Dublin, 10-1-2013 — /europawire.eu/ — It is always a great pleasure to be back in Dublin – it’s a good place to mark the start of the New Year! My visit today comes at a special time, as Ireland takes over Presidency of the Council of the European Union for the coming six months. Upon taking on this responsibility, Ireland’s message to Europe has been a message of determination fuelled by the knowledge that hard work will pay off.
I share this determination, and above all, this sense of responsibility. For Europe, 2013 must be a year of change, a year of results. We can spare no efforts to drive our economies toward recovery. I know it is precisely with this approach that the Irish government is intending to carry out the work throughout its Presidency – I just had a fruitful meeting with the Taoiseach and the Tánaiste, during which we discussed the priorities for the coming six months and beyond. It is also the approach driving the work of Irish businesses, who have an ambitious agenda for Ireland.
IBEC plays an important role in that respect. You believe strongly, and rightly, in what Ireland can achieve. And you know how an unwavering engagement at the heart of Europe can help Ireland fulfil these ambitions, and more.
I understand that this event is part of a series of meetings planned throughout the Presidency, and that business leaders from across the Union will be gathering in the coming months in Dublin to discuss how business can help drive economic recovery in Europe. The active interest that the Irish business community takes in Ireland holding the Presidency of the Council is extremely positive.
Ireland has of course a long-standing experience in holding these responsibilities. This is the seventh Irish Presidency, marking exactly forty years since your country joined the European Union a milestone worth celebrating. Each Presidency had its challenges, but this time, there is no question on the foremost task at hand: driving Europe’s economic recovery. The watchwords chosen by Ireland to guide the course of the Union for the
coming six months could not better capture what we are all working for: Stability, Jobs and Growth. And I should like to look at them in turn.
First, Stability. Restoring stability has been the main focus of the efforts of the past three years, and these efforts have caused much pain from people all across Europe, not least here, in Ireland. Stability is not a goal in itself; rather it is a means to an end.It is the precondition from which all other conditions for growth derive, the key for business and jobs to prosper.
The crisis has laid bare the scale of the structural adjustments needed to bring our economies back on a sustainable footing. To secure lasting stability for our economies, there can be no quick-fixes, no short-cuts – changes of this magnitude take time. We have already come a long way: unrelenting efforts both in individual countries across Europe and together as a Union, are starting to bear fruit.
Our work has focused on three fronts: First, ensuring that together as a Union, we are better able to deal with the type of shocks that we have seen during this crisis, now and in the future. The improvements of the past three years to address short-term shocks have been more significant than is sometimes appreciated.
Our Union is now much better equipped to anticipate, prevent and overcome such difficulties, especially in the eurozone. We now have an early-warning system, and our permanent “firewall”, the European Stability Mechanism, has been fully operational for some months now. And European leaders and all EU institutions have made clear their commitment to step in when necessary, to help countries under market pressure withstand short-term shocks while they carry out much-needed reforms.
This is indeed the second front: reforming our economies, and improving their
competitiveness to ensure lasting growth. These reforms are essential for the return of lasting stability. In fact, they would have been necessary in any case. To adapt our economies to a fast-changing global economic landscape and an ageing population, to bring our public expenditure in line with our financial capacities, and to secure long-term growth and employment in our countries. And though reforms necessarily take time and often come at a heavy cost, we are already seeing the first, promising results.
Competitiveness and export performances are improving, not least in Ireland of course, but also in countries like Spain and Portugal. The aggregate budget deficit for eurozone countries is steadily decreasing. The cost of borrowing is going down substantially in almost all euro area countries.
Beyond these reforms, there is a third front that is crucial: addressing the gaps in our Economic and Monetary Union. The crisis has made clear that the eurozone’s difficulties are not only the sum of the problems of individual countries, but also the result of underlying deficiencies in the architecture of the Economic and Monetary Union as a whole.
These deficiencies are one of the underlying causes behind the financial fragmentation and acute market instability that has hit the eurozone − asphyxiating the economies of countries threatened with losing credit access, and taking a toll on European economies inside and outside the monetary union.
We have drawn the lessons from past mistakes. Much has already been achieved over the past three years to address some of the most obvious deficiencies. But to become fully solid and stable, the euro area still needs to evolve. This will involve further integration − financially, but also fiscally and economically.
This could not be more clear than for the financial sector: one of the main underlying drivers of the crisis has been the disconnect between, on the one hand, a fully integrated financial market and, on the other, a largely decentralised system of bank supervision and resolution. As a result, tax-payers in several countries, including Ireland, have had to shoulder a disproportionate costs for bank bail-outs. This situation has also contributed to financial fragmentation and undermined the provision of credit to viable companies and
households – hence delaying the recovery.
