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Mr Wieland,
Ladies and gentlemen,

Thank you very much for inviting me to your annual meeting. Just a week ago I had the honour of representing the Federal Government at the celebrations marking Croatia’s accession to the EU in Zagreb.

After many, often difficult discussions on how to tackle the economic and financial crisis in recent months, this was a happy occasion. The accession shows that the project of European integration remains vibrant and attractive.

And even if people are now saying Croatia could be the EU’s next “crisis candidate”, I am convinced the accession is right. Croatia passed a demanding screening process.

Croatia’s accession also shows that Europe is not just about crisis management. But how should a robust, value‑based EU shape up in a globalized world? That is what I would like to discuss with you.

For me, Europe’s future is rooted in three guiding principles:

- deepening (more Europe)

- enlarging (Europe on a broader basis)

- simplifying (better Europe).

Deepening

Let me begin with the deepening of European integration.

The EU has made substantial progress on tackling the debt crisis. We have adopted a fiscal compact which firmly anchors a culture of sustainable public budgets in the eurozone. We have set up an effective European Stability Mechanism and adopted an ambitious Compact for Growth and Jobs to boost investment and growth.

These steps stabilized the markets and provided ways out of the crisis, as we see in the case of Ireland. But it is not just Greece that shows the crisis is far from over.

In the short term, our central goal remains to implement resolutely the Compact for Growth and Jobs adopted a year ago. The Compact is hitting the target and chalking up its first successes. For example, almost 40 billion euros from the Structural Fund has now been earmarked for projects to promote growth and jobs.

But we must keep moving forward on implementing the Compact.

We must increase our efforts to combat youth unemployment which has reached worrying levels in a number of southern member states. The European Council took a number of important decisions here, including frontloading 6 billion euros for the youth initiative. This was also the focus of the youth jobs summit held in Berlin on 3 July.

We need to improve conditions for SMEs. Above all, we need to give them better access to loans. The economy cannot drive with its brakes on. The EIB will play an important role here.

But we cannot leave it at short‑term steps. Public debt of more than 8 trillion euros makes plain that the crisis in the eurozone is not done and dusted.

We need to tackle what has become the deepest crisis of confidence in the history of European integration at its roots. The time has come to deal with the structural problems of the euro and add a real economic union to our currency union, that is closer coordination of our financial, fiscal and economic policies.

Deepening economic and monetary union has dominated the agenda of several European Councils. It was also discussed at the European Council at the end of June.

The summit made plain that structural reform has to be continued to increase competitiveness. The yardstick is not EU member states, but the United States, China and India.

I am very much aware that this will be a long and often uphill struggle. After all, reforms only hit home with a certain time lag. We know this from experience. Distributing new money makes you popular, of course. But combating a debt crisis with more debts is just not a solution.

We need to be able to insist upon and implement structural reform. To do so, we need more binding economic policy coordination – without communitarizing central political fields such as the labour market or social security mechanisms.

That is why we support the idea of so‑called contractual arrangements to move forward on structural reform. This idea respects the distribution of competences between the EU and member states. It is also firmly rooted in the idea of full democratic legitimacy because all such arrangements need to be ratified by national parliaments.

Here, we also support limited financial support to keep the costs of these reforms in check. But we will not agree to communitarizing debts or to an unconditioned eurozone budget to absorb economic shocks.

So while dealing with the crisis in the eurozone remains our priority, we need to see the current crisis as a wake‑up call to improve the EU’s position across the board.

I would like now to draw your attention to the proposals made by the Future of Europe Group instigated by Federal Minister Westerwelle last year. Eleven European Foreign Ministers drew up detailed proposals on how a deeper political union could shape up.

Reforms are a sine qua non if we want the EU to remain a real international player. The foreign policy powers of the EU have to be reformed. High Representative Ashton and the European External Action Service must be strengthened. The EU has to speak with one voice on the global stage.

In all our reform efforts, we have to be sure that the people have a voice when competences are transferred to the European level. A Europe without full democratic legitimacy would be a Europe built on sand.

