Speech by Minister Verhagen to the European Round Table of Industrialists
A Post-Crisis Europe in a Post-American World’
22 November 2009
Thank you, Mr Van Boxmeer,
Good evening, ladies and gentlemen,
It is a great pleasure to address you this evening at the Hermitage in Amsterdam. I vividly recall the day it opened last June. It was an impressive gathering and a historic occasion too: President Medvedev was the first Russian leader to set foot in Amsterdam since Tsar Peter I visited our capital over 300 years ago. The past and the present seemed to converge that day.
Tonight, with the court of the tsars as our backdrop, we turn our eyes to the future. I would like to thank you, Mr Philippa, for your kind invitation, and you as well, Mr Van Boxmeer, for your hospitality. I have come to know the ERT as a visionary group that does not hesitate to make bold recommendations and that knows when to act. We have seen good examples of your decisiveness in the past. I am sure that this boldness and breadth of vision will once again be evident in your manifesto for a competitive Europe. I look forward to an inspiring exchange of views with you all.
But first, I’d like to offer some thoughts on what Europe can and should do to safeguard its position in a fast-changing world. When I say ‘Europe’, I don’t mean only the governments of the 27 member states, or the Brussels institutions. By ‘Europe’, I also mean its citizens; and I mean you, as entrepreneurs and leading European corporations. The future of Europe is our future, the future of our children and grandchildren. It concerns us all. And it will depend on our working together, as partners, to ensure that we can look forward to that future.
(globalisation and trust)
Right now, many people are not looking forward to the future. Ours is the first generation in a long time to wonder if their children will be better off than they are. My grandparents and my parents never doubted that their children would enjoy more prosperity and security than they had. Thanks to European integration, thanks to trans-Atlantic cooperation, thanks to NATO. And they were right to trust that what would later be called ‘globalisation’ – increased trade and investment, new technologies, access to knowledge and information, rapid communication – would greatly benefit our economies and make us more prosperous than ever before. Little did they know about the downside: climate change, the proliferation of weapons of mass destruction, international terrorism, and a financial bubble that would eventually burst.
Today we live in a more troubling world; and as a result, naturally, people are more troubled. We see this reflected in the fragmented political landscape in many European countries, including the Netherlands, in which political parties with a narrow, nationalist outlook are rapidly gaining ground. We see it reflected in declining trust in public institutions. And we see it reflected in the lack of public support for the European Union.
(a post-American world)
I can understand this pessimism. Ours is an insecure world, where we are faced with new challenges that transcend national boundaries and where the balance of power is shifting – and by all accounts, not to our advantage. The forecasters agree that China will be responsible for a quarter of global economic growth between now and 2020, and that India will contribute an impressive 12%. This is bound to change the face of the world. As Giovanni Grevi of the EU Institute for Security Studies concludes: a planet ‘where three of the five largest economies will be Asian (China, Japan and India) will be a very different place.’
The rise of the G20 as the premier forum for our international economic cooperation is one indication of doing business differently – and a very positive one too. For years the G20 led something of a dormant existence. But thanks to the financial crisis, the authority of the G20 is now many times greater. The G20 has some important advantages over other similar bodies. It’s bigger than the G7/8, comprising twenty official members (plus two observer countries), which are more regionally diverse. This makes the G20 not only more inclusive, but also more legitimate. Yet at the same time, it is small enough to make bold moves. It doesn’t get bogged down in the endless reading of declarations you so often see in the United Nations.
I think the G20 could become a great example of a new form of international cooperation. It is a forum that accurately reflects the true global nature of the economy in the 21stcentury. And it has managed to take some groundbreaking steps, as reflected in the Pittsburgh Framework for Strong, Sustainable and Balanced Growth. This includes a commitment to the further opening up of markets and refraining from raising existing barriers or imposing new ones. The Netherlands has argued strongly in favour of countering protectionism and with good result. It is disappointing that the Doha Round has still not been concluded: that would be the best insurance policy against future protectionism. I fully support the G20’s call to take stock of progress by early next year and work towards a successful conclusion of an ambitious and balanced Doha agreement in 2010.
Ladies and gentlemen,
In principle, the rise of Asia provides us with many opportunities. From an economic point of view, certainly, but also politically. The new rising middle class in Asia will shape many of the developments in the 21 st century. That’s why it’s so important that Europe invests in its strategic relationship with China and other emerging countries, also in Latin America, where Brazil is a rising star on the economic scene and in world politics. Such an investment should not restrict itself to a Summit once in a while, but should be continuous and across the board, also reaching out to the people.
