European Commissioner responsible for Regional Policy
"Meeting the challenges of the future –
institutional development of the European Union after
Lecture at Summer Academy on European Integration
Poland, 24 September 2008
Last year we celebrated 50 years of the common Europe. Over this time, the
Union has come a long way. It has grown from 6 Member States to 27. It has
widened its initial focus on peace to become a remarkable motor for democracy
and reconciliation across the whole continent. It has moved from a simple coal
and steel community to the biggest Internal Market ever created. The Union has
developed, broadly and deeply, contributing to many aspects of daily life, from
trade to transport, from environment to health and from security to foreign
We can be proud of what Europe has done and does. But it is also a good point
of departure towards the future. Our past should allow us to invest, without
fears and prejudices, in modernizing the present in order to better tackle
today's realities and future challenges.
The Union has developed institutions and structures of its own. It has its
own Parliament - the biggest directly elected multinational parliament in the
world, representing 500 million citizens, its own Court of Justice, and, for
many countries, a single currency. Its institutions have evolved over time with
a view to make the Union more effective in responding to new challenges.
That is why I believe it is sensible to consider what the main challenges to
the Union are likely to be in the medium term to see what institutional changes
are necessary to ensure that the Union can adequately respond to these
These challenges are both policy-related - in other words what policies are
appropriate to ensure that the Union remains an influential power for good in
the world, as well as developing a strong economic basis at home. But they are
also existential challenges about the sort of European Union in which its
citizens want to live.
How would we define what we want the European Union to be in the long-term?
My response to this question is that we want to defend our fundamental values
inside the European Union and we want to spread these values to the rest of the
world and in particular to our nearest neighbourhood. When we talk about
values, there is a lot of scepticism both inside and outside the Union. I don't
share this scepticism at all. We are certainly not perfect, but the values
which form the basis of European integration, tolerance, rule of law, democracy,
the protection of minorities, in other words the value base of European liberal
democracy, are what makes life in the European Union enjoyable and fulfilling.
And it is right that we should try to share these values with peoples outside
From this there flows a whole series of policy considerations for the
medium-term. Domestically we need general policies which ensure that these
values are upheld throughout the Union but also economic policies which allow
our citizens to look forward to rising prosperity and full employment. Abroad
we need policies which aim to maintain or establish peace and stability, and
which defend the open trading system which has been of such great importance to
our economic development. And all of these policies have to be credible both
within and without the European Union.
Looking today at the problems facing the Union, one has to be brave not to
bury one's head in the sand and hope that they will disappear. Unfortunately
they will not disappear. The list of recent world failures includes the war in
Georgia, energy and food shortages, our current difficulties in concluding the
Doha world trade round and the turbulence on world financial markets. Each of
these crises threatens the peace, stability and prosperity of our citizens in
the Union and each of them requires an EU response as well as national
Abroad, the European Union must have a foreign policy and trade policy which
are both credible to our partners. There is no point in disguising the fact in
foreign policy that there are profound differences between the member states of
the Union. We saw this over the war in Iraq and we have seen it again in the
reactions to the war in Georgia just over a month ago. It is really quite
unlikely that these differences can be bridged in the medium term, but I think
the way in which the Union dealt with these two crises indicates a considerable
advance in the quality of policy-making since 2003. In its response to the
Georgian War, the European Union concentrated on those areas of action in which
the agreement of all 27 member states could be ensured. It did not attempt to
apportion blame, even though many member states at home were prepared to do just
that, but it concentrated on getting a ceasefire as soon as possible and taking
measures to help those citizens in Georgia, including South Ossetia and
Abkhazia, who had been displaced by the fighting. It has continued since the
ceasefire to strive for a solution which is likely to maintain the peace in the
region. In this case the EU has appeared united and effective in spite of the
fundamental differences between member states.
