04 September 2012

Speech by President Barroso: "We should move forward in our project to consolidate a truly political union"

The last European Council broadly endorsed a paper prepared by the President of the European Council, by myself, the President of the European Central Bank and the President of the Eurogroup, examining how best to move along this path. And that is exactly what we are doing and preparing now for the next steps.

Of course the logic of integration cannot be purely economic. Banking union requires a single European supervisor, further economic union too requires supervision of the Member States' economic policies, joint supervision. Not supervision made by them in Brussels over our economies but our joint supervision over our economies because it is clear that in a currency, in a monetary union one country should not have the right to do harm to others as it is happening today.

It is therefore logical, but also right and just, that there is further political or institutional integration as well. This is needed to ensure democratic oversight of the process and to reassure the citizens of Europe that they are a part of the process. More integration, more democracy, more accountability. We should not be afraid of the words. We should move forward in our project to consolidate a truly political union.

The European Commission will shortly... table proposals to create a European banking union, namely a single supervisor for our banks, but we must be under no illusions that deepening economic integration and especially political integration are long-term projects. Yes, they provide a vision which is needed to generate confidence in the long term future of Europe, but Europe also needs action now.

So the key here is to combine ambition with a proper sequencing. It would be a complete mistake to suggest that to get out of this crisis Europe can do it only by Treaty change. We know that Treaty change takes time so we need to have short-term responses to financial instability we are now feeling in the euro area. But short-term is not enough because the so-called markets know very well that in the longer term the stability of the currency depends also on the political construct and on the solidity of the institutions that are behind it. That is why as the same time we are giving short-term answers to the instability we need to have a horizon for the medium and long term. So these issues – short-, medium- and longer-term – should not be seen as incompatible and we have to act on the several areas.

That is why Europe to overcome its present crisis needs further fiscal consolidation, deep structural reform and smart targeted investment so that we can return to long-term growth and create the jobs our citizens need. The last European Council committed to work in all these areas and the European Commission is leading or co-leading this work.

There are some things you can say even without further documents that sometimes our partners underestimate. The point is the following: if you look since the crisis there was no move until now to get back, to undo the economic integration. If you see the debate now in Europe is how far and how fast are we going for the next steps but no one really at least in the governments that are on Europe is proposing to undo the European integration. And if you look at the decisions, the decisions have all been for reinforcement of the economic and monetary union and further integration of the institutional apparatus and even more supranational powers. OK we can always say that probably it is not fast enough or we can say in some cases it was the intergovernmental route not the community method route but it was always for more and not less integration.

I want to give you my personal testimony after eight years in this position, and the last three years in the crisis mode day and night with this euro crisis that I am fully confident about the willingness of our Member States and their leadership to integrate further. It is a negotiation, extremely complex, where of course there are different teachers and different perceptions and different cultures, but at the end I have no doubts about the interest of all Member States to go forward in terms of sharing more sovereignty for the economic and monetary union, at least for the countries of the EMU and with the support of those who are not yet, or they do not intend to be in the euro.

Another issue is the lack of understanding of the role of the institutions, namely of the European Central Bank. Of course the ECB will do whatever is necessary to sustain the euro. By definition. The first mandate of the ECB is the very existence of euro, it is not only price stability. So when there are threats to the integrity of the monetary union the ECB has of course the right to intervene and reintervene. But of course rightly the ECB does not want to give the message that the Member States can go on with, let's put it frankly, irresponsible fiscal policies, unsustainable levels of debt and lack of supervision as we have seen recently when we have discovered that the reality of the financial sectors was not exactly the one that they were pretending to be.

So this is the game. That is why I am confident, not underestimating the difficulties that we know very well where they are, but I am confident and I want to convey to you my perception that we are going to overcome these difficulties. Of course there are risks and serious risks because we have seen in the past and in history that sometimes even when there is not the intention to create a problem it may happen that interrelation of independent consequences can provoke the problem. Yes, this risk exists.

Of course there is a very important problem is that at the time when we are required to take further steps in terms of integration it is exactly the time when there is less support in the public opinion for this integration. This is why we need also to act politically for the Member States and the European institutions to act together to keep the population of Europe broadly supporting the European integration which may be at a risk in the current circumstances when we see the economic situation deteriorating and when we see the very high levels of unemployment.

Full speech

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