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European Commission

[Check Against Delivery]

José Manuel Durão Barroso

President of the European Commission

Speech by President Barroso: The European Union’s Choices and Challenges

Heinrich Heine University

Düsseldorf, 4 April 2014

Sehr geehrter Herr Präsident der Heinrich-Heine-Universität zu Düsseldorf,

lieber Herr Professor Piper,

sehr geehrte Damen und Herren,

in zehn Jahren als Präsident der Europäischen Kommission bin ich sehr oft und sehr gerne in Nordrhein-Westfalen gewesen. Und so ist dies auch nicht mein erster Besuch in der Landeshauptstadt Düsseldorf. Ich war zuvor auch schon in Köln, Bonn und Aachen, in Essen, Bochum und Paderborn, in Brauweiler, Neheim-Hüsten und in Oerlinghausen. Wie Sie sehen, ich war in den großen Städten und in den kleinen Orten. Ich war im Rheinland, im Ruhrgebiet und in Westfalen. Überhaupt war ich in meinen zwei Amtszeiten in keinem anderen Land der EU so oft wie in Deutschland.

Und woran lag das? Es lag vor allem an Ihnen, an den Deutschen selbst. Denn aus keinem anderen Land habe ich in diesen Jahre so viele Einladungen erhalten. Es ist schon komisch. Die Deutschen schimpfen viel und gerne über Europa. Und doch haben sie auch ein sehr großes Interesse an Europa.

Viele dieser Einladungen musste ich absagen. Weit mehr als zweihundert Tage im Jahr bin ich rund um die Welt unterwegs. Der Einladung der Heinrich-Heine-Universität Düsseldorf bin ich gerne gefolgt. Haben Sie vielen herzlichen Dank für diesen großen Empfang. Herzlich grüßen möchte ich auch die Menschen im Saal … nebenan.

Der Rheinländer gilt ja als tolerant und lebensfroh. Aber Ihre Toleranz habe ich jetzt lange genug in Anspruch genommen. Wenn Sie gestatten, werde ich die Sprache Heinrich Heines nun nicht noch länger strapazieren und auf Englisch fortfahren.

So I am delighted to be here today at the Heinrich Heine University in Düsseldorf. A university known for its high level of research; and a city renowned for its dynamism in business, finance, trade, culture, art and fashion.

Düsseldorf has a rich history, experiencing periods of conflict as well as peace and prosperity. It is an international city, with exciting partnerships across the world, from Warsaw to Amman, Moscow to the mega city of Chongqing. And not to forget the very important Japanese community.

Düsseldorf is a place that has successfully developed and adapted, from the industrial revolution to today's digital age. It is a perfect example of the choices and challenges that we have to deal with today – as the European Union – in a globalised world.

Because this issue preoccupies us all: political leaders, businessmen, academics; parents and students worrying about their first exposure to the job market and the outside world.

These last few years, months and weeks have asked us some fundamental questions and challenged our assumptions. The financial and economic crisis caused shockwaves across the world and in the European Union; our prosperity, our social market model and our financial sector all visibly shaken.

Events across the world and in particular in European Union's neighbourhood remind us how difficult it can be to secure peace. Think of Libya, of Syria or the former Yugoslavia of a few years ago. Today, the crisis in Ukraine is highlighting the fragility of peace in Europe, and is challenging the values and fundamentals of a continent that was torn apart one hundred years ago.

I never agreed with those who said that Europe needs a new justification to exist because its old raison d'être, to secure peace in Europe, is guaranteed anyway. It is true that we can always adapt our ideals to the new age, namely the age of globalisation. But we should never forget that it is thanks to Europe and European integration that within the European Union we don't need to be worried about war. Guaranteeing peace between nations and countries will always be the main reason for Europe.

Look at the crisis in Ukraine. The European Union has an inspirational influence on others. It is Europe's democratic values and Europe's way of life which led the people of Ukraine to take to the streets. We have been moved by European flags being waved by so many people in Ukraine, young people resisting very, very frozen temperatures. Many of them paid with their lives for these values. The way we respond to this crisis also embodies Europe's own lessons of history, and I believe we can be proud of this, to take a principle position on that matter. No doubt we are facing here today a historical challenge of global dimension.

