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Speech on the State of the Union, hosted by the European Institute in Florence - For a Union based more firmly on solidarity

Speeches
Palazzo Vecchio
11-05-2018

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Introduction: A success story

Today, we Europeans can look back with great pride on what we have achieved in the last 70 years. It is a story of freedoms and rights which have brought benefits that were unimaginable in the immediate aftermath of the Second World War.

It is a story of solid and lasting peace, of democracy rooted in the rule of law and freedom of expression, of the tearing down of walls, of the opening up of borders for persons, goods and capital.

We have lived through the most extraordinary rebirth in Europe’s history. Hard work, talent, entrepreneurship and European creativity ushered in an era of well-being and widespread growth in an environment of unwavering solidarity.

We created the largest market in the world, while at the same time pursuing cohesion policies designed to ensure that no one is left behind. We built a social market economy in which the market is understood as the means of creating jobs and opportunities for everyone.

The origins of this success story can be traced back to the courage and foresight of men and women who had survived the horrors of war and experienced at first hand the disastrous consequences of nationalism. They were men and women who saw clearly that the European project was the only path which could lead to the rebirth of our continent. They knew that choosing that path meant putting themselves in other people’s shoes. It meant not only asking for, but also offering, solidarity.

Europe’s successes are due, above all, to the friendships and mutual trust which developed between great leaders such as De Gasperi, Schuman, Adenauer, Spaak and Monnet and, more recently, Kohl, Mitterrand and González.

It is also thanks to their efforts that between 1957 and 2007 in Europe the share of the population regarded as poor fell from 41% to 14%, that household incomes increased more than fourfold, and that inequalities narrowed to an extent unprecedented in human history.

Unfortunately, the last 10 years of financial and economic crisis have put a brake on these improvements and weakened the impetus behind the European integration process. The spirit of trust and solidarity between countries which was the real driving force behind that process has waned.

Europe’s new political leaders have not always been up to the task, putting electoral expediency before commitment to a shared vision of Europe.

The legacy of the crisis

Because of that short-sighted attitude, the crisis triggered by the subprime mortgage scandal in the USA spilled over to our banks and turned into a sovereign debt crisis, whose impact on some countries was comparable to that of a war.

Italy lost one-quarter of its manufacturing base and one-third of its investment, while GDP fell to levels last seen in the 1990s. In many countries, real wages remained stagnant for 10 years.

Globalisation does not produce only winners

The recent recovery is certainly good news, but the gap between rich and poor, and between developed regions and regions which are lagging behind, is widening. Some 80% of the new wealth being generated goes straight into the pockets of the richest 15% of the population.

Growth as asymmetrical as this does not create sufficient jobs, particularly for young people. The middle class is ever more fearful of losing ground. For the first time in decades, the younger generations have worse prospects than their parents.

In the EU today, 23 million people aged between 15 and 34 are not in employment, education or training. Some 118 million people – 24% of our population – are at risk of poverty or social exclusion.

The global economy has followed a similar trend. The technological revolution, the free movement of capital and increasingly open markets have unquestionably fostered growth and competitiveness. But they have also triggered a race to the bottom in areas such as working conditions, tax or environmental standards.

The impact of migration, much of it uncontrolled, and the availability of cheap labour has penalised the weakest in society most, the same people that live on the fringes of our cities, alongside new immigrants who are reluctant to integrate. These are places of social deprivation, where the frustration and sense of exclusion felt by Europeans meets and fuels that of the new arrivals.

The insecurity felt by ordinary people grows, along with resentment and fears for their own future and their children’s future. Fear leads people to shut themselves off and reject the open-society model advocated by the Union, a model seen as elitist and distant, capable of generating benefits only for the few.

Walls, borders and nationalism ostensibly offer comforting antidotes to a globalisation process in which ordinary people seem to have no say whatsoever. Trump, Brexit, the emergence of authoritarian movements which harp on the importance of sovereignty and the populism that is rife in Europe are symptoms of this malaise.

A European Union which can protect its citizens

If policy-makers are distant and unresponsive to citizens’ concerns – as happens with bureaucratic, self-serving institutions – their attitude fuels rage and creates a breeding ground for peddlers of illusions.

