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Uppdrag: utrikesminister

September 29, 2014

Anförande vid Utrikespolitiska institutet, Stockholm, Sverige

Det var i början av december 2006 som jag stod här och talade om en ny politik för en ny...

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Utvalda anföranden

Anförande om Europa hos SNS

August 22, 2012

Anförande i Tylösand, Sverige

 

I am delighted to be here with you on the beautiful coast of my native Halland.

 

More than three decades ago - in the late 1980s - I published a book called 'Hallänning, Svensk, Europé'.

 

That was a time when neutrality verged on a national dogma, when Europe hardly figured in our national discourse, and when eurosclerosis had been talked about for years.

 

I argued then that we were entering a time when we should think of our multiple identities and shape our politics accordingly. I was proud of being from this province of Halland and the city of Halmstad.

 

But I could also be proud of being a citizen of the country of Sweden.

 

And increasingly I believed that our identity as Europeans would be of increasing importance in political and economic terms as well. That was indeed a long time ago.

 

Developments in the decades since then have been truly breathtaking.

 

Virtually no one believed then that we were going to see the peaceful collapse of the mighty Soviet empire.

 

And don't forget that all of Sweden was to the east of the most advanced position of the Soviet armies on the southern shores of the Baltic Sea. The two decades that followed have transformed Sweden, Europe and the world.

 

And done so distinctly for the better.

 

I sincerely believe it has been the two best decades for mankind in known human history. We have seen the freedom of humanity and the freedom of societies making great strides.

 

In spite of tragedies such as a decade of conflict in the Balkans and carnage in parts of Africa, we have seen a marked decline in the number of people killed in armed conflict.

 

And we have seen a remarkable decrease in poverty, a profound increase in life spans, a surge in education and an increase in material wellbeing across the globe.

 

The fall of the Soviet empire, in combination with the radical reform policies of China and the new liberal orientation of India, ushered in a new era of trade, investment and globalisation.

 

And this happened at the same time as we saw a new generation of technologies starting to transform our societies. We are living in the revolutionary age of Moore's law.

 

Europe was, of course, very much a part of this story.

 

I mentioned that eurosclerosis was a term widely used during the 70s and 80s.

 

But this autumn we will celebrate the 20th anniversary of the completion of the radical single market agenda launched by then-President of the European Commission Jacques Delors five years earlier.

 

The European Economic Community had been launched three decades earlier as a political compromise between French demands for a common agricultural policy and the German desire for a customs union for industrial goods.

 

And for some decades it was - in economic terms - little more than this.

 

But in political terms, facilitating reconciliation between the former main enemies in Western Europe that was the very purpose of the project. The single market project changed  everything.

 

It was an attempt to radically increase the integration of our economies, thus facilitating increases in productivity and growth.

 

And as it approached its projected completion date of 1992, there came an additional political imperative of integrating the newly liberated nations of Central and Eastern Europe.

 

The combined effect of these two processes was a vast increase in economic integration in Europe which also spurred a radical increase in productivity virtually  across the board.

 

And this naturally interacted with the advancing pace of globalisation in the overall economy, as well as with the accelerating pace of technological change.

 

Through a series of economic reforms, Sweden also benefited tremendously from this as stagnation and crisis forced us to reconsider old policies.

 

In the early 1990s, the trade share of our economy, fairly high by the standards of most nations, had only reached the level it had in 1914, before the breakdown of that first golden age of globalisation.

 

But since then that share has nearly doubled.

 

And our economic development has been better than that of many other countries.

 

A recent study by McKinsey showed that, since 1993, our growth has been higher than that of not only the EU15 but also the US. We have seen a very clear upward shift in the growth of productivity in our economy.

 

And it wasn't only us.

 

This happened at the same time as the "convergence machine of Europe", to use a phrase from a recent World Bank report, created vastly better opportunities for the 100 million people of the 10 former Soviet bloc countries that joined the European Union.

 

The new member states of the EU and the candidate countries engineered productivity increases that outstripped those of East Asia and Latin America.

 

Exports of goods and services in advanced and emerging Europe rose faster than world output and exceeded the growth rates of even the much- heralded  BRIC economies.

 

And the rapid increase in integration benefited us all.

 

Today, Audi may be producing more cars and car parts in Hungary than in Germany, Ericsson has 25 per cent of its production in Estonia and Fiat is producing more cars in one plant in Poland than in all of its plants in Italy put together.

 

We have embraced integration and globalisation.

 

But we obviously have a problem, primarily in southern Europe.

