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Secretary General Grassi,
Ladies and gentlemen,
Good afternoon. I am very happy to be here today.
Thank you very much for the honour of delivering the first opening lecture of the School of Transnational Governance.
I want to congratulate all of you, but especially Miguel [Poiares Maduro]. Your vision for a new transnational school of governance has become a reality.
I know that this school will fill the gap felt around the world in this area. I wish you all the best of luck in this new endeavour for the future.
I want to argue today that Europe is living in kind of "sputnik moment?". A time when change is needed. A time when complacency has to give way to action.
The original sputnik moment was of course, 1957. Two countries, the US and the former Soviet Union were battling head to head for greater geopolitical power.
From the perspective of the US at the time, dominance was a self-evident truth. They were on top. They were making strides in science, in technology, in engineering, in manufacturing. They had won the war.
And then suddenly, one day, it happened.
The Russians launched the Sputnik satellite into orbit.
And the United States realised very quickly that they no longer had the leadership position in what was considered the most advanced technological challenge of the day.
So what did the US decide to do? It redoubled its efforts in science and technology. Ultimately, their response resulted in the creation of NASA and the race to put a man on the moon.
With this, a new American identity was embraced. One that was defined by the unfailing quest for scientific advancement, which lasted decades.
This sputnik moment shocked a nation into action.
The problem is that rarely History gives us such a neat and precise Sputnik moment, one that cannot be ignored and denied.
In fact, usually History's sputniks moments are diffused, subtle and difficult to grasp.
But our obligation as politicians and policy makers is to be on the look-out for them.
And your role as scholars, especially ones engaged in issues of public policy, is to help politicians and policy makers grasp and understand these "sputnik moments".
I will argue that Europe is today living in one of those at the moment. That we live in a time when we need to come to grip with a changing position of Europe in the World.
A moment when action needs to replace complacency.
Our world will evolve into a truly global place in the next few decades.
I want Europe to be strong in that globalised world. So we should use this moment to launch us into action.
Let's embrace this as an opportunity to transform Europe for the future.
Why is this the moment for action?
Let's look at the reality.
In the last 10 years we have been living through the worst crises since the Second World War.
The Financial Crisis, the refugee crisis, terrorism and Brexit.
The problem was not only in each specific crisis but also in the fact that they were happening all at the same time, creating massive pressure to the institutions. President Juncker calls it the decade of “poly-crisis”.
Still, what a difference a year makes. Though many challenges remain:
- The refugee crisis is far from over but is under control.
- All economies of Europe are growing and creating jobs.
- All euro countries are either meeting the fiscal targets or on a fast path towards meeting them.
- The threat of political extremism is still a reality but the worse expectations were not met – on the contrary.
As we emerge from all these crisis there is the very real danger of complacency.
We should resist this urge.
We are right now in a critical window for reform, one we cannot afford to waste.
That was in the end the main theme of President Juncker's recent State of the Union speech.
It was also the main theme of the speech of President Macron last week.
The crisis was a sober reminder, for us Europeans, of our fragilities, our demographic pressures, and our continent´s relative decline in the global arena.
It came after decades of prosperity, of great moderation, of successful steps in the integration process, such as the Euro. It came after the reunification of Germany and in the end of a larger political, symbolic, cultural reunification of West and East in Europe.
As we emerge from these multiple crises and have more time to reengage with the World, we realize that the world has changed dramatically and so has our position in it.
We are discovering new weaknesses, but we are also discovering new strengths.
Consider some indicators:
- 20 years ago Europe represented 30% of world GDP. Today it is 20%.
- Back then China represented 2%. Today it is 16%.
- California has surpassed France in terms of GDP.
- India has surpassed the UK.
Today at the G7 there are 9 people around the table and 6 are Europeans, the four leaders of the largest economies of Europe, the president of the Council and the President of the European Commission.
However, in 20 years Germany is forecast to be the 9th largest economy in the world. Which means there might not be any European leader sitting around the table of the G7.
As former Italian Prime Minister Enrico Letta says:
There are types of countries in Europe, the small ones and those who haven't yet realised they are small.
That is the reality we live in today.
Don’t get me wrong, influence in the global arena is not just about these indicators. Europe is still a major economic player; it by far the main trade and investment partner of the US and vice versa; it is the premier global social superpower, leader in the fight against climate change. And it remains a cultural and scientific powerhouse.
But power is shifting. More and more people predict that 2030 will be a multi-polar world.
One where Asia will surpass North America and Europe combined in terms of global economic power.
This is what we are faced with. We therefore have an obligation to face reality and prepare Europe for the future that is coming.
We have to build a strong Europe, based on sound democratic values, unity, and prosperity. But to achieve that we have to step up our reform drive.
Starting from the ambition laid out in President Juncker’s speech, we have to focus on concrete institutional reforms that reinforce Europe and give us a fighting chance to continue relevant and active in critical global challenges, to the benefit of our citizens.
Every time there is talk of institutional reform of the EU institutions people bring up the difficulties of changing the treaties. Frankly, I think this tends to be overplayed. There is a lot that can be done without any change in the treaties. In fact all the reforms proposed by President Juncker in his State of the Union, can be done without any change of the Treaties.