The proposals contained in the Lisbon Treaty would undoubtedly contribute to
a more effective foreign policy - one High Representative, who would combine
responsibility for traditional foreign policy and the tools of foreign policy
and a Union diplomatic service for instance – but as we saw in the case of
Georgia effective foreign policy is really a matter of action based on our
fundamental values and a genuine attempt by all member states to work towards a
common policy approach. I personally believe that we need to introduce
improvements to our foreign policy performance in the medium term and that this
improvement includes institutional change.
In reality of course we cannot divorce questions of foreign policy from
questions of trade policy - indeed the double-hatting of the High Representative
would have allowed him to work even more closely with the Trade Commissioner
than at present. Trade is a key part of foreign policy but it is equally a key
part of economic policy. The Union has great interest in the maintenance of
open markets throughout the world and in the multilateral negotiations which
take place within the World Trade Organisation. It was therefore very
unfortunate that the Doha Round could not be brought to a conclusion before the
summer, though we still hope that the conclusion might be found later this
The maintenance of open markets will be especially important as the world
moves into a period, when the temptation for governments to take protectionist
measures will increase. But the Union has another interest in trade policy; the
projection of the Union's acquis communautaire throughout the EU's neighbourhood
and its main trading partners. This will now be a key objective in the
negotiation of deep free trade agreements which aim to spread Community
regulation to our trading partners, simplify trade, increase mutual confidence
and are therefore an advantage for both sides.
In trade policy, a Community competence, there are also major differences
between member states as we have clearly seen with respect to the Doha Round,
but it is essential that the Union speaks with one voice not just in the WTO but
also in relations with all our main trading partners throughout the world.
We know very well that power in foreign policy can only be achieved if the
economy and society at home are working well. It is therefore vital that our
common foreign policy is backed up by a growing economy and high employment.
Monetary policy has been managed well by the European Central Bank and this is
likely to remain so in the medium term. However economic policy is the
competence of the member states, with the Union essentially only having a
coordinating role. This situation creates certain dangers for the development
of the Eurozone and the whole question of the coordination of economic policy,
and particularly fiscal policy, may well have to be looked at again in the
We have recently seen rapidly rising inflation within the Eurozone but also
growing divergence across member states. This is reflected in interest rate
spreads on Government paper with similar maturities, which have grown recently
and may be put under increased pressure by the current fiscal turbulence. While
increased spreads punish governments for inappropriate fiscal policy, they are
unlikely to prevent governments in political trouble domestically from following
policies which are not appropriate in the monetary union.
The deficiencies in international financial market regulation have become
evident in the current crisis. Creating international and European regulation
to deal with the international character of banks and other finance institutions
is an urgent task, which will not be easy given the complexity and the jealousy
of national regulatory institutions.
Structural change in the member states of the European Union is likely to
stay high on the political agenda through the medium term. Considerable
progress has been made in many member states in line with the recommendations of
the Lisbon agenda, but much more needs to be done and reform is a never-ending
process. The Lisbon Agenda is implemented not through legally binding Union
legislation, but through the enhanced open method of coordination. No doubt in
the coming years the discussion about the effectiveness of the open method of
coordination will continue, with some observers arguing that the Lisbon agenda
should be increasingly implemented by law. It appears to me that the progress
which has been made in structural reform in the Union suggests that the enhanced
OMC can be reasonably effective in some areas.
It is becoming ever more important for the Member States to remain at the
forefront of research and development and innovation. We are in many ways
falling behind even some of the emerging nations in certain areas of research.
It is obvious that the Union and the Member States need to spend more money on R
and D and in many areas cooperative research across frontiers could create
efficiency dividends. The search for an efficient way to stimulate R and D will
continue with the emphasis on delivery mechanisms.
Energy policy within the Union will of course remain extremely important in
the coming years in the light of both questions around climate change and the
supply and price of energy. The dramatic changes in climate that we have
already seen require urgent action by the Union. Co2 reduction objectives have
been set but the means of reaching these objectives are still being discussed.
Increased diversification of energy supply and an increase in research in new
sources of energy will be required. At the EU level both increased storage
capacity for energy and the sharing of energy resources around the Union
especially when one or more countries are threatened by an external supplier,
will remain crucial topics for EU policy.