 

While the new competitive pressures drove reforms that facilitated the exports that produced growth in northern Europe - the labour market changes in Germany are a good example of this - the southern countries relied on domestic demand with heavy emphasis on cyclical and credit- dependent  non-tradable sectors.

 

And they failed to improve their business climate.

 

While this mattered less when our eastern neighbours were nearly non-existent in economic terms and China and India suffered the least business- friendly systems in the world, the situation now is, of course, fundamentally different.

 

And we see the result. Competitiveness declining. Debts mounting. Growth stalling. Some would doubtless argue that monetary union made things worse.

 

Money was available for free. Banks acted like drunks. The famous rating agencies fell asleep. I am still a believer in monetary union.

 

I think it's good that we have a uniform currency across the different regional economies of Sweden.

 

And I cannot fail to note that the most successful periods of economic growth in Europe were associated with monetary stability. First, of course, the gold standard prior to 1914.

 

And then the Bretton Woods system - the dollar - until it broke down in the early 70s. Their success teaches us important lessons. But so does their ultimate failure.

 

Economies that are part of a common currency must be both ready and able to adjust. And this may be quite tough at times.

 

It can be hard to stay in when there is no easy way out. But the rewards can also be huge.

 

There were many reasons why the European Union that was produced by the Maastricht Treaty put a common currency on its agenda. Some of these were undoubtedly purely political.

 

But some were entirely economic.

 

There was the realisation that, over time, a system that risked deteriorating to one of competitive devaluations would, sooner or later, tear the single market apart.

 

We saw those risks clearly in the early 90s.

 

In those days, devaluations were the order of the day in a number of countries.

 

Then the belief hardened that, over time, a single market would require a single currency.

 

We are now at a most testing time for this profound leap forward that has been taken by 13 of the 27 members of the Union and its single market. Five years from now, I'm certain the Euro will still be there.

 

Whether it will have fewer or more members remains to be seen.

 

There is no one that wishes to leave, but there are those still reaffirming their commitment to join. Time will tell.

 

In this testing time, the decisions already taken are a major step forward in terms of the coordination of economic and fiscal policies in Europe. The 'six-pack', in combination with the coming fiscal compact, will take us into a profound phase of deficit reduction and fiscal prudence.

 

And that's urgently needed.

 

Although we should note that the level of public debt in the eurozone and the EU is still substantially lower than in the United States, the imperative is clearly there.

 

Some argue that a prolonged period of deficit reduction will impact on our growth prospects. But that is not the experience of countries such as Sweden, Poland or Turkey.

 

All have reduced deficits, and all are widely seen as growth leaders in Europe.

 

But it is certainly true that we must look far more carefully at the need for more growth-oriented policies.

 

While it is obvious that the immediate need in large parts of Europe is for fiscal consolidation, the larger and far more demanding agenda is related to the demographic challenge over the decades to come.

 

From the Lisbon process and onwards, there have been numerous efforts to facilitate the introduction of more growth-oriented policies across the EU.

 

The latest attempt is the EU2020 strategy to create a "smart, sustainable and inclusive economy" by setting ambitious objectives - on employment,

 

innovation, education, social inclusion and climate/energy - to be achieved by 2020.

 

But even if the EU2020 approach is less complicated than that of the Lisbon strategy, there is still the risk that a lack of focus will result in a lack of strength.

 

I believe that the single most important thing that needs to be done to get growth moving in Europe as a whole is to bring the single market back into focus, and do so in a far more determined way.

 

Much was certainly achieved in the years up to 1992, but a great deal has changed since then.

 

The service part of our economies has grown very fast. And, even more rapidly, we are entering a digital economy.

 

There are obvious limitations to the single market within different parts of the more classical economy.

 

The transport sector is a good example.

 

But a handicap of radically increasing importance is that the single market applies only partly to the service sector, and - even worse - does not apply at all to the digital economy.

 

A number of studies have been done on what effect a more determined application of the principles of the single market in these areas as well would have on growth.

 

An IMF study published in June of this year says that "large-scale labour, product market, and pension reforms, which cut the distance of euro area countries to growth-maximising benchmarks in half, could boost output by 4½ per cent over the next five years."

 

Other studies go even further.

 

A study published by a prominent think tank in Paris - CEPII - less than a year ago believes that "after 10 years of implementation of a programme based on removal of all barriers, hence taking into account some of the dynamic gains of economic integration, the European Union's national income could be 14% higher than under a no-change scenario."

