state of the union: delivering a ‘europe of results’ in a harsh economic climate

State of the Union: Delivering a ‘Europe ofResults’ in a Harsh Economic Climate

JOSÉ MANUEL BARROSOPresident of the European Commissionjcms_2011 7..16

If any good has come from the past 18 months of turbulence, it must surelybe that the European Union and the multilateralism it embodies have provedthemselves more necessary than perhaps at any period since the commonmarket was created. The global economic crisis has brought unprecedentedpressure to bear on our economy and consequently on businesses, familiesand communities. Our banking system has been shaken to its foundations andthe knock-on effects on the real economy have been severe. Europe’s citizenshave begun to feel the effects of the crisis for jobs and prosperity. Since thelatter part of 2008, the agenda has been dominated by the need to put togetherour collective response to the crisis, which has tested both our resilience andthe speed of our reaction. We have also faced challenges of co-ordination thathave highlighted further the need for solidarity between the 27 MemberStates. We have stepped up to the plate: on all these counts, the Union hasresponded effectively to the crisis and forged together a co-ordinated setof policies to set Europe back on the road to prosperity in the EuropeanEconomic Recovery Plan (EERP).

With elections to the European Parliament just held and a new Com-mission due to take office, I wish to look forward to the policy agenda ofthe European Commission over the next five years and share with you mythoughts on what our priorities should be during that period. After fiveyears at the helm of the executive, I will also, briefly, look back on whatI consider to be our principal achievements over the past five years.

JCMS 2009 Volume 47 Annual Review pp. 7–16

© 2009 The Author(s)Journal compilation © 2009 Blackwell Publishing Ltd, 9600 Garsington Road, Oxford OX4 2DQ, UK and 350 Main Street, Malden, MA 02148,USA

Nonetheless, the focus remains firmly on the future and on what, con-cretely, the European Union can and should achieve both for its own peopleand for the world.

The policy agenda I wish to set out here is structured under four pillars.First, and most importantly in the current crisis, I will examine our plan todrive Europe’s economic recovery, considering both those necessary short-term measures that will protect our citizens from the worst effects of therecession and a package of structural reform measures designed to ensurethe Union’s prosperity through increased competitiveness and productivityin the longer term. Whilst the economic crisis is the most pressing of all thechallenges we presently face, it will not distract us from the necessity ofcontinuing our programme to tackle climate change and build a sustainableEurope. Thus the second part of my article deals with our efforts in thisfield. Thirdly, I turn to those policy measures that deal with specific actionto aid Europe’s citizens, including a package of measures designed to helpconsumers and new proposals to combat terrorism and organized crime. Myfourth area of consideration looks at Europe in the world as well as thechallenges of enlargement and the neighbourhood.

I. Jobs and Growth: Driving European Recovery

A major mobilization of efforts is required for the European economy becauserecovery from the present crisis will take time – indeed it is likely to dominatethe policy agenda over the next five years. It is important to set the EU ontrack to sustainable prosperity by continuing the programme of structuralreform under the Lisbon Strategy.

The Commission has identified four key areas for Community actionthat will restore growth and prosperity. First, it is clear that the Europeanrecovery cannot begin without a significant increase in bank lending toprovide the investment that business needs. We will take steps to break thecycle of declining confidence and unwillingness to lend, which will in somecases mean taking direct action on the asset side of bank balance sheets,putting an end to uncertainty about the valuation and location of futurelosses. The banks themselves must reveal the scale of their losses. Inaddition the ECB and the other central banks will continue to provideliquidity.

However, it must be recognized that the banks themselves are at least inpart responsible for the crisis. Unacceptable risks were taken by bankers andwe must ensure there is no repetition. Our financial system must be reformed.Five key objectives are worthy of highlighting here:

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© 2009 The Author(s)Journal compilation © 2009 Blackwell Publishing Ltd

1. The EU will be provided with a supervisory framework to detect potentialrisks early through a Europe-wide financial supervision system.