Whether you take the crisis in Ukraine or the economic crisis during the past five years, these events are confronting us with a strategic choice about which path we take at a new set of crossroads in this new 21st Century.

Do we Europeans stick together in dealing with these internal and external challenges or do we try to resist separately? Are we stronger in numbers by pooling our resources or should we be doing things by ourselves?

Jean Monnet, one of the founding fathers of the European Union, recognised this over 70 years ago, when he said that “our countries have become too small for today’s world”. And he said explicitly: our countries, even the biggest countries in Europe are smaller, compared with the United States and Soviet Union of today – that was his remark – and it will be even smaller with China and India of the future. This he said decades before globalisation really started.

I am ignoring the views of those who sometimes struggle with the European idea. I can understand that people look to blame someone and something for hardship and pain, and pain is something many Europeans have truly felt enough during the crisis. It is therefore no surprise that populist, in some cases nationalist and outright xenophobic voices try to exploit this situation, notably in this period as we are in the run-up to next month's European parliamentary elections.

That is not to ignore the views of those who sometimes struggle with the European idea. I can understand that people look to blame someone and something for hardship and pain, and pain is something we have truly felt enough during the crisis. It is therefore no surprise that populist, in some cases nationalist and outright xenophobic voices try to exploit this situation, notably in this period as we are in the run-up to next month's European parliamentary elections.

Blaming the EU or Brussels, however, only helps to deflect the problem. It allows people to reject responsibility and deny reality. It turns a blind eye on the root causes of this crisis, namely the accumulation of excessive public and private debt at national levels, a lack of competitiveness of our companies as a result of a lack of reforms, a failure of national systems of financial supervision, and irresponsible, in some cases criminal behaviour in the financial markets. This is what led us into this crisis. It was not Europe that was the cause of the problems. The problems were indeed generated, not only in Europe by the way, at national level

It is indeed not fair to blame Europe for something which Europe has not caused.

First of all, we need to be clear that Europe is not a foreign power that imposes itself on people.

Europe is everywhere, no less here in Düsseldorf as in Strasbourg or Brussels. Decisions are made by elected politicians – at regional, national and also at European level.

And secondly, when European responses were called for in the mid of the deepest economic and financial crisis since World War II it is clear that those responses had to be bold and powerful, both in terms of discipline and solidarity. And, unfortunately, in many cases those responses had painful consequences to many of our citizens. Because indeed this was the only way to avoid scenarios which would have been much worse than anything we saw during this crisis.

The best way therefore to respond to those who try to take advantage of the crisis as an argument against Europe is through concrete results. Concrete results which over time improve people's lives and which ultimately bring back confidence, support and legitimacy for the European project.

We have to show, and I am today much more confident than at certain moments during this crisis, that we have learned the lessons of the past, and made the right decisions in today’s context – out of pragmatism, not out of dogma. The only way to succeed is through avoiding short-term, inward-looking and individualistic measures that may seem more attractive but indeed would weaken us in the longer term.

The financial, economic and social crisis has exposed both structural as well as operational problems; structural because the creation of the Euro focussed on the monetary side and neglected the economic; operational because the crisis has revealed that – as Europeans – many of us we were living beyond our means and had developed certain bad practices.

The reforms we have taken forward would have been unimaginable five years ago. Taboos have been broken and trust has been restored through the incredible efforts of some of our Member States who have undergone radical reforms, restructure and pain, with the support and solidarity of the European Union and Member States, not least Germany.

So what have we done? What economic choices have we made?

First, we have successfully strengthened the Euro. Not by losing but by gaining members. The Euro is today stronger than before and remains the second largest global currency. By the way, contrary to what some people say, strictly speaking, we never had a Euro crisis in the sense that the crisis was not created by the Euro. Indeed the crisis touched many countries outside of Europe. And the crisis was indeed a financial crisis – a crisis of the financial market and a sovereign debt crisis. And even in the most difficult periods the Euro remained a stable and strong currency. Indeed, it was the Euro which, when the financial crisis struck, protected our member countries in the Euro area against huge currency fluctuations in Europe, against rising interest rates, external shocks or currency speculations. European business, many of which German, save € 20 to 25 Billion every year thanks to the Euro, thanks to the removal of currency exchange costs. Since the introduction of the Euro, and thanks to its stability culture, inflation in the Euro area on average is at 2%, compared to 7% in Germany in 1974 or 5% in Germany still in 1992.

