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European Commission - Speech - [Check Against Delivery]

Speech of Vice-President Dombrovskis at the EP plenary on the EU-Turkey summit and the European Semester

Brussels, 9 March 2016

Honourable Mr President,

Honourable Madame Minister,

Honourable Members,

Today I am speaking on behalf of President Juncker, so allow me to underline a message that he has conveyed many times to this House: ours is a political Commission that delivers a political response to the major challenges of our time.

Nowhere is this more true than in our vision for the European economy. Just as the euro represents a political project that requires political governance and democratic accountability, so our economic strategy demands a political debate at all levels, European and national.

In the end, we will be measured by our ability to improve the prospects of our people, today and tomorrow.

That is why the European Semester is not a technocratic exercise but a political process, shaped by dialogue and debate. That is why this Parliament and our national parliaments play a central role. Not only do you strengthen our legitimacy; you also hold the policy-makers to account.
This year's Semester takes place in a complex global environment. As our Winter Economic Forecast observes:

"While growth is continuing at a moderate rate in Europe, significant parts of the world economy are grappling with major challenges."

These challenges include a slowing down of the emerging economies including China; geopolitical tensions in our neighbourhood; and volatility in global markets.

2016 will be the fourth year of recovery for the European Union as a whole, and we expect growth of 1.9%. Confidence is returning, and the euro area is no longer the bad pupil in class. Employment has risen to its highest level since 2008.

Yet these signs of progress are not enough. 22 million Europeans are still without work, and 4.5 million of these are below the age of 25.

When this European Commission took office, we put in a place a clear strategy to deliver growth and jobs – a virtuous triangle of investment, structural reforms and responsible fiscal policy. This strategy drives everything we do, and it has social fairness at its core.

When it comes to responsible public finances, average budget deficits in both euro area and the EU as a whole are clearly going down. In the euro area we expect the budget deficit going down from average 2.2% of GDP last year to 1.9% this year.

Cleaning up our public finances and reducing national debt are essential. Not only for ourselves – as the markets remind us – but also for future generations. Today, for the first time in years, our levels of debt have begun to fall. Let us continue the good work.

Structural reforms are in the hands of our Member States. Our latest country reports send a clear message: those with the courage to reform make progress. They show that we now have a window of opportunity to modernise our economies.

When this Commission took office, our first major initiative was to respond urgently to one of the greatest weaknesses of the European economy: a lack of investment.

With the help of this Parliament we launched a major offensive to boost investment across the European Union. Today we see the first results and they speak for themselves.

In its first six months, the European Fund for Strategic Investment has already mobilised more than EUR 60 billion of investment in 22 of our Member States. Around 80 percent of this new finance takes the form of new private capital – exactly what we wanted to achieve.

In short, we are making progress, but this is precisely the moment to redouble our efforts and continue what we have started. Now is the time, as the recovery takes hold, for Member States to act.

This brings me to the European Semester – and a political process that this Parliament is shaping.

The Semester helps us to identify new risks, increase stability and encourage the reforms that deliver growth. By focusing on its most urgent priorities, each Member State strengthens the Union as a whole.

Last month we published our latest country reports. These reports are vital to the quality of our policy-making. Each one analyses the economic and social developments in our Member States. Each one ensures that the national programmes are properly debated and prepared.

This year's reports paint a varied picture. Overall, our Member States are tackling their imbalances. They are making progress with the country-specific recommendations we issued last year – although that progress varies from country to country. As a whole, these efforts will strengthen the European recovery and help our economies to converge.

Yesterday we discussed the Winter Package of the European Semester and we finalised the decisions under the Macroeconomic Imbalances Procedure. The main conclusion is that there are now fewer Member States with macroeconomic imbalances than last year. This is encouraging, because it means we are making progress in reforming our economies and that the conditions for renewed convergence are gradually being restored. Of the 18 countries examined in depth, six are found to have no imbalances, seven show signs of imbalances and five are experiencing excessive imbalances. The situation therefore differs across countries, but in general the main reason for concern are the persistence of very high levels of indebtedness, be it public, private or external, vulnerabilities in the financial sector or deteriorating competitiveness.

