The time for a debate on the Future of Europe is now

The situation in the European UnionDespite intensive stabilization and consolidation efforts, the debt crisis is not yet over. Far-reaching consequences on financial markets and in the real economy remain a very real threat.The crisis also has a political dimension. In many regions nationalism and populism are on therise, while the feeling of solidarity and sense of belonging in Europe are dwindling. Europe issometimes seen as part of the problem rather than part of the solution. What is more, theexisting “narrative” of the European Union as an instrument for banishing war in Europe is nolonger sufficient for today’s “Erasmus generation”. The fruits of integration, for examplefreedom of movement in the Schengen area, are advantages all too often taken for granted.The cost associated with the European project often receives more attention than the value itcreates for our citizens.Furthermore we must not close our eyes to a second challenge which will be just as decisivefor Europe’s future as overcoming the debt crisis. In this era of globalization, the distributionof power in the world is shifting. New political and economic global players are gaining moreinfluence. In dealing with these new powerhouses, we Europeans will only be able to upholdour values and pursue our interests effectively if we pool our strengths much more bothinternally and in dealings with the outside world. We must seriously address this questionwhich is decisive for our future. We face the historic task of enabling Europe to become aglobal player.For Europe, the debt crisis and globalization pose an elementary challenge. We must rise tothis twofold challenge if we want a bright future for our continent and so that we canconvincingly realize and communicate the value of Europe.

What challenges do we face?The European Union has to pursue a two-pronged strategy: we have to work our way out ofthe crisis and develop Europe into a major global player.•Overcoming the economic, financial and debt crisis has absolute priority. Butcrisis management alone is not enough. We are deeply convinced that chartinga course for the future of Europe beyond the current crisis will ultimately helpus to solve the pressing challenges immediately ahead of us. We need decisivesteps on the basis of the three pillars of fiscal consolidation, competitivenessand growth, and solidarity. In order to improve its political capacity for action,the EU needs to achieve a stronger pooling of sovereignty in the medium-termin some areas.•Alongside practical reform steps to overcome the current crisis, citizens need tobe convinced that the EU can play a decisive role in maintaining our interestsand values globally and contribute to resolving global challenges. The EUneeds to demonstrate that it is capable to respond to global challenges andspeak with one voice on central questions on the international agenda while atthe same time respecting the subsidiarity of countries and regions.

We take the current crisis to be a wake-up call. Time for far-reaching reforms is short. Theneed to re-establish trust and confidence in our common project is urgent.That does not mean that all problems have to be solved immediately all in one. But thepolitical debate about the future of the European project has to be conducted now and it has totake place all across Europe. We need to provide a sense of direction and of Europe's purposebefore it is too late. What we are ultimately talking about is making the European Union andthe Euro irreversible.Our main focus is on steps within the framework of the existing Treaties. However, we shouldnot exclude the option of more far-reaching reform measures in the medium term.The following ideas are a personal contribution to a debate that we consider essential to thewell-being of our nations and all our citizens.

Overcoming the current crisisDuring the euro crisis, it has become clear that we must fundamentally strengthen theeconomic and monetary union. An effective and stable economic and monetary union is ofcentral importance for the overall functioning of the European Union. This concerns allmembers of the European Union – also those who have not yet introduced the euro. Reformsshould therefore be undertaken wherever possible in all 27 member states. To do this, wemust rigorously tackle the weak points revealed by the crisis. How can we put the Europeanfinancial sector on a firm footing for the future? How can we ensure sounder public financesin the long term? How can we ensure the competitiveness of our economies in order to returnto a sustainable path of growth? How can we further develop economic policy coordination?How can we ensure we have the necessary democratic legitimacy for decision-making inpotential new fields? In the longer term, this may also necessitate further-reaching stepstowards integration; these should be done ideally through treaty amendments.The importance of sound budgetsSince the Lehman crash, the level of public debt in the EU has risen on average from analready significant 60% to well over 80%. It is imperative that we reverse this trend, as itstifles our economies and reduces our political capacity for action. The EU has takennumerous steps to ensure sounder public finances, such as the European Semester, the “Six-Pack” and the Fiscal Compact. But we need to do more to convince the people and indeed thefinancial markets of our dedication to long-term sound public finances. Completing work onthe Two-Pack and implementing the Fiscal Compact are particularly pressing. In the mediumterm, the Stability and Growth Pact should be further strengthened. In this respect, we shouldalso look into the possibility of a stronger role of European institutions regarding nationalbudgets.In recent years we have also taken a number of steps to strengthen the European financialsector. But we need more steps to improve the functioning of European financial markets andto make them fit for the future. Furthermore, we consider it important to develop and adopt anEU legal framework for the restructuring and orderly winding-up of ailing banks, as a steptowards more financial integration.

