Europe's essential unity

BRUSSELS – Over the past ten years, the European Union has endured a series of unprecedented crises, the likes of which we are unlikely to see again. But other, no less daunting challenges lie ahead, and we would do well to remember the lessons learned along the way. One lesson is that unity is not an option; it is a condition sine qua non of the EU’s economic prosperity and political relevance. It is remarkable that since 2004, when I became President of the European Commission, the EU’s membership has nearly doubled, from 15 countries then to 28 now. There have been no defections. From 2004 to 2014, we enlarged both the EU and the eurozone. Most important, we have kept Europe united. I fought hard for that unity, particularly when defending, often against the odds, Greece’s continued membership in the eurozone, as well as when arguing against splitting the eurozone, as some people proposed. The Commission remained attentive not only to the dramatic impact of a “Grexit” on Greece, but also to its possible financial, economic, and political cascade effects. Unlike others, we never lost sight of the systemic effects of decisions across the eurozone or the EU. The EU is already an economic and political reality. This requires solidarity and responsibility – in particular, solidarity from the Union’s more prosperous countries and responsibility on the part of those countries in need of reform. The Commission has been equally firm in demanding both. The same logic applies to another core concern that I faced throughout my decade at the Commission: the need to deepen the eurozone while maintaining the integrity of the EU as a whole. This will remain a critical issue in the near future, if only because of the uncertainty surrounding the United Kingdom’s status in our Union. Allowing for flexibility while avoiding fragmentation is now a well-established approach within the EU. But it was not always so. Some have long advocated establishing a completely separate institutional framework for the eurozone. I remain convinced that multi-speed European cooperation has become a necessity, but that a multi-tier Europe must be avoided at all costs. While integration must deepen further, especially in the eurozone, this can and should be done in a way that preserves the integrity of Europe’s single market. Fortunately, this logic has been widely accepted, as demonstrated by the decision that the European Council’s next president, despite being from a country (Poland) that is not yet in the eurozone, will nonetheless preside over eurozone summits. A second lesson we learned is that openness to the world is an asset, not a liability. That thinking – which needs to be reaffirmed and politically supported – underpinned our active trade agenda. Indeed, it put the EU at the forefront of efforts to liberalize and regulate international trade, enabling us to reap the full benefits of globalization. This is not just about Europe’s economic wealth, but also about its political relevance on the global stage. One presupposes the other, requiring vigorous defense of the EU’s interests and views in bilateral relationships with strategic partners and in multilateral fora, such as the United Nations, the World Trade Organization, the G-20 and the G-8/G-7. If the EU as a whole engages internationally, it can help to shape the international order. Our current engagement in Ukraine is a case in point, as were our efforts to lead a global response to the 2008-2009 financial crisis, namely by collectively resisting the allure of protectionism. It was on the EU’s initiative that the world acted in a concerted and convincing way by establishing the G-20 Leaders’ Summit, comprising heads of state or government. Since then, the G-20 has become the premier forum for economic policy coordination among its members, giving concrete form to many of the ideas – for example, on a framework for balanced and sustainable growth, on financial regulation and supervision, and on action against tax evasion and fraud – that the EU proposed. The emergence of the G-20 has transformed the global system, and certainly helped to prevent the realization of worst-case scenarios in the aftermath of the crisis. The third lesson is that making Europe stronger – institutionally, politically, and economically – demands continued reform. Credibly delivering on important EU-level reforms enabled Europe to put the most existential phase of the crisis behind it. The system of economic governance that we put in place guarantees that EU members put their public finances in order, increase their competitiveness, and tackle their macroeconomic imbalances. We created the instruments needed to assist distressed countries, and the ensuing adjustment programs are delivering results. In short, we seized the momentum of the crisis to provide a structural response to the challenges we faced, in particular by establishing a European banking union. Step by step, despite strong resistance, we have changed the rules that govern financial institutions, the institutions that oversee banking operations, and the mechanisms to coordinate resolution of failed banks. Taken together, the reforms adopted since the start of the crisis have changed the way that Europe’s economies and financial sector are legislated, supervised, and regulated. The framework has been created. Now we need to implement it fully. But we also need to go further in advancing structural reforms at the national level. We can see that the countries that have done the most in this respect now have better economic prospects. We must not relax these efforts. After all, the economic crisis has not yet been fully overcome. We must not take for granted the progress that has been made. Political decisions matter – and mistakes have consequences. At the end of a ten-year rollercoaster ride as Commission President, I can confidently declare that Europe has shown great resilience. We have shown that the forces of integration are stronger than the forces of fragmentation. Despite all of the challenges we had to face – indeed, partly because of them – Europe remains united and open, and is now stronger and better able to face globalization. Copyright: Project Syndicate.

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Europe's essential unity