Foreign Affairs CommitteeWritten evidence from Civitatis International

About Civitatis International

Civitatis International is an independent and supranational think-tank on global governance. Civitatis International is composed of a global network of leading international relations professors and practitioners around the world who research according to the editorial mandate of Civitatis International: Constructive solutions to the common global challenges and crucial issues facing mankind’s civilization now and in the future.

Civitatis International works with stakeholders around the world as a supranational research institute independent of any state interest so as to effectively analyse and propose solutions to the interlinked global challenges. Civitatis International publishes its high-level research on global issues to former and serving heads of state and government and global stakeholders.

Policy Seminar: The Future of Europe

Civitatis International convened a policy seminar on “The Future of Europe: Towards the European Dream?” at the Office of the European Parliament in London on 19 April 2012.

Sir Peter Marshall KCMG CVO, Former Deputy Secretary General of the Commonwealth and distinguished British diplomat, chaired the seminar. The discussants included: Mr Edward Mortimer CMG, Former Chief Programme Officer of the Salzburg Global Seminar and former speechwriter to UN Secretary General Kofi Annan; Mr Daniel Ottolenghi, Head of the London Office of the European Investment Bank; Mr Maurice Fraser, Senior Fellow in European Politics at the European Institute, London School of Economics and Associate Fellow at Chatham House and Professor Christopher Coker, Lecturer in International Relations at the London School of Economics and former member of the Council of the Royal United Services Institute.

Taking part in the Civitatis International policy seminar were: Ambassadors to the Court of St James’s; First Political Officers and Embassy representatives from key nations; former British Ambassadors and diplomats; representatives from the United Kingdom Foreign and Commonwealth Office; Former Members of the British Parliament; the Atlantic Council and CEOs of City of London companies. Also in attendance were selected young leaders from the British political parties and London’s leading universities.

The basis of the seminar was to explore the greater vision for the future of the EU in a broader context and not necessarily for the specific interests of each member state. Therefore our recommendations to the UK Foreign Affairs Committee drawn below are specifically to questions 1 and 2 as submission of evidence.

The below submission of evidence does not necessarily represent the views of the seminar’s participants.

Summary to Recommendations

Some of the solutions derived from the seminar included: Retelling the European story in a way that engages and makes sense to all Europeans; emphasizing not what divides us but focusing on what brings us together as Europeans; reaffirming the values on which Europe was built and not allowing politicians to override those values; building a new European economic growth based on an increased European competitiveness in the global market; accepting the new realities of the changing world order towards a more communitarian world and that the European cosmopolitan model may not become universal.

1. Observations and Factual Information Derived from the Civitatis Seminar

1.1 The current pockets of optimism for Europe appear to be, on the surface, more economic, as opposed to political, and in terms of any separation between the two, a “two-tier” Europe appears to exist. However this is not just simply political versus economic, since there are aspects of economic union which are very important to countries such as Britain, the single market particularly, and equally there are aspects of the political which not all Eurozone members are willing to fully sign up for. “Variable Geometry” or “Multi-speed” Europe is the best description of Europe’s current state. Phrases like “two-tier” imply some sort of automatic division. The situation is infinitely complicated and unless there is full political union it is bound to exist. Sovereign states will always want to do different things. How far will it be possible to organise some sort of fiscal union without it drawing in its train everything else? The language of “two-tiers” is unhelpful. There must be more flexibility than terms of “two-tiers” or “two-speed”, and so “Variable Geometry” is a better phrase for the UK government to use.

1.2 It is imperative that Europe overcomes the Eurozone crisis, because apart from the economic damage, it decreases talk of integration and increases the language of break-up; of the Eurozone or perhaps even of the European Union. Average unemployment in Europe was at 10.9% in March 2012, according to the Financial Times, and there are nine countries in the European Union with double-digit unemployment rates. In creditor countries there is growing appeal of Eurosceptic populist parties. In debtor countries austerity is perceived as imposed by Brussels or hostile Northern European countries, and Europe-wide there is anti-EU sentiment feeding on the impact of recession. The UK government should look into alternatives to austerity.

1.3 To see growth which might facilitate its aims Europe must achieve an increase in competitiveness. This will require both in-depth structural reforms at the national level and gains in competitiveness that can be achieved by European action, through completing the single market in areas so far untouched, such as many service sectors, and potentially developing common infrastructure in transport and energy. Some countries, such as Germany, have already progressed greatly, but many others still have much to do to improve competitiveness. Here too, there is evidence, including that of Germany, suggesting it will take a long time. Mario Monti, the Italian Prime Minister, has even said that Italy will need eight years of structural reforms. Improving competitiveness will mean reform of labour markets, of pension and welfare systems, investments in physical infrastructure, education, Research & Development, and at the European level, completing the single market. There will be powerful resistance to reform from those who benefit from the existing system. Current opposition in Greece, or Italy, to structural reforms is because they touch the interests of people who are benefiting from the existing system.

1.4 While Europe needs to increase competitiveness, it does not have a problem of a finance gap in aggregate. Looking at the EU-27 as a whole, the European Union’s balance of payments is essentially in equilibrium. The problem of gaps in foreign finance for Europe as a whole would arise if Europe had a balance of payments deficit, and in order to finance that deficit it would need recourse to finance from countries such as China, Japan, and Brazil. Europe, as a whole, also does not have a balance of payments deficit. However there are surplus countries and deficit countries, so the problem is of a flow of funds within Europe. There is a reluctance already within Europe by European investors to invest in countries which currently do not appear to have favourable prospects. Why would Japanese investors, for example, want to invest in projects in countries where there is little confidence of a sufficient return? This reinforces the argument for improving competitiveness in Europe. The moment competitiveness begins to increase private capital will start flowing again. A reform that improves the productivity of a rail transport system, for example, would very much interest private investors globally.

