REVIEW: Article

EU 2017: We Will Rise to the Occasion

Nobody can deny that 2016 has been a difficult year for Europe. When I addressed the Council of American Ambassadors back in May, the focus of my speech was Europe’s response to the refugee crisis. Since then, many things have happened on the world scene, including a referendum on EU membership in the United Kingdom with the outcome we all know.

This may sound like a gloomy time to ponder Europe’s future, particularly in print, but as a veteran of many ups and downs in the EU’s history, I believe it’s important to go beyond the headlines and take stock of what is being done to relaunch the European Union in a way that is both sustainable and better understood by everyday people. It is this gap between the perception and reality of what the European Union is and does that poses perhaps the biggest internal challenge to European integration.

No question, Europe’s leaders get it. At two summit meetings since the shock Brexit result, leaders of the European Union and of 27 member countries pledged to forge ahead with even deeper integration, including in areas of defense and security. They realize that the many threats facing our individual member nations are common to all, requiring a common response, and that Europe is strongest when united.

The refugee crisis is a classic example. While the European Union was taking heat for not acting quickly enough in 2015, migration was not yet an area of EU policy. Until the refugee crisis overwhelmed national responses in the frontline states, migration and asylum were largely handled at the national level. It was not until a summit in April 2015 that agreement was reached to act collectively, and the European Union was empowered to take measures designed to break the business model of the smugglers, to help rescue people at sea, provide assistance to frontline states as well as humanitarian aid to facilities inside and outside our Union. We have just created an EU Border and Coast Guard service. The refugee crisis has been unprecedented—calling for extraordinary measures in the long and short term. Our response is still very much a policy in the making but it is working and over 400,000 lives have been saved because of it. Of course the job is not done—how to integrate and settle refugees remains socially and politically challenging—but this new area of EU policy will vastly improve our capacity to stabilize the situation.

The next twelve months will be decisive for the European Union. European Commission President Jean Claude Juncker recently gave an honest and fair assessment in his annual State of the European Union address to the European Parliament. He likened Europe to a cord of many strands that only works when the Institutions, national Governments and national Parliaments are all pulling in the same direction. In recent years, perhaps from an accumulation of too much tension during the financial crisis, the cords have become a little frayed. But having survived the financial crisis and put our financial house in order, it is time to start pulling together again.

Yes, another crisis has come along, and this time it is even being branded as ‘existential’. In some languages and cultures, crisis literally spells opportunity, and I truly believe that we have many reasons to be confident that the European Union will come through its challenges with renewed optimism and vigor. For a start, a lot of work is going beyond the glare of the latest headlines to strengthen Europe from within, to fundamentally modernize our economy, better manage financial risk, strengthen our banks and our private sector, and to create more jobs, particularly for young people. These are all formidable challenges and major initiatives in their own right. They include:

  • The Banking Union: As the 2008 financial crisis evolved and turned into the Eurozone debt crisis, it became clear that, for those countries which shared the euro and were even more interdependent, a deeper integration of the banking system was needed. This allowed us to take the step toward Banking Union with a Single Supervisory Mechanism (SSM) and a Single Resolution Mechanism (SRM) for banks. Both are now fully operational, the SSM from 2014 and the SRM as from end of last year.
  • The Capital Markets Union: Europe needs its banks, but an economy almost entirely dependent on bank credit is bad for financial stability and for business. That is why we are accelerating work on a Capital Markets Union which will make our financial system more resilient and give companies easier and more diversified access to finance. This is particularly important for start-ups.
  • The Investment Plan for Europe: Launched in late 2014, the plan aims to revive investment in strategic projects around Europe by mobilizing 315 billion euro for the period 2015-2017. In its first year, the plan raised 116 billion euro, over 200,000 small firms and start-ups across Europe have benefited from loans, and over 100,000 people have found new jobs. But that is not the end. We intend to double the duration of the Fund and double its capacity to provide at least 500 billion euro in investments by 2020, and reach 630 billion euro by 2022.
  • The Digital Single Market: The European Union’s Single Market is the largest most integrated market in the world. Its core functioning was completed in 1992, but keeping it that way is a constant work in progress, even more so in to the digital age. With a new Digital Single Market initiative launched last year, we are tearing down regulatory walls in the digital environment, from e-commerce to copyright, from cybersecurity to privacy, and moving from 28 national markets to a single one. This could contribute 415 billion euro per year to our economy and create hundreds of thousands more new jobs.

When completed in the coming years, these initiatives will be nothing short of a massive reboot for Europe’s economy. This is not just good for Europe; it is also good for our international partners and the global economy.

