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European Commission

José Manuel Durão Barroso

President of the European Commission

Erste Frankfurter Europa-Rede

Frankfurter Paulskirche/Frankfurt

5 November 2013

Excellencies,

Ladies and gentlemen,

Dear friends,

Let me start by thanking the Ministerpräsident of Hessen, Volker Bouffier, for inviting me to this "Erste Frankfurter Europarede". It is a great honour for me to be the one to launch, together with you, and with Oberbürgermeister Peter Feldmann, what will hopefully become a lasting tradition in the years to come.

I then want to congratulate the Deputy Ministerpräsident and Minister for European affairs, Jörg-Uwe Hahn, and also particularly the Secretary of State, Mrs Breier, for their true European commitment and for taking the initiative to create the "Europa-Dialog Hessen" one year ago.

And of course, I want to thank you for your hospitality. It is a great pleasure for me to be here in Frankfurt, an eminently European city in so many respects. And in saying that, I am thinking not only of the European Central Bank having its headquarters here in Frankfurt. ECB, now headed by the intelligence and wisdom of my good friend Mario Draghi, also among us this evening. I am also thinking of Frankfurt as indeed the financial capital of the Euro zone, I am also thinking of a state of mind that represents what is best about Europe. I am thinking of the cosmopolitan openness of a city proud of its diversity, a city where 170 different nationalities live side by side. A city focused on the future, research and advanced technology; a city that encourages cross-fertilisation between its excellent universities and the world of enterprise; and a city of cultural dynamism, with its famous book fair, its many museums – world class in terms of architecture and the quality of the collections they house – not to mention one of the most renowned opera houses, that by the way, has been giving very important contributions to Europe's opera.

And it is also with fascination that I address you here, in what is such a powerful symbol of democracy, the Frankfurter Paulskirche, home to the first freely elected assembly in German history. Back in 1848 its members were striving for a united Germany, still with a monarch but grounded on a common Constitution. These were the origins in a long and painful way to German unity in freedom and democracy.

Exactly fifty years ago, the Western part of Germany had already passed this threshold to freedom and democracy, allowing in June 1963, John F. Kennedy to say to a very prestigious audience here in the Paulskirche: "The great present task of construction is here on this continent where the effort for a unified free Europe is under way."

Fifty years since John F. Kennedy and 165 years since the Paulskirchenversammlung, a free and united Europe has become a reality. However, we know too well that this task of construction is not finished and requires further efforts. That is why we meet here today to deepen our reflections on a stronger, united, democratic, open Europe.

I do not need to tell you that the Paulskirche is also a symbol of the pride of place that Europe accords to thought, science, and culture. For it is this house that hosts the ceremonies for such prestigious awards as the Goethe Prize or the Peace Prize of the German Book Trade, and the Paul-Ehrlich and Ludwig-Darmstaedter Prize.

The most recent Goethe Prize was awarded in 2011 to the great Arab poet Adonis, who was born in Syria, a country torn into a terrible civil war raging only a few kilometres away from the European Union borders, namely Cyprus, and where the European Union spares no effort for a political solution, since this alone will guarantee lasting peace.

The poet Adonis tells us that poetry makes life on Earth more beautiful, less ephemeral, and less miserable, and that art is a bulwark against inhumanity. War, collective struggle, derives from the herd mentality, causing man to lapse back into barbarity and inhumanity, Adonis writes.

These words have a particular resonance when one thinks of the European Union. Not because the European Union is a poetic creation in itself but because it is the most original political creation of the 21th century, I would even say it's the most impressive creation in the history of international relations. No other political construction to date has proven to be a better way of organising life to lessen the barbarity in this world.

That was what the Nobel Committee recognised when it awarded its prestigious Peace Prize to the European Union last year: for its contribution to promoting peace and reconciliation, democracy and human rights in Europe.

If I came here tonight to share with you my idea and vision of Europe, this is indeed my starting point: Europe is above all and fundamentally a community of values.

The story of Europe over the past sixty years is one of reconciliation and reunification founded on strong values.

At the outset of what would later become the Community, reconciliation meant uniting yesterday’s enemies in a project centred on peace, and guaranteeing the same dignity to all its participating countries. The great historic novelty was that this was achieved through a supranational framework with institutions which are exclusively obliged to upholding the European interest.