The importance of action to foster growth, competitiveness and employment.On the basis of sound public finances, we also need to foster competitiveness, growth andemployment in order to overcome the current crisis in a sustainable manner. At Europeanlevel, we should aim at completing and bringing the Single Market, one of our main assetsand the most powerful engine for growth, to a new stage of development. We should also stepup our efforts to finance the economy by e.g. implementing the Project Bond initiative. Weshould increase the support for SMEs, in particular by facilitating easier access to existingfunds; in this respect we should also envisage a stronger role for the EIB. Finally we shouldstrengthen job creation, targeting in particular youth unemployment.Economic policy: overcoming Maastricht’s fundamental flawIn too many respects, economic policy coordination has to date not been binding. Thecurrently available instruments such as the Europe 2020 Strategy or the Euro Plus Pact do nothave real teeth. In key areas of economic policy (most members of the group suggestedfunctioning of labour markets, sustainability of pensions and social security systems),additional steps should be envisaged – preferably at 27, but if need be also through the use ofenhanced cooperation as foreseen in the Treaties. In the medium term, we must overcomeMaastricht’s fundamental flaw – monetary union without economic union. Most membersbelieve that we should therefore consider making the commitments in the framework of theEuro Plus Pact binding and granting the EU institutions a central role here, and that wefurthermore should think about more steps towards integration, for example more qualifiedmajority voting in key areas of economic policy.Strengthening solidarityPractical solidarity among EU member states is a founding principle of our Union. Since thestart of the crisis we have taken fundamental decisions to implement European solidarity, inparticular by creating the European Financial Stability Facility (EFSF) and the new long-termEuropean Stability Mechanism (ESM). Also the EU budget with its support for less developedmember states is a central component of European solidarity, as an essential tool for growthand convergence. Solidarity must remain a guiding principle for our action. It should befurther developed in a staged and criteria-based process; this development must also be seenin the context of the further development of the Economic and Monetary Union and of the EUinstitutions and their responsibilities. We should also assess whether to develop the ESM in4

the direction of a “European Monetary Fund” in the medium term. There were differing viewsexpressed on the question of mutualisation of sovereign risk.Europe as a global playerThe world is experiencing a tectonic shift. Major new players have burst onto the scene. Atthe same time, however, globalization forces all countries to come to grips with matters theyhave never had to address before. What is needed is a functioning global governance – toproperly regulate financial markets, to address the challenges of global warming and newlyemerging security threats. In competition with other economies, ideas and models of society,the countries of Europe will uphold their values and pursue their interests successfully only ifthey stand united. We believe in the continued attractiveness and adaptability of Europe'sopen societies.Our ambition is to shape EU external relations to make them much more effective than todate. In particular this affects relations with our strategic partners. Here we need better institu-tional arrangements, more efficient procedures and a better division of labour betweenEuropean and national levels.The EU got off to an important start with the reforms of the Lisbon Treaty. Now we have togo further and improve our ability to speak with one voice in the global arena and to unite ourforces more effectively vis-à-vis new players. To meet these challenges we need to have acomprehensive and integrated approach to all the components of the EU international profile.We therefore need to address, beyond CFSP and CSDP, development aid, management ofmigration flows, climate change negotiations, energy security and commercial policy. TheEuropean External Action Service has to be strengthened more; the next opportunity is thereview of the EEAS Decision in 2013. To be able to move forward, we have to start settingthe direction now. We need a more dynamic Common Security and Defence Policy, strongerEEAS planning and command capabilities for civil-military operations, more pooling andsharing. We should commit to more majority decisions in the sphere of our Common Foreignand Security Policy. With regard to Defence Policy most Foreign Ministers feel that weshould be more ambitious. We should raise the level of our ambition beyond “pooling andsharing”. In the long term, we should aim for a European Defence Policy with joint efforts

