The election of François Hollande in France and the outcome of the Greek elections are evident examples of the growing anti-austerity reaction in Europe. And France and Greece are not the only examples.

The Dutch Government had to resign recently after the populist right-wing party removed its support to a proposed austerity package, which included cuts to healthcare spending and increases in the retirement age. The Netherlands are of the few countries in Europe to maintain a AAA credit rating throughout the crisis. This is a clear sign that support for austerity is endangered even in the stronger economies. In Romania, the government led by the conservatives collapsed after only 78 days in office. It was the second Romanian government to fall over austerity measures this year. The collapse caused the Romanian currency “Leu” to fall to a record low against the euro. The newly chosen progressive government of Victor Ponta attempted to calm the markets by appointing a former Central Bank head as finance minister. The conservative Czech government survived – only by chance – a no-confidence vote driven by anti-austerity sentiment. All of a sudden, the conservative majority of governments faces pressure from voters.

Criticism of austerity policies is growing. It doesn’t matter whether austerity programmes are implemented by governments of the left or right or whether it is done willingly or under duress The crisis is not only economic and social but is becoming a real political one with growing populism and extremism. There is a danger of the dark side of Europe returning when governments do not act against it.

Last week Joseph Stiglitz stated in a conference organised by FEPS, the Initiative for Policy Dialogue (IPD) and Italianieuropei (IE) in Rome that “there are so many natural disasters in the world, like earthquakes and tsunamis, so it is a shame to add to these a man-made disaster. But that’s what Europe is doing.”

European governments need to play a more active role in tackling the crisis and wrong policies make matters worse. Another truth has to be taken seriously. No large economy – and Europe is one – has ever emerged from a crisis through austerity policies. Europe has resources, economic policy instruments and political structures to rescue the Euro and to overcome the crisis. Structural reforms and budgetary discipline are important, but it is the demand-side that is limiting the production and only supply side measures which lead to lower incomes and higher unemployment worsen the lack of aggregate demand.

The fiscal compact debate means that the debate over austerity has now come to a debate over Europe itself. François Hollande and the emerging anti-austerity coalition need support to transfer the willingness of alternative growth and investment strategies in the concrete path that satisfies creditors and puts Europe on a sustainable track to growth. It seems that even the markets have understood. The stock markets acted quite moderately the day after the election in France.

There are ways out of the crisis: Firstly, Germany has fiscal room for manoeuvre; secondly, a balanced expansion of taxes and spending stimulates the economy and can bring back increase in GDP and employment and thirdly and most important, the EU as a whole is not in a very bad fiscal position. The debt-GDP ratio is better than in the US. But here again we are in the middle of the question of whether we need more or less Europe. Today in Europe each member state is responsible for its own budget. This is much more difficult to handle than in the US. Therefore, progressive economists are completely right in saying: “The whole is more than the sum of the parts”.

Even if Europe cannot develop rapidly towards a real federal system, it can use already existing possibilities much better and enlarge them, such as the European Investment Bank or the European Solidarity Fund for Stabilisation as well as Eurobonds in the form of “project bonds”.

As long as the focus on austerity remains and only lip-service is paid to growth strategies, the crisis in Europe will deepen with totally unacceptable unemployment rates of 25% and even higher for the youth!

Delaying growth will be too costly for Europe and we have faced in the last century the disastrous consequences of extremism: Please, never again!

Keynes teaches us that we should not slow down growth in periods of already sluggish growth!

Last year ended with an EU Summit and 2012 started as 2011 ended. At the beginning of January Merkel and Sarkozy met in Berlin and at the end of the month we will again have another summit. It seems there is a trajectory towards similar procedures for this New Year.

Persistently urging austerity measures and cuts from the most affected Eurozone countries in the south is not the appropriate policy. But something has changed! We realise when we carefully read the press; when we look at posts and analyses published by economists such as Paul Krugman; when we attend debates here in Brussels and elsewhere; that there is more and more acknowledgement that austerity measures will not solve the crisis in Europe.

