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SPEECH/10/261

José Manuel Durão Barroso

President of the European Commission

The European Union after the Treaty of Lisbon

Figures and graphics available in PDF and WORD PROCESSED

Global Jean Monnet Conference

Brussels, 25 May 2010

Ladies and gentlemen, dear colleague Androulla,

It is indeed a pleasure to welcome you all – especially the Jean Monnet professors who have come to Brussels from all over the world, and to open this inaugural session with Ms Doris Pack, the chair of the Committee on education and culture of the European Parliament.

As you know the European Commission attaches enormous values to your academic work, and to your presence in the public forum.

Today, the Jean Monnet network is the largest knowledge community on European Union issues, and has a truly exceptional level of expertise. With a presence in 62 countries across five continents, you give the European Union worldwide visibility and you give great contributions to academic studies on European affairs.

At the same time you remain independent, authoritative and sometimes critical voices. I wouldn't have it any other way. It is because of this that your views command respect and are the best weapon against some populist attacks and unfair misrepresentations of the European Union as a project. I would like to invite you to keep in touch with the European Commission and with our project, of course in full respect of your academic independence. I think we are living at a phase when we are in need of the independent advice you can give in the middle of these very important transformations. The European Union, and the European Commission more concretely, will be attentive to some of your suggestions, namely through BEPA, the Bureau of European Policy Advisers. It is a body that works directly with me in these areas, lead by Jean Claude Thebaut, who is with us today. And I am sure that it is a practical way of putting some of your input, if you wish of course, in the policy making of the European Union.

Ladies and gentlemen,

It has become a tradition for me to use this platform to reflect on major policy developments and coming priorities.

Last year, I spoke of how the financial and economic crisis was changing the world. I spoke of the need to respond by building a more political Europe, and called on Member States to recognise their interdependence, and engage more fully on the European level.

This year, we are indeed building a more political Europe, and the entry into force of the Lisbon Treaty can contribute and is contributing to this. This is the subject of this year's conference, and I would like to share some of my thoughts about what this means today. At least seen from the Commission point of view and from my point of analysis of what is going on in our institutions.

As you know, the financial and economic crisis is not yet over, so I will say also a few words about the Commission's ambitious proposals to greatly reinforce European economic governance. This will also see Member States engaging much more at the European level, politically.

First, about the Lisbon Treaty. There is no need to outline its contents, namely in front of such a knowledgeable audience! But there is a curious interpretation of the treaty in certain quarters that I would like to comment on.

As you know, Europe has always been more than a simple marketplace. It's the greatest, and most successful, experiment in economic and political integration in the world. It's a community of law and values. It's an area of cooperation and solidarity.

The motor of all this progress has been the community method: strong European institutions, including a Commission that can develop and implement policies that are in the overall European interest.

We are the inheritors of this method, a precious gift from visionary leaders who were determined to turn the page on war and conflict in Europe forever.

So it comes as a surprise to me that some have interpreted the Lisbon Treaty as a defeat for the community method, as a victory for intergovernmentalism.

Nothing could be further from the truth.

If you look at the Treaty, its letter, and its spirit, you will see that what there is more community method, not less. The Treaty of Lisbon reinforces the European project. It reinforces Europe's institutions - all the institutions. It provides greater coherence, effectiveness and legitimacy to our decisions.

Nearly all legislation is now adopted by co-decision, with a significant expansion in qualified majority voting – especially in the field of justice and home affairs, for instance. So how can someone say that the qualified majority voting as a rule means more intergovernmentalism and less community method? How can anyone suggest that the increased role of the European Parliament, the institution directly elected by the European citizens means more intergovernmentalism and less community method? The competences of the Commission have also been acknowledged and reinforced, including its near monopoly on legislative initiative and its executive functions. It gains new competences, notably in the areas of economic and monetary union and external relations.

Europe has also a new face to show to the world, in the person of the High Representative, who is also Vice President of the Commission.

This position streamlines work by merging three previous roles, avoiding confusion and duplication. It strengthens coherence in external action, and brings together all Europe's external policy tools, both in policy development and policy delivery. What was before done by the High Representative, a Member of the Commission and the chair of the Foreign Affairs Council is now done by the same person.