Much like president Obama did during his ten-day trip to Asia last week. The Americans are clearly working towards more strategic partnerships with emerging powers. Fareed Zakaria said rather bluntly on CNN, ‘ Europeans felt slighted last week that Obama didn't go to Berlin [for the 20th anniversary of the end of the Berlin Wall]. That event was purely symbolic. Obama had something substantive to do with the Japanese and Chinese.’ 1 Now I do not believe that the trans-Atlantic cooperation is at stake. Relations between the US and Europe are excellent and will continue to be: in this fast changing world, we share the same values –freedom, democracy, respect for the rule of law and human rights – and it is in our common interest to uphold these values together. Like how we are doing in Afghanistan. But at the same time, Europeans need to realize that they will also need to deliver – that historic ties alone are not enough to keep the Americans interested in what is happening on this side of the Atlantic. To remain relevant and strategic partners for the US, Europe will need to do its share. If not, America will look elsewhere. And that would go against our interests.
Obama is certainly not in the business of managing American decline. His diplomacy is aimed at repositioning America in a world that is changing in fundamental ways, with a view to securing America’s interests in a future, post-American world.
(a post-crisis Europe)
Ladies and gentlemen,
Is Europe ready for this post-American world? Are we also repositioning ourselves on the world stage? Or are we too involved in damage control, in managing our own decline?
I am an optimist by nature. I do not believe in negativity and self-castigation. Time and again, the EU has been written off as sluggish, indecisive and ineffective. So how is it that by most standards the EU is the richest region in the world? That Europeans’ quality of life is consistently rated higher than anyone else’s? In fact, the EU is China’s and America’s biggest trading partner. Our response to the banking crisis following the fall of Lehman Brothers surprised even the EU’s sharpest critics. It may not have been perfect, and it took one or two extra summits, but it was certainly a more edifying and coherent response than what we saw from the US Congress.
Although the Americans and the Chinese both realise that theirs will be the most important bilateral relationship for the next ten years, neither ultimately feel comfortable with the idea of a G2. The two giants are holding each other hostage: the Americans are living off Chinese loans, while the Chinese accelerate their development with American debt and dollars. In the end, this is not a healthy relationship.
So there is a place for Europe in the world. The sheer size and strength of Europe’s combined economies will make it a natural economic and geopolitical magnet in any new world order. We have a strong and credible currency, which means that we enjoy excellent credit on the global market. In 2006, the euro zone had 37% of the world’s total Foreign Direct Investment, as compared to 17% for the US, 7.5 % for the UK and a mere 5.8% for China. That means that investors look upon Europe as the world’s safe haven for enterprise and investment.
In short, Europe’s prospects aren’t so bad. Europe has shown itself very capable in the past. We should take pride in our achievements, even as we focus on preparing for the next set of challenges. Challenges that will not be easy to meet.
Are we ready to assert our place in the world with confidence? The Treaty of Lisbon will allow us to take a step forward, with Herman van Rompuy as the first permanent President of the European Council and Cathy Ashton as a more powerful High Representative for the Common Foreign and Security Policy, who will be supported by a new European External Action Service. All these new elements should definitely enable the EU to have a more coherent external presence and to speak with one voice outside the Union.
But this in itself will not be enough. A new Treaty alone will not do the trick unless European leaders and voters change their mindset. In that respect, there is still a great deal to be done for Europe to not only remain a relevant actor, but to become a decisive factor for positive change in the world.
First, we need to get our citizens back on board. Too few people are prepared these days to speak out in favour of the European Union. We don’t need to ‘sell’ Europe to the public; we need to show them that it works, to their advantage and the advantage of their societies. ‘Show, don’t tell’ is the only way to convince them. I am glad that you, as Europe’s leading industrialists and staunch supporters of a ‘more perfect Union’ – if I may borrow that phrase – have always stood up for Europe. That kind of support is badly needed; today, your voices carry farther than any politician’s.
Secondly, we need to show leadership. We know where we want to be ten years from now: “ knowledge, reinventing education and developing broad research, promoting innovation policies and greening the economy are at the core of the EU 2020 strategy”, in the words of Commission President Barosso. 2 Now, we need to make some bold moves in the short run to make sure that we get there; that we safeguard our position in the long run. If ERT could help push that agenda, that would be extremely helpful. Your group has been highly influential in the past, so I hope you’ll forgive me for having high expectations this time around.
Here are a number of short-term priorities that I see:
- We need to forge ahead with our climate goals. We should make sure we stay in the lead, so that by 2025 Europe will indeed be a global champion of sustainable growth, as ERT’s manifesto says.