At the root of all this is the macroeconomic imbalances within the Euro Zones. This is nothing new. I argued this point throughout last year. What are the consequences of this verdict? Austerity will deepen these imbalances. The countries in the South of Europe (but also others) will probably go through further downgrades in the near future. These countries will not be able to recover, because there is a lack of coherent European economic policy and coordination.

European leaders are fighting against the wrong crisis. Fundamentally, we do not have a sovereign debt crisis in Europe. We are facing in Europe a balance of payments crisis and, more specifically, a current account crisis in the ‘peripheral’ economies as well as in the central countries which are still doing relatively well.
In economics, the current account is one of the two main components of the balance of payments, the other being the capital account. The current account is the sum of the balance of trade (exports minus imports of goods and services), net factor income and net transfer payments.

Action to reduce a substantial current account deficit in one country usually involves increasing exports or decreasing imports. Firstly, this is generally accomplished directly and in the short term through import restrictions, quotas, or duties, or subsidizing exports. The emphasis lies on short term. However in Europe we have a single market, so restrictions, quotas, subsidies from one member state against another are not possible. The second possibility is influencing the exchange rate to make exports cheaper for foreign buyers. This will indirectly increase the balance of payments. This is also impossible within the Euro Zone. We are living in a single currency zone.

But current account deficits can be reduced by promoting an investor friendly environment and adjusting government spending to favour domestic suppliers as a possible policy-action.

How could this be done? The answers have existed for a long time: We need an economic investment and industrial policy in Europe with accompanying instruments like investments in the public sector, facilitating credit lines for small and medium sized industries to invest, Eurobonds to finance and coordinated labour market policies to avoid social dumping. Europe should therefore develop a common fiscal policy and differentiated policies in terms of the sectorial and geographical needs.

All this together with greater responsibility for the European Central Bank will help much more to overcome the crisis. But such thinking seems to be absent from the current “Merkozy” talks.

How long will Germans be made guilty in a Platonian cave haunted by shadows of the past?

In the last couple of weeks all over Europe a sentiment of Germanophopia appeared and this even amongst political friends. Comments like “If the Euro fails, the EU will disintegrate. And you, our German friends, will miss the golden goose that paid for reunification and ensures your prosperity. (European Voice 1_12_2011). Others in France spoke of the return of Bismarck.

As a German working for more than 30 years on European affairs I am shocked. The European story started to bring freedom and prosperity to our burnt out continent in the spirit of solidarity amongst our nations. I understand even more now the former Chancellor Helmut Schmidt when he stated at the SPD Congress this week in his “century speech” that in the near future Germany will not become a normal state. Against that is first and foremost the German enormous historical burden.

Europe’s crisis is not about Germany against all the others; it is not a crisis of German economic power. It is the crisis of a system which seems not to have the proper responses to the challenges of Europe within the globalised world. Europe is facing a massive lash back after not having seriously implemented macroeconomic regulation and policy when the Euro was created and not responded properly (i.e. with a sound European answer) when the first signs of weaknesses appeared even before the start of the financial crisis in 2008. Now we need a new renaissance of Europe, a strong and credible leadership.

Europe is facing one of the most difficult periods in its recent history. The current sovereign debt crisis is – so it seems – the most crucial test of the solidity of the future of Europe and the on-going journey of European integration since World War II.

The crisis has shown two major problems of the political, economic and fiscal architecture of the European Union. The crisis should teach us that we have the responsibility to develop solid and effective responses in order to provide alternatives to the current austerity policies of the conservative governments in Europe.

Strengthening the current framework such as, for example, the Growth and Stability pact will not bring better results. So it is also a question of a Political Europe and a question of a proper assessment of the crisis for developing alternative policies. So it is a question of our common European future. Let us quote the Nobel Prize winner Joseph Stiglitz in a recent comment on Europe:

“Public-sector cutbacks today do not solve the problem of yesterday’s profligacy; they simply push economies into deeper recessions. Europe’s leaders know this. They know that growth is needed. But, rather than deal with today’s problems and find a formula for growth, they prefer to deliver homilies about what some previous government should have done. This may be satisfying for the sermonizer, but it won’t solve Europe’s problems – and it won’t save the euro.”