And this part deserves some special recognition. We are, it is true, a unity of Member States but we are also a union of citizens. And we need to complement the cooperation between our Member States that are democratic Member States. We need independent, strong supranational institutions, like the European Parliament directly elected by our citizens; like the European Central Bank, an independent central bank; like the European Court of Justice, also an independent institution; like the European Commission, a supranational institution. This is the originality of the European Union, what makes the European Union different from other forms of international cooperation. And indeed, I can tell you, now based on the experience of what is now my 10th year leading the European Commission, that without these institutions we would not have been able to overcome the last crisis. We would not have been able for instance, to resist the pressures of national protectionism and division. I saw it very clearly in the most acute moments of the crisis, the pressures coming from national capitals, to put at risk a lot of the aquis of the European integration, the temptation to close borders, the temptation to division, the temptation not to respect common rules. And this is something we should think about for the future.

Ladies and gentlemen,

Starting the European project from a values basis is not soft politics or just political theories. Neither is it the theme of a "Sonntagsrede über Europa". On the contrary, we are talking about the most successful and powerful political concept in Europe since the end of World War II. Because ultimately, these values of human dignity, freedom, democracy, equality and the rule of law incarnated in the European project of integration, became a pole of attraction for citizens all over Europe, stronger than any totalitarian regime, stronger than the worst forms of suppression, stronger than barbed wire and stronger than the highest walls separating the free from the non-free. Nobody understands this better than you, the people of Germany.

I also know from my own personal experience what it means to be deprived of fundamental human rights such as the freedom of expression and freedom of information. In my country Portugal, too, national dictatorship that existed until 1974 did not resist the force of the European idea and its values, like in many other countries in East and West, or also in South Europe. We should not forget, while we speak about Europe, and when I listen at many of the current discourses, pessimistic discourses, about Europe, what I call the intellectual glamour of pessimism, that our Europe some years ago, the South of Europe was living under dictatorship, that Central and Eastern European countries were living under totalitarianism, some of those countries even did not exist as independent countries, because they were under Soviet rule, like the Baltic states. And so, when we think that Europe today is not fulfilling on its promises, which is true, when we think about the big problems we have in Europe today, like the crucial problem of unemployment, namely youth unemployment, we should not lose sight of the perspective, how Europe was 20, 30, 50 years ago. Europe is today stronger than before. Europe today is more respected, not only than before the European Community but I can also give you my testimony. When I was Foreign Minister of my country in the early 90s, when we were a European Union only with 12 Member States, before the Accession of Finland, Austria and Sweden and of course before the accession of the Central and Eastern European countries and some countries in the South, Europe was less influential in the world. The way Americans or Chinese or others were looking at us was not with the same respect that today they have when they deal with a Europe that has a continental scale. A continental scale that counts, in the globalisation of the 21st century, when we see powers that have also a continental dimension like the United States, China or others. So this is important, to add in perspective when we speak about Europe today.

And indeed, it is because these values can now be shared. Before they could not be shared, because a big part of Europe was living under dictatorship. It is because these values can now be shared that today we have the power at the European Union to uphold them, and that today there should be no place for dictators in Europe any more.

Thanks to the European idea, we have succeeded in restoring concord, friendship between erstwhile enemies, in restoring unity between those who for too long were divided. Overcoming fatalism and national egoism, rejecting defeatism and willing to act, having faith in progress and in human beings, that is what this European civilisation is about.

Too often, we take the accomplishments of European reconciliation and integration, including all its freedoms for granted, we know that. Our children, and that's very good for them, they were already born in a Europe of freedom and democracy and they take it as something natural. This sometimes leads some people to call into question the value added of the European Union. Why do you need the European Union? We already have these kinds of liberties.

But let me tell you one thing: for those countries and those people who live in our neighbourhood, in the South or in the East and who do not belong to the European Union, the European Union has lost nothing of its attraction, of its "Strahlkraft". For all them Europe is still a model to follow and to take inspiration from.

And secondly, never more often and more loudly as during this mandate, the European Commission has been called upon to act when there were problems with the respect for the Rule of Law, also in some of our Member States. The Commission is dealing with those issues with utmost sensitivity. But when core values in our dealings between each other are at stake it is time to act, and the Commission is ready to assume its responsibilities, because we should not forget that we are a union based on the principles of the Rule of Law. This is also something that makes us different from other organisations that have not, as a fundamental principle, the respect of the Rule of Law, including, of course, the respect of the democratic principles.

