My Bloomberg-Speech on the United Kingdom and the EU from July 9, 2012 RELOADED

May 13, 2015
One result of the British elections of May 7, 2015 will be that the referendum on the EU will take place in the United Kingdom before the end of 2017. Prime Minister David Cameron promised this in his Speech at Bloomberg’s on January 23, 2013. Half a year before that there was a German Day at the same venue in London where State Secretary Kampeter from the German Ministry of Finance explained the German position on the crisis in the Eurozone. It was my task then still as German ambassador to give some introductory remarks. I used this opportunity to say some words on how I saw the rumours about a referendum then. So I RELOADED this speech here, because I found that it is still worthwhile reading:

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Mr.Cotzias,
Parliamentary Secretary of State, Herr Kampeter,
My Lords,
Ladies and Gentlemen,

Thank you for inviting me to Bloomberg’s German day in London today. Every morning I read several British newspapers, from the others papers I get a number of cuts to read. During the last two years Europe was most prominent as a topic and Federal Chancellor Merkel may be the most cited person outside Britain in headlines as well as in caricatures. Most of the caricatures are very funny – most of the articles are not, they are rather depressing.

They are depressing because there is not much knowledge about Germany around in Britain and in those countries where German papers are not read. Therefore the picture of Germany painted by most of the commentators, pundits and gurus in the British press is often brillantlly formulated and at the same time far off target.

We get quite a lot of well-intentioned advice from rather badly-informed people throughout the Anglo-Saxon world, and even Nobel Prizes don’t protect from error.

So I congratulate Bloomberg for making this effort for a better understanding – and with our Parlamentary Secretary of State for Finance, Mr.Kampeter, you invited the right person to help us to shed light on the actual developments.

This is especially important after the EU-Summit at the end of June. I leave it to him to explain our position in detail. So I concentrate myself on some observations made in the UK.

The day after the summit I read a lot about winners and loosers in Brussels. But in modern sports one has always to wait for the doping test before such proclamations are made. Anyway we should leave such proclamations to the upcoming London Olympics. In Brussels it is important that Europe is the winner.

In America the simple words: „We the people“! express a deep feeling. We should come to a point to say: „We, the Europeans“.

We in Europe will need deeper integration. It is not about a superstate. That talk is as real as the ghost of Canterville: what is needed is a clear understanding what should be done on European level, and what should be left or even shifted to the level of national, regional or county and city governments.

There are areas like international trade where no national state can any more wield the necessary power to promote its interest alone in a globalized world. The area of keeping the single market competitive under equal conditions for everybody cannot be secured by national governments any more. There are areas like monetary, fiscal and banking policy where the financial crisis taught us that national governments are far too weak to deal with global financial turmoil.

But there are other areas where we believe this can perfectly be done as near to the citizen as possible: In Germany we let most politics be defined in Munich, Düsseldorf or Hanover, not in Berlin. The police is mainly an affair of the „Länder“ – our states. We give mayors of cities and villages great powers to do their own job without too much interference from the state or the national government. The principle of subsidiarity is very important – meaning that whatever can be decided more efficiently at a lower level should not be done on a higher level.

This is why for Germans federalism means something opposite to what is understood as federalism here in Britain. It means power to the people and not to a central superstate.

But what can be done if some of the states or cities run into huge deficits and others keep their books clean by a sound budget – do we compensate the more profligate by the money of the best performers ? If there is not superstate then this problem needs an institutional solution. The written German Constitution contains an important part we often call the financial constitution.

As you see Germans are well acquainted with these questions at home, questions which we now have to resolve on a European level as well. Once again we need an institutional rule-based solution.

The British government announced to publish a White Book very soon on the areas where it believes that competences should be repatriated from Brussels. If this were a balanced effort this should also include areas where additional competences should be given to Brussels from national governments.