1.5 It may be time to start thinking of a wider Europe, and a looser confederation of countries, perhaps in stark contrast to any protectionist measures, including countries like Turkey. This does not exclude the European project or the European Union continuing to go on its way as a free-market, but it does rule out the idea of a political state in the near term, because a political state would exclude those other European countries that have to be part of the European project. Indeed through a broader lens the EU should welcome the fast growth of new emerging powers as they could power a major engine of growth for Europe through trade, and therefore there needs to be an increasingly open trading system both within the EU and with the rest of the world.

1.6 The emerging economic powers must be factored into European decision-making. Many non-Western people see the European Project as a form of regulatory imperialism, translating Europe’s minimal political power into maximal political power by changing the rules of the game. There are also an increasing number of non-Western social advocacy groups and NGOs that do not share the liberal agenda of the 75,000 NGOs Europe is familiar with, in areas such as social planning. Much of the world does not share Europe’s vision. For example in Africa the Cotonou agreement has existed since 2008, a tripartite dialogue between the European Union, China and Africa around terms of trade. Europe has tried to use this to influence China away from corrupting local officials or using bribery, and to adhere to International Labour Organization standards regarding labour practices. However those in Africa share the Chinese view not the European view. So perhaps there is a failure by the European Union, despite its commitment in its first security paper of 2003, to underwrite soft power with a military dimension which Solana said was essential for civilian power to mean anything in a 21st Century world.

1.7 There is an emerging common European voice on the world level. It is a voice based on European values that speaks on global issues: on climate change, on human rights, on democracy, on the breakdown of non-proliferation, and on the activities of transnational companies around the world. In terms of trade and climate change, it is evident that there is such a thing as collective preferences based on a particular culture and originating in a particular set of values. If Europe intends to be serious about multilateralism then it is going to have to develop a new emboldened type of multilateralism and back up its values with a credible peacemaking capability.

2. Civitatis International Recommendations from the Seminar

2.1 Europe must increase its competitiveness. This is imperative if Europe seeks to see growth and is the strongest plan to bring Europe out of the Eurozone crisis. This will allow the flow of private capital to recommence within Europe, both internally and through external investment.

2.2 The European story must be retold in a way that engages and makes sense to all Europeans. The threat of far-right and -left parties in Europe is very real and many people feel disassociated with the European Project. It is important to connect with those living in Europe to make them feel like Europeans and become engaged with the European story.

2.3 Europe should adopt an increased liberal attitude, rejecting insular protectionist measures. The future of Europe is not as predictable as it once was and as it is rewritten, Europe must ensure that this is not at the cost of the project. Europe needs to start rethinking what it should be ultimately by emphasizing not what divides but what unites us.

2.4 Europe should consider a common military policy. Although it looks unlikely at present, if the EU is going to punch at least not under its weight in the future, there will need to be some form of common military and foreign policy with teeth. This could take the form of an integrated EU Army, Navy, and Air Force. Furthermore, Europe should create its own European Security Council, composed solely of EU member states, enabling Europe to speak and act with one voice on security issues.

2.5 There is a need for a real European identity. Having created Europe there is now a need to create Europeans. It may be time to start thinking of a looser confederation of countries as the way forward for Europe and through this establish what a European identity actually means. This is also true for ideas of the West, which must reconsider its own common values and integration, and seek a new model which facilitates these.

2.6 The EU needs one voice on the global stage, and to enable this each EU country should be represented by one voice on the boards of global economic institutions such as the IMF and World Bank. A debate should begin on the merits of a directly elected, through universal suffrage, executive President of the European Union.

2.7 The EU should welcome the growth of the new emerging powers, as they could prove an engine for growth within the EU through trade. To enable this Europe must promote an increasingly open trading system between itself and the rest of the world.

2.8 Erecting protectionist barriers, both within Europe and at its borders, would be a grave mistake as it would deprive Europe of at least half its potential for growth and job creation. Seeking compromise solutions would do a great deal to avoid the break-up of the EU, and encourage further integration, as many past crises have done.

2.9 Europe must achieve gains in competitiveness by completing the single market in areas so far untouched such as many service sectors and developing common infrastructure in areas such as transport and energy. Europe must also recognise and invest sufficiently into key areas where opportunities for future growth lie, such as Research and Development.

2.10 The UK should seek to emulate states such as Denmark, Sweden and Germany in building models of affordable welfare states within stabilised economies. These countries show this existence is not beyond the capabilities of European states such as the UK and on a wider scale suggest that competitiveness can be restored without eliminating the social protection to which Europe has become accustomed.

2.11 If European heads of government do not pull themselves together in matters of solidarity with Greece, consolidating the common European values of human rights, social justice and delivering real democracy, they risk the break up of the EU and the values that it and the broader West stand for. To consolidate the peace of Europe, heads of government must build a common defence and energy security framework for the E-27 and accession states or the European Dream of a cosmopolitan legal and rights based world order risks being eclipsed by one of “Hybrid free-market communism”. The United Kingdom, more so than others, has a key interest in and therefore responsibility to secure the peace, values and prosperity of the European Union. The British Government, MPs and MEPs should be mindful of this in their statements which are noted as representing our resolve on the world stage.

22 May 2012

Prepared 10th June 2013