Mon discours à la conférence « Les 20 ans du noyau dur européen » à Berlin

J’ai participé hier à Berlin à la conférence « Les 20 ans du noyau dur européen/ 20 Jahre Kerneuropa » organisée par le Jacques Delors Institut – Berlin, la Konrad-Adenauer-Stiftung (Fondation Konrad Adenauer), et Open Society Foundations.

Retrouvez dans le discours ci-dessous mes convictions pour le projet européen, ma vision des avancées de l’Union européenne et de la zone euro ces 20 dernières années, et les défis et objectifs pour les années à venir. Sur ce point, je suis convaincu que les 5 prochaines années seront décisives, avec pour priorités la croissance et l’emploi. Je reviens aussi dans ce discours sur la nécessité de compléter l’Union économique et monétaire, avec plus de solidarité, de contrôle et d’intégration.

 

Conférence – 20 Jahre Kerneuropa

Berlin – 1er septembre 2014

 

 

Ladies and Gentlemen,

20 years ago today, Wolfgang Schäuble and Karl Lamers wrote their master piece « Reflections on European Politics ».

The central proposal of the paper, the idea of a « core group » of European nations bound to lead the further integration of the continent, triggered a heated debate on the continent at the time.

The debate first came from those member states that were not considered belonging to the core: Spain, and, most of all, Italy. But the debate also emanated from within the core countries, Germany and, prominently, France, where the reactions from both sides of the political spectrum were, to say the least, very careful.

Unfortunately the debate was short-lived and today, the Schäuble-Lamers initiative stands in France for a wasted opportunity to deepen integration before enlargement took place.

Reading again this excellent piece before I came to Berlin, I was impressed by how lucid the authors were at the time about the challenges the Union would face in the future.

I believe the Schäuble-Lamers paper is still very useful today, in a least two different ways.

First, the central interrogation of the paper is still absolutely modern in 2014 : how to keep Europe efficient, agile able to take quick and good decisions.

And I would like to give you my understanding, that of a French European – or European Frenchman – on what core Europe – Kerneuropa – can mean today.

Second, the paper has another virtue, 20 years after. It enables us today to measure what can be achieved – or not, in a timespan of 20 years.

And by doing so, it inevitably calls for thinking about the next, the coming 20 years of the European project.

The Euroland has de facto become the embryo of a Kerneuropa

« Reflections on European politics » is rooted in the world of yesterday and in the European Union of yesterday. But it tells us a lot about the world of today and tomorrow, about the Union of today and tomorrow.

1994-Europe was western-, 12 members-Europe.

1994-Europe was before the Euro.

In the last 20 years the European Union experienced quasi-simultaneously massive enlargement (12 to 28…) and the deepest integration step ever since its creation : the introduction of the common currency.

The environment of the European Union also dramatically changed : globalization, and the emergence of economies the size of continents (BRICs) ; new threats and challenges emerged: climate change, environmental risks, terrorism, migrations, geostrategic instability at our borders.

 

Somehow in the last 20 years, Europe has become at the same time larger, and smaller in a world that has become bigger, more challenging, more dangerous.

Enlargement to the east was a historical necessity and history does not wait. Schäuble and Lamers were very right in anticipating this.

Enlargement to the east was a historical necessity and history does not wait. Schäuble and Lamers were very right in anticipating this. It was probably better understood in Germany than in France at the time because of obvious geographical and historical factors.

A Frenchman with Polish Mother and Romanian Father, I consider that enlargement was in fact the reunification of Europe.

Now : Enlargement did make Europe bigger in a bigger world. But did it make Europe stronger ?

There is a risk that wider means weaker. This was well identified by Schäuble and Lamers, and Kerneuropa was their answer to address that risk.

It is hard to deny that Europe has become very complex and more difficult to manoeuver in the last 20 years.