On the political level we face “a post-democratic threat of an executive federalism” as Jürgen Habermas analyses in his new book.

Therefore, do not blame the German people. Yes you can criticise the policies of Angela Merkel or the strategies of German industry. But Europe is unfortunately not yet a zone of common economic and fiscal governance, herein lies the problem. Therefore the responsibility of the current sovereign debt crisis is a proper European responsibility.

Accusing Germans, awakening old devils and bottomless hatred is to repeat mistakes we should have learnt to avoid from our history: It leads to nowhere but a dead-end!

Those who have seen the recent movie Contagion are aware how terrible this is when necessary precautions have not been taken in time. Let us be clear, the “crisis-beast”, or the financial markets have already been very successful in their contagion strategy. We have seen last week that two democratically elected Euro-zone governments, Greece and Italy, had to step down. Both situations are different and of course it is high time for the Berlusconi government to be replaced. Nevertheless, the situation gives us the picture that we crossed the threshold to post-democratic times. This is clearly expressed in a statement of EU Council President Herman Van Rompuy, when he said in Rome last week that “Italy needs reforms, not elections”. Read in this perspective the German philosopher Jürgen Habermas in his recent opinion piece in the Frankurter Allgemein Zeitung. He stated very clearly the danger of a post-democratic Europe and the neglect of legitimate concerns that there should be no poverty and that there would not be marginalised populations in European welfare states.

This should be the overall reference point of the analysis. Inequality is the inherent cause of the problem in Europe which we now call “sovereign debt crisis”. It is more than urgent to re-establish social justice. Re-establishing social justice means re-orienting our economic policies in the sense that these policies serve the people and not the opposite in which the people serve the economy. Such an approach is the general starting point of overcoming the crisis in Europe and elsewhere. Such a policy has to be more environmentalist, and more respectful towards the rights of all workforces and definitely more socially balanced and democratic.

The largely deregulated financial markets created products which were risky beyond imagination. Lower taxes heightened inequalities in many of the Euro Zone countries as incomes of middle and lower wage earners deteriorated significantly. These policies have decisively contributed to the “contagion” which the financial markets brought to Europe. Moreover, it is the core of the crisis.

The macroeconomic coordination mechanisms established in Europe since the beginning of the crisis in 2008 are in reality nothing more than simple austerity policies. Coordination therefore means alignment. Look at the reform of the European growth and stability pact, the introduction of the European semester, the European 2020 strategy and all the instruments for financial stability established recently.

There is a clear need for our economic policies to cure these macroeconomic imbalances! If politicians impose savings programmes all over Europe, they recognise that the mechanism of public borrowing is pushed to its limits, but they are not asking for the reasons behind it. Aggregate price stability is simply not sufficient at all. Austerity programmes all over Europe mean contagion and deep recession. The EU Commissioner Olli Rehn announced last Friday the prognosis of a recession in Europe from next year on – Here we are!
Hence the problem is quite simple: Either we cut our expenses and diminish our sovereign debt in the short and medium term while running a huge risk of raising in the long run or we increase income due to a sound fiscal policy which puts employment at the centre of our preoccupations. This creates further income, growth and welfare.

Yesterday the President of the European Council announced the postponement of the long overdue Eurozone summit which was due to take place next week. I am wondering if the Belgian Council President is now using Belgian practices of non-decision making and postponing. We all know that Belgium is now more than 16 months – since 10th June 2010 – without a government! Are we facing similar prospects for the European Union?

This would be a very bad signal towards European citizens. I deliberately mention citizens and not the financial markets. The well-being of speculators at the European and global stock exchange and financial markets should not be the first priority of European decision makers! The crisis is now first and foremost a dangerous threat for the daily life of the European citizens.

The next European summit should propose a powerful and significant framework for Economic Governance in Europe: The most important elements for such a system are regular decisive meetings of the Finance ministers of the Eurozone as well as the establishment of a special financial committee in the European parliament to strengthen democratic legitimacy of such a system. In a second phase the head of the finance ministers committee should be the European finance minister (as already discussed in former blogs).