Inward migration is likely to remain an important element of policy in the
medium term, and one which requires a European Union coordinated response. The
European Union remains a very attractive destination for many of the
world’s migrants seeking work and better living conditions. The
demographic situation of the European Union means that we will require more
migrant labour in the coming decades as the falling birthrate here continues to
reduce the cohorts of working age. However while the Union will need skilled
migrants the majority will be unskilled and difficult to integrate. It would be
very important to have common rules on immigration and work permits, as well as
asylum, to avoid the problems which differing rules will certainly bring. In a
Union without frontiers, it is obvious that the decision of any member state
affects the other member states.
These challenges do not exhaust the list. The demands for accession to the
EU, not only from Croatia and Turkey, but also other states in the western
Balkans and Eastern Europe, will put major strains on the institutional
architecture of the Union in the longer term.
These areas of work for the Union are fairly obvious. However what sort of
Union European citizens want affects all of these policies. In the early years
of the European community there was a deep feeling that a high level of
integration should be aimed at. The failure of referenda in the Netherlands,
France and Ireland on the Lisbon Treaty have added new elements and have
encouraged a new debate on Europe affected by the arrival of the countries of
central and eastern Europe, which in many areas have different views to those of
the original six member states.
An open debate is fundamental to the future of the European Union and to the
institutions which are required to achieve the policy objectives. While
membership of a monetary union binds the Eurozone countries through a common
monetary policy to deeper integration in many of the economic policy areas,
other policy areas are often characterised by radically diverging views. It is
for this reason that the Amsterdam Treaty included the possibility of enhanced
cooperation or flexible integration, through which member states interested in
deeper integration in a particular policy area could forge ahead without
requiring the less enthusiastic member states to follow them. In a way the Euro
is an example, a very specific example, of enhanced cooperation. There will
undoubtedly be much discussion around the question of what sort of quality of
integration we want and whether enhanced cooperation can solve problems of
increased divergence. My own view is that we all need to be extremely careful
in the use of flexible integration because of policy interrelationships.
Enhanced co-operation in areas such as the environment may well create risks to
the essential policies of the European Union, such as the internal market, which
require the participation of all member states. One internal market requires
Having looked at some of the key policy challenges and the sort of European
Union which we want to have, what does this mean for the institutional structure
of the Union?
The first point I think it worth making is that policy is always
inter-related and institutions must reflect this. The Union’s foreign
policy has clear implications for trade policy, economic policy, justice liberty
and security and many other areas. This interrelationship of policy is already
established in the institutions of the Union through the College of
Commissioners, the Committee of Permanent Representatives – COREPER
– and to a certain extent the Plenary Assembly, the Conference of
Presidents and the Bureau of the European Parliament. However in the past one
can find examples of sectoral councils taking decisions without considering the
views of other sectoral councils which are affected. As policy becomes more
complex and frequently more technical, there will be increasing pressure for
sectoral decision-making. The proposal in the Lisbon Treaty to create a new
post of high representative, sitting both in the Commission and the Council was
in my view a small guarantee that this would not be the case in the Union's
foreign policy at least.
The policies, which I have already discussed, in addition suggest a series of
principles which must be reflected in the institutional arrangements within the
Union. I would suggest that some of the key principles should be cohesiveness,
moderation, solidarity, democracy and the rights of the citizen and economic and
administrative efficiency. Let me briefly say a couple of words about each of
By cohesiveness I mean that institutions in the widest sense need to
promote agreement on policy across all 27 member states. Disunity within the
European Union will be exploited by those within the Union who are against
integration but more seriously by third countries which stand to gain from a
disunited Union. The Council showed clearly over Georgia that it understood the
importance of cohesiveness in the face of Russian attempts to drive a wedge
between Member States. The Commission should always play an important role in
ensuring as far as possible that Member States in the Council act as one
vis-à-vis the outside world.