Ladies and gentlemen,

The logical conclusion of Europe's deep interdependence is to make it strong, united and open. In this sense, besides being a community of values, the European Union is also a cultural project in the broad sense; in other words a vision of the world and of the place of human beings in the world; a conception of how to live together, where solidarity and responsibility go hand in hand.

It is a cultural unity nurtured by our diversity, yet converging towards a common kinship, a shared notion of liberty and the rule of law, separation of the sacred and the profane, the primacy of reason, or yet again willing affirmation of our differences, for example through our multilingualism – as Umberto Eco rightly put it, the language of Europe is translation - La lingua dell’Europa è la traduzione.

It is a conception of the world founded on respect for human dignity, a conception that places science and culture at the very heart of Europe’s openness precisely because they enrich us as individuals and create links that reach beyond frontiers.

For we believe, as Goethe said, that ‘free trade in ideas and sentiments, just as much as the exchange of products and the fruits of the earth will increase the wealth and general well-being of mankind.’

And in a world of profound and rapid change, that is truer than ever. That is why Europe needs policies, programmes and funding that give education, training, research, and innovation the European space to breathe and unfold. In the next seven years we have just managed to ensure that the new Erasmus programme, called Erasmus+, will receive € 14.5 billion, a funding increase of around 40%, and another € 70 billion will be allocated to the new programme for research and innovation, Horizon 2020 – an increase of almost a third compared with the previous programme.

The aim of these investments, which promise growth and the creation of future oriented jobs, is not only to defend the interests of our citizens and the competitiveness of Europe but also to promote our values. Values that are crucial to reinforce our open societies and our open economies.

Ladies and gentlemen,

It was important for me to underline that Europe's point of departure is not the economy. It is first of all political.

Why is that so? Because the economy provides us with the material basis to live, but the economy does not provide us with fulfilment in life. Civilisation is more than functioning market economies. In turn, market economies are there to serve our civilisation. Our conception of life.

That is why the point of departure for dealing with this economic and financial crisis is not alone, and not even in the first place, an economic challenge. This crisis is first and foremost a political stress test. The question is: are we capable and willing to preserve and maintain, in a period of most severe economic difficulties, our community of destiny which binds us together by history, by geography and by culture? Are we really willing to do it? And are we ready to do it? What, in other words,is it that really binds us together? Is it our will and affirmation to live together, or is it simply the rule of supply and demand in the markets?

Many of our partners within and outside Europe, including the vast majority of market actors, have seen this crisis from its very beginning as a political challenge. That may come as a surprise to some of you, but I can confirm that, because of the management of the crisis. The fundamental question which people, including the very important entities in the markets, have been asking me consistently during all these years, was not in the first place: Can you, can Europe manage fiscal consolidation, structural reforms and future-oriented investments? I would say that most, if not all my interlocutors found that economically and technically this could be done.

The real question they asked me was political. The question that I received from the leaders of the United States to China, from leaders of Brazil to Japan, from India to Russia was the precise question: What is the political will of the Europeans? Are they ready to go together? In other words: this crisis would have never taken the dimension it has taken if in some quarters there would not have been doubts about the willingness of the Europeans to solve the crisis together. And it is telling that the crisis reached its turning point at the very moment when those doubts were dispelled.

And here I may add that for many the determination of Germany to stick to the Euro was a decisive factor. The question about the political will was very often the following: does Germany have the political will? And that was the question that I was receiving not only from Presidents or political leaders but from entities in the financial markets. And I was saying, and I believe I was right, yes, Germany has the political will. And indeed, Germany under the leadership of Chancellor Merkel has shown this political will and that deserves its full recognition. Of course, Germany acted also in its own national interest, but that is not a problem as long as this is compatible with the wider European interest. This is precisely what Europe is about, to defend our national interests in a collective manner, pooling our sovereignty and building and respecting a common good for Europe.

