Monday 3 February 2003

Committed to Europe, Reforming Europe [23/2/2000]

23 February 2000

At a time when the European Union is embarking on radical expansion and internal reform, I would like to take a moment to put the challenges facing Europe in context.

My starting point is this: the European Union has been one of the outstanding political achievements of the twentieth century.

NATO kept the peace. But it was the European Union and its predecessors, jumpstarted by the enlightened self-interest of the Marshall Plan, that led to the political and economic reconstruction of Europe.

The project that began with the European Coal and Steel Community had one over-arching objective: to end the feud between France and Germany that had been at the heart of one European and two world wars in less than a century.

The project has succeeded brilliantly. It has turned the age-old rivalry between France and Germany into friendship and partnership, so much so that France and Germany have been the driving force behind the European project for 50 years.

But the European Union has done more than that, much more.

It has provided a Framework for law and institutions which respects the rights of Europe’s democracies, large and small: which allows competition but prevents dominance.

It has provided the framework for Europe’s prosperity, not just free trade in Europe, but a single market and, increasingly, a single economy.

And it has provided a clear path forward for countries emerging from political dictatorship and centrally planned economics.

It was the European Union more than any other institution that helped Greece, Spain and Portugal turn their back on dictatorship.

Not by force of arms, but by force of example.

It was the European Union and with it the vision of a prosperous, democratic, European Germany that helped bring down the Berlin Wall, so setting off the chain reaction that ended the Cold War.

And it is the hope and promise of European Union membership that is now driving political and economic reform across eastern Europe and the Balkans, from Latvia to Bulgaria, from Poland to Croatia.

That is strengthening the hand of those who believe in democracy and free enterprise, against those who would exploit the fear of change to play the card of nationalism and protectionism.

The European Union is on the threshold of achieving the dreams of its founders. Of reuniting the continent in peace, democracy and prosperity.

But Britain could have played and can play a larger part in it.

Britain in Europe

Britains relations with Europe have too often been ambivalent or indifferent, Indeed, I believe Britain’s hesitation over Europe was one of my country’s greatest miscalculations of the post-War years.

We opted out of the European Coal and Steel Community. We opted out of the European Economic Community. We opted out of the Social Chapter. And we played little part in the debate over the single currency. When we finally decided to join many of these institutions, we found unsurprisingly that they did not reflect British interests or British experience as much as we would have wished.

Yet, as our history shows, Britains place has always been at the centre of Europe. England was a European power long before it became an imperial one. No King of England if not King of France, as Shakespeare’s Henry V rather bluntly put it.

Even in the days of Empire, Britain was first and foremost a European power, preserving the balance in Europe, opposing those who sought to dominate Europe.

Belgian history can attest to that.

Waterloo, Ypres, the Battle of the Bulge.

British servicemen died to set Europe free. Yet since the second world war, Britain has too often been an observer in Europes development, not a player.

With the creation of the European Union, for the first time in our history, we were content to stand aside from a major development on the continent.

Nearly 60% of British trade is with the rest of the European Union. Over three million British jobs and billions of pounds of investment in Britain depend on Europe. Europe’s s global trade interests arc Britains trade interests.

Of course, Britain could survive outside the European Union. But it would be a poorer, weaker Britain. We could probably get access to the Single Market, as Norway and Switzerland do. But the price would be applying Europes laws without having the chance to shape them.

That is why I am determined that Britain should play its full part in Europe - for the same reason that Belgium or France play their full part in Europe: because that is what is best for my country.

A few miles from here, in Bruges, another British Prime Minister made a speech. From it stemmed the isolationist and hostile view of the European Union. My disagreement with Mrs Thatcher’s speech in Bruges is not that its criticisms were all unjustified. Some were justified. Some indeed were and are shared by others in the European Union. My disagreement is that the response to those criticisms was for Britain to withdraw into its shell, to opt-out. To see at least in terms of presentation the European Union as Britain vs Europe.

The result was not that Europe stopped moving, but that Britain stopped shaping the form and direction of that movement. The very lesson that the development of the Single Market taught us where Britain was heavily engaged was abandoned. The idea of Britain vs Europe also infected the debate in Britain and encouraged the perception that Europe was something done to Britain, over which we had little say.

And as we lost influence in Europe, it did not help us in America. Britain has close ties with America. They will remain close, no more so than under this Government. But America wants Britain to be a strong ally in a strong Europe. The stronger we are in Europe, the stronger our American relationship.

I hold to my view that Britain’s destiny is to be a leading partner in Europe. It is right for Britain, and it is right for Europe. It is a central ambition for the New Labour Government.

