01 June 2016

Speech by President Donald Tusk at the European Business Summit

European Council President says that European institutions must focus on the political unity of the West and on maintaining the European order - Tusk warns against the "dramatic consequences, also economic, that would be brought about by Brexit."

[...]Let us focus on two issues. One, we must at all costs maintain and strengthen the political unity of the West. I mean the West in a political - not geographical - sense. We discussed this at the G7 Summit in Japan, among other things. Today it is becoming increasingly clear that a new international order may not necessarily follow our rules. Above all it is about the rule of self-restraint of the most powerful. Today, respect for the rules, agreements, and the institutions which supervise those rules, is not entirely a common phenomenon. And in a world without rules, the most brutal and insolent will be the ones who win, while the weaker and decent ones will lose. If we want to globally and effectively counter events such as violations of territorial integrity, vide Ukraine and Russia, territorial claims at sea, as in South-East Asia, breaching world trade regulations, as in the overcapacity in the steel industry, to mention but a few issues discussed at the last G7 Summit, we must stand united. A world which respects the standards present in the EU and the US, in Canada and Japan, and this is not a full list, is a better world than the one defined by a lack of rules, the use of force and short-term interests. That's why it is so important that in our debate about TTIP, CETA (the agreement with Canada), or EPA (with Japan), we remember about the strategic and geopolitical dimensions of those agreements.

Two, we have to maintain the internal European order. I don't need to explain to anyone present here what dramatic consequences, also economic, would be brought about by Brexit. An interesting forecast was presented by José Angel Gurria, Secretary General of the OECD at the G7 summit. According to him, a UK exit would be a major negative shock to the UK economy, with economic fallout in the rest of the OECD, particularly in other European countries. By 2020, UK's GDP would be over 3% smaller than otherwise. And by 2030, in a central scenario, GDP would be over 5% lower.

It is even worse when we look at the effects of a possible break-up of Schengen. The European Commission calculates the direct costs of 'non-Schengen' to be between 5 and 18 billion euros per year. A study by the Bertelsmann Foundation is even more dramatic when it says that Germany alone would face additional costs of between 77 and 235 billion euros in total by 2025.

Such may be the economic costs of our political mistakes and omissions. But we know that there are more threats, and the migration crisis has shown how difficult it is today to agree a common European answer and foster common determination in the decision process. However, the greatest threat to Europe is self-doubt and a lack of energy in the pro-European mainstream, as opposed to excessive energy among the radicals and extremists. There is no worse prospect for the European economy than the omen of a triumph of anti-liberal and Eurosceptic political forces, whether left or right. We must and can avoid this scenario. The condition is to depart from utopian dreams and move on to practical activities, such as for instance reinforcing the EU's external borders or consistently completing the Banking Union. Forcing lyrical and in fact naïve Euro-enthusiastic visions of total integration, regardless of the obvious good will of their proponents, is not a suitable answer to our problems. Firstly because it is simply not possible, and secondly because - paradoxically - promoting them only leads to the strengthening of Eurosceptic moods, not only in the UK. [...]

Full speech

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