debate about Europe’s future in the right direction. The key question is whether we need more or less of Europe. We must not allow the impression to arise that the preservation of national interests stands in opposition to the further development of European unity. This argument is wrongheaded. Re-nationalization would be a dangerous mistake.

The opposite is what we need: the answer to the debt crisis and the challenges of globalization is not less Europe, but more of it. This is the message we need to be sending right now. We need to be clear about where we stand. We Germans know that this is precisely what our neighbours in Europe expect of us.

In terms of tackling the debt crisis, what this means above all is that we can’t limit ourselves to short-term crisis management. We need to develop a vision for a lasting solution. The crisis has given us an opportunity to make up for what wasn’t possible yet at Maastricht: to complete the economic and monetary union by establishing a European stability union.

We’ve already taken the first steps in this direction. By clearing the way for an expanded rescue fund, the German Bundestag has sent an important signal to our European partners: you can rely on Germany. I’m confident that the parliament of the Netherlands will also make the right decision on 6 October. We need to build on this foundation in the coming months. We have to change course towards budgetary discipline and competitive strength for Europe, and we have to stick with that course.

In taking on this enormous task, we’re entering uncharted territory. Purportedly simple solutions such as eurobonds are of no help because they don’t get to the heart of the problem. What we in Europe need to do instead is come to an agreement about the conditions that a lasting solution to the crisis would have to meet.

There are four crucial points. Firstly, we in the eurozone must coordinate our economic and financial policies more closely and develop a culture of binding budgetary discipline. A culture of obligatory budgetary discipline must take shape in the euro countries. The pressure of the crisis has opened up many possibilities in this area which would have been inconceivable just a year ago. Fiscal discipline is not merely a German hobby, but rather is in the interest of all of Europe. Many euro countries are now moving forward in enshrining national debt limits in their constitutions. The strengthening of the Stability and Growth Pact which the European Parliament has just approved is also important. The European semester, which will provide Europe with greater rights to monitor national budgets, needs to rapidly bring about greater commitment. In the face of all these things, we have to avoid the mistake of viewing policy as the adversary of markets. In terms of both good governance and European policy, the right path is for us to wisely harness the disciplining forces of the market in order to hold eurozone governments to sustainable budgetary policy.

Secondly, we must give Europe the financial constitution that it needs. This includes appropriate incentives for major investors in order to motivate them to demonstrate sounder judgement and avoid harmful excesses. The financial market is not yet sufficiently hedged in: we need sound equity regulations for financial institutions and strong oversight of banks, at minimum at European level. This is the only way to prevent future financial bubbles and debt crises. We must also move forward in continuing to build up an independent European rating agency.

Thirdly, a culture of stability will remain fruitless in the long term without growth; this is why we need a strategy to increase Europe’s competitive strength. A strategy for greater competitive strength in Europe needs to include appreciable re-channelling of funds in the upcoming negotiations for the 2014-2020 EU budget: more investment in education, research and infrastructure, and less in subsidies. These negotiations will certainly not be easy, but if we are serious about Europe’s competitive strength, we need to stick faithfully to this path.

Fourthly, the steps we have taken so far are not enough to halt spiralling debt and travel down the road towards a real stability union. We need to further strengthen the stability pact by moving it towards automatic sanctions. Above all, however, we must really give teeth to the principle that solidarity and solidity are mutually dependent. Recommendations and rights of inspection are not enough. Countries that want to take advantage of the solidarity of the EFSF in the future need to now grant Europe binding rights to intervene in their budgetary decisions.

Changing the European treaties would be the clearest way to make budgetary rules more binding and thus to fundamentally ensure the inclusion of EU institutions. We need to remedy the structural deficiencies of the 1991 Maastricht Treaty. This is an enormous task. After our experiences in the past two years, however, it is fundamentally necessary to take it on now.

If, however, despite the crisis not everyone is prepared to take such a step, the euro countries will need to take the lead – for example, through an international treaty. In doing so we need to keep our eyes on the goal of later incorporating this treaty into the EU treaties, as was successfully done in the case of the Schengen Agreement on freedom of travel. One thing is certain: we can only succeed in moving forward if we also provide a convincing answer to the question of democratic legitimacy.