Ladies and gentlemen,

Even if I said that Europe's point of departure is political and not economic, this did not spare us from tackling the deep structural causes of this economic crisis, and this is what we have been doing since its beginning more or less five years ago. In fact, I may tell you that I spent probably 90% of my time and energy over the past five years dealing with this economic crisis. Almost always in crisis mode. Working with the President of the European Council, the President of the European Central Bank, working with the European Parliament and with the leaders of our Member States, from Germany and France to countries that were facing specific challenges like Ireland, Greece, Portugal, Spain, Italy, most recently Cyprus. And it is not easy, as you have said, Ministerpräsident, to reconcile different visions, different financial cultures, different points of departure, sometimes what is perceived as different interests, but I believe that we have made progress and that shows, once again, the extraordinary resilience of Europe. That shows that some of the prophets of doom were wrong, as now, they start to recognise. Because they have underestimated the force of integration in Europe. That the forces of integration in Europe are indeed stronger than the forces of disintegration. There are forces of disintegration, but I believe that the forces of integration are stronger.

Some people refer, and are still referring, to the crisis we are going through as a crisis of the euro. They blame the Euro for the difficulties we have been experiencing. I believe this is economically wrong and politically irresponsible.

First, the crisis is not specific to the euro. Neither was it created by the euro. It has affected other countries too, outside the Euro area, such as the UK, indeed a country that has had to mobilise more taxpayers' money to save its banks, but also outside the European Union, such as Iceland, or even outside Europe, such as the United States of America.

What we have been facing within the Euro Area is an economic and financial crisis in a number of countries that share the same currency, and it has therefore had an impact on the whole euro zone. This is something different as a crisis of the Euro.

If we need to find an origin, a responsible for the crisis, it should not be the euro, but it should be the excessive debts accumulated by our national governments, many of them, or the excessive private debts accumulated by many financial institutions, including by the way, sometimes irresponsible behaviour from some parts of the financial sector. These were the true origins of the crisis, the sovereign crisis, financial crisis, indeed in Europe sometimes having a special impact also because of the problems of divergence between our economies because of the fact of that we are lacking some instruments and also because of the fact that some of our countries have problems of competiveness.

But regarding the euro, the reality is that from the very outset the euro has been a success. For 330 million Europeans, sharing a common currency means that they enjoy low interest rates, and a strong, stable currency.

When the Lehman Brothers crisis broke out, the euro actually helped shield us from the financial upheavals, saving us from the need for a string of competitive devaluations. And let us not forget that the euro has, in a very short time, become the second reference currency in the world, guaranteeing that Europe counts for somewhat more in an increasingly competitive world. Indeed, if we look at areas where Europe counts in the world, Europe counts in the world exactly in those areas where the Member States were ready to pool their competence, to give competence also to common institutions. Europe counts in the world in trade. We are the first trade partner in the world, still by far. And we have a common trade policy. Europe counts in the world in competition. I can tell you that from the American to the Russian or to European firms they know that Europe counts because we have a European competition policy. Europe counts in the world because of its internal market, because we have common laws for the internal market. Europe counts in the world because of the euro, because we have established our single currency and this, I think, is also a lesson, to understand what we should do if we want Europe not just to be a European as a space but European as a power. Not only l'Europe espace but also l'Europe puissance. We need to put together some of our competences.

And indeed, the euro has lost none of its attraction. The vast majority of Europe’s citizens still support the euro after five years of economic crisis. The euro zone is soon going to take in its 18th member, Latvia. And it is amazing to see that even the countries that have been doing bigger sacrifices, the public opinion supports the euro and that is precisely why these countries are making so many sacrifices. They don't want to leave the euro, they understand that the consequences of leaving the euro would be for them much more difficult to bear than the current difficulties they have in terms of adjustments.

And now Germany, the Euro greatly benefits German companies and jobs. Thanks to the absence of currency transaction costs and exchange rate fluctuations, as opposed to D-Mark times, Germany has a 0,5% higher economic growth every year. This equals an income of plus € 1,100 per citizen per year or 200.000 additional jobs annually. In 2012 at least 50% of foreign imports and exports, a volume of around € 2 trillion - 2 Billionen Euro auf Deutsch - have been traded in Euro. Without transaction costs of previously 3% thanks to the Euro, savings for the German economy are in the order of € 30 Bn per year. And thanks to the lack of foreign exchange rate risks, German companies, not only the big German companies but also SMEs, save approximately € 10 Bn per year. Last but not least, the Euro provides Germany with massive windfall profits on the global market. The real effective exchange rate of the Euro is 15-20% lower than with the D-Mark.