The only counter to these siren voices are policy-makers who are capable of listening and providing effective responses through the work of a strong and cohesive Union.

If there is a lesson to be learnt today, it is that globalisation has radically altered our understanding of sovereignty. Issues such as security and defence, managing migration, unemployment and tax justice can only be addressed at supranational level. If we are to defend our commercial interests, protect innovation and creativity, guarantee energy security and save the planet, we need joint instruments.

It is only by exercising some aspects of national sovereignty jointly that we can protect EU citizens in an ever more complex global environment.

A European super state is not the answer. There is no need for the EU to take responsibility for every last detail of every policy; the Union is stronger when it focuses on the areas where it can really make a difference.

No European State acting alone can compete with giants such as the USA, China, Russia or India. If Italy were part of China, it would be the eighth-largest province in terms of population.

Anyone who advocates a retreat behind national borders is spinning a lie. Anyone who blames European integration for our problems is aiming at the wrong target. In fact, the European Union is part of the solution. It is only by working together, by speaking with one voice, that the countries of Europe can protect their own citizens.

At the same time, we must be equally clear-sighted in acknowledging the criticisms voiced by those who point out that our Union is far from being effective. Only a different Europe – one that is more political, more democratic and more firmly based on solidarity – can close the gap between citizens and its institutions.

A budget geared to citizens’ priorities

A forward-looking political Europe needs a clear vision and the means to put that vision into practice. The first change on the agenda - for which no revision of the Treaties is required - is a political budget, endowed with sufficient resources and geared to citizens’ priorities.

Last week, the Commission submitted to Parliament the draft version of the new budget. The debate in plenary revealed it to be a mixed bag.

The proposals concerning the own resources system, the increased funding for innovation, research, defence and SMEs and the doubling of resources for Erasmus and migration management are consistent with the resolution which we adopted last March.

It is also only right that the provision of certain types of funding should be made conditional on compliance with key principles and on the honouring of undertakings given. It is unacceptable that some States should ask for solidarity with their most disadvantaged regions and at the same time refuse to show solidarity with the countries which are bearing the brunt of the migration crisis.

The Commission’s approach is the right one, but it must stated loud and clear that the figure of 1.1% of EU GDP which it is proposing is nowhere near enough. From 2021 onwards, the Union will have to do without the United Kingdom’s contributions. If we are to secure a budget commensurate with the challenges facing us, we need to show boldness and ambition. Parliament will therefore exercise its codecision powers to the full by calling for a figure of 1.3%.

That increase must not come out of the pockets of EU citizens, who already pay too much, but rather in the form of new own resources. The web giants, banks which engage in speculative financial transactions, companies which pollute our environment with non-biodegradable plastic - they must all pay their fair share.

If we want to spend less more effectively at national level, we must generate economies of scale and European added value. One euro spent at EU level on research, innovation, security, defence, border control or development in Africa has a much greater multiplier effect than one euro spent at national level.

If each Member State had needed to develop its own GPS or earth observation satellite system, it would have cost 20 times more than Galileo and Copernicus. If we had a fleet of Canadair aircraft or helicopters available for civil protection, motor boats for the EU coastguard service, cybersecurity systems or interoperable military hardware, we would be able to deploy more resources in response to crises and emergencies, and at lower cost.

Achieving the figure of 1.3% is essential if we want to have the resources required to develop modern and competitive farming and fishing industries, to fund territorial and social cohesion policies, and to have a Union which continues to be founded on solidarity, helps the real economy and reduces youth unemployment.

Increased investment in research and innovation will consolidate Europe’s leadership in the areas of science and technology. This funding, together with investment in training, is the basis for a competitive industrial policy which will enable us to seize the opportunities offered by the digital revolution. It is also fundamental to increased energy sustainability and security.

Defence, security, border control, migration management, the development of Africa, the Western Balkans - all these are crucial challenges which can only be met with the right resources.

It is important to reach a framework agreement during the current Parliament on the size of the budget and its main headings, so that an operational budget can already take effect in 2021.

A defence industry and a defence market

Parliament has approved a European defence fund to which some EUR 10.5 billion should be allocated under the next budget: EUR 3.5 billion for research and EUR 7 billion for manufacturing.