The change in our relations in Europe since May 1997 has been fundamental. Britain has fully participated in every new initiative: economic reform; defence and foreign policy; institutional change and enlargement; immigration and crime. To each we have made a substantive and clear contribution. Without it, the nature of the changes would have becn very different.

And we have not found ourselves alone in arguing the case for reform. Others, like the new government in Belgium. are arguing the case with us.

At this crucial juncture, where reforms of an absolutely momentous nature are being debated and decided, Britains place must be at the centre of them. To withdraw from them is not patriotic; it is an abdication of our true national interest. Other countries playing a leading role in Europe do not see the European Union as an alternative to the nation state; indeed, they see it as a way of enhancing their national interests. At a time when countries are coming together ASEAN in Asia, MERCOSUR in Latin America, NAFTA in North America - Eurosceptic isolationism means marginalisation.

If people tell you that the argument for Europe has been lost in Britain, they are wrong. Of course our position is made more difficult by our media. One part has abandoned all sense of objectivity and is essentially hostile to the European Union. The other part is supine in the face of that hostility.

Take the example of last years financial negotiations at Berlin. Europe is always at its most hard-headed when it comes to paying for it. But by making our case persuasively, we protected Britains rebate and got a very good deal on structural funds. Yet that got a fraction of the media attention that attended the failure by France to lift the ban on British beef, even though the financial consequences for Britain were more far-reaching.

Another example is Vodafone-Mannesman. For weeks, our media had been telling us that this was the test of reform, and that Europe would flunk it. That politicians, rather than shareholders, would decide. When the deal went through, the British media barely commented on its enormous implications.

In fact, reform is already happening in Europe. In Germany, the government has announced plans to reform capital gains tax, opening the way for the radical restructuring of German industry. 40% of French shares are now owned by people who arent French. Italy is reforming its labour markets. Belgium, the Netherlands and Scandinavia are setting the pace in Europe on welfare reform.

That is why I will carry on pressing for a more mature and sensible attitude. So that we in Britain dont blow every dispute with the European Union or with another member state into a crisis, and get a bit of balance into our debate.

We are committed to Europe. and to reform in Europe. I am determined that Britain will play its full part in the reforms necessary for the European Union to move to the next stage of its development.

So what are the main areas for reform?


At the Lisbon summit next month, Europe will be dealing with a dilemma confronting us all: economic reform. How do we reap the benefits of globalisation while preserving our values and strengthening our societies?

The choice facing Europe here is not between status quo or reform. The choice facing Europe is between uncontrolled change forced by the markets, or a process of economic reform that delivers both economic dynamism and social justice.

Globalisation and the competitive effects of the Euro make reform inevitable.

As for our own position on the Euro, it is clear. Despite whatever you read or hear, it will remain exactly where it is. In principle, we are in favour of joining a successful single currency. In practice, we have to get the economic conditions right The final say is with the people in a referendum. Meanwhile, we are making the necessary preparations in the manner we have set out.

We are all, however, in the midst of a wider economic transformation. A revolution in technology. An explosion in international capital. The wind of economic change has never blown through our economies with such force.

Every government in Europe is having to respond.

Here in Belgium, the government of Guy Verhofstadt is leading the way in strengthening Europes social model by modernising it. Active welfare measures that recognise that work is the best way out of poverty. Cutting non-wage labour costs. The Rosetta plan to tackle youth unemployment. Flexible and decentralised wage bargaining. More labour market mobility.

But some things can only be done effectively at the European level.

If Europe is to compete on equal terms with America in the new economy, were going to have to create a whole new single market.

E-businesses are not like traditional businesses. They start small, use knowledge and intellectual property as their raw materials, operate internationally, and grow exponentially.

If Europe is to give them the same benefits that America offers, we need to extend the single market to the internet, to innovation, telecoms, and venture capital. Europe cant legislate for technology entrepreneurs. But we can surely get out of their way.

That is the main challenge for the Lisbon summit: how to make Europe the best place in the world to do business in the new high-tech knowledge economy.

But the Lisbon agenda rightly goes wider. It is about promoting economic dynamism and social justice. About recognising that getting people back to work is the best way of alleviating poverty and strengthening societies.

I also hope that Lisbon will mark a turning point in Europe’s approach to economic and social policy at the European level. Legislation to push through liberalisation, enforced by strong independent institutions. Benchmarking and peer review to make best practice the norm in areas where member states have the sole or main responsibility, such as social and employment policy.

Today, Guy Verhofstadt and I have announced a joint proposal for Lisbon on modernising European social policy so that it makes work pay.

