12 September 2012

President Barroso: State of the Union 2012 Address - The 'Decisive Deal for Europe'

3. Response to the situation – the 'Decisive Deal for Europe'

"What I demand and what I present to you today is a Decisive Deal for Europe.

A decisive deal to project our values, our freedom and our prosperity into the future of a globalized world. A deal that combines the need to keep our social market economies on one hand and the need to reform them on the other. A deal that will stabilise the EMU, boost sustainable growth, and restore competitiveness. A deal that will establish a contract of confidence between our countries, between Member States and the European institutions, between social partners, and between the citizens and the European Union.

The Decisive Deal for Europe means that:

• We must leave no doubt about the integrity of the Union or the irreversibility of the euro. The more vulnerable countries must leave no doubts about their willingness to reform. About their sense of responsibility. But the stronger countries must leave no doubts about their willingness to stick together. About their sense of solidarity. We must all leave no doubts that we are determined to reform. To REFORM TOGETHER.
• The idea that we can grow without reform, or that we can prosper alone is simply false. We must recognise that we are in this together and must resolve it together.
• This decisive deal requires the completion of a deep and genuine economic union, based on a political union."

Expanding on economic union, Barroso talked i.a. about creating better and fairer taxation systems. "Stopping tax fraud and tax evasion could put extra billions into the public purse across Europe. This is why the Commission will fight for an agreement on the revised savings tax directive, and on mandates to negotiate stronger savings tax agreements with third countries. Their completion would be a major source of legitimate tax revenues.

And the Commission will continue to fight for a fair and ambitious Financial Transactions Tax that would ensure that taxpayers benefit from the financial sector, not just that the financial sector benefits from taxpayers. Now that it is clear that agreement on this can only happen through enhanced cooperation, the Commission will do all it can to move this forward rapidly and effectively with those Member States that are willing. Because this is about fairness. And fairness is an essential condition to make the necessary economic reforms socially and politically acceptable. And above all fairness is a question of justice, social justice."

He then went on to talk about banking union:

"Today, the Commission is presenting legislative proposals for a single European supervisory mechanism. This is the stepping stone to a banking union. The crisis has shown that while banks became transnational, rules and oversight remained national. And when things went wrong, it was the taxpayers who had to pick up the bill."

"The single supervisory mechanism proposed today will create a reinforced architecture, with a core role for the European Central Bank, and appropriate articulation with the European Banking Authority, which will restore confidence in the supervision of the banks in the euro area. It will be a supervision for all euro area banks. Supervision must be able to look everywhere because systemic risks can be anywhere, not just in so-called systemically relevant banks. Of course, this in a system that fully engages the national supervisors.

The package comprises two legal texts, one on the ECB and the other on the EBA, which go together. It is clear that this parliament will have a crucial role to play in the adoption of the new mechanism, and after that in its democratic oversight. This is a crucial first step towards the banking union I proposed before this House in June. Getting the European supervisor in place is the top priority for now, because it is the precondition for the better management of banking crises, from banking resolution to deposit insurance.

In parallel the Commission will continue to work on the reform of the banking sector, to make sure it plays its role in the responsible financing of the real economy. That means improving long term financing for SMEs and other companies. It means rules on reference indices, so we do not again see the manipulation of bank interest rates affecting companies and mortgage holders alike. It means legislation to ensure that banks give a fair deal to consumers and another look at the structure of banking activities to eliminate inherent risks."

On political union, he said: "Ultimately, the credibility and sustainability of the Economic and Monetary Union depends on the institutions and the political construct behind it. This is why the Economic and Monetary Union raises the question of a political union and the European democracy that must underpin it. If we want economic and monetary union to succeed, we need to combine ambition and proper sequencing. We need to take concrete steps now, with a political union as a horizon."

"An important means to deepen the pan-European political debate would be the presentation by European political parties of their candidate for the post of Commission President at the European Parliament elections already in 2014. This can be done without Treaty change. This would be a decisive step to make the possibility of a European choice offered by these elections even clearer. I call on the political parties to commit to this step and thus to further Europeanise these European elections."

4. Treaty change, 17/27 dimension and expanding public debate

Barroso called for a federation of nation states. "Not a superstate. A democratic federation of nation states that can tackle our common problems, through the sharing of sovereignty in a way that each country and each citizen are better equipped to control their own destiny. This is about the Union with the Member States, not against the Member States. In the age of globalisation pooled sovereignty means more power, not less."

"Creating this federation of nation states will ultimately require a new Treaty... A deep and genuine economic and monetary union can be started under the current Treaties, but can only be completed with changes in the treaties."

5. Conclusion: is this realistic?

"To sum up, what we need is a decisive deal to complete the EMU, based on a political commitment to a stronger European Union. The sequence I put before you today is clear. We should start by doing all we can to stabilise the euro area and accelerate growth in the EU as a whole. The Commission will present all the necessary proposals and we have started today with the single supervisor to create a banking union, in line with the current Treaty provisions.

Secondly, we will present our blueprint on a deep and genuine economic and monetary union, including the political instruments, and this will be done still this autumn. We will present here again all proposals in line with the current Treaty provisions.

And thirdly, where we cannot move forward under the existing treaties, we will present explicit proposals for the necessary Treaty changes ahead of the next European Parliamentary election in 2014, including elements for reinforced democracy and accountability

This is our project. A project which is step by step but with a big ambition for the future with a Federation as our horizon for Europe."

Full address

Video

Closing remarks

Letter from President Barroso to EP President Schulz

Read more about the proposal for single European supervisory mechanism

Read more about the proposal for European political parties

Barroso answers citizens' questions on the State of the Union, 19.9.12

© European Commission