This is the roadmap we should be following. It will demand great effort on our part. Nonetheless, we have every reason to move forward with assurance and self-confidence as we build a stability union. We all stand to gain a great deal from this – which is something we bear in mind far too rarely in these times of crisis. If we strengthen the euro’s position as a global reserve currency, we will gain major competitive advantages.

Above all, we need to see the larger picture beyond the sacrifices of the crisis: only a Europe which rests on sound economic foundations and is able to act effectively can manage the challenges that globalization poses to us. No European country acting alone is equal to these challenges. If we didn’t already have the European Union, we would have to invent it now as our continent’s response to globalization.

Since the end of the Cold War, our world has been undergoing a massive power shift. The European Union’s share of the global population is declining. The 500 million people of Europe now comprise only seven percent of the world’s steadily growing population. In 1989 Germany still generated one and a half times as much revenue as China. Now China’s GNP is twice the size of Germany’s.

We are witnessing the debut of new players on the world stage. In the booming metropolises of the emerging economies, ever-broader swathes of the population are gaining prosperity and seeking to have a say in their societies. This holds especially true for the BRICS countries – Brazil, Russia, India, China and South Africa. This acronym, which once belonged to the specialist terminology of investment banking, is now familiar to a much broader public. It has become a hallmark of emerging markets and powers. In the past ten years the volume of German and Netherlands trade with these countries has multiplied.

This major shift goes hand in hand with the development of a global middle class whose notions of economic and political participation often aren’t very different from our own. This is what we have seen in recent months right in our own neighbourhood – from North Africa to the Arab world to Belarus. We are coming to witness the globalization of values.

We are seeing millions of people take to the streets in spite of repression, seeking freedom and fair opportunities in life. And we sense that their demands are not so different from those that courageous Europeans have fought for time and again – as in 1989, for instance. This experience must prompt us to turn our gaze to the possibilities which come with the sweeping changes of our era.

We need to look to the emergence of new centres of power as an opportunity to face the challenges of globalization together. This is true when it comes to climate change and energy policy and just as true when it comes to dealing with immigration and combating terrorism.

This is why we Europeans have to more fully recognize the new emerging powers as strategic partners. We need them to share responsibility for global governance and treat it as a matter of their own concern.

We need this kind of global governance more urgently than ever. There is pioneering work to be done in this area. We have no panaceas to turn to. The only things that’s certain is that the United Nations, with its global legitimacy, must play a key role. What global governance should mean beyond this is something we need to spell out together, letter by letter.

We are not rejecting old friends when we form new strategic partnerships. On the contrary
– we need to firmly embed these new partnerships in a European framework.

We will only succeed at this if we give tangible substance to the European Union’s strategic partnerships. Thus, we have to work together with Catherine Ashton, the High Representative for the Common Foreign and Security Policy, to draft a joint plan about how Europe is to face the world’s new shaping forces in the future. We need to agree on what shared goals and strategies to pursue here. This is the only way to put Europe in a position to speak with one voice in world politics.

As a stability union, the European Union can itself be a power shaping globalization. This is the vision that needs to guide us. We have to stand by it as we face the tests that recent months have brought. Now is the time when we must move the political project of Europe forward and start discussing how we will constitute Europe anew.

The Netherlands and Germany have an important role to play in this. We’re founding members of Europe. We signed the Treaties of Rome together. We launched the Schengen rules on freedom of travel together. We worked side by side in Maastricht to found the monetary union.

Now we must carry on this great tradition and write the next chapter in the unification of Europe. Together with our friends in France, Poland and the other countries of Europe, we need to establish a European stability union as a power shaping globalization.

This is more than an expression of our old bonds with a Europe which has brought us sixty years of peace and prosperity. It is an act arising from the sober realization that we can only prove equal to the momentous changes of our era in a steadfast and united Europe. This is what we have to strive for.

In doing so we should be guided by the enlightened and cosmopolitan spirit of openness which the Societeit de Witte embodies.

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