Thus Germany profited the most from a virtuous circle triggered by the Euro: the removal of nominal exchange rates with the Euro area lowered transaction costs. Trade within the Euro area increased. Competitiveness rose as firms benefited from economies of scale and scope, and investment and consumption were boosted by low interest rates.

I know these were a lot of figures coming by the way from independent studies, I can give you the sources for these studies, but I also know that Germans love numbers and figures so I hope you listened to that with some patience.

There is, however, a dimension beyond statistics and which is at least as important.

The Euro is more than a currency. I spoke in the beginning about the power and force of values and ideas. Let us not forget that also German reunification was embedded in the process of European integration to make it acceptable for its European neighbours. I remember well those discussions; I was at that time at the Foreign Ministry of my country, when these matters were discussed. When most of us were very happy with European reunification and with the German reunification. But let's be frank, some in Europe were cautious about German reunification. This was not a free given at the time. The passing from the D-Mark to the Euro, with its home base here in Frankfurt only two kilometres from here, I think, is the European Central Bank, is the most concrete symbol of German and European unification being the two sides of the same coin. German reunification and European reunification. I think it is a very important issue, we should not forget. The Euro alongside the Single Market is one of the greatest concrete achievements of European integration. It is and will remain one of the most powerful and most visible symbols of our unity.

So the Euro is not the problem. The problem is to be found in certain kinds of behaviour that have tended to weaken the cohesion of the euro zone over the years: differences, important gaps in competiveness, excessive debt, economic imbalances, but also irresponsible speculative practices in some parts of the financial sector. And in this respect the origin of the problem lies outside Europe.

In the midst of this maelstrom we had to act to give the euro what any common currency needs for lasting success: a much reinforced coordination of economic and budgetary policies and stronger institutions.

In the end it has been an unprecedented effort of solidarity and stabilisation, mobilising a financial firepower of some € 700 billion to bring the countries hardest hit by the crisis back from the edge of the abyss, and to provide a shield against further risks.

It has also involved considerable efforts and which are still on-going by those countries to reform their economies, very, very difficult efforts. And with sometimes with very important sacrifices for the population. I beg you at least to understand the bewilderment of all those of our citizens who are not the cause of the trouble but who are now footing the bill in terms of very significant cuts in living standards and also, increasingly high levels of unemployment. That explains why today there is so much anxiety and sometimes distrust in Europe because the common citizen of this country says, but it was not myself, it was my government that was overspending, it was the practises in the banking sector that I was not aware and now I have to pay the bill. This is, in fact, a very important crisis, a crisis of confidence. Not, as some people say, a crisis of confidence in Europe. It is a crisis of confidence in the politicians, in the elites, in the financial leaders as well. It is something that creates, in fact, a very fertile ground for extremism and populism and we should be cautious and attentive to these developments.

As much as we all expect these countries to return to responsible and sustainable finances, we also must, as Europe we are now doing, show solidarity and hold out a helping hand, not least to the young generation. And here I would like to acknowledge the major role that Germany has played in securing and maintaining this solidarity. As I said, Europe needs solidarity and responsibility, we need both.

By the way, the most vulnerable countries need more than credits. Stronger economies paying for weaker economies is not the answer. What we do need, in contrast, is the correction of existing macro-economic imbalances, notably in the Euro area. This is where Germany by its own legitimate interest can give a contribution. The Commission is not asking Germany to pay for the other, weaker economies. What we are asking Germany as we are asking any other member of the euro area is to do its homework so that we can guarantee financial stability in the Euro zone.

Let me be very clear because we are dealing here with a mystification which has been around for too long in the public debate: When we talk about the need for re-balancing we are not talking about weakening the competitiveness of the German economy. Nothing is gained by weakening Germany so that the others look a bit less weak. That would not make any sense from a global economy perspective, on the contrary, the strength of the German economy is an asset for the euro and for the European economy. What we do need, however, is to strengthen the competitiveness of other European economies.

Of course, we need reforms for achieving this. But it also requires having a European single market which brings each others' competitive advantages to full fruition. And here the truth is also the single market as we have it very much allows Germany to play out its competitive advantages, namely technology and its strong industry. In turn, Germany could do more to enable also others to bring in their respective assets, for example, through free and unhindered access to the service markets across Europe including Germany, or through wages in line with productivity. Thus more open markets in the stronger economies would be a very important contribution to the recovery of the weaker economies.