To overcome this situation, we have therefore decided to build a banking union. In December important steps were made towards this goal. First, on setting up a genuine single banking supervisory system, that will cover all banks in the eurozone, with no exceptions. It’s a major leap forward, but it’s just the first step.
That’s why less than 24 hours after agreeing on the modalities of this single supervisory mechanism, we have also agreed to take the next step towards banking union: the establishment of a single resolution mechanism. Here too, the aim is to reduce risks for taxpayers and for the economy, by making sure that any bank failures are dealt with in a swift and orderly way, in the best interest of all.
Progress on the banking union will be at the top of the eurozone’s agenda for the first half of 2013, and will therefore be at the heart of the work of the Irish Presidency. I know we can rely on Ireland to push these important measures forward so they can be effective as soon as possible.
Beyond the financial sector, there is also more that we can do, and must do to bring our economic and fiscal policies closer. One remark: if we fully use all the tools we created over the last three years, that will already be a major step towards fiscal and economic union! One of these was the Treaty on Stability, Coordination and Governance (popularly known as the “fiscal compact”), which Ireland ratified after a referendum and which entered into force on 1 January.
Yet to secure the eurozone’s stability in the long-run, there is more that can be done. So whilst we progress on the banking union in the coming semester, as President of the European Council I will lead a process, in cooperation with Commission President Barroso, of thorough consultations with the Member States on how to further improve the integration of our economic and fiscal frameworks.
It will be based on the conclusions set forward in my report “Towards a Genuine Economic and Monetary Union”. I will present possible measures and a roadmap, on the way forward to European leaders in June, looking at how to better coordinate major national economic reforms and how to reinforce the social dimension of our Economic and Monetary Union. I will also examine possible measures to support competitiveness and growth, such as mutually-agreed contracts between governments and European institutions, possibly
assorted with solidarity mechanisms to encourage these efforts.
All the work I have mentioned is driven by a quest for stability and resilience. Through better crisis management, structural changes and a long-term vision to bring our Economic and Monetary Union to completion.
And if we look at where we were just three years ago and where we are now, it is clear that we have made a lot of progress. Of course we have moved gradually, step by step, which at times may have created the impression that we are too slow. But this is unavoidable when we need, for many steps, the agreement of each and every member state. What is crucial is that the steps keep coming. And they do!
In this regard, 2012 has marked a turning point in the crisis: the eurozone is no longer in “existential threat” mode. The gloomiest of expectations are slowly fading, and the integrity of our monetary union is no longer called into question, whether by the media or the markets. The proof is that those who last year bet against the euro lost heavily! This means the worst is now behind us. But not all is bright, far from it.
We have to be fully aware that the economy is reacting with a time-lag: once stability starts coming back, it takes time before this is translated into more investment and growth. And as growth returns, it also takes time before perceptible effects on employment start kicking in. There are increasing signs that 2013 is likely to mark the end of the recession in the euro area, but unemployment levels across the Union are unacceptably high, causing great
hardship to many people.
This is why along our work to secure stability, we must concentrate all our efforts on improving the growth of our economies and the job situation for European citizens. Growth and Jobs: it is our ultimate objective. With 26 million unemployed throughout the Union, the situation is dramatic and there can be no more important priority.
I am thinking in particular of Europe’s youth, who are often the hardest hit by the crisis, with unemployment rates reaching 50% in some countries. Everything must be done to reverse this situation. And much can be done. By improving education and skills to gear tomorrow’s workforce for tomorrow’s jobs. By setting up the right incentives to encourage companies to hire new workers, and unemployed workers to take up jobs. And by making it easier to go where the jobs are, whether within a country or within Europe.
Europe’s youth is Europe’s future. It is our most precious asset. In a well-known verse, W.B. Yeats beautifully described education as the “lighting of the fire”. We Europeans are blessed with one of the best-educated, most enterprising youth in the world. We simply cannot let that fire die out. We must bring hope back, and open opportunities for a brighter future. And Europe holds plenty of opportunities to be exploited, and opportunities to be created.
Take for instance our digital agenda – an issue on which Ireland is among the most active, and rightly so. We are far from having a single digital market in Europe, and until we do, we won’t have a real single market full-stop. We need cross-border online trade to become seamless, we need to roll-out high-speed internet everywhere in Europe. This is clearly an area where we must shape change, as it will shape the future of our economies.