This will create a sound basis for a European defence industry and defence market and, in turn, generate economies of scale. It is vital to develop technologies, prototypes, interoperability and common standards so that our forces can interact effectively and so that we can carry out missions outside the Union.

This is a stepping stone towards a system of common defence, a European army and the rationalisation of military spending. It is the only way to ensure our credibility on the world stage and guarantee the security of our citizens more effectively.

A European FBI and external border management

Parliament and the Commission are proposing a marked increase in the amounts allocated for security, combating terrorism and management of the EU’s external borders.

Only by working together, in a climate of enhanced trust between our intelligence services, can we protect our citizens.

We must in my view establish a fully fledged European FBI, with more effective arrangements for exchanging information between law enforcement services. We also need a European agency which specialises in tracing financial transactions linked to terrorism and other transnational crimes.

These and other ideas are currently being considered by the special committee set up by Parliament to step up the fight against terrorism and radicalisation.

We must safeguard the major achievement that is the Schengen Area. Rather than threatening to send tanks to the Brenner Pass or carrying out cross-border police raids in Bardonecchia, let’s show our citizens that we can join forces to police the EU’s external borders more effectively.

The Commission's proposal to increase the pool of Frontex border guards from 1200 currently to 10 000 is welcome.

 

 

Managing migration

Last November, Parliament approved by a large majority the overhaul of the Dublin Regulation which is designed to ensure that European asylum arrangements are based on fairness, solidarity and consistency. At long last, the Council has also started to address the substance of this issue.

Parliament cannot accept that the vital balance between responsibility and solidarity should be upset. We cannot leave States that for geographical reasons are bearing the brunt of international humanitarian crises alone in the front line. All the EU Member States without exception have a duty to uphold the values which underpin our Union, one of which is that we take in those fleeing war, violence or persecution.

An overhaul of the Dublin Regulation which merely imposes new obligations on States of first entry without introducing a fair and effective system for the relocation of asylum seekers would represent a step backwards on the road to a closer Union. A Europe which is incapable of showing solidarity towards refugees risks losing its soul.

At the same time, we must be resolute in turning away or securing the prompt readmission of those who have no right to enter Europe.

All the Mediterranean routes need to be shut down in the same way as the Balkan route was, on the basis of investment in and agreements with third countries. Europe must invest at least the same level of resources in Libya, Tunisia, Morocco, Chad, Niger and Mali as it has in Turkey and Jordan, as part of a robust diplomatic process in the areas of economic and security policy.

The ultimate aim is to introduce more rapid and effective European asylum and readmission procedures, in combination with economic agreements and legal quotas for immigration from African countries.

A strategy for Africa

The migration problem needs to be addressed at its roots. By 2050, the population of Africa will have doubled to more than 2.5 billion. Desertification, pandemics, terrorism, unemployment and bad governance are fuelling instability and contributing to uncontrolled immigration. Without action to tackle these phenomena, new generations will seek fresh hope and a future in Europe.

We need a Marshall Plan for Africa. The current development fund approved by Parliament amounts to barely EUR 3.4 billion, which is totally inadequate to meet these challenges. Under the new budget, we are calling for at least EUR 40 billion to be set aside, money which would generate a leverage effect of EUR 500 billion.

These funds are essential to attract more investment in infrastructure, technology transfer, resource efficiency and training; to help develop a manufacturing base and a modern farming industry; and to create major opportunities for European companies as well.

A European Union able to play its part on the world stage

Many of the migrants who come to the European Union are seeking to escape the instability affecting countries on our borders, from North Africa to the Middle East. A Europe which is better able to play its part on the world stage can help to reduce that instability, by working for peace. And that, today more than ever, is what EU citizens want us to do. For that we need unity and more effective tools.

The Balkans

During my visits to Montenegro and Serbia, I sought to emphasise how important a clear prospect of EU membership is for the stability of the region as a whole.

Next week at the Sofia Summit on the Western Balkans I will emphasise the need to speed up the integration process, which is also essential if we are to combat terrorism and control our borders more effectively. We must also step up our political and economic presence in an area where China, Turkey, the United Arab Emirates and Russia are already exerting a powerful influence.