But cohesiveness goes along with moderation. In areas of particular
sensitivity, it may be necessary to lower the ambitions of certain member states
to ensure that agreement can be reached with which all Member States can be
comfortable. This applies too to the European Parliament which occasionally
takes positions which are unacceptable to certain groups or minorities in the
Union. The challenge is, however, to avoid compromises built on the lowest
possible common denominator. Here, the enhanced role of the Commission could be
Institutions should ensure that the Union shows a united face to the world
and that all Member States are fundamentally supportive of positions taken. Of
course there will be situations in which action is necessary and when not all
Member States will be able to be persuaded; indeed one of the proposals in the
Draft Lisbon Treaty is to extend the scope of Qualified Majority Voting.
Particularly where there are states which have ‘red lines’ which are
not acceptable to the other Member States and which hold back progress in the
Union, it is necessary to use QMC.
Solidarity is implicit in most of the policy dilemmas for the medium
term which I mentioned earlier. All member states recognize that they have a
responsibility to support other member states which find themselves in difficult
situations not of their own making. This applies for instance to energy policy,
where some of our suppliers have used the oil or gas weapon to put pressure on
certain member states. Solidarity is essentially grounded in our common values
on which our institutional arrangements must be based.
That our institutions should be democratic will not be doubted by
anyone in this room. However I sense that the structure of our democracy in
Europe is changing under the pressures of new technologies which are reinforcing
centripetal rather than centrifugal tendencies. New data processing and
communications technologies allow citizens, apparently with the exception of
European Commissioners, to live and work in their own towns and villages. Being
at the centre is no longer a necessary condition to have influence in the world.
But this leads people to identify more clearly with their local region. I
notice this as Commissioner for Regional Policy, as I travel around the European
regions. There is growing sense that regional and local actors can really
influence their own development and that not everything has to come from the
This tendency for regions and localities to demand a greater say in their own
future has implications for the institutional set up in the Union. A first step
was proposed in the Lisbon Treaty giving the right to national parliaments to be
informed early about EU legislative proposals. The Lisbon Treaty introduced the
notion of territorial cohesion and also provided for a new definition of
European subsidiarity, emphasising the role of the regional and local actors.
When at the Cohesion Forum in September 2007 I launched the public consultation
on the future of the Cohesion policy, more than 100 comments warmly welcomed the
inclusion of territorial cohesion in the Lisbon Treaty considering it an
important step towards a better territorial coherence of EU policies.
Finally institutions and the institutional architecture will need to conform
to ideas of economic and administrative efficiency.
I am convinced that the institutional structure of the Eurozone will
gradually develop in line with the needs of the monetary union. Gradually the
role of the Eurozone finance ministers will increase and become a firmer part of
the institutional structure. But it is likely too that other sectoral groupings
of Eurozone ministers will begin to meet simply because the discipline of being
a member of the Eurozone will force other ministers to coordinate policy
I am unable to say whether the institutional structure of the Lisbon Agenda
will develop beyond the OMC but I think that this is likely at least in some
particular fields, in line with a growing perceived need to strengthen the
impact of the Broad Economic Policy Guidelines.
Finally, the demand of governments and citizens for administrative efficiency
will weigh heavily on all the European Union institutions, as the demands on the
EU budget from new policies grow and the willingness of Member States to
contribute stagnates. One particular element which I think will become
important in the implementation of the budget will be the efficiency of the
institutional structure in spending the available finance.
Well after all of this, how does the draft Lisbon Treaty meet the demands of
medium term growth and change? In my view it tackles several of these problems
but not all. It is particularly reticent in the economic policy area, perhaps
because it might be unwise to change institutional structures so soon after the
launch of the Single Currency. It states reasonably clearly the competence of
the Union which should lead to more cohesiveness of Union policy in the future.
Foreign policy would clearly get a boost from the widening of the powers of the
High Representative while the granting of certain powers to the National
Parliaments can only be welcomed.
I hope that Lisbon will be saved. I think it would be a considerable
improvement in the institutional structures required to tackle the problems of
the next decade. It is not perfect but as every politician says at the end of
his or her speech: the best is the enemy of the good!.