Ladies and gentlemen,

We also need to look very deeply into the question of governance. Do we have the structures and competencies in place which a monetary union needs? It is clear that something went wrong in the past. Something went wrong with the overspending by many national Governments. Something went wrong with the enforcement of European rules on national budgets. Something went wrong with the national supervision of banks and financial markets. Something went wrong in making governments understand that their resolve or their reluctance to carry out reforms can either create stability or instability in the Euro area as a whole.

Today, one can say that we have understood the message. In our response to the crisis the countries of the Union have moved towards greater integration – much greater integration – rather than less. We have pressed forward rather than taking a step backward, in terms of more effective market supervision and more integrated governance. We have proven wrong all those who predicted disintegration and the collapse of the euro zone. In fact, some of them are now complaining of the euro being too strong!

In the middle of a storm we had to be fire-brigade and architects at the same time. Under most difficult circumstances we managed to reinforce the structure of our European house when it started to shake.

The most important but also the most difficult task today is not to relax, to avoid any kind of complacency. Yes, we have reached a turning point in the crisis and recovery is setting off. Yes, we have regained confidence in the Euro thanks to our response to the crisis. And here I mean the response that collectively member states and the European institutions, including the ECB, have given. Because we preserved the integrity of the Euro area, because we did not let anybody down, because we built up a massive financial firewall, because we strengthened our fiscal and macro-economic systems, because we started stabilising the banking system, because we made it clear to the rest of the world that the Euro is irreversible. And this was a very important message, not only for the markets, but for our partners. And last but not least because the programme countries start to see the first fruits of their enormous efforts.

But it would be a huge mistake to believe that there are no more risks, there are risks. Apart from some external risks that I will not comment, the main risks are, in my opinion, actually political, namely political instability, and lack of political determination. In some of our countries people are tired of what some call fiscal consolidation, some call austerity. It would be a tragedy if populists were given the chance to roll-back those achievements. We need to take these situations very seriously and give responses which project hope and which are trustworthy. The only reasonable response is to continue our path of responsibility and solidarity. So among the political risks I see, is a risk of fatigue of these reforms. The temptation that may happen in some of our countries to stop the reform or to not even initiate strong reforms for further competiveness.

And we also must preserve the impetus for completing a deep and genuine Economic and Monetary Union. This work is yet unfinished. Reform fatigue here would be as dangerous as in our countries because it would undermine the yet fragile credibility of our endeavours.

Last year the European Commission presented its blueprint for a deep and genuine economic and monetary union. So far this is the most detailed and comprehensive document thinking the economic and monetary union until its completion. Our Union, economic and monetary union, must have an economic pillar, but also a budgetary pillar, a banking pillar, and a political pillar. We will ultimately need a political union because important such far-reaching economic and budgetary policies need legitimacy and accountability. The solidity of the economic and monetary union will eventually depend on its underlying political and institutional structure.

I am of course aware that this is a process, I am aware that it needs time. I am also aware of the constitutional context in which the German government and the German parliament are operating. I am also aware of some Euro-sceptic voices here in Germany and elsewhere which we need to take seriously but which we must not allow to weaken our determination.

It is true that for some reforms we would probably need treaty change. Now we all know from experience that treaty changes are very complex. We therefore need to be cautious.

But there is so much more we can do without treaty change, on the basis of the treaties we have. To increase ownership at national level for economic reforms and make our existing framework more binding, this is possible without further treaty change, to complete the banking union through a single European resolution mechanism, now that we have the single supervisory mechanism, this is possible without treaty change, to fully support the Commission role in enforcing the rules on fiscal and macro-economic stability within the European Semester, this is possible without treaty change, and last but not least, and some of this may need a treaty change, to move step by step towards a political union. So when people ask me about what can Germany do more to contribute to the success of our action, I would say: to leave no doubts that the goal will be a political union. Not for tomorrow. But the political horizon – this is very important to keep in mind - we will as we have done in the European community since the beginning do it step by step, but the commitment and the message that Germany as the biggest economy in the euro zone and indeed the European Union gives, is fundamentally important to restore confidence. And confidence is a fundamental variable in the equation for the euro area and for the European Union success.