2. Where national regulation is insufficient or incomplete, European regula-tion will be proposed on the principle of ‘safety first’. In detail, hedgefunds and private equity will be more tightly regulated and steps taken tomake derivatives and other complex structured products more transparent.

3. The confidence of European investors, consumers and small businesses inthe safety of their savings will be boosted by greater depositor protection.

4. Pay incentive structures in financial firms will be brought in line withperformance and recommendations will be made on appropriate remu-neration for directors.

5. The Market Abuse Directive will be reviewed with a view to providingtougher sanctions against market wrongdoing.

Second, the real economy of the European Union, which is predicted todecline by an unprecedented rate of 2 per cent in 2009, will be supported bythe European Economic Recovery Plan (EERP). At the core of this initiativeis an immediate fiscal boost of at least 4 per cent of Union GDP, intelligentlytargeted at strengthening the European economy for long-term challengesfollowing the Lisbon Strategy’s recommendations for growth and jobs. Theseadditional funds will be targeted at building our knowledge base, boostingenergy security and adapting to a low-carbon economy. Here again, theco-ordinating role of the Commission is of vital importance to make sure thatthe Single Market is one of the key drivers for recovery and that the positivespillovers are maximized. Upholding the benefits of the Single Market andpromoting its values outside of Europe will provide the EU with a uniquelaunch pad for growth. Although the renewed Stability and Growth Pactallows for government deficits to expand during economic downturns, it isclear that Member States must have plans in place setting out how govern-ment budgets will return to positions consistent with sustainable publicfinances in the longer term.

Third, the European Union will take action to ensure that our peoplereceive the maximum level of support during the painful short-term impactof the crisis. During 2009, it is predicted that Europe will lose some 3.5million jobs. The role of the Commission in co-ordinating efforts must becentred first and foremost on helping Member States to make the structuralimprovements to their labour markets that will best allow them to bounceback rapidly after the worst of the crisis subsides. The GlobalizationAdjustment Fund will be quickly activated to allow workers andcommunities that are affected by job losses to be supported – andsupported swiftly. The European Social Fund will be used to respond to

STATE OF THE UNION 9


crisis-driven needs, here again in the shortest time possible. The emphasismust be placed on speed and easy access to resources to ensure that wekeep our people in employment wherever possible, provide adequateincome support, invest in training and skills, ensure that the free movementof workers is preserved and provide sufficient support to tackle youthunemployment. Above all, we cannot allow a generation of youngEuropeans to suffer the long-lasting and hugely damaging effects ofunemployment.

Fourth, it cannot be overlooked that the economic crisis is worldwide andthat this demands global action. The experience of 50 years’ integration,including in particular the launch of the euro and the expansion of the EU to27 Member States, means that we are better able to speak with one voice inthe world than ever before. We must promote a globalization that is based onthose values that have served us so well over the past 50 years. I will returnto these issues again in section IV.

II. Energy and Climate

The European Union is leading the way in advancing the agenda on theunprecedented climate change challenges we are facing today. Our effortsreached a turning point in 2007. After the decision of the European Councilin March 2007 to set precise, legally binding targets on greenhouse gas andcarbon emissions, the EU paved the way towards the momentous deal in Baliof December 2007 to pursue a global agreement on emission reductions bythe end of 2009. These proposals have been reviewed and endorsed by theInternational Energy Agency, and the review shows that the EU, through itsEnergy Policy for Europe, is now moving closer towards being recognized asa single entity in energy matters. These were major achievements for thepresent Commission that are already making a significant impact in the fightagainst climate change.

The EU’s climate change policy is a series of specific actions, all of whichwill be realized by 2020 in line with the headline 20, 20, 20 by 2020 policygoal. To reiterate: we will reduce greenhouse gases by 20 per cent; we willmeet the target for an overall share of 20 per cent for renewables in the EU’senergy consumption; and we will increase our energy efficiency by 20 percent. The EU is the first region in the world to commit to such far-reachingand legally binding emission reductions.