There are certainly more than one topic where Germans think that under the principle of subsidiarity Brussels should abstain to meddle – the German system of „Verkehrsverbünde“ are one example, providing one single ticket on all public transport in a wider area, or the German „Sparkassen“, the local saving banks which have saved many small and medium business from any credit crunch during the financial crisis.

However: If all member states would start a similar effort we could come to the point where the whole treaty needs to be done from scratch again. If this is not wanted, what is it all about ?

I fear that many in the Tory party who think this could be a bargain chip in times of crisis. It is certainly not easy for the other members of a club if one member wants to renegotiate terms every 25 years. In a British gentlemen’s club you would be fired. But it gets particularly unrealistic if one member wants an advantage over other member countries by cherry-picking only the most convenient part of the club’s rules.

Many in the UK seem to want something that is not on offer: they want the old EFTA revived. This is not the will of any other member.

Completing the single market is a goal explicitly endorsed by the British government: that means that the level playing field has to be organized for all member states. With weak institutions neither a common energy policy nor a common climate policy nor a common services area can be created.

Those who want to renationalize rules that affect the single market will end up renationalizing the market itself, destroying the common market. Be aware what that means: if the EU would degenerate into a free trade area you also have to come back to nationally negotiated trade agreements with third parties. The necessary enforcement of rules of origin will make trade more complicated as our friends in Norway know quite well.

The European institutions have to work for the common interest – not for everybody’s particular interest: the Commission, the Council, the European Parliament, the External Action Service do this.

The ECB is also a European institution under the Lisbon Treaty although only relevant for member states that joined the monetary union. The Schengen database which makes Schengen outside borders very secure for members of the Schengen-agreement is another example. So it is nothing unusual that the Eurozone is using the institutions in place.

The fact that you can travel without any border control driving from Finland to Portugal under the Schengen Treaty is a very popular symbol for Europe– where Britain opted out – and the common currency, the Euro – where Britain also opted out has a good purchasing power and spares people to loose money to exchange offices – also a popular symbol for Europe.

I will not dwell on the actual situation in the Eurozone, but don’t miss the point: if there is any fear or anger in Spain, Portugal, Italy or Ireland it is because people do not want to loose the Euro, and this was also clear in the Greek elections. If this comes at a price this is generally accepted. The debate is what this price is and who shall pay for the mistakes – and this is the same debate in all similar situations where you need to consolidate finance and budgets all over the world. This is not specific to the Eurozone.

Only extremists in some countries would love to go backwards to internal border controls inside the Schengen room: if there is a debate then only about how open this room can be to the outside.

All over the EU, except in Britain, the blue flag with the golden stars waves from all public buildings. And if there is any bad feeling about Europe it is about politicans not managing Europe as well as people expect – except in Britain where the EU itself is increasingly questioned in the public debate.

This shows up a problem that is coming up faster than I would have expected some years ago and which is still not fully realized by most Europeans who do not live in Britain and do not read British newspapers:

On the one hand the UK is a leading and very active, partner in the Union as it is today – inside the acquis in the Brussels jargon. But on the other hand the United Kingdom has no intention and for the time being may not have the democratic legitimation for participating in any further integration in the European Union.

Now we are in a new situation where on all sides the view grows that more integration is necessary and has to come sooner than many people thought it would come. The British Prime Minister has said it is in the logic of a monetary union that it needs also a fiscal and a banking union. On a first look the UK may have nothing to do with all of this because it will not join any of these schemes. But the effects will certainly be felt in all 27 countries of the EU.

In such a situation I fully understand that we may need some new arrangements between those who are more deeply integrated in the Eurozone including those who want to join the Euro as soon as they can provide the conditions to do so – and those, like the UK, who for the time being see no perspective of joining the monetary union in a nearer future.

At the same time it would be a folly to question the existing acquis under the circumstances of a crisis and insecurity about the future – if anybody thinks we should go back to vetos and blackmail by single member states in areas where we can now decide with qualified majorities, this would open up a box of Pandora.