This need for deepening will have to be anchored in formal agreements. To my mind, our aim should be to amend the European treaties. This raises many questions. How can we implement essential integration in the eurozone without leaving other member states behind? How do we deal with the domestic situation in Britain? The list goes on. This is something we will only be able to tackle after the European elections next year.

Enlarging

This brings me to my second guiding principle, enlargement.

An intensive political debate is currently underway on this issue. On 1 July, Croatia became the 28th member of the EU. Yet many citizens are sceptical about enlargement.

Should we nevertheless think about further enlargement steps? My response is a clear “yes”. Not just because we need to keep our promises. But also because it is in the EU’s interest to promote democratic reform in its neighbouring regions and to export stability. This is true above all for the Balkans which experienced devastating conflicts not all that long ago. That is why Croatia’s accession is such an important step.

But of course we need to look carefully here at whether the conditions for accession can be fulfilled.

The European Council has now decided to launch accession negotiations with Serbia. This is the right thing to do as it also pays tribute to the normalization of relations between Serbia and Kosovo. But the accession talks will not start until January after the Council and the European Council revisit the case in December.

The EU’s power to transform can also be seen in Turkey. Since accession negotiations began in 2005, there have been far‑reaching reforms to meet the criteria laid down by the EU. I am convinced that the reforms to date encouraged the Gezi Park generation to call for more democracy in Turkey. It is clear that Turkey still has a long way to go. In this situation, the EU sent out a logical signal. “Yes” to opening a new chapter in negotiations, but not immediately, only in the light of the next Commission progress report.

I don’t want to deny that we have made mistakes in the enlargement process and that a number of developments in some candidate countries are not yet satisfactory. But it is in the existential interest of the EU and its citizens to export norms and values and to promote stability in our neighbouring regions.

Therefore, the enlargement process must continue. We have to make sure that it works and bring it closer to the people. A sine qua non if it is to work is that absolutely all accession criteria must be met.

Respect for basic values and the rule of law however also must apply when a country is already a member of the EU. Foreign Minister Westerwelle and his colleagues from Denmark, Finland and the Netherlands have drawn up a proposal for a new monitoring procedure (rule of law initiative).

Finally, enlargement policy also has to take into account the EU’s ability to absorb new members. This criterion was established by the European Council as early as 2006 and brings me to the question of deepening and simplifying EU structures.

Simplifying (better Europe)

For me, this is the third guiding principle.

I am convinced we can make the EU more successful and effective if we focus it on key areas. Of course, close European cooperation is essential for a strong European economy, for a united Europe, for a Europe that can hold its own in global competition. We all benefit enormously from the internal market, from our common trade policy and from the Schengen area. We want “more Europe” on the euro and foreign policy. But we want less Europe outside these key areas. We do not need to harmonize every single aspect of life in Europe. Some fields where European legislative proposals are on the table are actually completely unsuitable for such legislation.

The Commission’s proposal for a women quota on boards is a case in point. It was contradictory to the subsidiarity principle. I’m not trying to say the issue is unimportant – on the contrary. But it is an issue that can and must be dealt with at member state level.

This brings me to another phenomenon. Our European institutions also need to be reformed. They must take their responsibility more seriously and work together better and more efficiently.

This holds true, for example, for the Council in which lengthy tours de table frequently prevent an open debate.

It also holds true for the Commission. Do we really need a Commission with 28 Commissioners, perhaps even with more than 30 – all with an individual portfolio? No, what we need is a smaller and more efficient Commission. One possibility would be to introduce a system of senior and junior Commissioners.

I am sure that a Commission reformed in this way would be able to focus its political energy more on the key areas and would show more restraint about issuing legislation.

All this would help strengthen the subsidiarity principle. And, in turn, this would lead to greater acceptance of the EU by the public.

What we don’t want however is a process of repatriating competences. That would shatter the EU acquis.

Conclusions

The European Union is much more than an economic community. It is a community of shared values and a political project.

Thus, we need to look beyond current crisis management efforts and fix our gaze on the long‑term goal of a political union. A political union with the Commission as a real government with two parliamentary chambers – the European Parliament and a second chamber made up of representatives of the member states. On this foundation, Europe could become a real global player that defends its values and interests with a single, strong voice.

Democratic, competitive, transparent, efficient and open. That is my vision of a united Europe!