The new external action service, responsible for Europe's diplomacy, will bind national diplomatic services closer together, and reinforce the place of Europe in the world.

Finally – in what is just the briefest of summaries – a new, permanent President of the European Council is contributing to a reinforcement of the Union, namely through an increased continuity, coherence and strong leadership in the European Council.

Far from seeing the European Council as a rival to the Commission, I see it as a powerful ally who can act as a way of reinforcing the European project if, of course, there is a loyal cooperation between our institutions. Let me tell you now from my experience of six years in this position that the real problem that we have when it comes to a decision at European level, does not come from the institutions if they respect the competences and if they take decisions in the European spirit . It comes very often from narrow-minded, nationalistic, chauvinistic political leaders at national level.

All of these innovations I have just outlined are major steps forward. And their general thrust is clear: a more European approach, more Community method for joint European action. And that's as it should be. Because when we follow a community approach, based on respect of the competences of all the institutions, and loyal cooperation between Member states and the institutions, we can achieve much more.

That is why I'm sharing my puzzlement with you, about how some have misinterpreted the Lisbon Treaty, because it is important, I think, for all of us to convey the truth about these changes. "The European Union after the Lisbon Treaty", provided that there is political will, can be and will is a stronger Europe, a more democratic Europe, a more efficient Europe, and a more visible Europe on the global stage.

And far from being a high water mark in the construction of Europe, the Lisbon Treaty - like past treaties - is proving to be just the latest staging post in an ever closer union.

Since it entered into force, the European Union has continued to take steps that increase Member States' engagement at the European level, and bind them closer together, in recognition of their increasing interdependence.

Which brings me nicely to the latest such step I mentioned earlier: the proposals by the Commission for greater European economic governance.

Such a move is essential, because confidence in both European economies and the euro itself have taken a hit over recent weeks. Without confidence, there can be no growth. Without growth there can be no exit from this crisis, no jobs, no investment in Europe's future, no prosperity for Europe's citizens.

Confidence has taken a hit because of the crisis in Greece, of course. And while it is true that the deterioration in public finances is partly due to attempts to limit the impact of the financial crisis, it is also a result of the failure to reduce debt levels during the period of economic growth. Yes, there is speculation against the sovereign debt of some Member States, but speculators are surfing the wave, and the wave is precisely the wave of high levels of debt and the lack of structural reforms. So we should not give the speculators a wave to surf on. And there is I think a misinterpretation of the reality, presenting it just as a result of speculator's action or presenting it just as a result of the lack of structural reforms.

To put it bluntly, some Member States - by no means just Greece - have not undertaken the structural reforms that were needed and they have not respected the Stability and Growth Pact and namely the principles of financial stability that are enshrined in the Lisbon Treaty and were already enshrined in past Treaties.. And the crisis has shown that existing mechanisms for fiscal discipline and imbalances are simply not up to the job, and namely that we have no clear rules about what to do in case of non respect of the Treaties.

Just like the banking crisis, this collapse of confidence has demonstrated how interdependent EU economies really are, and how a crisis in one Member State can affect them all, and indeed not only in the euro area, in the European Union and in global markets. If someone still needs some proof, some evidence of the levels of interdependence we are now seeing in Europe and in global markets, I think the recent case with the euro is a powerful, and extremely dramatic, demonstration of how interdependent we are. This underlines the need for action in the euro area, and also by all 27 Member States of the European Union.

The time has come to beef up the 'E' of EMU, instead of just lamenting the shortfalls of the 'M'! As I have been saying for several years, we cannot have a monetary union without an economic union.

On 7 May 2008 when we have presented the report of the first 10 years of the euro, commemorating that fact we said in the most explicit terms, that the euro has been a success, but to continue as a success we need stronger economic policy coordination, stronger economic governance of the euro area and also addressing some of the imbalances in the euro area and in the European Union. Two years afterwards, I think, Member states realize that this was the case.

So what are we proposing?