Yes, there were shortcomings in the design of the Euro, and we have addressed them decisively: through much stronger budgetary rules; through effective coordination of economic policies and reform; and through a rescue fund, the European Stability Mechanism, which has € 700 billion to provide stability to Euro area countries in emergency and which is stronger than the International Monetary Fund.

Secondly, we have changed the way the Euro works with the completion of the Banking Union, with one single supervisor and one single mechanism to restructure or shut down banks to protect the currency and to protect taxpayers’ money. Thus we have shown leadership across the G20 and reformed the way banks operate across all our 28 Member States, by addressing certain practices that prioritised huge profits at all costs. New rules on hedge funds, on bankers' bonuses, rating agencies are now in place to instil and reinforce a culture of balance, prudence and robustness to deal with any future economic shocks. Banks now have to set money aside for a rainy day, in case of financial difficulty.

Thirdly, we have taken forward a longer term economic strategy, that we have called Europe 2020, for sustainable growth, and I insist on the word sustainable. Because we have seen that growth fuelled by debt – public debt or private debt – is indeed not sustainable. And now we have much more focus on the need of a sustainable, inclusive, smart growth. In response to the crisis, Europe has grown closer together. We had to find ways to make our economies more balanced across all sectors and to reverse the trend of economic divergence.

Today, the European Union looks at draft national budgets ahead of adoption and offers country specific recommendations on their economy, flagging up any macro-economic imbalances, identifying whether debts, or savings, are too high; whether more investment, reform and action are required in different sectors of our economy, in agriculture, industry, education, health, research and innovation.

I can assure you that ultimately responsibility in these areas rests with the Member States. But one of the lessons learnt from this this crisis was that within one currency area a crisis of the smallest country can spill over into a systemic crisis of the whole euro area. Every important reform at national level, whether carried through with determination or whether postponed or rejected, has an impact on the rest, either for better or worse. This was our challenge, and these were the choices we made.

Today, we see that the strategy is working to get us back on track. This has been the worst crisis since the beginning of European integration, and its effects have been painful in many Member States, and indeed still are. However, the EU has emerged from recession and the recovery – we already have a recovery – will strengthen, according to our forecasts already this year and even more notably next year. GDP is expected to grow 1,5% this year and 2% next year. Budget deficits have been halved. Consumer and industrial confidence is returning, and so are industrial investments. Interest rates have come down and helped borrowers. On the downside – and this is clearly our biggest concern – levels of unemployment, specifically youth unemployment, are still very high, unacceptably high. Even if we see also in this indicator some positive developments in the most recent quarters, either a stabilisation or even a reduction of the overall figures of unemployment.

Above all of this, and this is clearly our most important achievement of the past five years, the existential threat to the Euro is behind us. The EU's firm actions have restored the trust of our global partners. We proved that the doomsayers, who predicted the Greek exit and the implosion of the Euro were wrong.

We had to fight hard. In some of those contacts some time ago with the American President and Chinese President, the Japanese, the Russians and the Brazilians, I had to answer the question: "Do you believe that the Euro is going to survive?" That was the precise question, because some of those countries have huge reserves in Euro. And I have said always: "Yes, I am sure it will survive." And one of the answers I was giving – because they were questioning me more about Germany than about the deficits of Greece. They were asking me: Do you believe that Germany will stand by the Euro. And I said: "Yes, I am sure that Germany will stand by the Euro." Because Germany has made a fundamental political decision to link the future of Germany to the future of Europe. And Germany has clearly stated that the future of the Euro is decisive for the future of Europe.

So we were in extremely difficult circumstances, where the markets had no confidence in some of our countries, not in the Euro as such at the beginning – in some of our countries that were contaminating the system. But, of course some of us would have of course preferred a bolder, a much quicker response, but the reality is that today, we don't have to answer those questions.