However, we cannot simply talk about the importance of these issues,since public opinion demands that we take action. Consumer attitudes arechanging – EU citizens value renewable sources and prioritize clean energy.



Many citizens think guaranteeing low energy prices and continuous supply ofenergy should be a priority for national governments.

Whilst other issues may appear more pertinent in the current financialsituation, tackling climate change makes economic sense. Not only do bio-fuels make a good alternative when oil prices rise – as they are likely to doonce we emerge from the present crisis – but not tackling climate changecould cost Member States up to 20 per cent of GDP. Currently, we areworking on plans which will result in an anti-climate change programme thatwill cost just 0.5 per cent of GDP. Pre-crisis, market revenues for solar, wind,biofuels and fuel cells were forecast to increase by approximately €150billion by 2016, and record levels of investment in wine, solar and biofuelsreflect increased investor confidence as well as a public demand to see greenerbusinesses and more ethical investments.

In the current financial crisis, investment in green energy is crucial, as in theEU alone this sector has a turnover of €30 billion and provides approximately350,000 jobs. If investment is to continue at the current rate, the green sectorwill be one of the key industries generating new employment opportunities inthe economic downturn. The proposals set out in our climate change policieswill need to make use of new technologies and creative ways of dealing withcarbon emissions, making businesses across Europe more innovative andresourceful in the ways in which they tackle the problem of climate change.This innovation will boost further growth across the sector. In this sense, theEU’s climate and energy package is part of the solution both to the climatecrisis and to the current economic and financial crisis.As such it should remainat the heart of the Commission’s policy agenda for the next five years.

III. Putting our People First

Over the past five years, we have striven to bring Europeans closer to the heartof the EU project, by focusing much of our attention on implementingpolicies in areas closest to their hearts, such as their fundamental rights andcitizenship, migration, justice, security and safety, consumer protection andhealth.

We will continue this people-centred approach over the next five yearsthrough further concrete measures to strengthen the effective enforcement ofconsumer protection rules across Europe. Food safety, animal health andanimal welfare will be continuously monitored, whilst the Commission willcontinue the work of the EU Health Strategy to help Member States promotepublic health to the best effect. We will examine in particular what role the EUcan play in helping to reduce health inequalities across Europe. To prepare the



future, work on demographic issues will continue in 2009, in closeco-operation with the Czech and Swedish Presidencies: an assessment of theEU’s preparedness for demographic change will be presented to the SpringEuropean Council. In 2009, the Commission will set out its proposals for thefurther development of the EU as an area of Freedom, Security and Justice.These will form the basis for discussion with Member States, with a view toadopting the Stockholm Programme, a follow-up to the current Hague Pro-gramme. Pursuing the establishment of a common immigration policy willcontinue to be a priority. In a recent Communication, ‘A Common Immigra-tion Policy for Europe: Principles, Actions and Tools’, the Commission hascommitted itself to deliver on a series of objectives and principles, in part-nership with the Member States and the other EU institutions. This will guidethe Commission’s action, where immigration must be fully integrated into thewider EU policies for economic growth, competitiveness and social inclusion.External relations policies must also play a role, through promoting rein-forced partnerships with third countries in migration management as well ascloser links with development and trade policies.

As citizens move freely within the EU, they must have equal access tojustice and the protection of the rule of law. Those who break the law shouldbe prosecuted and judged on an equal basis. To enhance the security of EUcitizens, the Commission will also present a series of proposals to deal withspecific and new forms of criminality: greater prevention of child abuse andtrafficking; reinforced international co-operation to fight and prevent cyberattacks; and combat the risk of terrorist attacks in areas such as chemical,biological, nuclear and radiological threats.