The European Union is long overdue a response to the sovereign debt crisis with a well-defined and thoroughly developed plan. The spotlight of today, 10th October 2011 turns to the EU member state Slovakia. The future of the Eurozone is dependent on a vote in the parliament of Slovakia and of some Eurosceptics in the government. That is what, unhappily, the Eurozone crisis has come to. Necessary European reforms are endangered by some anti-European members of parliaments in the member states. But not only are European citizens waiting for Eurozone parliaments to approve the proposed structures, the European officials are still working on how exactly they should be used, as the Financial Times is reporting.

Therefore, it is more than essential to increase the power of European institutions and decision making. Only truly European structures can give the necessary powers to the European Financial Stability Facility (EFSF) and give it the emergency authority to recapitalise banks and stabilize the sovereign debts at the same time. Indeed, the EFSF, rather than the member states, should be given the responsibility for rescuing European banks. If not, we run the risk of experiencing a decrease in confidence for such a scheme, and ultimately a decrease in ratings.

It is then imperative that a sound reform of European governance is brought in. The crisis is more than a sovereign debt crisis in Greece. It is a profound crisis of Solidarity and Democracy in the European Union. In Germany conservatives and liberals are stating daily in the tabloid press, that Germans should no longer be the “paymaster” of Europe; in France left wing politicians are urging a “De-Europeanisation”; in Italy the current Prime Minister is getting more and more ridiculous with his recurring sex-scandals and the way in which he governs the country; in Finland the so called “True Finns” initiated discussions on collaterals and solidarity with Greece which have spread to the Netherlands and Austria etc….

All this is a medium and long term European issue. However the Euro zone is now under threat and the necessary long term solutions take time i.e. change of the treaties. The ECB President Jean Claude Trichet – presently still in charge – is underlying that “further delays are only contributing to aggravating the situation.” This means the need for real short term solutions for Greece but also for Portugal and Spain is required. Greece needs without any further delay the next money transfer for an immediate help.
European reality is regrettably darkening more and more. The chances for a profound reform of the treaties in order to overcome the crisis are nearly zero. And even when the next summit comes out with strong proposals it will have the risk that somewhere in Europe a referendum will bring to an end such a process.

So what is required are pragmatic short and medium term solutions. Proposals are on the table, such as for example binding national budgets with common agreed social standards, with obligatory investment plans for research and innovation as well as for education and definitely mandatory rules for the financial sectors in the different member states. Such choices are then the best pathway for further answers as European sovereign bonds and more regulation on the financial markets such as the financial transaction tax. A real sanctions mechanism should then be implemented and voted in the European Parliament and afterwards approved by the different national parliaments, paying special attention to not adding new elements of pro-cyclicality in the system.

Such proposals could be helpful to fade out the risks of further divisions within the European Union. The greatest risk for Europe is national egoism and weak spiritedness. Successful European integration was always a story of bravery and leadership. Postponing necessary decisions and not taking risks for Europe is hazardous.

No Belgian habits for Europe – this is the important message to give to the European leaders!

9/11 changed the world. This is what most of the comments made this week-end stipulate. The world seems to have shrunk in many ways in the last decade. It goes without saying that we still suffer the consequences: thousands of innocent people killed at 9/11, the wars in Iraq, in Afghanistan, the wave of violence and terror with attacks in Europe (Madrid and London), in North Africa, in the Middle East, in Indonesia, in India and elsewhere. The terrorists have no reason to kill innocent people or involve them in their fight without motives!

Terrorism affects society. The most effective way to counter it is to reaffirm our values – this is exactly what terrorists want to destroy. This was the strong answer of the Norwegian leadership following the terrorist attacks in Oslo this summer. The Norwegians were outstandingly unanimous in declaring that the best response to terrorism is a strong convention around democratic values and the rule of law. The values of freedom of expression and tolerance are the way to confront terror.

