Foreign Minister Guido Westerwelle on the repercussions of the debt crisis in Europe. Published inthe Neue Zürcher Zeitung on 29 November 2011.
The debt crisis is putting the European Union to its hardest ever test. Despite strenuous efforts, we have not yet won back the confidence of the financial markets. Even worse: in many countries citizens’ confidence in the whole European project has been hit. Many EU member states have had to impose dramatic, painful cuts on their citizens. We Germans have observed this process with great respect. I am full of admiration for the courage and resolve displayed by many Governments intent on implementing reforms, even unpopular ones. Last year, the German Government itself brought in the biggest ever austerity package in the history of the Federal Republic. We received a barrage of criticism for doing so. But now it’s clear that we were ahead of the game.
The crisis has shown that very different levels of competitiveness have emerged within the eurozone. The historically low interest rates following the introduction of the euro caused very harmful developments in some countries: it was all too easy to get loans, the state apparatus expanded excessively, there was a lack of investment in forward-looking sectors, and there was inadequate supervision and control of banks and financial markets. These problems were covered up for a long time. But now we are seeing that things cannot go on like this. And we have learnt that a communitarized financial and monetary policy cannot function in the long run without a strictly coordinated economic and fiscal policy.
Quo vadis Europa?
Firstly, acute crisis management: we must implement the European Council’s decisions as quickly as possible. We are setting up financial rescue packages and making them as strong as possible. In this way we can protect states and banks against the risk of contagion. Germany is demonstrating solidarity and, supported by a broad-based consensus in parliament, stands firmly at the side of its European partners. All of this is necessary if economic dynamism is to return throughout the EU, but it is not enough: national austerity and reform packages need to be implemented quickly and must lead to a credible, sustainable policy of debt reduction.
Secondly: competitiveness is the key to a new growth dynamic. With the Europe 2020 strategy, the EU has provided important orientation. With the Euro Plus Pact, national measures (for example in taxation or labour market policy) will be coordinated at European level as well. We want to further develop the single market. Here, too, however, Europe will be fixing the framework. It is crucial that everyone contribute ideas and creativity. That is the only way to make full use of our tremendous common potential and to prepare the ground for new dynamism and sustainable growth.
Thirdly: the tightening of the rules on stability is a step in the right direction. But that in itself is not enough. The rising interest rates for the bonds issued by some euro states are indicative of the continuing lack of confidence. So we need to go further and evolve the economic and monetary union into a true stability union. That’s the only way to ensure that the distortions of the past can never ever be repeated. This will not be possible without some limited amendments to the Treaty on European Union. What we need above all are automatic sanctions that kick in when the rules on stability are broken and the right to go to the European Court of Justice if they are repeatedly violated.
We have no time to lose; we need a political agreement as early as the forthcoming European Council meeting. If we get one, a convention could meet in the spring of next year to speedily draw up clear rules for stability in keeping with a limited and very closely defined mandate. These new rules, too, will apply only to the euro states. Even so, it is important that all 27 member states are involved in elaborating them. The priority is to avoid a split within the European Union.
To us Germans, our commitment to Europe is and will remain the foundation of our policy. The EU needs timely solutions so that we can preserve our unique model of freedom, social justice and cultural diversity. It is the responsibility of all member states to work together to ensure that we succeed. Everyone has an equal place in Europe as well as the right, indeed obligation, to play a committed and constructive part in voicing ideas. We should use and extend the community method wherever appropriate: it gives everyone at the table a seat and a voice and has produced much confidence within Europe.
Our single currency is a project whose importance for Europe cannot be overestimated. The euro is respected across the world; despite the current tribulations, its importance as an international reserve currency is continuing to grow. It therefore underpins our claim to a say in shaping globalization. One thing is clear: only if we work together will we Europeans succeed in keeping up with the new centres of power in the world in the global competition.
Together we Europeans have always managed to emerge stronger from crises and to advance the European integration project. And we will manage this time as well – if, together, we resolutely take a courageous step towards greater integration. Further developing the Treaties certainly won’t be an easy task, but it is the only way to become a union of stability and growth.