18 November 2013

President Barroso: The political implications of European economic integration – Towards a political union

Our fundamental response to the crisis was aimed at restoring confidence that the achievements of the single market and single currency will not be undone. But while focusing on the individual economic and institutional reforms we should not be missing a bigger picture: not just of the changes required, but also of the political will, to move forward on the road to complete the design of the Economic and Monetary Union and ultimately the political union.

And here I want to highlight the word 'political', because indeed it's about politics we are speaking. Once again I want to share with you my experiences during the most difficult periods of the crisis. When discussing this matter with the President of the United States, the Prime Minister of China, the President of Russia or the Prime Minister of Japan and also very important entities in the financial markets, the question they asked was not about the deficit of Greece or about the debt of Ireland. It was namely about the political determination in the euro area to sustain the currency. It was, very concretely, about Germany. 'Do you believe', I was asked, 'that Germany will do whatever necessary to sustain to euro?' And the answer I gave was: 'yes, I believe it will'. And I explained why.

So in the end, and this is very important to understand, the stability and the credibility of a currency like the euro lies on the credibility and the sustainability of the political institution construct behind it. That is why in the end – of course it has to do with markets, of course it has to do with debt, of course it has to do with deficits – but it has to do with the political construct that is behind a common currency. In the end it is about the commitment to live together and share a future. To share not only a currency that is by the way a symbol of Europe but to share a future. So it is eminently a political issue. And it's very interesting that the main doubts about the euro dissipated when there was a clear sign from the Member States and the European institutions like the ECB that in fact Europeans would be ready to do whatever it takes to support the euro. Once again, it was not an economic intervention, it was not a technical decision, it was a political commitment that changed the mood in the markets - once again an example that politics matter.

With our Blueprint on a deep and genuine economic and monetary union, presented in November 2012, the European Commission is precisely filling this gap, the gap between what is perceived as the current crisis, namely to some problems that we have already mentioned, including in the market perception, and the future. Our main purpose is to present the political vision that justifies the institutional change in the short term, builds political awareness and leverage in the medium term, and launches a public debate on Europe's longer term.

This comprehensive approach is based on key principles that need to be upheld in order to deepen the EMU while at the same time preserving the integrity of the European Union at large.

First, deepening the euro area should be done within the institutional and legal framework of the Treaties, according to the Community method. Moving outside of the Community framework risks legal fragmentation but also undermines democratic accountability.

Second, the deepening of the EMU should first and foremost make full use of the potential of EU-wide instruments...

And third, moves towards a genuine EMU should primarily be made through secondary legislation. Treaty change should be contemplated only where and when necessary. Most of the building blocks of the EMU in the medium term, however, go beyond what is possible under the current treaty, and we should acknowledge that.

The Blueprint presented by the Commission also sets out the major questions both of our destination and how we progress on all fronts at the same time. The crisis has made one thing clear, it is that economic governance, democratic legitimacy and social commitments need to move forward hand in hand, keeping pace with one another.

We have provided our vision and principles for the future, with concrete sequencing of short, medium and long term to support the deepening of the EMU. And we should now focus – while keeping that horizon, the political union – on what we can do in the short run. The Banking Union is at the forefront of our priorities. The single supervisory mechanism has been adopted and a single resolution mechanism is under discussion. We have also been working on some other measures such as a mechanism to better coordinate major economic reforms across Europe, the so called contractual arrangements. Or, as the Commission has said, convergence and competitiveness instruments, that could combine specific contractual arrangements for reforms with Member States with a focused and targeted financial support.

The social dimension of the economic and monetary union is also being strengthened along the lines recently proposed by the Commission.

Full speech

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