On the other hand, the threat from an international group such as Al Qaeda is different from that of a domestic terrorist. Confronting international terrorism means rigorous, well-resourced and global efforts by police and intelligence services to prevent attacks and bring the worst criminals to justice.

However confronting terrorism means also to do the utmost to stimulate development and growth for the well-being in the world. It is globalisation which brought the growing interdependencies between regions, countries and people. The shape of the new global relations has so far been challenged, also by the terrorists. The financial crisis, together with the current economic crisis, exposed that
the real disaster of today is the collapse of our system and the crisis of global governance.

The argument of the “clash of civilizations” (Samuel Huntington) is over-stereotyping. Similarly, the religious argument of the differences between the Islam and Christianity is too simple. The only answer to combat terrorism is stimulating growth and welfare to overcome poverty.

So far significant steps have been made towards the achievement of the Millennium Development Goals but not enough. It is a discredit that the Millennium Development Goals are not seen as one of the most effective approaches to overcome terrorism. Stimulating growth requires not just easier monetary and fiscal policies, but continued pressure for reforms of the global governance system. Reform of the global system is critically important but is currently in stalemate. A new push is needed from the leaders of major countries, acting together through a reformed G-20 that effectively includes emerging market economies such as China, India, Brazil, and others. Moreover, since global challenges are interrelated, they demand integrated approaches, with greater coordination and synergy among international institutions.

Indeed, the threat of terrorism should not be ignored. But the way out is not continuing war in Afghanistan and intervening in Somalia or being more than cautious in our part of the world. The long term solution is to overcome poverty and to give happiness to people so that they can afford a decent life and educate their children in a proper way with hope for their future. The seed of growth
and welfare falls then on a fertile ground to overcome the reasonless and concentrated hatred of the terrorists against the US and Europe. Here lies the responsibility of the governments in these two continents.

The current crisis almost brought us to a dead end – certainly more evident in the US and Europe than perhaps in the other continents. But nevertheless the situation is frightening.

Europe seems to be crumbling; the sovereign debt crisis threatened the whole European project. In Spain, in Britain and elsewhere the youth no longer accept promises for a better future; they are asking jobs for their decent life now. Older people are facing enormous difficulties to live with their pensions. And more and more unemployed have no chance to get back into jobs. Even in Germany where unemployment is fortunately declining, nearly one million people are jobless for years and years and are supported by a social welfare system which is in danger. In other countries, far right movements are growing quickly like in France or in Eastern Europe and individuals such as the Anders Behring Breivik, the perpetrator of the horrible murders in Norway, are challenging and threatening European democracies.

In Europe’s southern neighbourhood, in the Arab world, dictatorship is fortunately now being dismissed but we do not know what is coming next. In Asia we are also seeing the growth of movements such as with Anna Hazare‘s campaign against corruption in India. Chinese human rights violations are continuing. An estimated 500,000 people are currently enduring punitive detention without charge or trial. House arrest and imprisonment of human rights defenders are on the rise, and censorship of the internet and other media has grown. However, Chinese human rights activists are becoming ever more outspoken.

The US is more occupied with internal political fights which are becoming ever more unmanageable. This summer the small but influential Tea Party movement challenged the whole system of international finance and global governance! In the next year President Obama has to focus on his re-election, so will have less time to dedicate to tackling global issues and problems. And we are facing similar problems in Latin America and especially in Chile. Hence the global crisis is evident.

We have to recognize that the current model of globalization driven by neo-liberal rules undermined the foundations of our world order with severe consequences for regional and national economies. The erosion of our welfare systems, the problems of youth (un)employment, the challenges of aging societies and definitely the long term impact of climate change need answers. But we don’t need simple answers in doing little measures or small reforms. We really need to face the problems in a progressive way. We have to develop sustainable alternatives to the liberal model.

Firstly on the global level: We must build a new international architecture able to guarantee a fair globalization, while reducing inequalities and ensuring a sustainable development.  We must recognize that such an outcome cannot be achieved through the sole action of single states. We must recognize that the challenge of a global world lies in the ability to govern processes at a supranational level. We must recognize that politics and democratic institutions must orientate and regulate the economy, because this is the only way in which capitalist development can be reconciled with the principles of democracy and social justice.