Germany will have to play an imminently crucial role in all this. Being the biggest economy in the Euro Area and the EU as a whole, Germany will have to assume the highest degree of leadership for this endeavour. Of course, Germany cannot and should not lead alone, for the reasons we all know. It has to lead with its partner states, and with and through the European institutions. But you Germans have this historic responsibility and you can use it to the better.

I know very well that all the main political forces in Germany have that commitment to Europe. And that was precisely what I was responding to some of my interlocutors, political or financial interlocutors during the most acute moments of the crisis. When they were asking me 'but do you really believe that Germany will be ready to support the most vulnerable countries?', I said, 'yes'. I trust not only the current government but also the main opposition parties. In fact Germany has kept a stable position on that. So I know that commitment to Europe of Germany, and we have seen it here, are seeing here today in Frankfurt or in Hessen, but also in all of Germany. And my message to you is very simple: keep it. Do not allow any doubts to emerge. This is very important for Germany and for the European Union as a whole.

The most important and also the most difficult reform policies in Europe, and which have a knock-on effect on all of us – for all those reforms we need a strong political consensus, and it is important that in Europe we are not divided, not only by the national lines but by ideological differences. That's very important at European level, I know that by experience to avoid the division at European level. That's why we need the consensus for continued fiscal consolidation, deep structural reforms, for competitiveness and also for targeted investments for growth.

The European Commission itself is a super-grand coalition with members from the European People's Party, from the Social Democrats and from the Liberals. This is important because we should make clear that these reforms are indispensable, either from a right or from a left political point of view. The next German government, and I will not interfere in German politics of course, but I was told that this next government will be a grand coalition. And I can hardly see more favourable conditions to move ahead an ambitious European reform agenda than now. Because the fact that we have in Europe the need for this grand coalition to avoid ideological divisions can be helped by the fact that in Germany – the most important economy in Europe – you have a cross-party agreement about the need for the continuation of reforms in Germany but also at European level. This is why I trust that the government in Germany will give a very important contribution to the next steps. And the most immediate step is very simple, is a banking union. We should have an agreement until the end of this year. I hope that the government will be formed before the end of the year.

Ladies and gentlemen,

The subtitle of the EMU blueprint is: ‘Launching a European debate’. Half a year ahead of the 2014 European elections we need to have this wide-ranging debate on how to build the future Europe.

We need debate, because Europe must be more democratic. Europe must not be constructed behind closed doors. We need to develop spaces for European public debate where European issues are debated from a European point of view and not, as very often it happens, just from a national point of view, a collection of national perspectives. We need of course the national perspective but we need also to develop this European perspective.

We need debate, because the need for a more integrated Euro area must not be to the detriment of what we have achieved all together, from the single market to the four freedoms. The European Union must remain a project for all its members – whether in the Euro or not yet, whether big or small, continental or island – a community of equal members.

We need debate, because a political union does not mean that everything has to be done at European level. As I said previously, Europe needs to be big on big things, and smaller on small things. Subsidiarity is an essential democratic principle that I hold in very high esteem. It must be exercised to the full. Yes, it is important in same areas that we have more integration. For instance, in the euro area we need that, we need the banking union, and that requires more competence at European level without question but there are many other areas where in fact Europe should avoid meddling too much in citizens' lives. And that's why we are so much committed to this process of better regulation, or REFIT, as we call it, to reduce a burden on companies and citizens.

We also need debate, and that is why I came to pay tribute to the first anniversary of the Europa Dialog Hessen. And I want to congratulate the winners of the school contest "Hessian Ambassadors to Europe" and of the prize "Lebendiges Europa in Hessen". I want to encourage the members of the Council "Hessians for Europe" to continue their commitment.

The European Union is not and cannot be a project made in and imposed from Brussels and the European institutions. It has to be precisely the other way round. Europe is where Europeans live and act. Europe is Giessen, Giessen as you know, is the town of your Minister President. Europe is Giessen, is Wiesbaden, is Frankfurt, is Berlin, Paris, and thousands of other places between Finland, Greece, between Ireland and Poland, between Portugal and Estonia.