Wc want to put full employment back at the heart of Europe’s social agenda. This requires a cross-cutting, joined up approach to policy-making. A stable macro-economic framework; market liberalisation; welfare reform.

Europe needs to be able to respond rapidly to technical, economic and social change and compete globally. To have flexible and fair working arrangements which encourage individual choice and overcome disincentives to work. To recognise the key role of education, skills and life-long learning.

A Europe of full employment also calls for the modernisation of European social policy. Changing social and economic conditions means that we need a new concept of the welfare state if we are to continue to deliver the services people need.

In Belgium and Britain we are now pursuing active welfare policies. Reforming our welfare systems so they become springboards for employment rather than simply safety nets.

And finally, Belgium and Britain will be advocating a new focus on small businesses as the main generator of jobs in modern economies.

Wider reform

But while economic reform is vitally important, it is not enough by itself.

Europe’s post-war political leadership built the European Union on the basis of widespread popular support. But as the EU has matured and taken on more powers, and as the external and internal threats have subsided, the people of Europe have rightly come to expect more of a say in how it is run.

The world is changing. The Cold War is over, but we face new threats in the Balkans. from international crime, from global poverty and instability, from the consequences of mass migration.

Europe is responding to these new realities.

In 1998, Britain and France took the initiative to strengthen Europe’s common defences in a way that also strengthens NATO. EU Member States are now looking at ways of enhancing their military capabilities against headline goals.

NATO will always remain the cornerstone of European defence. Both of our countries know only too well the importance of the transatlantic alliance for maintaining peace in Europe. But Europe needs to take on more responsibility and share more of the burden within NATO. And Europe needs to be able to act when the Alliance as a whole is not engaged.

Last year, led by the Finnish Presidency, the European Union also agreed changes to tighten co-operation between our judicial, law-enforcement and immigration authorities. Cross-border problems such as international crime, illegal immigration and asylum abuse require cross-border solutions.

As the new Belgium Government is doing, we must take decisive steps to deal with these problems by combining an overhaul of our immigration services with the reform of asylum and immigration law.

The dangers of inaction are clear. When reasonable and tolerant people fail to deal with the genuine concerns raised by these issues, then unreasonable and intolerant people will take their place.

Bogus or fraudulent asylum claims are the enemy of the genuine asylum seeker and these issues must be tackled at the national and European level.

The European Union is also reforming institutionally in the wake of the Commission’s resignation last year and in preparation for enlargement.

I have always maintained the view that an efficient, strong and independent Commission working in the service of the whole Union is a basic requirement of successful European development. That is why the Commission reform process led by Neil Kinnock is so important, and why Britain strongly supports the changes underway.

Enlargement is also driving institutional reform. We began an intergovernmental conference earlier this month to look at how we can streamline the Commission, and reform voting in the Council to fit an enlarged European Union.

But enlargement raises wider questions. In due course, we will need to consider in what circumstances the flexibility outlined at Amersterdam should operate. To consider how we balance the desire to move forward with the desire not to create a two-tier Europe. I am confident common sense can find a way through.

And what of democratic legitimacy?

How do you prevent an enlarged Union further diluting the link between voters and decision-makers in Europe?

The tension here is between pushing forward the development of Europes institutions; and recognising that most of our citizens identify first and foremost with their national governments and national parliaments.

This is not the place for a detailed analysis. I would just make two points. The first is that there is a case for examining how we bring a greater understanding and cooperation between national and European institutions, in particular national and European parliaments. Secondly, we need a concerted drive on subsidiarity. As Romano Prodi said in his speech to the European Parliament last week:

Europe’s citizens are disenchanted and anxious. They have lost faith in the European institutions. They are losing patience with our slow rate of progress in tackling unemployment. The prospect of enlargement divides public opinion between hope and fear hope for stability and progress, fear of a Europe without identity or frontiers.

As he said, the answer lies in focusing on what really needs to be done at the EU level and what should be done by the member states or civil society. Together we need to create a new, more democratic form of partnership between the European, national and regional levels in Europe.


So, to conclude:

The British on the whole are too pragmatic to believe in visions.

But this is, I suppose, my vision of Europe.

Free, fair and open. A community of values.

Delivering on the potential of a single market every bit as wide and as deep as Americas to generate jobs, prosperity, opportunity.

Strengthening Europe’s societies and promoting social justice by once again putting full employment at the heart of our common agenda.

A beacon of democracy and free enterprise in the world. An international force for stability, for promoting European interests and European values.

A Europe that is truly the servant of the people, never their master. Strength based on strong democracy. Acting effectively in the interests of all the people of Europe, and accountable to them.


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