And today, when I go with my colleagues from Europe to the G20, I can tell you, I don't have to answer these questions anymore. And also I don't have to receive some lessons, including coming from some countries that are not always the best in running themselves and that during the crisis were trying to tell us how we should do things. So I think we should be proud, without arrogance, but proud that Europe has shown its resilience – not only the European institutions, the European countries. Reforms that have taken place in Ireland, in Portugal, in Spain, are impressive. Even in Greece sometimes people are underestimating the big efforts that Greece has made. Now Greece has the first historic result of a primary surplus, which they did not have for so many decades.

So a lot has been done and I think that it should be recognised, even if I know that today it is very fashionable to be a pessimist in Europe. I think some commentators believe they look more intelligent if they keep that pessimism and frankly, this is something I cannot accept. Because one of the deficits we have in Europe, compared with the Americans, compared with Brazil, compared with other parts of the world, is a deficit that is worse than the budgetary deficit, is a deficit of self-confidence in Europe. And I believe that we as Europeans have the capacity to solve the problems, not less than the others, I am sure. Probably not more, but I think with our capacities, our intelligence, our critical thinking, our culture, we are able to solve the problems and we are showing the world that we can solve the problems.

Of course now we have to recognise that we are not yet completely out of the crisis. We cannot say we are out of the crisis with those very high figures of unemployment. What is now important is to stay on track, to keep the line, not to give up, to preserve what we have achieved. We are not at the end of our reform process, and some Member States are more advanced than others.

The biggest risk and the biggest mistake now would be to lean back and return to the old "Schlendrian". This we cannot afford. This European Commission together with others has done an enormous job in getting us out of the crisis and laying the foundations to prevent future crises. I am sure that the next Commission will continue this job.

President Piper,

Ladies and Gentlemen,

Before coming here to speak to you, I had the great pleasure of exchanging ideas already on this campus with some of the best talents of your University. Most of them were scientists in mathematics and medicine. And although this is not my personal specialty, I was impressed to see how much Europe has actually become the frame of reference for your work. In an innovative city such as this, and even in a country as big and strong like Germany you understand very well that you need this European dimension to compete globally in areas such as research and science.

I don’t believe that anything epitomises our challenges and choices better than our need to improve our education, at secondary and tertiary levels; and our research and innovation, if we are to create a sustainable and creative future for Europe in the world, with growth and jobs.

Your work here at this university and in the research laboratories is where Europe’s future lies. Our choice should be to stay ahead of the curve and have our place in the world through our added value, high quality development and products; something I would like to call European excellence.

We have evidence that at European level we have made good progress, despite the crisis. Member States with the highest rates of innovation have come out of the crisis fastest. You have shown in this university, and more widely in Nordrhein-Westfalen, that you are innovative leaders, with several patents and breakthroughs in health, the bio-economy and ICT, with innovative small and medium businesses.

The European Union has one third of the world’s total science and technological production; twice as many science and technology graduates as in the USA. We are catching up more generally in research with the USA and Japan.

However, and this is a problem, investment in knowledge is increasing faster in some economies, for instance in Asian economies, than in Europe. We are falling further behind South Korea. China is gradually catching up. Science and technology development in the US and in China is often more strategically focused on transformative and pervasive technologies oriented towards emerging global markets.

This is why Europe needs to make further efforts to meet, by 2020, its 3% target for research and innovation. We must complete our work for a fully-fledged European Research Area with increased research mobility. We must use to the full our new 7- year research budget, the Horizon 2020. And we are so proud to get agreed by the Member States, a budget of € 80 billion Euro. I encourage and I welcome the fact that Heinrich Heine University sees itself as an ambitious player in this competitive environment.

As I said now in this restrict meeting with some of your researchers and scientists, I believe the future of Europe is science. Because it is obvious that, if you want to remain competitive, we cannot do it by low standards of salaries or reducing some costs that are associated with our European social model. We don't want to change our model. We want to adapt it to a more competitive environment. But we want a Europe that is open and competitive, based of course on the market economy, but a Europe that also keeps the welfare state, that does not believe that for all those that are left behind it is because of their fault. We want to help those that are weakest, at the same time we want to protect our environment and the rights of our consumers.

So the only way to gain this competition globally is of course to improve the value added and that can only come from new ideas, new concepts for research, for science, not only science in the technological sense, also knowledge in general, capacity to be creative that can come from cutting-edge science, fundamental research, but also for humanities, for a new way to look critically at the developments in the world.