If any member of the club wants special rights when voting on financial industries, then others may ask for special treatment of their chemical or automobile industries. This would blow up the single market. So hands off from such dangerous games.

It is high time that all relevant parties in the UK make clear if they are really committed to the European Union and to its further development. The famous sentence of the „ever closer union“ is not an invention of wicked Brussels bureaucrats. It has been signed by the UK when it was admitted to the EEC.

Some Tories seem to dream of getting a price for graciously offering to stay inside the EU if they are allowed to opt out of everything of substance. This is an illusion: there is no price tag for keeping the UK in the EU under the premise of cherry-picking.

In the last weeks I hear more and more commentators suspect that the UK may be moving out of the EU in an uncontrolled way – possibly against the will of the government – by getting to a referendum under massive political pressure.

Our friends in government say this is far from any real possibility, but then it should be easy to pronounce a clear uncompromising commitment to the European Project. This certainly means to risk conflict with those Tories who sound more like UKIP than a classical party of centre right.

We want Britain to be a strong and committed full member, not sitting on the fence. If this is the wish of the British government and the main opposition party it should not be a problem to have the courage to tell this to the British people, explaining the advantages of membership with vigor and conviction.

Does this mean that one should not have a critical position towards Brussels ? Definitely not. It is human beings with their splendour and their misery working in our institutions not better but also not worse than in our national capitals.

All power, the formal one of bureaucrats and politicians and even more the informal one of the great number of lobbyists in Brussels, need permanent scrutiny. If Euroscepticism means that in the best tradition of Hume and Kant we need to be sceptic about all power in the hands of human beings then I am eurosceptic.

But let us steer away from europhobic positions based on ideology and bad faith. On the continent this is a privilege of parties from the far right who stick to the most evil spectres of the last century, aggressive nationalism, xenophobia, antisemitism and neonazism. The party of Winston Churchill and Margaret Thatcher, Ted Heath and Harold Macmillan has nothing to do with these people, but the danger of getting the wrong bedfellows should not be underestimated.

During the last 60 years a culture of consultations and negotiations, a culture of compromise has developed that stands out against the culture of war which tore Europe into pieces in the first half of last century. Compromise means mutual respect.

We need mutual respect when dealing with the difficult question how to rebalance institutions and competences for the new setting, where the 17 need a much closer union while 7 or 8 others want to join as fast as possible while some 2 or 3 are unwilling to go into any further integration.

It can be helpful to put oneself into the shoes of the other and find out if he or she could live with our views or not – and then go back to the own shoes and try the best options.

Putting myself in the shoes of a British government of whatever party in power it seems to me rather unacceptable if in a new setting the more integrated core makes all the decisions and those more on the periphery can only nod but are automatically in a minority when it comes to voting.

Now I ask our British friends to step into the role of Germany, France and all the others who want a closer union.

They may find out that it is rather unacceptable to claim a decisive vote for the UK on topics where Britain does not participate neither politically nor financially. There cannot be a premium for non-participation, which would discriminate against those who gave up sovereignty for the common good. Britain excludes itself from some decisions because Co-decision needs Co-operation.

Where is the compromise to take both positions into account ?

First of all we need to keep the existing acquis of the EU-27 intact even if some members go into a deeper integration. And we need much more bilateral cooperation and consultation. Even if the UK cannot have a vote in matters where it does not participate, we should give the UK the opportunity to be consulted in these matters.

It would be helpful if Britain develops a clear idea about what its role in the future of Europe shall be. If it wants to leave there are no reasons for the others to care about the British role. But if this is not the case then a stable new arrangement is only possible if those who want a somewhat looser union do not hinder the efforts of others for deeper integration.

I hope all of you here at Bloombergs German day may contribute to better understanding. This is the best way to create an atmosphere of trust and confidence in Europe as a whole which is needed to resolve our problems. In that sign we will all win.

Thank you