- We need to agree on a post Lisbon strategy that will foster innovation and make Europe more competitive. The Dutch government doesn’t see a need for a fundamental change of course; the challenges remain the same: ageing, globalization, climate change and eco-efficiency. But they are even more pressing now, so we must seize the moment to structurally reinforce the economy. We must emerge stronger from the crisis by putting the EU firmly on a path to a more competitive and sustainable green-growth economy. The focus should be on, one, sustainable growth and two, jobs. Sustainable growth is not a contradiction, on the contrary, it holds the key to a healthy future. Social or green policies should go hand in hand with the fostering of economic growth and jobs: it’s a win-win situation. Eco-efficient innovations will contribute to the EU’s competitiveness: that’s the way to go. Naturally, the EU’s out of date budget must reflect and make way for these new priorities: the CAP should be reformed and more money should be spent on research and development and on energy and climate policy. I must say I was quite encouraged by an early draft of the Commission’s plans for the budget review: it entailed a radical review of expenditure and a call for domestic reprioritisation. It’s a shame that the review was –again- postponed. I would urge the new Commission to press ahead with proposals that are in line with what we have seen so far. If from your end, you could send a similar signal, that would be most welcome. ‘Fear of flying’ shouldn’t prevent adjustments we all know are badly needed.
- We need to work much harder on a common security and defence policy. This includes strengthening our defence capabilities. We needed the EU in the last half-century to keep us safe in the world; we will need the EU even more in the next 50 years.
- And we need to continue to defend our shared values in the world, to pursue a policy of ethical globalisation.
(defending our common values in the world: the human rights agenda)
Ladies and gentlemen,
If there is one thing the financial crisis has taught us, it is that responsible behaviour is indispensable for successful business. Economy and morality are not two separate spheres: we cannot persist that never the twain shall meet. That’s precisely why Prime Minister Balkenende called for ‘a stronger set of common values and principals to guide our economic activity’ at the London Summit of the G20, and why he and Chancellor Merkel proposed a manifesto on morality.
One of the EU’s strengths is that it is a community of values. Values such as justice, equality, solidarity, humanity and freedom have always been the bedrock under European integration, and they continue to bind us together today. It is with good reason that the EU monitors its political criteria for accession very sharply: if you want to be a member of the club, you have to prove that you embrace the values that lie at its heart. I know of no other power that takes its own credibility more seriously than the European Union. And it is essential that we continue to do so, also with a view to public support. Accession should happen for all the right reasons. That’s why it’s out of the question that the Eastern neighbourhood partners, for example, will join the EU in the next coming decades. In fact, I would say that they only have a theoretical possibility to join the EU ever. Overall, I don’t find it very useful to always focus on membership perspectives. There is still a lot of ground that can be covered, and a lot to be gained, by concentrating on political and economic transformation and working towards full participation in the internal market. Corruption is one issue that needs to be addressed firmly. I am worried about accounts of increasing corruption in some parts of the world. That also puts pressure on the integrity of solid companies like yours.
Ladies and gentlemen,
There is not only a moral side to promoting human rights in the world. It also serves our own interest. For these two reasons, I have placed human rights squarely at the centre of Dutch foreign policy. A stable and secure world, in which the rule of law and human rights are respected, offers better opportunities for trade and investment. A favourable human rights climate is in every company’s interest too. I would say that our human rights policy benefits our trade relations and vice versa. I’d be interested to know if you agree.
(corporate social responsibility)
I know many of you are taking your corporate social responsibility very seriously. ERT, I heard, is working on a manifesto on broader societal issues. I commend that kind of involvement, that kind of commitment. Governments and companies are not adversaries in pushing the societal agenda, we’re partners. Last year, I organized a meeting with representatives of major Dutch companies to talk about how our efforts can be mutually reinforcing. The United Nations Special Representative for business and human rights, Mr John Ruggie, whose work we support, was also there. And it was really constructive: we discussed how transnational corporations can live up to their ‘due diligence’ responsibilities. This is a good example of the new kind of partnership that is needed: we need to solve the world’s problems, and the world’s crises, together. We each have our own responsibility, but we can only be successful if our actions complement each other.
The fight against child labour is a good case in point. Governments can use diplomacy, development policies and trade measures. Companies should ensure that their main suppliers do not use child labour. And consumers should be made aware of what products are child labour-free. No one wants young children to suffer in terrible conditions to produce cheaper products for our market. Together, we can make a difference.
Public-private partnerships are the way of the future, whether it’s about improving the human environment and social conditions, tackling climate change or boosting energy efficiency. In that respect, the Hermitage offers the perfect setting for tonight’s exchange, as it is a great example of public-private partnership itself. Here, government and businesses have worked together well to show the public a glimpse of the past. We should be even more motivated to work together on a bright future.
2 Remarks by President Barroso at the press conference on the European Manifesto for Creativity and Innovation and on EU 2020 Press conference with the EYCI Ambassadors Brussels, 12 November 2009