Our objective must be clear: complete the first accession by 2025. Only in this way can we ensure that the Balkan countries see their future in the European Union.

Free and fair trade

European entrepreneurs set the standard in terms of quality and the use of technology in many sectors. One statistic in particular bears this out: 70% of the luxury products sold around the world are manufactured in Europe. Protectionism and trade wars are not in the interests of our workers or our firms.

We do have an interest in continuing to promote open markets, but not naively. We must be advocates for fairness, equal conditions and reciprocity.

The success of the negotiations with Korea and Canada and, more recently, with Japan, Singapore and Mexico will bring benefits for firms and consumers, by enabling us to protect pubic health, safety and intellectual property.

We must continue along that path with Australia, New Zealand, Chile and Mercosur.

But we cannot play 11 a side in Europe, but 9 against 13 in China. For that reason, Parliament successfully lobbied for China to be denied market economy status and for effective anti-dumping instruments to be kept in force.

 

The USA, a natural and necessary partner

Trump’s decision to impose aluminium and steel tariffs on the EU is incomprehensible and unjustifiable.

Deferring implementation of these tariffs from one month to another is creating uncertainty detrimental to investment and industry, and is damaging both to Europe and to the United States.

I am calling, on behalf of Parliament, for a permanent exemption for the EU from such tariffs. We must make Trump see that we are in the right, and it is not us who are breaking the rules.

The threat of tariffs has further cooled relations with a country we considered to be our natural ally. We are friends, we share values, culture, languages and a host of strategic interests. Yet there can be no doubt that the suspension of TTIP, trade tensions, ambiguous messages on Brexit and European integration, and withdrawal from the climate agreement have widened the distance between the two sides of the Atlantic.

Recently, the US President issued a timely reminder that ‘America first’ does not mean ‘America alone’.

Let’s hope he means what he says. Sound cooperation between the US and the EU is vital if we are to address the challenges of terrorism, peace and stability that affect us both, from Africa to the Middle East, and from Afghanistan to North Korea.

A fairer market and single currency

The European Union has a formidable instrument at its disposal to create growth and jobs: the single market. If we are to exploit its enormous untapped potential, we need to rediscover the energy which drove its pioneers, when political will won out over protectionism and national self-interest.

What we are seeing today, in contrast, are dangerous steps backward towards fragmentation into 27 small markets. We are still a long way from a genuine services, digital, capital or energy market with proper network infrastructure.

If we are to open up new areas of freedom for consumers and businesses, we must find a way of reconciling the imperatives of the internal market with our social market economy model. If we do nothing to remedy plant relocations, social and fiscal dumping and the apparent omnipotence of the web giants, public opposition will grow to an integration process viewed as damaging and unfair. 

Belonging to a borderless area brings with it responsibilities and the need for solidarity. The 2 000 or more special agreements under which multinationals and web giants pay derisory amounts of tax are far from being a good example of this. They deprive other Member States of resources, undermine public confidence and impoverish the Union as a whole.

They shrink the tax base by an estimated EUR 600 billion a year, depriving the EU Member States of over EUR 100 billion in revenue each year. This is why Parliament and the Commission are proposing that the web giants and multinationals must be taxed where they generate value.

Tax competition between states in the same market is acceptable only if everyone plays by the rules. Parliament is calling for a minimum tax base for European companies. Tax agreements which undercut that floor should be regarded as state aid detrimental to competition and the functioning of the internal market.

These and other unfair practices, such as subsidies and rock-bottom social standards, are jeopardising the mobility of firms and workers. What do we say to someone who has lost their job because a firm has moved from one Member State to another, possibly even to take advantage of European funding?

The proposal to set up a European Labour Authority to act as a mediator in cases of corporate restructuring and retraining of workers is a step towards addressing these challenges. I have proposed that a task force be established to deal with these issues immediately, and until such time as the Authority is up and running.

 

 

A more solidarity-based Economic and Monetary Union

Parliament is working to establish a genuine European capital market which will make it easier to finance the real economy.

To do this we must complete the Banking Union as soon as possible, but what we are seeing are dangerous moves to increase the demands being made on banks, and even to postpone indefinitely this key stage in the process of boosting confidence.

