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Introduction
I would like to thank both of you, Dr. Scheidt and Professor Nonnenmacher, for organising this event and for your kind introduction. It is a pleasure to be here with you today.
An epoch-making invention: the European Union
Distinguished guests, ladies and gentlemen,
Let me start with the words of Oskar, the main character of “The Tin Drum”, Gunter Grass’s masterpiece. He observed: “the clock may well be the grown-ups’ greatest achievement”. However, he added, grown-ups “become creatures of their own epoch-making inventions the moment they create them”.
Let me reassure you. I am not here to talk either about literature or about clocks. I am here to speak about other “epoch-making inventions”: the euro, the single market, the European Union. The euro and the single market are much more to us than a mere means of exchange and a geographical region where goods are sold. And the EU –as Prime Minister Monti has stressed –is the most fantastic achievement that European countries have produced so far.
Much of our security and prosperity is linked to the correct application of these achievements. In this sense, we Europeans are creatures of our epoch-making inventions. That is why we have to keep checking and, if necessary, repairing them. We must all realise that if the single currency and the single market were to break up, not only would the economic mechanism be smashed but also the political construction it symbolises. It is not the clock which is at stake but time itself. Time could stop or even reverse. Back to a period when Europe was divided by economic barriers, nationalism and resentment.
If the euro becomes a factor of disintegration rather than a symbol of integration, if we do not solve our current problems with growth, then populism and demagogy could spread throughout Europe. And the whole world would become more unstable and more unsafe if we were to destroy the edifice that we have constructed by building upon the ideals of our founding fathers: Adenauer, Schuman, De Gasperi, Monnet.
The euro
Ladies and Gentlemen,
Italians have always attached a strong sense of moral responsibility to money. The word “money” itself comes from moneta, a title of the Roman goddess Juno, in whose temple money is said to have been coined for the first time. And, as you know, the verb monere in Latin means to advise, to warn. When Italians pronounce the word moneta, they recall the image of that admonishing goddess, that sense of warning, which has accompanied money since that first coinage.
In the ’90s, when the Italians were asked to accept austerity measures to meet the Maastricht criteria and join the euro, they did so with confidence: they believed in the political project and were ready to take on the responsibilities it entailed. But there was also another motivation: we were sustained by the optimism inspired by your constructive virtues. The euro exists because the member states belong to the same community and espouse shared principles and values – and also because they were attracted by the German model.
Germany has gained great advantages from the euro, a stable and viable currency. But it is not the only country to have done so. Thanks to the euro, the eurozone economies have enjoyed years of low inflation, low interest rates, reduced transaction costs, clearer information about price-setting. And, without the need to convert currencies, their companies have enjoyed greater stability, with small and medium-sized enterprises benefiting greatly from the removal of exchange rate risks.
That is why there are countries in the EU which aspire to join the euro. And even countries outside the EU, such as Montenegro and Kosovo, which have chosen the euro as their currency. Italy strongly believes in the euro and will do everything in its power to protect it. And to defend the irreversible nature of European integration.
Italy has no major macroeconomic imbalances apart from high public debt: no major bubbles in the housing market, no major external deficits. We have low household debt, and a sound banking system. I can see how, on the face of it, Italy’s public debt may have put part of the credibility of the Economic and Monetary Union at risk. However, Italy is now fiercely determined to restore this credibility. The Italian government is adopting a number of structural reforms and liberalisation measures because we are convinced that, as Goethe once said, the best of all governments is that which teaches us to govern ourselves.
Italy’s net overall adjustment is structural and amounts to €20.2 billion in 2012, €21.3 billion in 2013 and €21.4 billion in 2014. The Government’s action to spur economic growth includes policies aimed at improving the business environment, increasing the overall flexibility of the labour market, enhancing liberalisation and consumer protection, developing infrastructure and reducing administrative costs. Let me mention just two examples: the liberalisation of opening hours for retailers and the new regulations governing the liberal professions. The measures approved thus far shift the tax burden away from labour and capital and towards property and consumption. For example, greater fiscal deductions were introduced for companies hiring women and workers under the age of 35. Consultations on the labour market reform are on-going between the government and labour unions.