I know I am preaching to the converted here in Dublin. Ireland is in the business of digital and network industries: famous Irish companies have contributed a great deal to connecting Europe and Europeans. But there is still much to be done on our digital agenda, and Ireland’s contribution in that respect can be invaluable. I trust that taking this work forward will rank high among the Irish Presidency priorities.
In fact, improving our networks, ensuring we keep our technological lead, and that Europe – and countries like Ireland – remain the most attractive destination for innovation worldwide: this is what is driving our work to bring growth back to Europe.
Here, the European Union’s common budget, which is currently under negotiation for the coming seven years, can play an important role. Although it consists of only 1% of our combined GDP, it is indeed first and foremost an investment budget, and we must ensure that it acts fully as a motor for growth, geared for the future and not to the past.
Of course, in these difficult times, our budget’s spending ceilings will have to reflect the tightening of belts clear in all national budgets. On the other hand, the European budget serves an important purpose – and Ireland is well placed to appreciate that, having regularly benefitted from its investment power in the past. It is the main catalyst for public investments in many member states, and therefore has a substantial impact on their growth. The EU budget is not only a tool for solidarity. Rather, it is essential for higher growth rates all over Europe.
Another important priority which can help create new growth opportunities is our international trade agenda. Access to our common market, the world’s largest, is a much sought after prize. Trade is still the best example of how Europeans gain considerable leverage by a strong common approach. And it is a considerable engine for growth.
We have a number of trade agreements which either just entered into force (South Korea) or are under way (Singapour, Japan, India, Malaysia, Vietnam). And we are looking at further opening up trade with the United States. A glance at trading figures shows that hardly any country is set to benefit from such trade deals as much as Ireland. Your country is also among the most talented when it comes to attracting inward investment.
In fact, I was staggered to find out from IBEC that the total investment coming from the United States into Ireland is greater than into Brazil, Russia, India, and China… combined!
And this is just one of the many signs that full economic recovery is around the corner for Ireland. Of course it won’t be an easy path – there are no easy ways – but looking at the progress since the crisis hit your economy hard, so much has been achieved, and your economy is certainly closer to the end of the programme than it is to its beginning. Your determination to hold the course despite the difficulties can be held as an example for all the other member states. Though the path is hard, it is the right path, and it will yield results.
This has already been the case over the last few months, with the trickle of good news that may not always have made the headlines but that taken together, makes a significant difference. The return to international financial markets of course, which has our full support ; but also companies developing new activities, expanding factories, new firms setting up European headquarters in Ireland. 50 new positions opening here, 100 new jobs created there… A steady sign that confidence is growing.
At its launch, the Irish Presidency has been described as “a recovery country driving recovery in Europe”. This could not be more true. Ireland’s course is indeed Europe’s course and just as a strong Ireland is important for Europe, securing economic recovery across Europe is the best way to help the Irish economy. This responsibility is not a distraction from your domestic agenda — it is central to it.
The Presidency will place Ireland in a unique position to lead and mediate on crucial legislation for Europe: to drive forward the development of the Single Market, reinforce our banking system for the future, increase our international trade power, and help bring growth and jobs for Europeans.
I know from experience that Ireland will be an excellent host for the thousands of official visitors who will come to Ireland during the Presidency. In a way, it will be Europe’s contribution to the Gathering that you are organising next summer!
And this idea, this tradition of the Gathering is something that I hold dear. Because it is what Europe is about. Bringing people together. This incredible achievement of our Union – bringing together in peace countries across the continent – was the reason of course behind the award of the Nobel Peace Prize to our Union, a few months ago.
In Oslo, during the traditional banquet, I recalled the words of a Nobel Peace laureate from Ireland, John Hume, a story he told during his Nobel Lecture, 15 years ago. On his first visit as Member of the European Parliament to Strasbourg in 1979, he explained how he went for a walk across the bridge from Strasbourg, in France, to Kehl, in Germany. He recalled stopping in the middle of the bridge and meditating.
“There is Germany, he said, – there is France. If I had stood on this bridge 30 years before at the end of the Second World War when 25 million people lay dead across our continent and if I had said: ‘Don’t worry. In 30 years time we will all be together in a new Europe, our conflicts and wars will be ended and we will be working together in our common parliament’, I would have been sent to a psychiatrist. But it has happened”.
Coming together in moments of difficulty is what defines this new Europe, our Europe, because we know that it is together that we come out stronger.
Go raibh maith agaibh go léir, thank you all.
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