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05 November 2013

President Barroso: "This crisis is first and foremost a political stress test"

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In his 'First Frankfurt speech on Europe', Barroso stressed that "the goal will be a political union" and that Germany would have an "imminently crucial role" to play in this. He urged Germany to do more to address economic imbalances in the eurozone.

Germany's role

Stronger economies paying for weaker economies is not the answer. What we do need, in contrast, is the correction of existing macro-economic imbalances, notably in the euro area. This is where Germany by its own legitimate interest can give a contribution. The Commission is not asking Germany to pay for the other, weaker economies. What we are asking Germany as we are asking any other member of the euro area is to do its homework so that we can guarantee financial stability in the eurozone.

Let me be very clear because we are dealing here with a mystification which has been around for too long in the public debate: When we talk about the need for re-balancing we are not talking about weakening the competitiveness of the German economy. Nothing is gained by weakening Germany so that the others look a bit less weak. That would not make any sense from a global economy perspective, on the contrary, the strength of the German economy is an asset for the euro and for the European economy. What we do need, however, is to strengthen the competitiveness of other European economies.

Of course, we need reforms for achieving this. But it also requires having a European single market which brings each others' competitive advantages to full fruition. And here the truth is also the single market as we have it very much allows Germany to play out its competitive advantages, namely technology and its strong industry. In turn, Germany could do more to enable also others to bring in their respective assets, for example, through free and unhindered access to the service markets across Europe including Germany, or through wages in line with productivity. Thus more open markets in the stronger economies would be a very important contribution to the recovery of the weaker economies.


We also need to look very deeply into the question of governance. Do we have the structures and competencies in place which a monetary union needs? (...) It would be a huge mistake to believe that there are no more risks, there are risks. Apart from some external risks that I will not comment, the main risks are, in my opinion, actually political, namely political instability, and lack of political determination. In some of our countries people are tired of what some call fiscal consolidation, some call austerity. It would be a tragedy if populists were given the chance to roll-back those achievements. We need to take these situations very seriously and give responses which project hope and which are trustworthy. The only reasonable response is to continue our path of responsibility and solidarity. So among the political risks I see is a risk of fatigue of these reforms. The temptation that may happen in some of our countries to stop the reform or to not even initiate strong reforms for further competiveness.

EMU/political union

We also must preserve the impetus for completing a deep and genuine Economic and Monetary Union. This work is yet unfinished. Reform fatigue here would be as dangerous as in our countries because it would undermine the yet fragile credibility of our endeavours.


We will ultimately need a political union because important such far-reaching economic and budgetary policies need legitimacy and accountability. The solidity of the economic and monetary union will eventually depend on its underlying political and institutional structure… It is true that for some reforms we would probably need treaty change. Now we all know from experience that treaty changes are very complex. We therefore need to be cautious.

But there is so much more we can do without treaty change, on the basis of the treaties we have. To increase ownership at national level for economic reforms and make our existing framework more binding, this is possible without further treaty change, to complete the banking union through a single European resolution mechanism, now that we have the single supervisory mechanism, this is possible without treaty change, to fully support the Commission role in enforcing the rules on fiscal and macro-economic stability within the European Semester, this is possible without treaty change, and last but not least, and some of this may need a treaty change, to move step by step towards a political union.

So when people ask me about what can Germany do more to contribute to the success of our action, I would say: to leave no doubts that the goal will be a political union. Not for tomorrow. But the political horizon – this is very important to keep in mind - we will as we have done in the European community since the beginning do it step by step, but the commitment and the message that Germany as the biggest economy in the eurozone and indeed the European Union gives, is fundamentally important to restore confidence. And confidence is a fundamental variable in the equation for the euro area and for the European Union success.

Germany will have to play an imminently crucial role in all this. Being the biggest economy in the euro area and the EU as a whole, Germany will have to assume the highest degree of leadership for this endeavour. Of course, Germany cannot and should not lead alone, for the reasons we all know. It has to lead with its partner states, and with and through the European institutions. But you Germans have this historic responsibility and you can use it to the better.

I know very well that all the main political forces in Germany have that commitment to Europe. And that was precisely what I was responding to some of my interlocutors, political or financial interlocutors during the most acute moments of the crisis. When they were asking me 'but do you really believe that Germany will be ready to support the most vulnerable countries?', I said, 'yes'. I trust not only the current government but also the main opposition parties. In fact Germany has kept a stable position on that. So I know that commitment to Europe of Germany, and we have seen it here, are seeing here today in Frankfurt or in Hessen, but also in all of Germany. And my message to you is very simple: keep it. Do not allow any doubts to emerge. This is very important for Germany and for the European Union as a whole.

The most important and also the most difficult reform policies in Europe, and which have a knock-on effect on all of us – for all those reforms we need a strong political consensus, and it is important that in Europe we are not divided, not only by the national lines but by ideological differences. That's very important at European level, I know that by experience to avoid the division at European level. That's why we need the consensus for continued fiscal consolidation, deep structural reforms, for competitiveness and also for targeted investments for growth.

European elections

Half a year ahead of the 2014 European elections we need to have this wide-ranging debate on how to build the future Europe.

We need debate, because Europe must be more democratic. Europe must not be constructed behind closed doors. We need to develop spaces for European public debate where European issues are debated from a European point of view and not, as very often it happens, just from a national point of view, a collection of national perspectives. We need of course the national perspective but we need also to develop this European perspective.

We need debate, because the need for a more integrated euro area must not be to the detriment of what we have achieved all together, from the single market to the four freedoms. The European Union must remain a project for all its members – whether in the Euro or not yet, whether big or small, continental or island – a community of equal members.

We need debate, because a political union does not mean that everything has to be done at European level. As I said previously, Europe needs to be big on big things, and smaller on small things. Subsidiarity is an essential democratic principle that I hold in very high esteem. It must be exercised to the full. Yes, it is important in same areas that we have more integration. For instance, in the euro area we need that, we need the banking union, and that requires more competence at European level without question but there are many other areas where in fact Europe should avoid meddling too much in citizens' lives. And that's why we are so much committed to this process of better regulation, or REFIT, as we call it, to reduce a burden on companies and citizens.

The European Union is not and cannot be a project made in and imposed from Brussels and the European institutions. It has to be precisely the other way round. Europe is where Europeans live and act… We must make no mistake about what is at stake at forthcoming European elections in May next year. It is too important for that. What is at stake is Europe. The ballot paper we drop into the ballot box must be a vote expressing a genuine European political choice. Let us not abuse it out of frustration with this or that national policy. For that we have other elections.

Full speech

© European Commission

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