The Future of the European Union - Managing Globalization
Bucerius Summer School
Hamburg, August 31, 2007
Dear Senator Gedaschko,
Dear Dr. Sommer,
Dear Bucerius Alumni,
Ladies and Gentlemen,
It is a pleasure to be here, in this magnificent City Hall that embodies Hamburg’s hanseatic openness to the world.
I have been asked to speak about the future of the European Union. Few subjects could be more relevant, especially after Germany’s successful EU Presidency.
However, before I enter the complex maze of EU affairs, I want to place the subject in the broader global context.
The future of the EU is linked to globalization. The EU-reforms that we just agreed will make our Union more effective and transparent. But they are also indispensable to strengthen us as a global actor.
Ladies and Gentlemen,
Globalization is not an option. It is a fact.
First, we live in an age of networks. States, individuals and companies are more and more integrated. The challenges we face – economic integration and migration, energy security and climate change, humanitarian crises, failing states and terrorism – are interdependent. The current turmoil in financial markets clearly shows how interlinked the world has become.
A second key feature is that, in many ways, we live in a global village. Information spreads in real-time. Geography is no obstacle to knowledge anymore. Economic attitudes converge. The same mobile phones and fashion brands are present from Brazil to Beirut.
So the world has become more homogeneous, but also more heterogeneous. The “flattening”of the earth, as Thomas Friedman calls it, can provoke a backlash. The radicalization in some regions is often a response to globalized “crash-modernization”.
Still, the challenge today is not stemming the tide of globalization, but making it work properly.
The EU has a crucial role to play in this process. It is neither the Trojan horse of globalization nor should it be the scapegoat for the changes it brings. On the contrary: The EU is a tool to manage that change.
Over the last 60 years, European integration has been the successful answer to “regional interdependence”. Today, the EU is a truly global actor. It unites half a billion people. It is the world’s largest economic block, with a quarter of global GDP. 56% of worldwide financial aid comes from Europe. 60,000 European peacekeepers serve from Congo to Kosovo, from Afghanistan to Indonesia.
Our seemingly “internal policies” also have a great external impact. The Euro is the world’s second currency. We have created the world’s largest market, which is not only a magnet for investors, but also “globalizes” European rules, from financial services to mobile phone technology.
Managing globalizationand strengthening its rules is thus in our vital interest: Pulling up the drawbridges of a “fortress Europe” would be absurd and counterproductive: Globalization is not a zero-sum game. We draw a massive dividend from it. A fifth of Europe’s wealth depends on our openness.
This call for a “global Europe” is echoed by our partners. One may not go so far as to call the EU “the new City on the Hill”. But the vast majority of people around the world – in a recent BBC poll - want a stronger role for the EU.
Ladies and Gentlemen,
Let me dwell on three key issues, without attempting to be complete:
First, economic globalization;
Secondly, its cultural dimension, which needs a stronger dialogue of civilizations;
And finally: The need to protect global security in terms of climate change and sustainable sources of energy.
Let me first turn to the economy.
Globalization has given us great opportunities. Businesses trade more freely, people and goods travel more cheaply, millions of people have been lifted out of poverty.
Yet there is a dark side. Increased competition can lead to the outsourcing of jobs. Technological change enables the enemies of globalization. Inequality breeds discontent.
The European Commission has made a clear choice in embracing globalization, even in difficult times when this was not exactly popular.
At the same time, this commitment to open markets also means that we defend Europe’s interests, be in bilaterally in trade relations with China, on energy issues with Russia or on the multilateral level.
This EU strategy of “making globalization work” is reflected in the ongoing Doha Round of world trade liberalization. Bringing Doha to a successful conclusion must be a priority for all of us, including for the emerging markets. This largest trade deal ever could generate more than 200 billion US Dollars of gains annually. More than half of that would go to the developing world.
The EU has been in the lead to make an agreement possible. We have gone a long way on sensitive issues like agriculture. And while the talks remain difficult, it is still possible to achieve a positive package, covering industrial liberalization, agricultural market access and other matters like services and competition rules.
But Doha as such is not sufficient to strengthen the fabric of globalization. In addition to trade, we need to enhance international aid. That is an investment. We cannot build peace and prosperity without basic freedom from want.
The EU is already the world’s largest donor. But we need to do more. Our goal is to raise aid to 0.7% of our Gross National Income by 2015, and to improve the links between aid and other policies, such as trade, climate change and human security. But we will not succeed alone. We count on our international partners to deliver.
A third key step to strengthen the global economy is using the full potential of the transatlantic marketplace. This is not an exclusive relationship but the world's most powerful economic engine. It accounts for 60% of global GDP. Together we cover 40% of world trade, with exchanges worth over €1.7 billion a day.
