Originally published on 2013/12/13
On November 20th 2013, Dutch Finance Minister and President of the Eurogroup, Jeroen Dijsselbloem, conducted a lecture organized by the House of Europe (sometimes referred to as ‘the voice of Europe in the Netherlands’). The lecture was about building a community sense in Europe after the ‘shock’ of the Eurozone crisis. There is still much left to be done, but the words of the President of the Eurogroup are encouraging and confirm the entrance of the Euro area and the EU into the post-crisis era.
It was a lecture full of symbolism. Organized by the House of Europe, it took place during a rainy day in the Grote Kerk in the Hague. The building was built in the 15 century and is the former house of the protestant community in The Hague where the King Willem-Alexander of the Netherlands was baptized. The attendance was varied, ranging from students, diplomats, academics, and journalists from different countries, within and outside Europe. The lecture was also broadcast live on the internet and followed by Q&A sessions via Twitter. If you missed the event, it is okay, just scroll down and you should not miss the most important information.
The strength of European integration
For those who are still doubting the strength of European integration, watch out. This lecture is an underscoring of the remaining power of the EU and probably a clear message addressed to the euroskeptics: that the euro and the European Union have not only survived the crisis, but they have also come out strengthened by it. Indeed, the President of the Eurogroup is confident that Ireland and Spain have recently ‘got back on their feet’.
The Eurogroup has decided to release them from the bailout programs which are now judged as being successful (at least for these two countries). Moreover, a European Banking Union project is ongoing, and on November 22nd 2013, the Eurogroup members’ finance ministers for the first time met to discuss each member’s draft budget for next year before the start of the fiscal year.
He also added that the works of the Commission during the crisis have been successful, and the EU has managed to keep a low deficit rate during the economic hard time. It now has a more stable budget than the UK, the US, and Japan. Thus, according to him, all Eurozone countries have now entered into a new phase: the post-crisis era.
However, the President of the Eurogroup also mentioned the changing atmosphere in the Eurogroup negotiations: ‘[The members of the Eurogroup] have realized that European governance and fiscal policy need far more than ticking the box to the three percent deficit target. When setting deficit targets and deadlines, it is also important to discuss the more structural measures in need. European economic governance is about accepting that the members of the EU area have a clear interest in other members’ economic affairs and it is about accepting that there is a European interest in your own national budget. We have realized that having civil rules is not enough. Members need to point out to one another and appoint responsibilities in order to keep the community sound and stable.’
Indeed, some important challenges still remain : the latest European Commission figures are not so optimistic. The Euro area’s growth this year is -0.4%. Its potential growth remains weak (0.7% in 2015), while anticipated unemployment rate remains double digits for the coming years.
In this regard, the old problems of unemployment, competitiveness, and how to preserve the unique European social model–which have been accentuated by the crisis–are still haunting the Eurozone and the European Union.
‘Turning Europe into a convergence machine once again’
There are some possible solutions, and we can find them in our past experience. Referring to the success of the European integration at the beginning of its creation, The World Bank has perceived Europe as a ‘convergence machine’. This machine has indeed been affected by the crisis and we have to make it work again. How do we do that?
Dijsselbloem pointed out the need for structural reforms. Indeed, OECD estimates that over a period of time, economies in the Euro area can increase by up to 1/5 through the implementation of structural reforms–the labor markets being some of the major challenges. He also pointed out the major responsibilities of political leaders to conduct these reforms: ‘[Leading politicians] must maintain the sense of urgency and take their countries through the inevitable transition phase.’ It is indeed important to notice that 99% of the decisions in Brussels are taken by the EU national ministers. They are therefore the most important actors in the European decision-making process.
These reforms also imply, among others, the modernization of the EU members’ social policies, setting deadlines in deficit procedures or using European structural funds to implement structural reforms.
Furthermore, he stressed the fact that ‘we [European nations] have more in common than we think’, citing the rising retirement age and the problems in the housing market. In this regard, ‘we have to have the courage to confront each other with the inconvenient truth. We need to make one another aware of our weaknesses in time and put forward best practices to solving them’. This is an approach that we need in order to solve our problems more efficiently.
Thus, far from being obsolete, Dijsselbloem has proven that the EU integration and the common currency is still holding strong despite the crisis, and that there is a need to further strengthen it through structural reforms.
However, are the structural reforms he has suggested really new ideas? As some Greek participants pointed out, have not these measures resulted in heavy consequences for some countries, and left indelible marks in European History? Moreover, towards which direction should these structural reforms go, more or less, Europe? With divergent views across Europe, how can one conceive a functioning common economic and fiscal governance? These are the open questions that were on my mind as I was leaving the big Protestant church under the Dutch rain. Have we got more in common than we think? “Well, certainly not regarding the weather,” said I, thinking about some members of my family who are now enjoying their short holiday in the south of Spain.
You can see the whole lecture here.