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José Manuel Durão Barroso

President of the European Commission

The European way forward: Leadership and ownership

Europe Day

Florence, 9 May 2012

Ladies and Gentlemen

I would like to start by thanking the European University Institute for having invited me to be with you today on this very special day, with so many good friends and committed Europeans.

We are gathered in a most appropriate place to inspire us. We are here in the Palazzo Vecchio in the heart of the Florentine culture. We are here in Florence in the cradle of the Renaissance. We are here in Italy, a founding country of the European Union, which remains a frontrunner of European action and reforms. We are indeed in a highly symbolic place for contemplating the future of the European Union on Europe Day.

First, at a time when a so-called decline of Europe is widely discussed in Europe and beyond, it is the appropriate place to remind us that decline and renewal are two of the greatest and intertwined themes of our European culture and history. We have been a continent of wars and dictatorships, a continent of divisions and oppression, a continent of Europeans led by hatred and narrow interests. And we have been a continent of constant renewals, a continent of cooperation and freedom; of openness to dissemination of ideas and trade with others, a continent of Europeans led by their thirst for learning and knowledge, confident in the potential of humankind, and ready to challenge accepted orthodoxy and seek progress.

It is also a place to remind us of the vital importance of institutions for ideas to be turned into lasting realities. For centuries intellectuals have dreamt of a peaceful, unified Europe. For centuries this dream has been thwarted by the forces of narrow nationalism and wars. And, finally our Union is born out of the devastating experience of two World Wars backed by the firm political will and determination of our founding fathers.

And what is unique in this process is the combination of economic integration with supranational institutions.

In the European Union we have institutions of an innovative, supranational nature: the democratically elected European Parliament; the European Commission; the European Court of Justice; the European Central Bank; the Court of Auditors.

It is precisely these supranational institutions that are the best guarantee for the respect of the agreed principles and rules in a union of sovereign states.

And thanks to this unique institutional arrangement, the European Union has always been able to cope with crises and emerge from them stronger and more united.

In little more than half a century, we grew from 6 to 27 Member States, and soon 28. And today our Union is one of the most highly developed regions in the world, with a population of 500 million. It is a single, dynamic market based on the free circulation of goods, capital, services and people. It has a single currency, the euro, which in just a few years has become the second reserve currency in the world. It is the leading trading power in the world and the second largest source of foreign direct investment. It is the world's number one donor of development aid. In a nutshell, it is an active economic and political player, with growing regional and global interests and responsibilities.

This is a considerable acquis that should not be underestimated or even worst unravelled.

Yes we are faced with great difficulties. And as I said in the State of the Union address I delivered in the European Parliament in September last year we are probably facing the most serious crisis in the history of European integration.

But we have to look at things in perspective. We have to remember where we started from and look at where we are today.

The reality is that only by sticking all together we have the dimension and the capabilities to overcome the current difficulties. In today's 21st century world, size matters more than ever. In today's 21st century world, even the biggest of our Member States does not have the dimension to deal on equal footing with countries of billions of inhabitants.

It is only by acting together as a Union that we will have the relevant dimension and a greater say in today's world. And it is only by remaining open to the world that we will be able to bring more prosperity to our citizens.

That is why I have called for a "European renewal" building on our acquis and adapting it to the new geopolitical and geo-economic realities.

And indeed today we are gathered in the most appropriate place to remind us that renewal and survival and growth against the odds are not things Europeans are merely capable of, they are in our historical, cultural and institutional DNA.

Ladies and gentlemen,

The fact is that we are showing the way out of the crisis while building a sustainable, inclusive, fair and competitive social market economy for the 21st century Europe.

I know that some critics argue that Europe is doing too little too late.

Allow me to be very frank. There is no doubt that the Commission would have preferred bolder and quicker decisions. But our Union works on the basis of compromise among 17 Member States of the euro area and 27 Member States of the European Union. So, yes it takes time to reach agreement. But it is worth it. This is the time needed for a genuine democratic process. And democracy is the best way to organize our societies.

And again, let's look at things in perspective. Coming, sometimes, from very different positions, we have been able to reach a consensus on the necessity to foster European integration to resist the crisis and to lay the foundations for a more structural response.