This brings me to trade which has been both the ‘glue’ of our Union and the bedrock of our external relations since the very beginning. As a former trade negotiator, I can tell you that the European Union is no slouch when it comes to pursuing its international trade agenda and this is evident in the recent completion of two ambitious agreements, one with Vietnam and the other with Canada (CETA). We are in negotiations with several key trading partners, but fittingly, the biggest deal of all is with our biggest trade partner, the United States.

We have been negotiating a Transatlantic Trade and Investment Partnership (T-TIP) with the United States since 2013. Given that we are both free traders with a mostly friction-free trade relationship, T-TIP tackles the remaining market access and most stubborn non-tariff and behind-the-border barriers to trade and investment. This, by definition, made it more difficult, and the political environment for trade is increasingly challenging on both sides of the Atlantic. Early hopes that T-TIP might be completed in the life of this Administration are starting to dim. This will not be the end of T-TIP—it still makes sense economically, politically and strategically. In Europe, we need jobs, so with 31 million people employed in export related jobs on our side of the pond, trade agreements like T-TIP are a must to increase that number. In terms of our ties with the United States, there is no room for complacency. Together, we constitute the most valuable economic corridor in the world, but things will not remain this way unless we unlock the full potential of our relationship. So, it is crucial that we put our trade relations on a new and more competitive footing, one that delivers growth and economic opportunities for all while contributing to developing new global trade rules that correspond to our values. Meanwhile, agreement on a highly ambitious agreement with Canada shows that Europe is still very much open for progressive trade deals.

Over the years the European Union has become much more than a trade block. Although a European Defense Community was attempted in the early years of European integration, it was not until the collapse of the Soviet Union that the world, including the United States, looked to Europe to play a political and economic role in stabilizing the countries of Central and Eastern Europe. Since then, the European Union has had to equip itself structurally and institutionally to become an increasingly cohesive foreign policy actor. The fact that we have done so is a major achievement given our deep histories, diplomatic traditions and alliances.
Prior to my current position, I had a job I could never have imagined when I first joined the European Union more than 35 years ago—as Chief Operating Officer of the EU’s new diplomatic service created by the Lisbon Treaty first headed by High Representative Catherine Ashton and since November 2014 by Federica Mogherini. We have seen some pretty major achievements in transatlantic diplomacy in the five years since Lisbon and the seven years since President Obama’s first day in office. 

  • The Iran nuclear deal: When I arrived in Washington DC, negotiations had made progress but were still well short of a deal. Thanks to the leadership of HRVP Mogherini, the EU plus 3 (France, Germany and the United Kingdom) played an indispensable role in working with Russia, China and the United States to bring that deal home. The agreement undoubtedly makes the world a safer place for the next ten years. Secretary Kerry deserves a lot of credit, but we as Europeans can also be proud of what we brought to the table as the European Union, in the role of coordinator, and as member states drawing on deep diplomatic traditions and expertise.
  • The European Union again proved its capacity as a foreign policy actor during the Ukraine-Russia crisis. With a program of joint sanctions, the European Union and the United States were able to thwart Russia’s ambitions in eastern Ukraine on the borders of the European Union. These sanctions programs were politically harder for the European Union to impose given our much bigger trade relationship with both Iran and Russia than the United States, but we mustered the common purpose and we succeeded in our objective.
  • On climate, the European Union and the United States have a duty as the world’s largest economies to make sure we take the necessary steps to move to low carbon economies and put our societies on a more sustainable path. Both the United States and the European Union have shown tremendous leadership on climate issues going into and since the COP-21 summit in Paris.

As Brexit and the US presidential election campaigns have shown, our democracies are being tested by a new kind of populism. People are angry about the downsides of globalization and technological change and at the same time empowered by social media which often gives voice to, and amplifies, the rage at not feeling in control.

We have to address this disconnect. We have to engage our youth in a way that is meaningful and prepares them for the torch of responsibility that will be passed to them. We have to join, inspire and inform the debate which in Europe is sometimes framed as ‘taking back sovereignty from elites’. Currently, this debate often overlooks some of the realities of a globalized world. We cannot put the genie of globalization or technological innovation back in the bottle without inflicting a huge cost on our economic welfare. The income and regional inequalities which these changes bring in their wake need to be addressed through flanking policies in the areas of education and training, regional development programs and fiscal policies.

Like democracy, the European Union is far from perfect, but it is the best way we have found to keep the peace and build prosperity among the sovereign nations of Europe for over 60 years. There are no guarantees about the future, but of this I’m certain: it would be reckless to risk all we have achieved as the European Union, and indeed through multilateralism, out of concern that sovereignty is being eroded. We need to understand what sovereignty means in our interconnected world. It does not exist in isolation and indeed has adapted itself to suit the times! If the European Union did not exist today, it would be necessary to invent it.

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Ambassador of the European Union to the United States of America