Still, there is a lot we can do to improve our relations, in particular in dismantling non-tariff barriers and dealing with regulatory issues. The new EU-US Transatlantic Economic Council, set up under German Presidency, will play an important role in that regard.
Let me emphasize that the transatlantic partnership is – of course - far from being only economic. We work with Washington on all major international issues. I will touch on some of them later.
Finally, to be fit for globalization, we also need to continue internal economicreforms. The efforts of the last years are already paying off, especially in Germany. Europe is not a sclerotic underachiever. Its GDP growth is actually outperforming the US and Japan.
The EU reform program, the Lisbon Strategy for Growth and Jobs, is critical for that. It fully unleashes our internal market, helps us to regulate smartly and incites Member States to deregulate labour markets and focus their welfare systems. The incoming EU-Presidencies, including economic heavy-weights like France, are fully committed to these ambitious goals.
Last but not least, we invest more in innovation, following what Chancellor Merkel has called Europe’s “creative imperative”. By 2010, Member States want to spend 3% of their GNP on research and development. That is vital to stay on the cutting edge.
Ladies and Gentlemen,
Opening our economies, making globalization fair and investing in people is not sufficient. The last years have shown that globalization cannot succeed without a stronger dialogue of civilizations.
A “clash of civilizations” is not inevitable. But we must make sure it does not become a self-fulfilling prophecy. The real threat is a clash of ignorance and intolerance.
Europe cannot turn a blind eye to the anger and frustration felt in some regions and particularly Muslim nations. Also, the EU’s motto “unity in diversity” hasn’t been fully achieved internally.
Vice versa, other nations cannot ignore our concerns about their economicstalemate and political radicalization, which affect us all.
Therefore, we need a vigorous but peaceful dialogue of civilizations. This dialogue must have liberty, dignity andrespect at its core. Both the freedom of speech and the freedom of religion are universal and non-negotiable. More fundamentally, violence is never a remedy for perceived wrong.
The EU promotes tolerance,human security and good governance wherever we act around the world, and in particular in our relations with our immediate neighbours to the East and South.
The EU itself is built on this commitment, despite all shortcomings. This victory of tolerance is the “secret of our own success”, which we offer to others.
That is not blue-eyed idealism or “liberal imperialism”. It is a strategic necessity, for us and our partners alike. Kofi Annan got it right when he noted that without respect for human rights, there could neither be security nor development.
But what the EU can and must do is use its transformative power and make sure that reform can grow from within. We want to foster societal change rather than “regime change”. That is clearly a long-term project. Supporting democracy is not like making instant coffee, as my predecessor Lord Patten said.
Helping the forces of moderationand modernity is vital to protect human security. It is also critical for the functioning of globalization as such. Only stable stakeholders are responsible partners. There is no open world without open societies.
A key weapon against instability and the “clash of ignorance” is education. For example, one third of our Southern neighbours are below 15 years old. That figure speaks for itself.
We are therefore using the Euro-Mediterranean Partnership and the European Neighbourhood Policy and special platforms like the Anna Lindh Foundation in Alexandria to reform education systems. We co-fund the training of 35.000 elementary school teachers in Egypt alone, to give you just one example.
Supporting open societies is particularly important to fight another scourge of our times: Global terrorism.
This is not a matter of “the West against the rest”. The problem of extremism spans the globe. In New York and Bali, London, Baghdad and Madrid, people have been the victims of horrific mass murder.
We can only tackle this together: Through better policing and intelligence-sharing - but without undermining the freedoms on which our societies are based.
Most fundamentally, we must dry up the pool of supporters of extremism. Fighting terrorism is ultimately a battle for the hearts and minds. That is why open dialogue, coupled to modernization support, is so critical.
A recent poll by the Pew Foundation across the Muslim world is encouraging in this regard. A vast majority in these countries strongly opposes terrorism. We must build on that.
Tackling the root causes of terrorism also means we must deal with issues that serve as a pretext for extremists, like the Middle East conflict.
The EU plays a major role as a trusted partner for both sides and as a Member of the Middle East Quartet. We remain committed to laying the groundwork for an independent, viable and democratic Palestinian State in the West Bank and Gaza, living side by side with Israel in peace and security, as a step towards comprehensive regional peace.
There is now new momentum in the peace process: An international Middle East meeting in the fall is being prepared, which should support the bilateral discussions towards a lasting settlement, which have resumed.