The comments of European colleagues and the positive reactions of the financial markets are evidence that Italy is on the right track, that Italy is no longer the eurozone problem but part of the solution. Of the measures adopted, and already in force since 1 January, let me remind you of the important pensions reform, which will produce savings of about 7.6 billion euros in 2014, rising to almost 22 billion in 2020. In this way, in 2013 Italy will balance its budget and achieve a primary surplus of 5.5% of GDP: an effort without equal amongst European Union member states. The Italian Parliament also voted in December to include the balanced budget rule in the Constitution. The final approvals will be obtained this spring.
By adopting this economic package, we have pursued our national interest. But these measures may not be sufficient to enable Europe to make that step-change required by the current difficult challenges. Let me be crystal-clear on this point. Europe still has big fires to put out. And to extinguish them, structural reforms and fiscal discipline are as important as reassurance from Germany about its willingness to engage in the construction of Europe.
We therefore welcomed the words pronounced some days ago by Chancellor Merkel when she also mentioned the prospect of a political union, “something that wasn’t done when the euro was launched”. Italy is implementing tough budget measures, but Italians, like many other people in Europe, want to be sure that they can continue to trust in the political project of an ever-more integrated Union.
The political challenge facing policymakers is to restore the confidence of frustrated citizens and to reassure them that the difficult decisions they are implementing will help create a brighter future for the European Union. As De Gasperi once stressed: If we restrict ourselves to creating shared administrations, without a higher political will […], this European venture may seem cold and lifeless, like the Holy Roman Empire at certain moments in its decline. Our higher political will must focus on achieving an ever-closer union, and with it growth, jobs, social fairness and economic integration. The agreement reached by the Eurogroup with the Greek government on a policy package testifies that this higher political will is still alive and productive.
The single market
This leads me to the other pillar of the European construction: the single market, made up of half a billion consumers. A better, stronger and well-functioning internal market is the best endogenous source of growth for the European Union. The single market is indeed one of the EU’s greatest achievements. Let me recall that –between 1992 and 2009 –it played a significant part in increasing growth by 1.85% and creating 2.75 million additional jobs.
Italy counts on Germany to spur economic growth. I am also referring to the need for a German commitment to the full integration of the single market, where your country can play an important role. The current European crisis is in some respects a crisis of incomplete integration. The completion of the single market and a quality leap in its governance would enhance European prosperity and increase member states’ potential growth rates. We are not asking Germany to reduce its competitiveness. On the contrary, we are asking you to increase it: it’s a win-win game.
Fiscal discipline, though necessary, is not sufficient to overcome the present problems. We need to complement the fiscal agenda with an agenda for growth. We need to foster greater competitiveness among the market players and provide a more level playing field to boost competition and efficiency. The “Fiscal Compact” must be complemented by a similar “Compact for Growth”.
What is worrying, however, is that some countries are showing signs of market integration fatigue. Sometimes, even of resistance to the principles of the market economy. This tendency becomes all the more worrisome when you find it in the three big founding countries: Germany, France, and Italy. Inspired by Germany, supported by France and Italy, the concept of the social market economy found its way into the Treaty of Rome and the integrated Europe. But these three member states now display deficits in terms of implementing the single market. Italy in particular is well behind, but we are not the only ones.
Our countries should better exploit the opportunities for growth and vitality offered by a single market where goods and services are mostly sold in a single currency. We should be encouraged by the fact that even some non-euro countries have a less marked implementation deficit than the eurozone ones. They are seizing advantages that we have within our reach, and that the euro could help us amplify – to the benefit of our enterprises.
Part of the problem may be that, while the EU is introducing tougher sanctions for public budgetary violations, it does not have an efficient mechanism to swiftly sanction those countries that fail to fully open their economies to competition. Some politicians look at the next election polls rather than at the overall welfare of their citizens and their children. They think that protecting some businesses from competition and acting against European integration may be politically advantageous. For example, we have noticed a renewed determination by governments to resist cross-border consolidation by industrial services companies. This is a short-sighted approach.