regarding the defence industry; for some members this could also include a “European army”.We should also aim for a common seat in international organizations.If Europe wants to hold its own in the new global order, increased integration in other centralpolitical fields has to be the aim. Justice and home affairs is one possibility, for example workto strengthen the protection of external borders (“European Border Police”) instead ofweakening freedom of travel within the Schengen area or, in the medium term, efforts to cre-ate a European visa to replace national visas. Another field where we need “more Europe” issustainable energy policy: we need to create a functioning European energy infrastructure,improve energy efficiency and define common external energy relations.B.What changes are needed on the institutional side?

Strengthening specific policies must go hand in hand with improving the capacity for actionand strengthening democratic legitimacy. If we want to strengthen EU cohesion, we have toimprove its capacity for action. This has to mean: more efficient decision-making processesand better coordination between the institutions. Yet at the same time: additional tasks atEuropean level or closer coordination of national policies require greater democraticlegitimacy. This relates above all to the European Parliament but also requires a newunderstanding of the involvement of national parliaments.Improved capacity for actionThe European CommissionThe Commission has to be able to perform its crucial role as driver of EU decision-makingprocedures also in the future in order to allow the community method to work fully andeffectively. We should examine whether we can strengthen the Commission with regard to itsinternal organization and procedures. In the medium term, the number of commissionersshould be addressed.The CouncilCooperation in the Council needs to be improved, also with a view to ensuring that theEuropean Council is properly prepared by the different Council formations, above all by theGeneral Affairs Council; it should fully assume its coordinating role foreseen in the Treaty.6

With regard to debate in the Councils, the possibility of written statements and bundledinterventions should be envisaged to reduce the inefficient “tours de table”. In the mediumterm, more permanent chairs could be envisaged, also in the General Affairs Council, toincrease the efficiency of the work in the various Council formations. Furthermore, thepossibility of better dovetailing the work of the Council and the Commission could beexplored. Some Foreign Ministers suggested to examine the creation of a double-hatted postof President of the Commission and President of the European Council.European decision-making processThe efficiency of European decisions can also be increased by making more use of differenti-ated integration, a possibility provided for in the treaties, but hardly implemented so far. Inthe medium term, a fundamental extension of decisions taken by qualified majority should beexamined.Increasing democratic legitimacyThe European ParliamentThe directly elected European Parliament today has a high degree of democratic legitimacy;the next step is to improve its democratic visibility. An important step would be thenomination of a top candidate for the next European elections that could also be a candidatefor the position of Commission President. Further concrete points could be examined such asgreater distinction between majority and minority in the European Parliament, Europeanelections in all member states on the same day, drawing up a (limited) European list or a morepublic procedure in the European Parliament to appoint the Commission President.National parliamentsNational parliaments should become more effectively involved in the work of the EuropeanUnion in the spirit of the Lisbon Treaty. To this effect, contacts between the EP and nationalparliaments should be strengthened further. There should be closer cooperation between theEP and national parliaments particularly in the fields of economic and fiscal policy. The coretask of national parliaments will however remain to control the action of their nationalgovernments.

Most Foreign Ministers suggested that further pooling of sovereignty at the European levelshould be considered. In this respect, we also need to rethink the interaction betweenEuropean institutions in the long term. We need to consider the question of Europeangovernance, including the role and function of European and national institutions in aEuropean system of separation of powers. This could include: a directly elected CommissionPresident who chooses the members of his “European Government”, and an EP with theability to initiate legislation and a second chamber for the member states.