These direct talks between Prime Minister Olmert and President Abbas are absolutely critical. They touch upon the core issues, like final borders, the status of Jerusalem and Palestinian refugees.
Similarly, the dialogue between Israel and the Arab states on their Peace initiative is an important track that we support.
Helping the development of the Palestinian territories is another key part of this puzzle. We are working closely with former Prime Minister Blair and his team. The EU has always been at the forefront of these efforts, with a mix of aid (we are the biggest international donor), strategic state-building support and advice on security sector reform.
So far in 2007, the Commission has provided over 400 million euros in support to the Palestinians, not least to families in need. The Temporary International Mechanism (TIM), which we created, is the vehicle of choice for many donors in a complex situation.
Equally, our border assistance mission at the Rafah crossing can play a key role for the Palestinian economy. The crossing must now be reopened to alleviate the humanitarian situation in Gaza.
Ladies and Gentlemen,
The Middle East Peace Process is just one example that shows how crucial it is to engage with partners, especially in our neighbourhood.
We are therefore in the process of strengthening our European Neighbourhood Policy for which I hold special responsibility.
The ENP’s rationale is to strengthen prosperity and stability to our East and South through Europe’s gravitational pull. It is in our interest that our neighbourhood should be well-governed and prosperous. And it is in our partners’ interest to have EU support for their reforms – a classic “win-win” partnership.
The ENP has expanded our co-operation and produced tangible successes. We draw on a broad array of tools, especially tailor-made Action Plans for reforms.
And we have recently proposed new ways to make the ENP even more effective, attractive and focused, in four core areas:
Economic integration, also meaning better market access for our partners;
Mobility: This means less complex visa rules and Mobility Partnerships, agreements between the EU and neighbours encouraging legal migration and combating illegal migration – a big step for us.
Thirdly energy – I will come to this in a second;
And finally increased aid for good governance in the best-performing countries.
The ENP will thus remain a dynamic process. Next Monday I am bringing ministers from the EU and the Neighbourhood together to debate how to drive this project forward.
Generally, our policy of engagement around the EU brings clear results: The freeing of seven Bulgarian medics by Libya proves that.
I am happy that my relentless efforts over the last two-and-a-half years, and those of Germany and many other countries, have brought success.
We have found a solution for the treatment of the HIV-infected children; we help to ameliorate Libya’s medical system; and we have thus taken away a stumbling block for Libya’s integration into the international community. This is clearly a success for the EU’s foreign policy
Ladies and Gentlemen,
This brings me to my third main point:
Today, safeguarding global security and prosperity also means working for reliable energy relations and sustainable development
This is critical to avoid mortgaging future generations, but also to ensure a level playing-field for globalization today. Think about the impact of global warming, price hikes on resources and environmental disasters, in particular on developing economies.
A stronger EU energy policy is especially important. The EU is likely to import 70% of its energy in 2030, compared to 50% today.
In the light of this, the EU Spring Council sent a strong signal of leadership and adopted a comprehensive “energy package”. It not only includes domestic actions such as the finalization of Europe’s internal energy market, promoting efficiency and renewable sources and advancing technologies. Given our dependence on foreign sources, it also places great emphasis on external energy relations.
Already today, energy matters are a central feature of our relations with producer and transit countries, from China to Central Asia, from the Gulf to Western Africa. They range from better market access and ensuring fair competition to cooperation on efficiency and aid on transport infrastructure. We are now exploring the feasibility of a broader neighbourhood energy agreement.
Stable energy markets work in everyone’s favour. This is not just a matter of security of supply. Our partners have a clear stake in reliable business links and European investment and technology. This holds, not least, for our relationship with Russia.
Ladies and Gentlemen,
Energy security is inextricably linked with the issue of climate change.
There can’t be any doubt that man’s activities are responsible for global warming. Last year’s review by Sir Nicholas Stern estimates its costs at 20% of global GDP when extrapolating wider risks. At the same time the cost of action to avoid the worst impacts can be limited to 1% of global GDP per year.
That shows that we must act – and that we can act!
The EU is at the forefront of combating climate change. We now agreed to cut carbon-dioxide emissions by 20% and to raise the share of renewable energy sources to 20%, both by the year 2020.
Also, Europe’s system of emissions trading has blazed a trail in using market forces to protect the environment. That is why various players, including e.g. California, consider joining this system.
Our ambitious EU targets were important steps on the way to the international G8-agreement in Heiligendamm this spring. We now need to make sure that this deal is implemented. We will continue to use all levers of our “green diplomacy” to that end, especially in the run-up to the UN Climate Change Conference in Bali in December
In particular, we need to make sure that emerging economies are on board too. By 2020, developing countries’ emissions will surpass those of developed countries. At the same time, it is the poorest that would suffer most from the impact of global warming. That is why we are integrating climate change into our development policy.