Secondly on trade: “Fair trade” has become something of a buzz phrase, a logo and a brand. This threatens to rob it of its meaning. Trade must be to the benefit of all, and not only the rich countries of the world. This is the fundamental question of global governance and if we do not address the injustices in our trade system, we show dishonesty in our concern for the poor. This will require reform in the global trade architecture to offset the vulnerabilities of the developing world.

Thirdly on the three basics progressive values: Jobs, Solidarity and Education: A job has always been perceived as an occupation that someone should hold in order to sustain oneself and one’s family financially. The cruel reality is that work is the question of economic survival. The promises made by politicians to create employment are hard to believe by the people. Even progressives have seen unemployment not as a group or society matter but as an individual problem. This fosters disappointment in politics, breeds emotions of resignation, resentment and withdrawal.

We have to do the utmost to assure the right to a good job for everybody. I am aware that this is visionary but we also need vision in order to fulfil our commitments, one of which is “a good job”. This means in the traditional social democratic sense of a decent standard in income, an assured social security and the ability to be trained for new challenges. Here comes also in the notion of Solidarity. And it should not be neglected that investing in human capital is something which benefits the individual through higher wages and capabilities and the society through a higher level of productivity and welfare provisions. People have to be more and more empowered through programs of education and professional training in order to be prepared for the new challenges in their work.

But the great contradiction of economic life nowadays is still that financial markets are inherently globalised, while regulation is still predominantly national and regional. This has allowed actors in financial markets to take extreme risks and the consequences of this anomaly have been truly catastrophic as we all know.

If regulation is to work, it must be genuinely international. Any effort to improve international financial regulation must be based upon the will to build an ethical and comprehensive institutional framework. We must develop an alternative based on the values of social justice and the pursuit of global public goods.

(more…)

Newspapers all over Europe, political observers and politicians are gloomy of late.  For example Le Monde’s headline tells us that Greece has another 10 days to avoid the worst. The Financial Times published in a post by Gideon Rachman that a political union cannot fix the Euro! Frankfurter Allgemeine Zeitung argues that the German taxpayer holds the greatest risk.

Greece cannot default. If we follow the example of Nevada used by Nobel Prizewinner Paul Krugman we should accept that the major  mistake at the birth of the Euro was that there are no federal and automatic structures in case of problems in one member state (as is the case in the US).

This is exactly the case of Greece now. In general terms spoken, it is now time to go further towards genuine European federalism. The tools are on the table: first to implement fully the existing Lisbon treaty, secondly to give full responsibility to the already existing authorities like the President of the Council, the High Representative and the President of the Commission and thirdly, but most importantly, to advance towards European economic governance with a European finance minister responsible for financial and monetary policies. This authority has to be responsible to speak and act in the name of the member states. There is an urgent appeal for having such a shared sovereignty in financial and monetary matters.

Not sharing more, not having in mind the overall European future is a huge error! What is at stake for the different actors?

• At the moment the European Central Bank (ECB) holds approximately 77 billion sovereign bonds from Euro-zone member states. 40 billion are Greek sovereign bonds. But this is the nominal value. The ECB credited these bonds to the private banks in real terms with much less. Estimations are about possible losses for the ECB of roughly 15 to 20 billion (see FAZ 21^st June 2011) Euros in the case of a debt and financial re-scheduling. Europe is worth more than 20 billion Euros, isn’t it?
  So the question is: why is the ECB so tough in the case of Greece?
• Greece has delivered in the last year. Recent figures published by the Greek government show very clearly that Greece is on the track. Greece has given the largest annual deficit reduction ever by a euro zone economy in the last year. The cyclically adjusted general government deficit was reduced by 6.7% of GDP (from -14.9% in 2009 to -8.2% in 2010).The current account deficit was reduced from 14% in 2009 to 11.8% in 2010. Growth in GDP seems to be “re-established”. In the first quarter of this year the rate was 3.4%. This is exactly the figure for the whole Euro area!
  So the question is: why is the EU so tough in the case of Greece?
• Germany is doing more than well at the moment: 6.1% GDP growth in the first quarter of 2011 (!); less than 3 million unemployed (7%); second largest exporter and a trade balance surplus of more than $186 billion for 2010. (The Economist 18^th June 2011). Hence the interest of Germany should be all about strengthening Europe. A horror scenario of dissolution of the Euro zone would be a disaster for Germans business: A far more expensive currency and therefore a less competitive world market position. So the question is: why is Germany so tough in the case of Greece?