We must take a balanced approach to non-performing loans. It is in everyone’s interest for banks to be on a sound footing, but they must be able gradually to dispose of these loans, which are often backed by mortgages that must be factored into the equation. Selling off these loans benefits only speculative funds, and weakens banks rather than strengthening them.

Taking a balanced approach also means weighing all the risks equally, including those attached to derivatives.

 

Any measure that widens the gap between euro area countries, such as downgrading bank-held state bonds with the worst ratings, will undermine the Monetary Union.

We must complete the Economic and Monetary Union because half-measures will only increase the risk of our being overwhelmed by the next crisis. Our guiding principles should certainly not be self-interest and mistrust but, once again, solidarity and responsibility.

To ensure convergence between our economies, we need not only a Banking Union, but also economic and fiscal union, and a European Central Bank with powers similar to those of the Federal Reserve.   

We must strengthen the mechanisms that encourage Member States to make their economies more efficient. The Commission’s proposal to allocate EUR 55 billion for reforms under the next budget is a step in that direction.

Any country, such as Italy, whose economy grows more slowly than that of other countries must assume its responsibilities. It is far too convenient to always blame Brussels or the euro, regardless of the circumstances. Lower growth rates can also be the result of national policy-making that has not done what was needed to boost competitiveness and employment.

It is not enough to just criticise the single currency as it now stands. Politicians are duty bound to propose practical solutions to the problems encountered. Suggesting that these problems can be resolved by leaving the euro or the EU is tantamount to spreading fake news. Those who do this are garnering votes by peddling dangerous illusions at the expense of businesses, workers and savings.   

Anyone who glibly proposes a referendum on the euro has learnt nothing from Brexit and all the harm it is causing Europe, and above all the United Kingdom.   

To understand the disaster towards which those who fan discontent are driving us, one need look no further than Argentina. Leaving the euro would literally spell disaster: queues at banks, double-digit inflation, mounting debt, a collapse in the value of savings, and the end of many businesses and jobs.

Taking control of technology

The technological revolution, digitalisation, robotics, artificial intelligence: all these things are profoundly changing the world of work and the basis for competitiveness.

European policies are needed to regulate this process of change by supporting not only industry’s efforts, but also those of workers.

Substantial investment is needed in education and training under the next budget to help people acquire the requisite skills. The answer is not to tax robots, which would be tantamount to taxing production. What we do need to do is reduce taxes on human labour.

The Cambridge Analytica - Facebook scandal has also highlighted the urgent need for effective rules.

On 25 April, together with the European Commissioner with responsibility for the digital economy, Mariya Gabriel, I hosted a conference on this topic in Parliament’s Chamber in Brussels.

Without freedom, the digital revolution will not be able to show its full potential as a force for growth, job creation and technological development. At the same time, however, we should not forget that in our liberal democracies freedom must go hand in hand with accountability.

Until now, however, freedom has generally come before accountability. One reason for this is the dizzying pace at which digital applications are being developed. Another, however, is the misguided ideology which views all regulation as a brake. It is as if, at the beginning of the last century, a decision had been taken not to introduce traffic lights or trip switches in order not to slow down the development of the car or electricity.

In reality, good rules create trust and foster investment, technological development and growth.

Most digital platforms behave like publishers, lining their own pockets with profits from advertising and depriving the traditional media of those resources. It is only right, therefore, that they should be held accountable for the content they publish.

They cannot be allowed to turn a blind eye to the dissemination of child pornography, the illegal sale of weapons, messages preaching radicalisation and racial hatred, terrorist propaganda, the selling of counterfeit goods or blatantly fake news items.

Freedom of expression and information must be matched by a responsibility to verify the authenticity of content. Our citizens’ right to accurate information must be guaranteed.

In Europe, 250 million people use the internet every day and 99% of them say that they have encountered fake news disseminated by online platforms. As many as 83% of them regard these blatantly fake news stories as a threat to democracy.

I congratulate Commissioner Gabriel on having responded to Parliament’s calls by proposing measures to combat disinformation. The web giants will be offered the chance to put their own house in order by drawing up a code of conduct. If they don’t do this properly, the Commission will bring forward legislative measures.

