Speech by Michael Georg Link, Minister of State at the Federal Foreign Office, at the Franco German Institute congress on 21 November 2013 in Ludwigsburg

-- Translation of advance text --

When I took up my post in January 2012 as Minister of State and Commissioner for Franco German Cooperation, we were in the end phase of a global financial crisis. Back then it was for a while unclear whether this would escalate into an existential threat not only to our common currency but also to the euro area and the European Union as a whole.

The crisis spotlighted a major structural flaw in Europe’s architecture: in the long run a monetary union without an economic union, in other words, without closely coordinating economic, financial and fiscal policies simply won’t work. This became dramatically clear when a number of what had previously seemed sound economies threatened to implode under the pressure of the global financial crisis.

Intensive crisis diplomacy eventually produced a range of new instruments and agreements such as the European Stability Mechanism and the fiscal compact. Thanks to strenuous efforts of this kind we managed to prevent the euro area collapsing and the contagion spreading to EU countries that are not members of the monetary union.

We can’t allow such a crisis to happen again. That’s why the Franco-German tandem is so crucial here. For it’s only when Germany and France get our act together that Europe can make progress.That was the background to the proposals Federal Chancellor Merkel and President Hollande presented on 30 May for a stronger Europe of stability and growth. The consensus in the European Council is that structural reforms geared to increasing competitiveness must continue.

The ambitious reforms our neighbours are undertaking deserve our respect. That goes for France, too, even if there’s currently much debate over the need for further reforms. In many countries the reforms now in train are already making a difference. Current account deficits have shrunk significantly. According to the European Commission’s latest forecasts, Europe’s economy is now once again growing, with a plus of 1.4% expected in 2014. Ireland and Spain have announced their intention to leave the European Stability Mechanism by the end of the year.

So there are increasing signs that we’ve now turned the corner and the three-pronged strategy of solidarity, consolidation and growth driven by competitiveness is beginning to work.

But it’ll be a long haul yet before we’re out of the woods. In many countries in Europe unemployment, especially among young people, remains alarmingly high. That goes for France, too, unfortunately. EU heads of state and government are well aware of the problem, however. So at the conference on youth employment convened by President Hollande on 12 November they agreed that all young people should be guaranteed either a job or training. They plan to have this youth guarantee in place by 2015. That sends a powerful message.

What’s needed to really improve the situation, however, are further efforts to generate sustainable growth and make the EU more competitive in global markets. So a great deal remains to be done.

Even if economic pointers show light at the end of the tunnel, current political trends are a sombre warning that there can be no resting on our laurels. The debt crisis has created a profound crisis of confidence. Many people no longer trust the EU and its institutions to find effective and viable ways to help economies in trouble. There’s a danger they may even lose sight of the value of European integration per se. The economic crisis could then become a profound political crisis. Here, too, Germany and France have a special responsibility to live up to. Together we must communicate the EU better, make it meaningful to people in our own countries and all across Europe. We must jointly push the European idea in the wider world, too.

The European Parliament elections next year will clearly serve to concentrate minds here. Given the deprivations people are suffering in the crisis, many will see the elections as a vote on the entire European integration project. That will play into the hands of populist, nationalistic or Euro-sceptical parties. Even at this stage they feel everything’s going their way. We see this not only in France but also in Germany, where Euro-critical parties have been gaining ground in recent months.

And of course we mustn’t cede the field to the Euro-sceptics. What populists and nationalists of every stripe are pushing for all over Europe won’t solve the real problems. The pronouncements made by Marine Le Pen and Geert Wilders also make that very clear. While they recently agreed to collaborate on their anti-EU campaign, they don’t have any constructive proposals to offer on how France and the Netherlands could achieve greater prosperity without the EU. If the current crisis has taught us anything, it’s that less Europe is not the answer. What’s needed is for all 28 partners to stand together here. Only when we join forces do we have the means, the strategies and the institutions that will enable us to ride out a global economic crisis.

So now, in the run-up to the elections, all parties have a responsibility to explain how they intend to take European integration forward. Crude populistic, anti-European or even racist slogans can’t restore trust that’s been lost. But better functioning institutions, more effective decision-making and greater democratic legitimacy most certainly can. For that we need a common strategy.

It’s crucial we have the biggest possible turnout of voters who believe in the European idea. That’s the only way to prevent a strong presence in the European Parliament of those who basically want to get rid of it. But Europe’s citizens will only turn out and vote if they see the EU offers real added value when it comes to solving specific, major problems. In other words, the EU must demonstrate its problem-solving capacity and enact a number of important bills now in the pipeline by the end of the current legislative term. Germany and France have a special responsibility here. We’ve traditionally played a pivotal role in this area, for on many occasions the joint proposals we put forward paved the way for a breakthrough during the consultation and decision-making process.

What’s absolutely crucial during the coming election campaign is to present a range of genuine policy options. People need to know there are different ways of tackling the challenges facing Europe. That means Europe’s political parties need to publicly debate the whys and wherefores of their policies.