IV. Europe in the World

Europe will face considerable competition in the 21st century, both economi-cally and politically as the emerging powers of Asia, Africa and SouthAmerica rightly begin to assume more responsibility for global governance. Ibelieve very strongly, however, that Europe still has much to contribute inworld politics and global governance and that the enlarged European Unionhas the power and the capability to shape the global order. During the last 50years, we have built a peaceful Europe based on freedom and solidarity. In thefuture, to guarantee and to reinforce such achievements, we need to continueto influence and to shape the world around us.

A united Europe is also a source of power and influence for all its MemberStates. In all my meetings around the world, I see that other countries look atEurope with different eyes since the last enlargement. Compared to when I



was Foreign Minister of Portugal in the early 1990s, the differences are huge.It is a mistake to believe that European states can resolve the main globalchallenges on their own. In the current world, we need to act together. As isso often the case, our citizens’ views are clear on this. Public opinion studiesin Europe show on a regular basis that around 70 per cent of Europeans wantEurope to be more active and influential in world politics.

This is why we need the right institutions. We cannot face successfully the21st-century globalization with the institutions of the 20th century. Theenlarged Europe cannot act effectively with the institutions that were createdin a divided Europe. The Treaty of Lisbon will strengthen the enlargedEuropean Union. The permanent President of the European Council will havean important role in the Union’s external relations. A change in the Presidentof the European Council every six months is not the most efficient way to actat the international level. In tandem with the President of the EuropeanCommission, the President of the European Council will reinforce the coher-ence and the cohesion of the Union. The High Representative and, simulta-neously, Vice-President of the Commission will also be very beneficial to theUnion. The ability to pool intergovernmental and supranational tools willmake the Union more effective on the external stage. With the HighRepresentative/Vice-President, the External European Action Service willalso be a key part of the framework to improve the effectiveness of theUnion’s foreign policy.

In answer to the Lisbon Treaty’s detractors, let me be quite clear: I find itmore than a little contradictory to criticize as undemocratic a text which doesa great deal to enhance accountability and transparency. National parliamentsget increased scrutiny rights over Commission bills and, if enough of themhave misgivings, can force the executive to reconsider them. Minutes of theCouncil of Ministers go on the record and Europeans get the right to ask theCommission to table legislation in areas over which it has jurisdiction if theycan muster a million signatures. Lisbon is not about the EU accruing morepower for its own sake: it is about improving and clarifying the bargainbetween Brussels, national capitals and Europe’s people.

On the world stage, without European leadership, the international com-munity will not succeed in meeting the ambitious goals that will set us on thepath towards a global politics. There have been very important developmentslately. Australia has signed the Kyoto agreement. China has recognized thatclimate change is a serious problem and wants to join international efforts toaddress it. Japan is committed to working with us. And, finally, there is a clearchange in the United States. The new administration has identified the fightagainst climate change as a priority. When our main partners start to under-stand our efforts, we need to have the determination to keep the commitments



made for our climate change and energy package. It is crucial for Europe’sinternational standing and authority.

Europe is itself a laboratory of globalization, a successful case of settingtransnational rules and standards. This experience makes me believe that weare better prepared than any other great power to propose, not to impose, theorganizing principles and values of the global order. To propose our valuesgoes hand in hand with defending our interests. They reinforce each other.The right expression is the ‘promotion of the European interest’. It is in ourinterest to spread our norms and to extend our influence. Let me be clear onthis point: if we do not persuade other great powers that our norms arebeneficial for world order, it will be very difficult to keep our social, envi-ronmental standards, and at the same time our economic growth.

The pressures of global interdependence deeply affect European internaleconomic and social policies. The growth and the increased competitivenessof the new great powers have a strong impact on our economic, social andenvironmental policies. To deal with these challenges, we need to act at twolevels.

