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José Manuel Durão Barroso
President of the European Commission
Speech by President Barroso: "A story of European endurance and perseverance"
Euro campaign event launch
Beijing, 15 February 2012
Distinguished guests and dear students,
It is a great pleasure for me to share with you some thoughts on the euro and the future of Europe.
At a time where practically all the world is discussing much about the European Union I would propose that we look first at its past to better understand its future. So let me start by recalling that the idea of European integration grew from the victory of peace over war, and the triumph of democracy and respect for human dignity over oppression, following two major conflicts in the first half of the 20th Century. These were the very basic roots that lied at the heart of the beginning of the EU integration.
By 1968, besides common institutions, Europe had created also a customs union and by 1993 a single market allowing the free movement of goods, services, people and capital. The euro was introduced in 2002 and is currently the currency of 17 of the EU Member States.
Now, over 55 years after its foundation, the European Union is a place of lasting peace and prosperity. It has grown from six to 27 member states, soon 28 with the accession of Croatia, and created the world's largest single market by value of over 500 million people, accounting for around 20% of global GDP.
All over these years, we have been a unique experience of a successful cross-border supranational cooperation. And the establishment of the euro has been one of our most significant achievements, a great expression of Europe's political will and determination. The euro is now part of millions of people's daily life and it has become the world's second reserve currency.
In fact the Euro is much more than a currency. It is the most visible symbol of European economic and political integration. And let's be clear, the future of the Euro and the future of European integration are inseparable.
The euro story is indeed a remarkable story. The euro has boosted internal cross-border trade, and external trade. The euro has given us lower exchange rate risks, offers one-stop access to our markets and has proven a powerful catalyst for financial-market integration. And, above all, the euro has brought price stability, through the independent action of the European Central Bank.
At the most practical level the euro helps consumers to make better decisions, for example by allowing easy price comparisons when travelling or shopping online.
The euro area is a club that more EU member states want to join and will be able to do it once they have met some economic convergence criteria.
But the Euro and European policies in general have not been beneficial only for the Europeans. Since its creation it has also brought many benefits to our international partners.
And China is very well placed to fully appreciate that, as the European Union is your largest trading partner – with business worth more than €1bn taking place each day.
However, despite the benefits the single currency has brought, the euro area has in recent times been subject to severe strains.
In fact, to fully exploit the benefits of the euro we depend on sound economic policies, in particular budgetary policies. Incomplete governance and surveillance arrangements in the euro area have allowed imbalances and divergences in competitiveness. In this regard, the sovereign debt crisis has been a stark wake up call.
But the EU has been acting decisively. We have taken important decisions to tackle the question of sovereign debt and strengthen economic governance in the euro zone, to improve financial supervision and stabilise public finances, to implement the necessary structural reforms and to enhance our competitiveness.
Let me recall some aspects:
We have constituted significant firewalls, to the combined tune of 500 bn euros (EFSM+ESFSF) which are being used to give financial assistance to some Member States. From July on, the permanent crisis resolution mechanism, the European Stability Mechanism (ESM) will be in force.
We have strongly reinforced the rules for fiscal discipline, the so called Stability and Growth Pact. More recently, in fact on 30 January, there was agreement on a fiscal compact in the form of a new Treaty which further fosters fiscal rectitude.
Member States are implementing hard but necessary budgetary adjustment and structural reform. Take for example the measures taken by the new Italian government.
The process of recapitalization of European banks, where needed, is going according to schedule.
Finally, and last but not the least, the European Central Bank is taking decisive action through making available to banks liquidity, which is contributing to ease banks funding problems.
To sum-up we are creating a sustainable future for the euro and we will come through our current difficulties with an even stronger and more united Europe at the end of the process.
However, I have the feeling that sometimes commentators or the markets minimise both the far-reaching measures already taken and the complexity of moving forward 27 democracies, each with its own internal accountability system.
In my view what Europe has been doing, in particular in the most recent period, constitutes a basis for investors to regain confidence in Europe.
While addressing with determination the euro sovereign debt crisis we must not lose from sight the need to secure growth and job creation.
Indeed, fiscal consolidation must go hand in hand with a long-term vision of a stable, competitive European economy which delivers sustainable growth and jobs.
That is why the European Union set its comprehensive strategic orientation which we call "the EU2020 strategy." This is our European blueprint to get the economy back on track over the course of the decade with education, research and innovation as its key drivers.
We are working hard on getting more people in education, training and work, on exploiting the full untapped potential of our internal market and on developing a more entrepreneurial and innovation-friendly environment.
I have recently presented concrete proposals to tackle urgently youth unemployment and to boost the competitiveness of our SMEs including by supporting them to go international.
But our economic position is also affected by the persisting imbalances in the global economy, and all leading economies need to contribute to redressing these. As the Confucian teaching goes "within the four seas, all men are brothers"
Eight years after China released its first policy paper on relations with the European Union, much has changed. China is now a global force and so it is especially welcome – and I have strongly welcomed - the Chinese leadership's ambition to rebalance "China's growth model" in the medium term, and in line with the G20 framework for growth. Increased Chinese consumption, like increased economic discipline and convergence in Europe, will be important for delivering sustainable global growth, and I welcome the recognition of this in China's 12th Five Year Plan.
In today's strongly interconnected world most challenges are global by nature and call for global responses. Strong economic global coordination is therefore key for world stability. The G20 is the appropriate forum for such a global coordination.
The economies of the EU and China have become ever more closely linked. This has confirmed the need for common analysis and joint actions by the EU and China, not only in the short term, but also in dealing with the fundamental challenges we both face in the medium term. We need to work ever more closely together on a wide range of issues to make change happen for the better and for the well-being of our citizens and future generations. This is exactly what the EU-China strategic partnership is about.
Ladies and gentlemen,
The European Union, and in particular the Euro area, certainly finds itself at a critical juncture. But the European Union is not complacent and we are fully assuming our responsibilities at home and beyond.
We are putting our house in order and protecting the euro. We are taking all the necessary steps to ensure stability, foster confidence and play our part in global solutions.
This is a long process - a marathon not a sprint. But we, in Europe, share with China the experience of being an old civilisation and know very well the virtue of endurance, resilience and perseverance. We have the strengths and we have the will.
So I thank you, and I hope you will enjoy learning more about Europe's history and its single currency at the exhibition that will now be opened.
I thank you for your attention.