Rebuilding the Economic and Monetary Union
Rehn, Olli, Hampton Roads International Security Quarterly
Olli Rehn is Vice President of the European Commission and Commissioner for Economic and Monetary Affairs.
Dr. Rehn has previously held numerous positions within the Finnish government and the European Union.
Commissioner Rehn presented this assessment of the future of European monetary union before the Center for European Studies at Harvard University on September 25, 2012.
I very much appreciate the opportunity to discuss the on-going economic and political transformation of the European Union with such a distinguished audience. I am glad to see that Europe and European affairs still draw such attention. After all, the news over the past few years from the old continent cannot have been exactly an inspiration for deeper European studies. Indeed, in Europe too there have been many voices expressing doubt about the future of the European Union. Some are even suggesting that the story of European integration might be reaching its final chapter.
Let me start by saying that one does better by not believing in these pessimistic Cassandras. We tend to say back home that a pessimist is never disappointed; but in the end, it is those with patience and stamina who will carry the day.
This goes for Europe as well. I am bringing some better news from across the ocean. And I am particularly happy to be able to do so here at the Harvard University, which is known for its openness and strong international links, and for unique academic and scientific achievements.
In the midst of so much worrying news about the economic and political crisis in Europe, one can too easily forget that Europe is still much stronger than often perceived.
The European Union, with its more than 500 million citizens, is and will still for some time to come be the largest single economic area in the world. It counts for almost one third of global economic output. It is the largest trading partner and source of foreign investment for the US, China and many others. It is the world's leading power in development cooperation, and its soft power is a source of stability and progress in its neighbourhood and beyond. The innovation and technical advancements it generates create well- being far beyond the borders of the continent. And most importantly, the European Union continues to do what it has always done best: maintaining the longest ever period of peace, freedom and prosperity in the troubled history of Europe.
To be sure, we are today witnessing an extremely fast global economic and political re-balancing between old and emerging powers. But it would be a mistake to count Europe out. The European Union is here to stay, and I believe this is good news for everyone, not just Europeans.
This is of course not to say we do not have deep problems to deal with, or that we would have already overcome the economic crisis.
Several of our Member States still face great challenges in stabilising their public finances and strengthening their competitiveness. Unemployment is at unacceptable levels in most of the 27 Member States. The return to growth will be sluggish and slow.
In the short term, we have to ensure that the financial markets are stable enough to fuel the engines of growth. We have had to create financial stabilisation mechanisms to provide liquidity to Member States that find themselves shut out of the markets, so that they have the time they need to pursue essential reforms. We have completely overhauled Europe's economic governance; that is the rules and practices for coordinating our member states' economic and fiscal policies. We have engaged in far-reaching structural reforms for growth at the European level and in individual countries. I am convinced that all this hard work will start bearing fruit in a not too distant future.
Indeed, the first signs are already visible, as I will explain in a moment. …