As well as focusing on the European elections, we also need to reflect next year on how in the long run we can build a “better” Europe and offer “genuine” solutions to the challenges ahead for Europe that I described earlier. Over the past two years Federal Foreign Minister Westerwelle and Foreign Minister Fabius have discussed in depth with nine of their European colleagues the future of the European project. Let me make two points in this connection:

Firstly, the crisis showed that the Treaty of Lisbon hasn’t corrected the basic structural flaw of a monetary union without an economic union. So the top priority must be to strengthen the economic and monetary union. This was a point President Hollande and Federal Chancellor Merkel also emphasised in the document they presented on 30 May setting out their ideas for the further development of the economic and monetary union. This will require additional institutional improvements as well as management of the long-term relationship between an increasingly integrated euro area and countries that remain outside the euro area. A cohesive EU is something Germany and France both believe is a valuable asset. But if the euro area is to function properly, further fundamental reforms in all spheres relating to the euro are required. What’s needed as regards the banking union, the fiscal union, the economic union and to ensure greater democratic legitimacy is concerted and synchronised progress.

Secondly, strengthening the economic and monetary union is not enough. What we also need are improvements in the way the EU as a whole functions. If the EU is to have a greater say in the conduct of world affairs, it must act with firm purpose. We’re living in an era of unprecedented globalisation, in which technological innovations happen at breakneck speed. It’s in our supreme interest to ensure that globalisation evolves peacefully and in accordance with accepted ground rules. This is a herculean task beyond what any European country can achieve on its own. So we need a united Europe. That’s the only way to ensure our values and interests will count in tomorrow’s world.

This means the EU must raise its international profile. We have to improveour decision making. We need a more effective European External Action Service with greater political clout. Germany and France are working very closely together on preparations for the upcoming European Council in December on the Common Security and Defence Policy. It’s my feeling, however, that we also need more majority voting in areas such as the Common Foreign and Security Policy. Foreign policy, I may add, is more than just the Common Foreign and Security Policy. We need concerted action also in areas such as trade and external economic policy, development aid, enlargement and neighbourhood policy, the management of migration flows – the refugee problems we’re now seeing in the Mediterranean region are of course issues we’re already working on intensively – as well as climate negotiations and energy security.

A functioning economic and monetary union and effective external action: these are the hallmarks of an EU that’s strong in those areas that fall within its core competence. But the EU mustn’t regulate matters that are best managed at local, regional or national level. Here I absolutely agree with the views of Commission President Barroso: “The EU should be big on big things and smaller on smaller things.” How best to apply this subsidiarity principle in practice is to my mind likely to be one of the major themes of the European debate over the months ahead. It’s very important to take this principle seriously, for it’s a measure of whether the EU is as citizen-friendly as we have a right to expect.

What must be prevented, however, is any inflation of “opt-outs” or repatriation of competences to the national level. The EU acquis must on no account be compromised. Otherwise what would be left of the Union wouldn’t amount to much.

It’s imperative that the post-Treaty of Lisbon reform process should continue, even if it remains tough going. Treaty changes shouldn’t be ruled out a priori. The opportunity to take reform initiatives forward will come in early 2015. Once the new Commission is in place and the European Parliament’s new legislative term has started, the time will be right to tackle long-term projects. In this phase the Franco-German tandem will once again come into its own as a source of seminal ideas on the future of European integration. We are conscious of the responsibility we bear here.

By the end of what will certainly be a lengthy process the separation of powers in Europe should function through a slimmed-down and more workable system that provides more effective decision-making and enjoys full democratic legitimacy. In the medium term our goal should be a truly bicameral parliamentary system with a strong European executive.

As Vice-President of the Franco-German Institute, I know I’m talking here to people who care deeply both about Franco-German relations and the European cause. You know Europe has always been more than the sum of its parts – institutions, member states, internal market and free trade zone. And today, too, it’s about so much more than a common currency. Above all else, Europe is a community of shared culture and values. These shared values are the foundations on which this Europe is built. They are the fruit of the Enlightenment, the fruit of the revolutions for freedom in 1789 and 1989. The ideals of liberty, equality and fraternity define to this very day our societies’ guiding ethos. The Franco-German reconciliation process and the friendship for which it paved the way – a friendship whose 50th anniversary we have been celebrating this year – and our joint commitment to a united Europe that is free and at peace is something quite unique. What we have built here in Europe holds a tremendous attraction for people in all parts of the world. This is a precious resource which it’s important to protect and nurture. Together with a number of his EU colleagues, Federal Minister Westerwelle has therefore launched a new initiative aimed at enhancing respect for fundamental European values and rule of law principles also within the Union. I’m very pleased to see that the European Commission is thinking along the same lines. These values are our trump card in today’s globalised world. If we’re true to our own principles, we need fear no competition. We can have every confidence that the values and kind of society we stand for will prove their true worth. I firmly believe that making sure we remain credible in this way will also help give our citizens a better sense of direction and renewed confidence in Europe.

Thank you very much.