The reality is that over these last two years, Member States have agreed on an unprecedented level of integration that was simply unthinkable a few years ago. Never in the past so many competences have been exercised at EU level. Why? Because to build tomorrow's Europe we must draw the lessons of our interdependence and Member States have become more than ever acutely aware of the high degree of our interdependence.

And allow me to remind you that early on the Commission has front-loaded all the issues that have dominated the European agenda over the last two years and will continue to dominate it for the years to come - from better economic governance and regulation of financial markets to supervision of fiscal policies; from the Europe 2020 strategy for growth and jobs to our proposals for a 2014-2020 EU budget that is a budget for growth and investment, not for Brussels but for our citizens, and also a budget of solidarity as illustrated by our proposal for a financial transaction tax to contribute to the budget.

Yes, we have set the scene to help bring Europe's economy back on track. This means to restore our growth potential for Europe to be once again fully competitive on the global stage; and to create jobs and ensure well-being for our citizens. And it is also about fairness, about delivering social and territorial cohesion. It is about a Union where competitiveness and social justice go hand in hand.

It is about drawing the right lessons from the crisis. And our challenge is how to combine fiscal consolidation and convergence, stability and growth, responsibility and solidarity.

Ladies and gentlemen,

Firstly, the crisis has made crystal clear that more discipline and convergence is a prerequisite to achieve lasting and sustainable growth, which is critical for the employment and well-being of our citizens. That is why we now have a reinforced and more rigorous European economic governance with the so-called "six-pack", six legislative measures that significantly reinforce the Stability and Growth Pact and widen surveillance beyond budgetary policy to cover macro-economic imbalances.

And earlier this year, the signature of the Treaty on Stability, Coordination and Growth by 25 Member States was a further sign of the commitment to discipline and convergence. This was not the Commission’s preferred mechanism due to its intergovernmental nature. But it is a strong political message about the irreversibility of the euro that is not just the currency of the 17 members of the euro area but the currency of the European Union.

Secondly, the crisis has made crystal clear that to go on building Europe "through concrete achievements" solidarity and responsibility have to be the two sides of the same coin. That is why we now have in the European Union an underlying political contract linking together responsibility and solidarity. Those who can do it undertake an effort of solidarity. And the Member States in difficulties do not take it as an entitlement, but undertake an effort of reform. It is on this contract that the European Stability Mechanism is based but also our proposals for the next EU budget. We are replacing a culture of entitlement with a focus on reforms and results.

Thirdly, the crisis has emphasized that growth and stability go hand in hand. A country cannot have sustainable economic growth and jobs creation nor sustainable social welfare if its public debt continues to spiral out of control. That is why Member States are now engaged in very courageous efforts of fiscal consolidation.

But from the very beginning the Commission has kept saying that apart from fiscal consolidation it is important to create conditions for enhanced growth. The reality is that to regain competitiveness several Member States need to reform their labour markets, create better conditions for business and adapt their tax law to make them more employment friendly.

This means that the choice should not be austerity versus growth. The choice is unsustainable short term stimulus that will lead to a short-living relaunch of growth versus sustainable long term reforms that will make a difference over time. And our choice is very clear. It is about investing in lasting sustainable growth while immediately addressing the most urgent issues and first of all unemployment that has reached intolerable rates.

And these are not just words or good intentions. These are effective actions that the Commission has not discovered today. We have already been working for some time on ensuring that the structural funds promote growth and job creation. For 2012 and 2013 we have proposed to reallocate some of the structural funds to support youth training and employment, as well as SMEs, the backbone of Europe's economy. And for example, here in Italy, last December we have agreed with the Italian authorities to reprogram close to 4 billion euros of European funds in particular towards education, and employment.

We are determined to pursue this course of action as illustrated by our proposals for the next EU budget which include a strong focus on better targeting the EU structural funds on competitiveness and convergence.

Fourthly, the crisis has underlined that a well-functioning and transparent financial sector is a key condition for lasting and sustainable growth and jobs creation. And we are now making Europe the first region in the world to have top-notch financial supervision and regulation that is up to the challenges of the future.