In the Council, 28 voices ; in the College of Commissioners, 28 voices. This has definitely changed the discussion dynamics. The capacity to reach consensus, which remains at the core of the Community approach, has been substantially constrained. This has led to more complexity, and a Union which is drifting away from the citizens.

The Treaty changes since 1994, including the Lisbon Treaty, have indeed brought positive improvements – the Spitzenkandidaten for the European elections is an example of how new rules have led to new, more democratic practices. But overall it is fair to say that the rationale for a Kerneuropa as it was proposed by Schäuble and Lamers has kept most of its appeal.

For me the euro is de facto the embryo of a Kerneuropa of today’s Europe.

There is one dimension of the Union, though, were integration was brought to a completely new level since 1994 : the economic and monetary union and the euro. For me the euro is de facto the embryo of a Kerneuropa of today’s Europe.

There, at the monetary, financial and economic level, the Union has definitely become stronger than 20 years ago.

Indeed we experienced a deep crisis, and work still has to be done to complete the architecture of the euro in the long run, but the overall assessment of what the euro brought Europe is very positive.

Let me dwell a minute on this question of the euro, very dear to my heart as a former Finance Minister.

In 1994, when « Reflections on European politics » was written, the continent had just witnessed the implosion of the European monetary system. The road to the euro was conceived as an answer to this first failure.

Today, in times where in France and Germany and elsewhere some are advocating for dismantling the euro, it is very important to remember why we embarked on this. To cut it short : the cement of the European project is the internal market. And without monetary arrangements between members, the internal market cannot give its full potential.

Loose currency arrangements do not work in the long run. So we embarked on the most irreversible kind of arrangement: sharing a common currency.

This choice made also sense as the horizon of the European project is to move towards an « ever closer union ». What better step in that direction than sharing our currency, the symbol of the sovereign?

What can be our assessment of the euro at the current juncture? To sum up my view : the first phase of the crisis has shown that the euro was an asset, the second, that it was more demanding than expected.

The euro has been a fantastic bulwark against financial instability from the outside.

The euro has been a fantastic bulwark against financial instability from the outside: the first years of the financial crisis, imported from the US, prove this point. The experience at the time of member states outside the euro, and the fact that since 2007 the rhythm of accession has not abated is a proof that the crisis has not weakened the rationale for adopting the euro.

The euro-membership unfortunately, like any insurance scheme, produced some moral hazard. Insurance can induce more risky behavior. The second phase of the crisis, specific to the Eurozone, revealed that the architecture of our common house was largely unfinished.

The founding fathers of the euro had indeed thought of a coordination mechanism with the Stability and Growth Pact. But the exclusive focus on public deficit and debt, the tip of the iceberg, missed everything happening below the surface, in the private sector.

In an economy were financial innovation was booming the best pupils in the class, Spain, Ireland, soon found themselves in very dire straits.

The euro architecture has been complemented, at the same time to stabilize it in the short run and to make it fit for the future in the longer run.

Our collective reaction since 2010 has been in retrospect impressively substantial, even if the process for going forward seemed sometimes messy. The euro architecture has been complemented, at the same time to stabilize it in the short run and to make it fit for the future in the longer run.

Work on the Eurozone has been two-fold since the beginning of the crisis, balancing solidarity and responsibility.

Solidarity mechanisms have been put in place which proved immediately quite powerful : EFSF and ESM.

At the same time the framework for coordination has been completed: it has been reinforced for public deficits and debt, and more importantly it has been extended to developments in the private economy. This is the 6pack 2pack regulations and the fiscal compact.

Even more important, the banking union also balances enhanced responsibility (supervision) with enhanced solidarity (resolution) and severs the link between private and public debt, which proved one of the most violent and unanticipated destabilizing mechanisms during the crisis.

Where do we stand now ? What are the lessons to draw from these 20 years?

Deeper integration for an open subgroup of member states, the Euro area, has proven a success and a driving integration force for the continent.

The first lesson I believe, is that deeper integration for an open subgroup of member states, the Euro area, has proven a success and a driving integration force for the continent. In this regard, some Kerneuropa happened. It should be pursued further.