The European idea can only thrive and grow through people who in their daily lives make this idea become a reality. People like those who have been engaging in the Europa-Dialog Hessen over the past twelve months. Pupils, students and trainees who learn about European tragedies of the past, and about European opportunities of today and of tomorrow, and who want to grasp these opportunities. Researchers and scientists who over decades and centuries have been dreaming of a European research area which is interconnected and free from borders and barriers. Entrepreneurs and workers who look for new and better opportunities in a Europe without frontiers.

Ladies and gentlemen,

We need debate because as Germany's legendary football coach Sepp Herberger said: "Nach dem Spiel ist vor dem Spiel!" And we can now say: "Nach dem Wahl ist vor dem Wahl."

We must make no mistake about what is at stake at forthcoming European elections in May next year. It is too important for that. What is at stake is Europe. The ballot paper we drop into the ballot box must be a vote expressing a genuine European political choice. Let us not abuse it out of frustration with this or that national policy. For that we have other elections.

Faced with globalisation, faced with crisis will we opt to retreat into our shells? Are we going to become just a defensive Europe? Is this the message we are going to convey to our children? "Let's protect from globalisation" or are we going to tell them "Let's use the opportunities offered by this new world". Will we be prepared to allow new lines of division to arise, to allow barriers to develop in people’s minds, distancing us from one another? Are we going to accept the coming back of national prejudices? Are we going to accept Europe to be divided between North and South? To be divided between centre and periphery? Between old and new members? Will we fall so low as to stigmatise one another? Will we not have the courage to defend Europe – that very Europe that we should be proud of - the Europe that has been honoured by the Nobel Peace Prize?

Europe today gives each of our countries, even the largest among them, the critical mass to count for something in dealings with the continent nations of the world economy. The reality is that the countries of Europe, even countries with 60 or 80 million people will not have the leverage dimension to deal in an equal footing with the United States of America, with China and other continental powers. But together, together we are the biggest economy in the world, together we can make a difference and this is not, of course, reducing the power of our member states, on the contrary. Sovereignty pooled means power gained for every member of the European Union, not power lost.

To be free and responsible means that each of us must participate actively in the shaping of Europe. And that is what we must do: not turn our backs on Europe, but debate and engage. Let us fight for the best way forward with our best ideas and arguments - as long as we do it together. For Europe, contrary to what some people would have us believe, is not the cause of our problems. Europe is part of the solution.

We should not be afraid to face the future with bold new ideas. Europe is also a state of mind, and it took bold courage for our founding fathers to set about working towards Franco-German reconciliation in a Europe still in ruins. It took boldness to make a reality of what Erich Maria Remarque wrote in Nichts Neues im Westen: ‘Vergib mir, Kamerad, wie konntest du mein Feind sein? Wenn wir diese Waffen und diese Uniform fortwerfen, könntest du ebenso mein Bruder sein.'

Ladies and gentlemen,

One can say, to love Europe and to understand Europe, sometimes we need to go out of Europe. When we are here we speak about differences, about divergences, but if we go outside of Europe and we think how is our model, our social market economy, an economy that wants to prosper, the idea of open economy and open societies, I think we have no reason not to be proud. Proud without arrogance, but to be proud of what we have achieved, namely since the Second World War. To have this Europe, of social market economy, with fundamental respect for human rights, recognising that today we have many problems and we face them courageously, namely the problem of unemployment, but being proud of being European. As someone can say, the fish is the last one to understand that it is living in the water. And sometimes we Europeans do not give enough value to the fact that we are living in what is probably the most civilised and advanced society that mankind have known. With no death penalty, with respect of human rights, with the commitments to these fundamental freedoms, including the right to privacy, with the respect for the rights of women and equality of rights between men and women and with societies that despite of all the problems we face can be proud of what they have been doing.

And this is the message I want to leave with you, a message regarding the difficulties we have, but a message of confidence, because we know that when we lead an institution, a company, a school, a trade union, we need to inspire confidence. And if you tell me what is the biggest deficit today in Europe, it is not the deficit of public accounts, it is the deficit of confidence, and without confidence we will not be able to lead the citizens and the citizens want to see hope, want to see leaders that engage confidently with the challenges of this world.

So I conclude, telling you dear friends that the Paulskirchen-Parlament had a lifetime of one year only. I wish the Europa-Dialog Hessen a much longer lasting success.

I thank you for your attention.


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