The Italian government, under the leadership of Prime Minister and former Competition Commissioner Mario Monti, is working hard to address this tendency. I am confident that Germany too will commit itself more fully to overcoming the obstacles to integration and growth. This is the most effective way for it to express its European solidarity, promote the principles of the social market economy and defend the fundamental values that inspired the founding fathers of the Union.
Enlargement
Ladies and Gentlemen,
The European Union has produced another “epoch-making invention”: its enlargement. By extending its frontiers to the countries that have accepted the values of freedom, rule of law and the market economy, Europe has established the most successful security policy of its recent history. Certain European countries could have developed into unsafe centres of instability, turmoil and nationalism. Their accession to the EU has instead brought peace and prosperity.
Thanks to its favourable prospects for EU membership, the Balkan area is no longer a powder keg. However, the continent’s stabilisation and reunification process is not yet complete. Especially in Serbia, the moment is crucial. In view of the upcoming parliamentary elections, Europe needs to acknowledge Belgrade’s achievements. To mention just some: the arrest of Mladic and Hadžić and their extradition to the Hague, the improvement of bilateral relations with neighbouring countries, the dialogue between Belgrade and Pristina, facilitated by the European Union, and many impressive domestic reforms.
By granting Belgrade candidate status, the next European Council would recognise Serbia’s commitment to the European agenda. And it would also be pursuing the EU’s core interests. Serbia, let us remember, has a pivotal role in the regional scenario and its closer integration with the EU is conducive to the reinforcement of stability and growth in the area.
European security and defence policies
Ladies and Gentlemen,
Let me now turn to the second broad area of my speech: European security policy. In this respect, the need to spur growth is even more pressing, because new global threats and regional risks are arising. We need only think of the uncertainty linked to the new scenario unfolding in the wake of the Arab Spring or the menaces brought by the Iranian nuclear program. Indeed, Europe faces two conflicting challenges. It needs to cope with tighter budgetary constraints, while also responding to a greater demand for security.
Europeans cannot deceive themselves that other partners, first and foremost the United States, can continue to bear the burden of their security. The lines set out in the new American defence strategy are leading towards a more agile and streamlined military instrument, and to a reduction of manoeuvre forces in favour of high specialisation units that can be rapidly deployed in distant theatres. Europeans can no longer be “security consumers”, under US protection and responsibility. If the EU wishes to act as a political leader, it will also need to make a significant contribution to world stability as an active provider of security.
It is also time to adapt the European security strategy to the new international reality. I have tabled a proposal to this end, given that the last review dates from 2008 – before the Lisbon Treaty, the economic crisis, and the Arab Spring. The starting point should be the need to place the protection of human rights at the centre of European foreign and defence policy, and to shape a positive agenda through a pro-active anticipatory diplomacy. We can no longer allow ourselves to be caught unprepared by events like the Arab Spring, where social transformations moved much faster than our ability to respond.
I know that some European states are reluctant to take decisive steps towards a fully shared European defence framework, with common, integrated armed forces. We all live under the same sky –as Konrad Adenauer once said -, but we don’t all have the same horizon. The consequences of this divergence of approaches, however, are fragmented initiatives and wasted resources. The Atlantic Alliance must, in Italy’s view, continue to be the cornerstone of European defence. At the same time, the EU countries should join forces, avoid undue duplication, streamline procedures and promote cooperation to maximise their collective defence output.
Italy is determined to move forward with these efforts to pool and share resources. And it counts on Germany’s role in dispelling the concerns felt by some European partners over sovereignty in the security and defence sector. I understand the unease of those European partners. As member states hand over more of their fiscal and economic policies to the central oversight of European institutions, they defend this sector as one of the last remnants of national sovereignty.
Therefore, the goal should be to advance with integration and partnerships, while at the same time avoiding untimely accelerations that would increase the risk of new divisions.
Transition in North Africa and the Middle East
Ladies and Gentlemen,
Speaking about European security, I would like to stress that developments in one region in particular will have a definite impact on this sector. The impact could be positive or negative: much will depend on us. Obviously, I refer to North Africa and the Middle East. If the democratic transition in the southern Mediterranean is successful, then it will be possible to create a new model that combines pluralism and Islam, respect for rights and tradition, free market and social equity. But if the transition fails, all Europe will bear the consequences. Europe, then, has a moral duty as well as a practical need to help our neighbours secure democracy and prosperity. No member state can consider itself a mere spectator.