Ladies and Gentlemen,
These examples clearly prove one thing:
The EU has policies and institutions that work. We are not starting from scratch or re-inventing the wheel of diplomacy on EU-level. Our job is to make existing policies more effective, more coherent and more visible. In the past, the EU often did not punch its real weight. That needs to change!
The improvements foreseen in the EU Reform Treaty are therefore crucial. Germany has very skillfully negotiated this deal. This Treaty is a smart adaptation of our successful model. It does not create a “Super-state”. But it helps us to better match our potential, especially in the global arena:
Firstly, the future High Representative of the Union for Foreign Affairs and Security Policy will also serve as Vice-President of the EU Commission. He, or she, will be the answer to Henry Kissinger’s question: “When I want to speak to Europe, who do I call?”
This “dual hat” will ensure that the EU draws on its toolbox in an even more coherent way. The High Representative will also chair the Council of Foreign Ministers and thus strengthen our strategic outlook.
The fact that we will have an EU with full legal personality rather than the twins of “Union” and “Community” is also helpful. It will make us more visible and strengthen our negotiating power.
Madeleine Albright once said: “To understand Europe, you have to be a genius“.The new treaty means we need fewer of these geniuses – fortunately!
To support the High Representative and Vice-President, we will create a European External Action Service. That will be our platform abroad. Already today, I am responsible for 134 Commission Delegations across the globe, with 6000 staff representing EU interests from political affairs to trade and aid. That is a firm basis to build on.
In addition, climate protection and energy solidarity will be taken up as explicit objectives of the Union, responding to the challenges I sketched.
All this will strengthen our stance on the world stage. Europe is not just a soft power, but an increasingly smart power employing all instruments at its disposal.
President Sarkozy stressed this global role of the EU in his speech last Monday and particularly pointed to the need for stronger EU crisis management and defence instruments. He particularly called for a new European Security Strategy.
It is good to see that France sees EU foreign policy as an absolute priority. I am sure that France’s Presidency next year will give us new input in this regard.
Ladies and Gentlemen,
Beyond the field of foreign policy, the new Treaty responds to the crisis of trust that the Union suffered from in the last two years.
The Treaty will make the Unionmore effective and democratic: The European Parliament will acquire an even bigger role, becoming a true co-lawmaker. A new “double majority” for Council decisions, taking population size into account, will be introduced. More decisions will be taken by that majority rather than unanimity. Also, legislative discussions among Ministers will be open to the public
At the same time, we are giving the EU a clearer focus: Its competences and tasks will be better defined. The “subsidiarity test” for each measure – the test whether an EU action is really indispensable – will be even stricter. This responds to worries that the Union would be “too interventionist”.
In short: The new Treaty strengthens and streamlines the EU, while keeping the institutional mix that served us well over half a century.
Building on the results of Germany’s Presidency, we just kicked off the so-called Intergovernmental Conference. It is translating our political consensus into legal details. I am confident that the Portuguese Presidency can reach an agreement on a treaty text by the Summit on 18/19 October. This would enable Member States to ratify the Treaty by June 2009, in time for the next European elections.
Still, the reforms I sketched are not an end in themselves. They are the basis for a “Europe of results”.The legitimacy of the EU not just depends on how it acts, but especially on what it does for its people.
Our citizens are not “against the EU”. But they rightly want a better Union that delivers. So we do need the right institutions. But above all, we need the political willto act together.
Therefore, the EU is not the problem. It is – already - part of the solution. That is the message that we – and in particular our Member States – must communicate in the next months.
Ladies and Gentlemen, let me conclude.
European integration is a success story. It has built permanent peace between Europeans, laid the basis for their prosperity and framed the re-unification of our continent.
But we cannot rest on these laurels. The Berlin Declaration, adopted in March, states: “Europe’s citizens have united for the better.” That is not a nostalgic look to the past. It is a call for action.
The EU is uniquely placed to deal with new trans-national challenges. In the 21st century, managing globalization is its new raison d’être.
Let me thus salute the Bucerius Class of 2007. You are “Globalization Managers” in the true sense of the word. I wish you well in your future endeavors. I am sure that you will carry the famous “Bucerius spirit” across the globe.
And I hope I have convinced you that Europe – rather than sliding into obscurity – is rising to the challenges we all face and helping to shape the new world order.
As China’s Ambassador in Brussels recently said: The EU is one of those things which happen only every four or five hundred years.”
That is the achievement on which we must build. Thank you.