The second lesson is that the initial framework we built was very, to say the least, very imperfect. There is still much work to do. Integration in the European Project is innovation, and like any innovation process, it entails a trial and error approach. We should be now conscious of that. Modesty about our capacity to anticipate the challenges of tomorrow is of the essence.

Complete the Euroland in the next 20 years

One of the striking features of the Schäuble-Lamers paper, is the sharp consciousness of the authors at the time, that Europe was at a turning point. And looking back, they were very right !

I am deeply convinced that Europe today is, again, at such a turning point.

I am deeply convinced that Europe today is, again, at such a turning point. The European elections of may the 25th indicate very clearly that if everthing stays the same, it will be too late next time.

In 1994, the changes to come, most prominently the enlargement, could be easily foreseen. In 2014 the changes to come are harder to forecast and this contributes to the uncertainty European citizens are experiencing.

We know we should move ahead in Europe and status quo is not an option, but specific goals, simple goals, which mobilize public opinion, have become harder to sketch.

We are now entering a new European sequence, with a new European Parliament and a new European Commission. The natural horizon of this exercise is 5 years ahead. Much can be – and I am sure much will be done in these 5 years.

But my conviction is that we should look further, we should understand the next 5 years as the first step on path toward more integration and more solidarity in the Euro area.

I believe that the Euro area today is caught in a dangerous contradiction.

On the one hand, we know that, to complete the EMU, to make it fully functional for the future, we need deeper integration, more solidarity and more control.

On the other hand, the current institutional framework has been pushed to the limit in both dimensions. The political situation in many countries, not to mention the opinion of constitutional courts, in Germany or Portugal for instance, show that more solidarity or more control, without changing substantially the functioning of the Union is not possible.

The experience of the last 20 years teaches us that it is very unlikely that in 2034, the Eurozone will be organized the same way as it is today. And Schäuble and Lamers demonstrated, back then, that thinking forward and ahead of their time was most useful.

We will need more risk sharing, we will need more common tools for policies that can be better conducted at the Eurozone level, we will need more democratic control of these tools if we want them to be acceptable.

We should be careful though: in the face of what Europe delivers today, in terms of growth and employment, the case for more Europe is very hard to sell to our fellow citizens.

We should articulate the long term objective – complete the EMU over the next two decades – with a short and medium term objective : growth and jobs in the 5 years to come.

So we should articulate the long term objective – complete the EMU over the next two decades – with a short and medium term objective : growth and jobs in the 5 years to come.

If this first step is a failure, the political space to improve the Union, make it more efficient and more democratic will never exist.

Of course, growth and jobs cannot be created by the European Union, the same way they cannot be created by the Member states. But the environment has to be the right one. And the challenge now is to build a European environment in which countries promoting the right policies and pushing the right reforms through do see the fruits of their efforts.

If they don’t, then we run the risk of seeing reform and Europe disqualified at the same time. We should not underestimate that risk.

The end of business as usual

Ladies and Gentlemen,

In 1994, with enlargement and the euro coming up, the subtitle of the Schäuble-Lamers paper could have been « the end of business as usual ».

I believe today again business as usual is not possible anymore, and this does not mean, of course, that we renounced to our common rules.

Well I believe today again business as usual is not possible anymore, and this does not mean, of course, that we renounced to our common rules.

« Reflections on European Politics » after 20 years is a lesson of modesty and courage at the same time.

Modesty because it shows that deep understanding of the challenges to come, and creativity about how to face them is not sufficient to command action. Being right is not enough ! This is why intensive debate and discussions between member-states, and within member-states about the future of Europe is needed more than ever. This conference was a great opportunity in this regard.

Courage because it should encourage the leaders of today’s Europe to look ahead with ambition, and prepare Europe and the Eurozone, for a changing world.

Thank you.

(Seul le prononcé fait foi)

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