First, to ensure that the Stability and Growth Pact rules for fiscal discipline are really respected. For instance, earlier scrutiny of the Member States' budgets in a peer review exercise will make sure governments pay more attention to respecting the rules. Some are arguing against this proposal of the Commission on the basis of the so called respect of the principle of sovereignty. It's not recognised in the simple reality. A reality that decisions taken by another Member State have a direct impact on the economic policy and economic situation of all the other member states. And as the Lisbon Treaty recognises – economic policy in one member state is not just a matter of national interest, it is indeed a matter of European interest. So it makes sense, and in fact it reinforces the powers and the competences of national Parliaments that they are in connection with other Parliaments when they prepare their budgets, because the decisions taken by the other Parliaments and their own decisions will have an impact on the overall community in the euro area, and outside the euro area. But it is interesting to see how some national politicians react to something that comes only from common sense. It is impossible to deny that a decision taken by the Parliament of Greece has an impact in the German Bundestag, as a decision in the French Assemblée nationale has an impact in all other member states of the European Union. So it makes sense from a political and institutional point of view to have this kind of peer review if we want to have stability and prosperity in the euro area and the European Union.

At the same time, we need to look at the policies. This is what Europe 2020 is about: building a competitive economy for the future, that delivers smart, sustainable and inclusive growth.

Of course, these policy choices have budgetary implications. And yet up until now, we have always looked at the policies in spring - the former Lisbon reports - and the budget in the autumn - the Stability and Convergence Programmes.

That doesn't make sense.

We should look at the policies and their implications for budgetary discipline at the same time. This is why we propose to establish a 'European Semester' for economic policy coordination. It's about joined-up economic governance. As we have seen now during this crisis it's clear that at the root of the crisis are major economic imbalances. So it makes sense precisely to reinforce the Stability and Growth Pact to consider not only the macroeconomic aspects but the microeconomic aspect of the reforms, but also the external dimension. We cannot have an economic policy for Europe that is fragmented as if we are not living in the same world, as if we should not take into consideration the various aspects of our economies and their development.

This is not about taking over Member States' tax systems. This is not about breaching national sovereignty. On the contrary, the European Semester will allow Member States and their national parliaments to benefit from an early analysis of both their budgets and their macro-economic performance.

Obviously, if corrective action is still not taken, then it must be possible to apply sanctions. People do not like the word sanctions, so I've suggested calling them "incentives for compliance". But we need to give credibility to our rules. If we do not give credibility to our rules, most likely they will not be respected. So we are now proposing some of these sanctions, of course not with the idea to implement these sanctions, but to give some incentives to the member states to adapt the corrective measures so that they will not need to see those sanctions implemented.

Let me be clear: there is no question of taking financial resources away from a Member state, especially when it is in a difficult position. What we say is that we should look at how in the next, the post-2013 budgets, a link could be established between respecting the rules and the way money is spent.

In a crisis like this, prevention is always better than correction, of course. But when even correction is not enough, the European Union must have the appropriate tools to take immediate action. We need to be able to intervene much earlier in a crisis, once prevention and correction have failed. We need more action, less reaction.

That is why the Commission has also proposed a permanent and robust framework for crisis management.

Now, anyone reading the newspapers over the last three months would be forgiven for thinking that the Lisbon Treaty reforms are yesterday's news; that the stability of the euro is our sole preoccupation.

It is true that the Commission has worked night and day to avoid the financial collapse of Greece, and to support the euro area. The Commission has drafted a stability programme with the Greek authorities, led the calls for the €110 billion loan to Greece, and put forward a proposal for a stabilisation mechanism for the euro area.

I am proud of the role that the Commission has played throughout one of the most serious crises that the European Union has ever faced. Some consider it the most serious crisis ever, because it was a real test to the rules, to the Treaties, and to the principle of responsibility and the principle of solidarity.

That crisis unfortunately is not yet over, and we are still seeking the best way out. But what is clear is that finding the right direction is much easier with the Lisbon Treaty. And I am coming back to the theme of our subject.