Platforms must be subject to the same rules on the protection of workers and consumers, transparency, taxation and intellectual property as all other firms. This is also essential to guarantee fair competition with traditional operators.

Introducing effective rules also means striking the right balance between freedoms and privacy. On 25 May, new EU rules will enter into force which will guarantee certain rights, including the right to be forgotten, the right to be protected against email spam and the right to know when a personal data breach has occurred and how the data in question is being used.

The Cambridge Analytica affair is a reminder that we must remain vigilant. With the forthcoming European elections in mind, we must investigate to the full the claims that EU citizens’ personal data has been used to manipulate elections. I have invited Mark Zuckerberg to appear in person before Parliament. I expect him to do everything he can to help win back our citizens’ trust.

 

A more democratic Union

Besides securing a proper budget and a fairer market and single currency, we must bolster the role of Parliament and enhance democratic participation.

Parliament is the only institution in which the elected representatives of the 500 million EU citizens sit, and must be granted the full powers which parliaments traditionally enjoy, starting with the power to propose legislation. This implies that the other chamber, representing the Member States, must always take decisions by a majority, including on taxation, security, asylum and immigration.

Parliament adopted the Spitzenkandidaten process by a large majority. In this process, the political groups in the European Parliament nominate their candidates for the Commission Presidency. The candidate from the political group with the largest number of seats in the next Parliament will be elected President of the Commission.

This is an important stage on the road to a more political and democratic Europe, a road on which there can be no turning back.

Strengthening the democratic process means bringing Europe closer to its citizens, by involving them in decisions which will affect their future. Europeans want the Union to be led by politicians, not bureaucrats. I have sought to guarantee the prerogatives of the EU legislator by preventing ECB supervisory officials from adopting regulatory measures on non-performing loans.

Involving Parliament in the revision of the Treaties

The signing of the Rome Declaration on 25 March 2017 marked the beginning of the debate on the future of Europe.

Parliament, the heart of European democracy, is playing a central role in promoting change. Heads of State and Government are being invited in turn to attend plenary sessions, present their ideas and engage in real debate with the representatives of the peoples of Europe.

So far this year we have heard the Irish Taoiseach, the Prime Ministers of Croatia, Portugal and Belgium, and the President of France. In the coming months Parliament will receive leaders from Luxembourg, the Netherlands, Austria, Poland, Romania, Estonia and Spain, and the Chancellor of Germany.

The success of these debates has been encouraging. They have generated proposals and ideas on the changes needed which have not followed the ‘sherpa’ line but have been aligned more closely with what the people want.

In conclusion

Our European identity has been over 3000 years in the making. We are much more than just a market or a currency. By highlighting Europe’s history and investing in culture, in Erasmus, we are nurturing the citizens of tomorrow.

Speaking to you here today at the European University Institute, I want to stress the importance of establishing a School at which we prepare Europe’s future decision-makers. I welcome the Partnership Agreement between Parliament and the Institute, which explicitly refers to this School.

Today, the European Union stands at a crossroads. We can listen to the siren voices urging us to take refuge behind our own borders and blindly pretend this will shield us from the ills of the world, or we can choose to continue on our path.

Europe’s leaders must learn to look further than the next election. They must show they have a holistic and forward-looking view. That is the only truly effective response to the concerns our citizens have about security, immigration and unemployment.

With a view to bringing Europe closer to its peoples, I have made restoring the primacy of politics and defending Parliament’s central role and prerogatives the guiding principles of my term of office.

Parliament is the drawbridge across which ordinary European citizens can enter the EU ‘castle’; it is the key to the castle keep. Strengthening its role means listening to and giving voice to the 500 million people who are not against Europe, but who often criticise it as being inefficient.

The United Kingdom’s departure from the Union shows that we have not always done things as well as we could. It is also irrefutable proof that leaving the Union causes irreparable damage.

If we are to prevent a repeat of this, we need to rekindle public enthusiasm for our great European adventure. We owe it to those who have given us 70 years of peace and prosperity.

We also owe it to future generations, who deserve to enjoy a similar legacy.

For further information:

europarl.president.press@europarl.europa.eu

 

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