And last but not least, the crisis has made clear that the real core issue is competitiveness, not only among Member States but also compared to other parts of the world. That is why right on taking office, in early 2010, the second College I have the honour to chair has presented a European agenda for growth and jobs, the Europe 2020 strategy for smart green and inclusive growth. Better coordination of our economic policies and long-overdue structural reforms are the centrepiece of this strategy that has been accepted by all Member States and endorsed by the European Parliament. But agreeing the strategy was the easier part. Now we need to work all together on its delivery, year after year. And we are already two years into this strategy.

It is highly time to show the same speed and determination in implementing our growth agenda as we have already shown in fiscal consolidation.

Ladies and gentlemen,

At the European level growth will be coming from three key sources.

First from the deepening of the Single Market, if Member States are ready to eliminate the remaining barriers in particular in the energy, digital and services sector. Let's take for example the digital sector. Going digital means more growth; small businesses that go on line grow twice as fast as their competitors. And ICT creates jobs; studies have shown that 2.5 jobs are created by the Internet for every job lost. In Italy in 2011, internet's contribution to GDP was 31.5 billion euros, or 2% of total GDP, and is expected to growth at an annual rate of 18%. For the whole of Europe, eliminating barriers to the expansion of digital economy could deliver 4% GDP growth by 2020. So there is no time to lose. Let's go digital! And let's also boost innovation, unleash the potential of green growth and remove obstacles in network industries. This will deliver results fast.

Then global trade is another important source of growth and jobs creation. I know that in times of crisis there is sometimes this temptation to close our doors. But that would be self-defeating for Europe to turn inwards. We are the biggest trading block in the world. And we need to have greater access to external markets.

Finally, we need targeted investments on a European scale; investments in research and innovation, in education, and also investments in energy, transport and digital infrastructures to better connect Europe and tap the full potential of our single market.

That is why the Commission has proposed, in the framework of the next EU budget, a Connecting Europe facility. We have also proposed to use project bonds to support such key strategic investments by attracting private sector investment and working with the European Investment Bank (EIB). Because the EIB has a crucial role to play in underpinninghas a crucial role to play in underpinning the investments needed to boost growth and job creation in Europe. has a crucial role to play in underpinning the investments needed to boost growth and job creation in Europe. has a crucial role to play in underpinning the investments needed to boost growth and job creation in Europe. has a crucial role to play in underpinning the investments needed to boost growth and job creation in Europe. has a crucial role to play in underpinning the investments needed to boost growth and job creation in Europe. the investment needed to boost growth and job creation in Europe. That is why its lending capacity should be increased. And the Commission is ready to increase structural fund support for EIB managed projects that support SMEs, research and innovation, and in the energy sector as well.

Ladies and gentleman,

To sum up, let me say clearly that whenever I hear or read about what we should be doing for a brighter European future, it often comes down to implement what has already be decided and to decide on a number of proposals that are already on the table.

And today, on Europe day, I want to call on all European stakeholders to step up their efforts for growth and jobs by accelerating the delivery of Europe 2020 strategy, which is the right platform for any new growth initiatives.

I call on all European leaders to promote, through an increased sense of responsibility and solidarity, stability and growth. And for growth to happen we need fiscal consolidation, structural reforms and investments.

The Commission has also proposed a pro-growth budget for 2013 and 2014-2020. It has tabled legislative and other proposals that can start delivering growth now and getting people back to work.

So I call on Member States to support us in making the next breaking news by showing their collective political will to decide now on these proposals and to fully implement with determination and vigour what has already been decided. This is the best way to create a real breakthrough for the economic and social well-being of our citizens.

And to conclude, I would like to say that as we are building a Union able to withstand all weathers, we need Europeans for all seasons. More dangerous than the anti-European positions of opponents to European integration is the European pessimism of proponents of the European process. And there is in Europe today a kind of "intellectual glamour of pessimism." This is a self-defeating attitude. Of course we should not be complacent about the gravity of the situation. But we should also be realistic about our achievements and capacities to overcome the current difficulties.

What we need more than anything else is leadership and ownership. This is essential to restore confidence and to promote Europe's growth and prosperity. We have to work all of us together. Because Europe is of course much more than Brussels, Europe is 27 Member States with their regions and their cities. Europe is Italy, Tuscany and Florence. Europe is not just institutions and governments. Europe is 500 million Europeans. Yes, Europe is all of us, and all together I am confident that we will build successfully on the legacy of our founding fathers a stronger and more united Europe fits for the 21st century

I thank you for your attention

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