There are several types of reforms that were announced or that are being worked on as we speak. In fact, too many for me to focus on them all.
So I would like to choose three types of reforms that seem to be particularly needed and relevant. As you will see they span from the general to the particular. From the macro to the micro. From the form to the substance.
First, on the more general level, I very much support the idea of simplifying the institutional architecture of the EU.
Everything should be made as simple as possible. But not simpler.
These are Einstein’s words. And they apply just as well to the European Union as they do to physics.
For me issues such as having a single person presiding the EU is not just an aspect of form. It has consequences for our connection with the EU citizen. We need a single face that represents Europe. That person, of course, has to be fully accountable to the EU countries and to the Parliament and ultimately to the people through a spitzenkadidaten process. But it is important that Europe faces its citizens and the World with a single face.
Similarly, I welcome the double-hatted commissioner and president of the Eurogroup. The joint reporting experience with the High Representative has been a very positive one, and this move increases parliamentary accountability.
We all know the origins of the in-built complexity of the EU institutions. They are the result of historical compromises. But we should also acknowledge that this complexity slowly erodes our capacity to be effective players in Global Politics.
Simplify should be our motto for the future.
The second type of reforms, rightly chosen by President Juncker to be the ones where immediate action is needed, is the reform of the EMU.
This commission has launched the 5 Presidents Report process and much has been achieved. But we need decisive action in the next months. Again, we have a window of opportunity that cannot be wasted.
This is a vast and complex topic but let me here focus on only one aspect of this reform agenda, which is the so-called Euro-Area budget.
The fact that this is even being discussed is a sign that we’ve gone a long way since the height of the crisis.
This is about adding a fundamental aspect that many argue has been missing since the beginning of the Single Currency – a stabilisation component, that is, the capacity to transfer resources to countries that face a massive shock to their economies.
This would mean that a country facing such situation would have a more rapid recovery. Because today, without such mechanism, countries face a double-impact in a time of crisis. They have less resources due to the crisis but then need to spend even more resources – even more expenditure – due to the social impacts of the crisis, thus creating a negative spiral.
This is a discussion that is both technical and political, and even ideological. This will entail, for example, discussions about giving the EU borrowing capacities, which is bound to be controversial. It will also reintroduce discussions on moral hazard. In sum, it will not be a pretty debate. But there is a clear window to do it now. And we cannot afford to lose this opportunity.
The third and final type of reforms is one that is very much below the radar. It is about making the European Commission more efficient and effective in helping Member States' reform efforts.
If you want, it is a type of “meta-reform”. How can the EU better encourage and enable successful reforms in each Member State.
I am usually very frustrated with the political debate around structural reforms. It is often a sterile discussion, not grounded on concrete actions.
"Structural reform" became a tired mantra, a sort of black-box – as if the concrete type of reform or the way it is implemented did not matter. It became a sort of Totem at the height of the crisis.
It was as if a government could add to a black box, as an I put, some short time pain mixed with a dose of courage and, on the other side of the box, as output, we would have moral rightness as well as a rise in potential GDP.
I think it is important to look deep inside the black box and think, in a calm and pragmatic way, as to how we can improve and make these reforms more effective and impactful.
I believe the European Commission will play an increasing role in this area. Conceptually, it makes a lot of sense.
By being a Transnational organisation, overseeing what is happening across all countries, it can more easily identify and assess what is working and what is not working; the commission also has the resources to help countries in the technical difficulties of undertaking a reforms; and, finally, it can have a more independent and distanced eye to the situation at hand. This can make its contribution more relevant.
Let me give you two quick examples of what we are already doing.
In my own portfolio we started a project called Policy Support Facility which is a resource that all Member States can request. Once they identify a potential reform in their science and innovation public system, we help them identify countries that underwent similar reforms in the recent past, we hire technical teams in those countries and we focus on very pragmatic responses to the issue at hand.
Another example is the newest Directorate General of the European Commission, called Structural Reform Support Service, which was precisely created to do what it says, help Member States engage in complex structural reforms.
I think this is something to be developed even further in the next decade.
The European Commission needs to have a surveillance arm, it needs to enforce rules. But there is also scope to develop a more collaborative approach toward concrete policy challenges of a given country.
This is about helping countries improve their institutions, it is about rolling the sleeves, being non-ideological, explaining and showing what has worked in other countries.
I believe that in a discreet way, these type of actions can have substantial impact in the way our political systems serve the needs of our citizens.
Ladies and gentlemen,
We are defined by our efforts today which create the world of tomorrow.
For the past 60 years we have been shaping a union. The most successful transnational structure that has ever existed on this planet.
And until recently we have stayed strong on the world stage.
But this won’t last forever. Not without conscious effort.
Now is the time to future-proof Europe.
Schools such as the one we are symbolically launching today, can be fundamental pieces of this brighter Europe.
The three types of reforms I mentioned need a lot of debate. They need a lot of research. They are about building something anew.
To be successful we need political determination and conviction.
But we also need students and scholars that are committed to academic excellence and to the fundamental democratic values of Europe.
We need the European University Institute and we need the new School of Transnational Governance.
Your job, at the end of the day, will be to help politicians grasp those Sputnik moments
Those moments of change we cannot afford to miss.