A clear reversal of these trends requires a decisive policy response. High debt levels are a drag on growth and make the economies vulnerable to shocks. They need to be brought down. Also, this is crucial to keep up structural reform efforts to address long-standing weaknesses. It is not always easy, as reforms have political costs, but this is the only way to unlock the growth potential of our economies, make them more competitive, create more jobs and reverse the deterioration of social conditions.

But overall, the system of closer monitoring and stronger coordination is bearing fruit, which should convince us to go further in our efforts.

We will now take this assessment into discussions with Member States this month and next.

The Semester is still in its early years, but we have already made changes that make it more effective, more transparent and more accountable.

There are changes big and small that will make a difference – from a new focus on employment and social performance to a streamlining of the process as a whole. But more than anything we have created time and space for dialogue, and focused on the urgent priorities that will deliver growth.

By publishing our country reports earlier, we now have a more open and substantial discussion. Our country-specific recommendations are more targeted. We focus on a limited number of priorities that require the government's attention in the coming 12 to 18 months.

And we published a recommendation for the euro area at the start of the Semester. This keeps our eye on a bigger picture – and helps us to develop a common understanding of the challenges we face together and the policies that will serve us all.

Presidents, Honourable Members,

The European Semester is the lifeblood of our economic governance. Its credibility depends not only on the quality of our analysis and judgement but also on the transparency and accountability of the process.

That is why we improve the Semester at every opportunity. We have made changes that ensure a truly political debate at all levels. We have built bridges between all the actors, starting with this Parliament.

This is how we build ownership and partnership. This is how we strengthen the legitimacy of economic governance. But above all, this is how we ensure that our economic strategy delivers the growth and the jobs that our people want.

Let me conclude with a few words about the meeting of EU Heads of State or Government with Turkey, which took place on Monday this week.

As you have seen, both sides agreed a number of steps that will significantly limit the flow of irregular migrants to the EU.

An agreement in principle was found with Prime Minister Davuto─člu that Turkey will readmit quickly all irregular migrants who do not qualify for international protection, and who arrive in Greece. Turkey will thus anticipate the entry into force of the EU-Turkey readmission agreement.

It was also agreed that Turkey will readmit Syrian nationals returned from the Greek islands under the logic that they can apply for asylum in Turkey and under the understanding that for every Syrian readmitted, one will be resettled to the EU directly from Turkey.

As President Juncker has said, this is a "game-changer". The new plan will help us to break the business model of smugglers who exploit human misery. There will no longer be an incentive for Syrians to pay criminals to smuggle them across the Aegean.

It will make clear that the only viable way to come to Europe is through legal channels.

Meanwhile, to ensure that Syrian refugees can benefit from decent conditions in Turkey, the newly created Facility for Refugees in Turkey is already starting to finance the first projects. The initial EUR 3 billion put into the Fund could also need to be supplemented after 2018.

Regarding the proposal to liberalise the EU's visa regime with Turkey, let me underline what President Juncker has said. The Commission will ensure that Turkey fully respects its commitments, and upholds the standards we have agreed. The same principle applies to the opening of new chapters in Turkey's accession negotiations.

Details of Monday's deal would need to be worked out on time for the next European Council in 17-18 March.

European Union leaders also welcomed the Commission's new Roadmap which will restore Schengen to its proper functioning by the end of this year. This means strengthening our external borders, putting an end to the so-called 'wave-through' approach, and coordinating all temporary border controls at European level.

As EU leaders recognised on Monday, this Roadmap requires more support for our frontline Member States, starting with Greece.

Last week, the Commission adopted proposals for a new Emergency Assistance instrument, whose first priority will be to relieve the situation in Greece. EU leaders called on the Council to adopt the new scheme before next week's March European Council. The Parliament, as an arm of the budgetary authority, will play a central role in filling this proposal with life. That is why the Commission will urgently propose an amending budget for 2016 to create the budget line for the instrument. The estimated needs for 2016 are EUR 300 million with a further EUR 200 million each for use in 2017 and 2018, respectively. Funding would therefore not be diverted from existing external humanitarian aid programmes outside the EU.

Mr President, the Commission is working in order to ensure a strong and coordinated European response. We count on this Parliament to help us in making it so.

Thank you.


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