 

Studies are studies, but there is very little doubt that a reinvigorated and deepened single market, covering all sectors of our economies, would give a badly needed growth impulse to the European economy.

 

It would increase competitive pressures, and hopefully this would drive and facilitate the structural reforms obviously needed in a number of economies.

 

We have seen it before. There is no fundamental reason why we can't see it again.

 

A single market is not possible without common institutions and common decision-making.

 

Indeed, it was in 1987, when it was decided to launch the initial single market programme, that the then European Community abandoned the practice of unanimity  in decision-making.

 

Otherwise the single market programme would have been stillborn. Today we have the institutions.

 

A Commission with the right of initiative. A Council of Ministers that, together with a directly elected European Parliament, takes the decisions. A Court of Justice to which issues can also be brought.

 

And the key to the future is ensuring that these common institutions of our Union are not undermined.

 

If this were to happen, there is a serious risk that the single market itself will start to erode, with grave consequences for the future competitiveness of our economies.

 

Enthusiasm for the common institutions is not uniform throughout the Union.

 

Before the recent changes in France - which might bring their own economic challenges - there was an explicit agenda there to favour a more intergovernmental  model  of  European integration.

 

But such a model is hardly likely to produce the single market we see clearly need, and can never preserve it. This said apart from all other considerations.

 

We are now looking forward to a couple of eventful months.

 

Focus during the autumn will be on how to reinforce surveillance of the financial sector in Europe and perhaps move towards common instruments for dealing with concrete challenges in it.

 

This is what is commonly referred to as a 'banking union'.

 

There are certainly strong arguments for this, particularly in the euro countries.

 

But we should remember that there is no clear-cut division between the financial sectors in the parts of the Union with and without the euro.

 

And we should be acutely aware of the risks inherent in setting up arrangements, institutional or otherwise, that apply only to parts of the integrated single market that we seek to create in the financial area too.

 

The euro is obviously a key part of the European integration we seek. But no less so the single market.

And I would argue that endangering the single market would be to endanger our growth possibilities in an increasingly competitive global economy.

 

In parallel with these efforts during the autumn, we may be seeing the contours of a wider debate about European integration in a number of countries.

 

There are fringe groups trying to rally the fears of uncertain populations against either Muslims or Brussels or - in some way - both. But there are also major political forces discussing the need to advance integration substantially in a number of areas.

 

There is talk of a political union - although in my opinion we already have one.

 

There is talk of doing more in the field of foreign and security affairs - and I would certainly be supportive of good ideas in this field.

 

If we are to be serious about climate and green issues, there is no doubt that we need to do more together, bringing in energy issues more explicitly. The focus these days is very much on the issues facing Europe inside the boundaries of the present European Union.

 

But we must not forget that our ambition is to build an area of the rule of the law, of representative government and open economies in all of Europe - as well as in our not uncomplicated neighbourhood.

 

If this is to be achieved, it can only be achieved if we work together. And then we have to see everything in the broader global context.

 

I was born here in Halmstad at a time when there were slightly more than 2 billion people in the world. Today there are more than 7 billion people on our Earth.

 

And by the middle of this century it is estimated that there will be approximately 9 billion people sharing this world. Of these, roughly 7 per cent will be Europeans.

 

Once upon a time, the world was dominated by Europeans.

 

Their trade, their technology, their ambitions. Globalisation was a European invention.

 

After the catastrophe that started in the fateful summer of 1914, the Americans gradually took over. It was their humming factories that also saved Europe from itself.

 

Now we see the comeback of the giants of Asia.

 

Going by present trends, in a couple of decades Asia will have surpassed North America and Europe combined in terms of global power, based upon GDP, population size, military spending, and technological investment.

 

But it is profoundly promising to note that we can look forward to a world not of a very rich tiny minority and the rest in misery, with a widening gap between them, but a world increasingly dominated by an emerging new middle class from Shanghai to São Paulo.

 

We Europeans have a profound interest in being part of shaping this new world, its economy and its governance. There are those who see it all primarily as a threat.

 

But in my view there is reason for optimism.

 

In essence, it is by applying policies and practices that were ours that these countries and continents are now starting to race ahead. And the more they do it, the better they perform.

 

It is the open economies and the open societies that are shaping the emerging new order.

 

But only a Europe that stays together, and continues to show the world the immense value of reconciliation, the huge benefits of integration and the necessity of cooperation, will be able to be part of shaping this new world.

 

It is not least with this in mind that we must tackle the challenges of today in our Union.

 

Thank you.

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