It is a simple fact that without the Lisbon Treaty innovations, especially the new Article 136, we would not have been able to propose the strengthening of the coordination and surveillance of budgetary discipline that I have just outlined. And so I want to tell you that it will be based on Article 136 that the Commission will come with several proposals that in full respect of the Treaty will increase the governance in the euro area and in the European Union. It will be much more difficult, as I am sure all the lawyers among you will recognise; to do it without a clear legal basis. But once again, the legal basis is not enough, we need the political input and the political willingness namely from our Member States. I think today we are closer than we ever were to that. Because as we know, and as most of you know from your studies in European integration history, that it is in times like these, in times of crisis that usually the European Community or the European Union find the resources to act and to move forward in our European project.

Ladies and gentlemen,

Despite the improvements that you can find in the Lisbon Treaty, these remain difficult times for Europe - and indeed the rest of the world.

We live in the middle of an historic challenge: we need to fight against the fear that citizens naturally feel during very difficult economic times; fear that can provoke inward-looking reactions.

And we should not forget that in these times there are sometimes occasions where we see populism, xenophobia, chauvinism in Europe. This has been the case in the past, can also be the situation in the present. That is why we need this type of leadership at all levels to make the case for Europe, the passionate case for some but at least in a rational way for everyone. I have sketched out some of the new tools available to us. I have also outlined some of the key economic challenges, and the opportunities European institutions are already seizing in responding to these challenges. Given more time, I could probably add a few institutional and external policy challenges we face as well! But I know that during the conference you will have the opportunity to address some of those challenges.

But one thing is clear: teasing out all the opportunities these challenges hide, and using the new tools available to us in the best way possible, will call for unprecedented and continual intellectual effort.

We need an impassioned analysis of the facts. We need to interpret these facts in innovative ways. And we need constructive and viable ideas for our future policies.

I expect a great deal from the Jean Monnet Programme in all these respects – analysis, interpretation, and fresh ideas for the future of Europe.

I have no doubt that with your help, our Union will manage to overcome today’s daunting challenges.

We will have to build on our historic achievements and make full use of the new tools to devise innovative, but at the same time realistic policies. Above all, we will need to win the battle of ideas. I think we are in a moment in the European integration process where this battle of ideas is coming to a very critical point. We are in a situation, from my point of observation, where if the European Union does not go further, it may be going back forever. This is the situation as we see it. It is not the old doctrine of the bicyclette, but it is a situation where we cannot be in that specific time. I do not mean from institutional point of view, and necessarily from the point of view of new Treaties. That is not what I am suggesting. I think that in the current Treaties we can do much more but there are some decisions crucial for the European Union where we need the support of those who are able to come with new ideas.

The recent crisis calls for swift and extraordinary measures. Everyone knows that. But above all it calls for a more structured European response.

When it comes to the future of the euro and our Union, we need to listen carefully to the critics, while rejecting the predictions of professional pessimists. I've spoken last year to you about what I called the "intellectual glamour of pessimism". The world is now full of Cassandras. Sometimes I see in some of the English speaking literature of the euro, what I would call "wishful thinking", because they expect the euro to fail. This is not my analysis. The euro will succeed and the euro will succeed because there are deep interests in the economic integration of Europe that demand that, apart from the importance of the political project. That is why I am really confident that Europe's unity is Europe's most valued asset, and this is never more true than in times of crises.

We can turn today’s challenges into opportunities only if we stand together, give a collective response, and never lose sight of the values that have kept us together for more than 50 years. Those values are more important than ever.

And as I have said, you have an important role in this process. You have the knowledge, the expertise, and the intellectual independence to assist the Union in the difficult tasks that lie ahead.

And this is one, just one of the many reasons why I will always support the Jean Monnet network. Indeed, I intend to defend and consolidate the programme in the years to come.

Ladies and gentlemen,

As well as the traditional cohort of respected academics, this year's Jean Monnet conference has brought together a number of distinguished policy-makers, diplomats, and journalists.

I welcome this fact, because I believe a more diverse audience will stimulate debate over the next couple of days.

I also believe that the presence of so many participants from non-academic circles shows the power of attraction of the Jean Monnet network. It is recognition of the vitality and authority of your expanding global community.

I have no doubt that the outcome of your work today and tomorrow will live up to the high standards fixed by past conferences.

It therefore only remains for me to wish you fruitful discussions, and every success.

Thank you very much for your attention.


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