The answers aren’t simple: The European Central Bank is not a central bank like the FED in the US. The responsibility of the ECB has always been seen only in terms of price stability and never in terms of welfare and growth. Greece has for a long time shown mistrust and non acceptable political and economic culture towards Europe. Germany – my home country – is headed by a conservative – liberal government looking in a populist way at European issues in order to assure possible right wing and nationalist voters in the upcoming regional elections this year and the national elections in 2013. This is purely populist!

But Europe is more than just figures and definitely more than looking at populist votes. Europe is about welfare, growth, competiveness and finding answers to the upcoming demographic challenges. Europe is about jobs.

Thus: Each crisis should be seen as a chance to advance and think further. Even if we argue at the moment that Europe needs not at all a new institutional debate, one has to be clear that the Union Is not yet politically achieved. A further deepening means further European shared responsibility and sovereignty. This is the time to convince the citizens in the member state countries that Europe is the solution!

The current Greek crisis is an integral part of the European integration process. Leaders should understand that having “the back at the wall” is the moment to decide to advance and overcome.

In the last few months so many comments have been very negative about the performance of Europe. But let us be affirmative and not vicious.

It should be very clear that the stereotypes of the European Union are not legitimate.

On the contrary, the European integration process is a story of success. 67 years after the Second World War and 54 years after the Treaty of Rome was signed, the European Union encompasses 27 member states. Within its borders more than 500 million people live in an order ruled by values such as peace, solidarity, freedom and democracy.

However, regarding the success story of Europe, the Union is not at all costly for the average citizen. The annual budget for the whole European Union is about 141 billion Euros or slightly more than 1% of the annual GDP per member state. Per citizen this represents ONLY €282!

Europe is not at all the big machinery often depicted in commentary. The administration of the European Union comes to about 32,500 civil servants in total. This is the same number of persons employed for example by the administration of Munich, a medium size town in Germany!

However it is also a democratic body. The European Parliament is elected directly by European citizens. The European Council is composed of the democratically elected members of Governments and the Committee of the Regions represents all the elected Mayors and City Councillors. The European Commission is nominated by the members of the European Council.
Therefore, it is a very democratic structure.

Europe also delivers concrete results: Schengen, the Euro, the Single Market and consumer protection are among the many examples.

Although when we consider the successes of the past, the future will require great efforts too.

A new 21st century Europe is required. Since World War II, Europe has never been under so much pressure; externally by globalisation and the related developments and internally by a threat to democracy in Europe.

Globalisation, and the developments related to it exposed the limitations of the European socio-economic paradigm. The subsequent economic crisis undermined the credibility of the model that had been the framework for generating prosperity and hence sustaining the welfare state. Weakened, Europe had to therefore endure a shift on the international stage, where other global powers emerged. This process is undoubtedly leading to a new global order.

Internally, the recent decade has been very turbulent too. The ambitions of the 1990s, which led to the Treaty of Maastricht and laid the foundations for a political Union, seem to have been overshadowed by the recent democratic crisis. Popular support for Europe has reached its lowest level, judging from the turnout in the last European elections. It seems that the EU’s political structure became inadequate to respond to the hopes and anxieties of changing European society.

This is the reason for the Call to Europe Conference on the 29^th and 30^th June 2011 in Brussels, organised by the Foundation for European Progressive Studies (FEPS). See the website for more details and to register for the event.