First, we need to promote the power of our example. As other societiesimprove and become more prosperous and open, their citizens will becomemore demanding. At first, they want to eat better meals, to drive cars and tolive in more comfortable houses. Later they will ask for better environmentalstandards, for more social and political rights, for more welfare and for abetter quality of life. These citizens will find out that European societies area good example in terms of the balance between economic growth and socialjustice and between competition and welfare. And their governments will alsorealize that the adoption of European rules and norms is in many cases theright answer to the demands of their electorate and to the stability andprosperity of their societies. For instance, China already applies Europeanregulations and standards for food safety and in its motor industry. Europeanstandards are becoming the global norm – and we must ensure that thisremains the case.

Europe must continue to shape the multilateral global agenda. We can helpto create a more just globalization if we spread our norms and rules to regulateglobal discourse. Europe is already one of the leading international norm-setters, in human rights and good governance, in fair trade, in development andaid, in labour and social standards, in environmental protection, and in manyother areas. It is not difficult to understand why the European Union is the bestprepared to promote a multilateral way of international and transnationalgovernance. Europe has unique historical experience of successful integrationand co-operation among sovereign states – an experience that has promotedpeace and democracy, freedom and solidarity across a whole continent.



In this respect, the European Union is a true school for global governance.Our main task for the next decades is to make the world understand this. I amfully confident that we will succeed as we did with other difficult anddemanding tasks during the last 50 years.

Closer to home, over the next five years we should make considerableprogress in integrating our neighbours into European structures through boththe Union for the Mediterranean and the Eastern Partnership. The success ofthese initiatives will testify to the Union’s ability to spread the mutual benefitsof EU integration and co-operation. We foresee far-reaching integration forour neighbours into the EU economy, easier travel for their citizens to the EUproviding that enhanced security arrangements are met, improved energysecurity arrangements and more financial assistance to allow for the morerapid development of our neighbours’ economies. Nonetheless, only withstrong political will and commitment on both sides will the Union for theMediterranean and the Eastern Partnership meet their economic and politicalobjectives. If we get it, it will lead to greatly enhanced security and prosperityfor Europe and its neighbours.

Conclusions

It would be naïve to deny that our policy agenda risks being blown off courseas a result of the current crisis. The danger is that our sense of urgency maymake us forget that there are still long-term challenges that will persistthroughout the current shocks. The world will no doubt be different after thecurrent crisis but if we do not face up to these issues of productivity, com-petitiveness and of responding to demographic changes they will still bewaiting for us – perhaps in more intractable forms – when we emerge fromthe present difficulties.

We have already seen during the present economic downturn that the sirencalls for protection of national industries and national jobs at the expense ofworkers elsewhere are growing ever louder. We cannot allow either the greatachievements of the Single Market or our transition towards an ever moreglobalised economy to be blown off course. When we were building theSingle Market in the late 1980s and early 1990s, we created the notion ofSocial Europe to compensate for the short-term pain of transition to a moreefficient economy. We also know that globalization will not automaticallycreate benefits for all at the same time – this is why it was necessary tointroduce adjustment mechanisms like the Globalization Adjustment Fund.During the current crisis, the need for collective action, for ‘more Europe’, isgreater than ever before.



Europe has always been at its best when it is at its most ambitious. Alongthe path of European integration we have faced numerous challenges andsetbacks. But Europe’s leaders never lost their vision of what a more unitedEurope could achieve. We should never lose sight of that vision and thatidealism, particularly now as we seek to bring our European values, normsand standards to the heart of the new institutions of global economic andpolitical governance.

Above all else, the next Commission must continue to build a ‘Europe ofresults’ that will deliver economic reform, modernization of social systems,increased security and a Union that speaks with one voice in world affairs.The JCMS is an important and influential publication and I hope that some ofthe ideas put forward in this article will spark a wider discussion not onlybetween academics and practitioners of European integration, but betweenstudents and all European citizens.

José Manuel Durão Barroso



state of the union: delivering a ‘europe of results’ in a harsh economic climate

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