Europeans were able to overcome divisions and become a paradigm of democracy, rights, rule of law and economic integration. Our experience shows that co-existence can transform resentment into cooperation, hatred into friendship, fear into respect. A cohesive European strategy is the only response to the issues posed by the Arab Spring. The reconstruction is the task of the Arab peoples alone. But they look to Europe with great expectations. I saw this at first hand during my recent visits to Tunis and Cairo, and accompanying Prime Minister Monti to Tripoli. They expect tangible improvements in people’s daily lives.
Europe must, therefore, provide concrete assistance, by increasing the EU resources allocated to our southern neighbours. And we need to ask for an effective and rapid mobilisation of the resources of international financial institutions such as the European Investment Bank and the European Bank for Reconstruction and Development. Delays or inadequacies in implementing the promises made by the G8 countries and by the EU would be unacceptable. Italy has conveyed to the IMF and Washington the urgent need to finalise the discussions between the IMF and the Egyptian government.
Our aim must also be to encourage regional integration. The Middle East and North Africa region is one of the least integrated in the world. This lack of trade and economic integration hinders foreign investments and increases unemployment. To help pave the way for the necessary step-change, yesterday I chaired two regional initiatives in Rome: the 5+5 Ministerial meeting, which I presided over with my Tunisian colleague, and the Foromed. All the participants sent a clear message in favour of stronger linkages and fewer barriers across the region.
However, there is no country in Europe that is able, alone, to win all these challenges. Not even a country like Italy, in spite of its strong geographical and historic ties with the Mediterranean. Europe should speak with a single voice. This is the best way for Europe to safeguard its soft power and its reputation as a well-governed entity that attracts and can influence the Arab region. Italy counts on its partners to define and implement a cohesive European strategy in the Mediterranean.
Syria
Let me spend a few more words on the critical situation that Syria and the Syrian people are living through in these tragic hours. Military attacks have increased over the last few weeks, in particular after the veto against the Security Council Resolution. The situation is unacceptable. This horrible bloodshed must stop now. Italy and Germany have firmly condemned the repression by the Syrian authorities. We have deplored the brutal use of force, calling for an immediate end to the violence.
Unfortunately, our appeals have so far not been met by the Syrian leadership. So the international community must take stronger, coordinated action. I am in close contact with my EU, Arab, US and Turkish colleagues. And I can tell you that Italy is ready to support targeted EU and UN measures for a political and peaceful solution, including a joint UN-Arab League peacekeeping mission to observe the implementation of the cease-fire. The last UN General Assembly resolution also sent out a strong and timely signal.
Giving concrete signs of solidarity to the Syrian people is imperative. They are struggling for the right to live. They want freedom and security, and they are paying a terrible price for it. I attach great expectations to the meeting of the Friends of Syria scheduled for Friday in Tunis.
Conclusions
Ladies and Gentlemen,
Italy feels a great need for more Europe. If we had not succeeded in our epoch-making inventions, Europe – as a geographical location – would have continued to exist. However, in this globalised world, in which the actors are protagonists only when they are big enough to make a difference, the small states of a fragmented Europe would have been doomed to irrelevance. More Europe means that every member state should avoid pursuing narrow self-interested goals that run counter to the higher European ones.
I am confident. Europe’s crises have historically been overcome with a further advance in European integration. Europe, unlike clocks, does not advance at a regular pace. It grows, like children, in fits and starts. Hopefully, even the present crisis might provide the opportunity to complete the tasks too long delayed in the European agenda. It’s time to take strategic decisions to move forward, not to stop time. Even Oskar allowed himself to give up the tin drum and eventually grow because he recognised that freedom is found through decisions, not through standing still.
Europeans can continue to create their future together. Germany and Italy can inspire this creative process by taking on their special responsibilities as founding members of the European Union. It is in our core interest to protect and develop the epoch-making inventions that we have conceived and produced together.