And this is the biggest battle for Europe. If you ask me what is the big, big battle Europe has to win in the next years, it is to win the big battle of science, education, research. If we do it, there is no reason to fear about the capacity of Europe to remain relevant and to help shape this new world in which we are living.

If we fail there, then we have a problem. Then we have a problem because in that case we will not be able to create the necessary economic growth to sustain our social market economy, to sustain our social model. That is why it is critical that together, supporting the national efforts, we increase our investment in science and research and we do our best to support our Universities.

To conclude, Ladies and Gentlemen,

Europe is our answer if we are to keep up to speed in a globalised world. With this I do not mean a uniform Europe where we will lose our national, regional and local identities. No, we will not lose anything. On the contrary, we stay what we are and in addition we develop a new European identity. For our young generation being European is normal. Ask someone from Estonia or from Ukraine whether they are afraid of Europe taking away their national identity. On the contrary, they want Europe to protect their identities.

I want the European Union to focus on where it can add most value, rather than meddle where it should not, or as I have said in the past, Europe needs to be big on the big things; small on the smaller things. You can believe me that I take this very seriously.

So what is big? Every man and woman has different ideas about the right priorities. That is normal in a democracy, and Europe is a democracy. For me, beating this crisis and leading Europe into a better future is big. Stabilising the situation between Ukraine and Russia is big. Boosting new sources of economic growth, stemming the rise in unemployment and giving new hope to our young people is big. Making financial regulation more responsible, completing a single market with networks for the 21st century, opening global markets for trade, making European legislation smarter, guaranteeing the rule of law, integrating legal migrants, combatting climate change, all this is certainly big, very big. And that requires European action.

I am saying this without order of priority and I could have mentioned some other areas. But these are key priorities where we need a Europe that is capable to act.

So instead of this ideological biased debate - more Europe or less Europe - that some anti-Europeans are trying to promote, trying to reduce the European scope, let's avoid this prejudice debate and let's focus on a qualitative analysis. When Europe can bring more value, we can do more, and we should push European integration; when Europe cannot solve the problems and can only add more bureaucracy we should not develop our own action.

For me one thing is clear: at least for the euro area, if we want to keep the currency, we need more integration for the euro area. I've seen that during the crisis. Because at the end, the stability and credibility of a currency depends on the stability and credibility of the institution and the political construct that is behind it. That is why – in those G20 meetings I've mentioned before – many of the foreign leaders were saying 'why don't you do more for European integration, why don't you give more powers to the European Central Bank, why don't you give more powers to the European Commission?' And in fact the leaders have given more power to the European institutions during the crisis because they understood that without this political coherence, institutional commitment and increased governance the euro will not be credible in face of the world.

That's why we need, at least for these countries, to make more progress in European integration. There are other areas where probably we should not go further if there is not a real commitment. Having nevertheless in mind that all the regulations that are approved in Europe are approved because the Member States have adopted them and the European Parliament as well. The European Commission doesn't have the possibility to adopt alone its own regulations. The European Commission proposes, takes initiative, but in the end we need – in many cases unanimity, in many cases qualified majority – for all relevant pieces of legislation.

This is a Europe that can become more democracy. As I said before, Europe some time ago could be making progress through implicit consent. It was taken for granted. Nowadays it is no longer possible. Nowadays we need the democratic consent of the citizens. That's why I keep on saying that the Europe we want should not be technocratic, bureaucratic or not even diplomatic. It has to be democratic. That's why we have a great opportunity, some weeks from now, to go for elections in the European Parliament. To those who are sceptical about Europe I just tell them 'if you don't like what is happening propose alternatives, but don't turn your back on Europe. Europe is a very precious thing to be left behind.

When I was, together with my colleagues, receiving the Nobel Peace Prize in Oslo last year, on behalf of the European Union, the message the Nobel Peace Prize was saying to us was 'you have something very precious. Don't put that in question, preserve it for the future generations'. That's why I think we can be proud.

One hundred years ago precisely, in 1914, young people your age were killing themselves in the battles of war. This year instead of killing themselves, young people and not so young people can go collectively vote for their future. This is one of the reason I cannot be pessimist about Europe, and I urge all of you to cooperate for a stronger, democratic, open and united Europe.

I thank you for your attention.

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