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www.iiea.com/audio/YPN/Bini Smaghi.mp3On Thursday 25 September 2008, Dr. Lorenzo Bini Smaghi, Member of the Executive Board of the European Central Bank visited the IIEA to give a keynote speech on 50 Years of Europe as part of the
Europe 2.0 series which is sponsored by the European Commission. As part of the IIEA's series of keynote speeches, Dr. Bini Smaghi identified a number of symptoms that are affecting Europeans as they reminisce and reflect about the years gone by, often viewing the these years through rose-tinted glasses.
The first of these symptoms is amnesia, meaning that many Europeans appear to have forgotten what Europe is about, assuming of course that they knew in the first place. The lack of awareness of Europe and how it functions is often embodied in statements about “Brussels” and when the Union fails to take a decision “Brussels” is often blamed rather than the individual member states of which it is made up. Europeans sometimes do not understand the competences of the Union, or who does what. The Union is much more limited than people think of terms of what it can do. Here, Dr. Bini Smaghi used the example of taxation. Some Irish voters rejected the Lisbon Treaty under the false belief that Brussels would decide on taxation in Ireland. Overall, the range of the Union’s competences is quite restricted. In the economic sphere, for instance, with the exception of monetary policy, its competencies are limited to the coordination of the Member States’ policies. This is the worst of all worlds for the Union: being blamed for something it’s not responsible for.
The second symptom affecting Europeans is inconsistency. The period between 2002 and 2007 saw the world economy grow at its fastest rate since the 1970s. However, this has masked notable differences between advanced and emerging economies. With the birth of the Euro, monetary stability has been achieved in Europe. Europeans tend to forget about the advantages of being a member of the Euro and the European Union, and often, financial problems are blamed on the Euro.
The third symptom is myopia. Europeans in particular have a tendency to think that the world hasn’t changed much over the last 10 to 20 years, while in fact the opposite is true. Europe is getting smaller and smaller, and our economy is gradually accounting for a smaller share of world GDP. Individual countries are becoming smaller and less powerful and increasingly irrelevant. European states can either ignore this development or they can organise themselves as a major player in the international system, possibly in partnership with the United States.
In the future, there will have to be increasingly coordinated action on the part of the major economies to overcome the current financial market turmoil, through the agreement of new regulations and supervision. This will need to be discussed and agreed across the Atlantic. Europe must unite and speak with one voice on the international stage.
Finally, there is a sense of denial in Europe that the Union’s power is shrinking. Dr. Bini Smaghi gave the example of the manner in which major decisions concerning the IMF are increasingly taken in other fora, typically the G7 or the G20, where only the four largest European countries are represented.
He concluded with the belief that Europe needs to streamline its activities and go on a diet. The Union should clarify its role and show how few competences it actually has. This might give the people of the Union a better idea of what the Union does.
