It will require the whole hearted support of the broad mass of the peoples of the European Union. In what say tonight, I will try to tackle that.
The Minister for Foreign Affairs has outlined to you today Ireland’s approach to the Brexit negotiations. I support all he said.
Tonight I would like to move beyond Brexit.
POST BREXIT EUROPE
I would like to talk about what the European Union might look like in 2025, the date by which I expect the UK will finally have settled on its relationship, as a non member, with the EU.
I do not, of course, exclude the possibility that the UK will change its mind about leaving, but the two year time limit of Article 50 has, unintentionally, created a hot house atmosphere in which a re examination of proclaimed positions is almost impossible, politically.
I have advocated that the 2 year period in Article 50 should be extended to 6, but, for the purposes of this presentation tonight, I will assume that we stick with the 2 years and that the UK will be out in March 2019, and have finally agreed a permanent relationship with the EU by March 2025.
Ireland will remain a full member of the EU, notwithstanding the fact that a large non member country will, from 2019 on, constitute a large geographic, cultural and political barrier between Ireland and the rest of the EU. This geographic difficulty can, and will, be overcome but it will require extra commitment here in Ireland, and in the rest of the Union.
REDUCING CULTURAL BARRIERS WITHIN THE EU
For the service sectors of our economy, this geographic barrier will be manageable, but it will be much less so or the goods sector, particularly for food, where UK and EU tariffs and standards may diverge. Assurances on the permanent arrangements this point from the UK will be a key point for Ireland in any framework for a future relationship that might be agreed with the UK.
The potential cultural gap between Ireland and the rest of the EU is of equal long term significance. Irish people consume their news through English, and what we see that the English language media about the EU is dominated by suspicious, and often under informed, Anglo Saxon notions about Europe, which go back hundreds of years. Yes, many Irish people do read French, German and Italian papers too, but they are in a minority.
In this context of avoiding cultural isolation, there are two of the aspects of President Macron’s excellent Sorbonne speech, which I especially welcome.
One was his setting a goal that all students should speak two EU languages by 2025.
The second one was and all EU 25 year olds should, by 2015, have been assisted to spend six months working in another EU country. This could be described as an “Erasmus for All”.
In practice, in the Irish case as far as language is concerned, that means being able to speak English and a continental European language as well.
If President Macron’s suggestion is taken up by the EU, each EU country should be benchmarked between now and 2025 on how far it is from the 2025 goal and EU funds allocated on a results basis.
As the European Parliament starts work on the next seven year budgetary perspective, it should allocate substantial funds to these goals and to the broader cultural unification of the European Union. We need to build a strong European Union sense of identity among people to go alongside their already strong national and regional identities.
The Erasmus for all idea is particularly important. Ultimately, in building the European Union, we are aiming to build a sense of shared identity among the peoples of this vast continent.
Among the minority of university students who have benefitted from Erasmus, I believe that has been a great success. But these students are part of an elite, and many are drawn from socio economic groups that that are pro EU anyway.
Extending the opportunity of Erasmus across the entire under 25 population would widen horizons for young people, and create a sense that the EU does good for everybody, and not just for the upwardly and outwardly mobile section of the community.
I hope the fact that educational policy is a primary function of the member states ( and in some cases of regions) will not be allowed to be an obstacle to action by the EU on these two activities, from which Ireland could gain, and from which Ireland needs more than most, because of the separation from the EU that Brexit will otherwise create.
BUILDING A COMMON EUROPEAN PUBLIC OPINION
It is said that Brexit will also create something of a political barrier between Ireland and the rest of the EU.
The absence of the UK at the table will create some difficulties on some regulatory issues, but even in my time in government, I felt that UK Ministers were beginning to disengage psychologically from the common EU goals, and to adopt a purely transactional, issue by issue, approach. If everybody had done that the EU would not last long.
The isolation of Irish public opinion from some of the thinking and ideas on the future of Europe in other countries is relevant. It is natural that different countries want different thing from the EU, and their needs will change over time. How much thought do Germans give to Greek public opinion about the EU, or vice versa? What Estonia expects of the EU will differ from what France expects.
If the EU is to work, voters in each country need to begin to understand, and take into account, the public opinion in other EU countries, and not just in their own.
We cannot just leave the job of building that better understanding to Ministers and diplomats alone.
One way of making the public opinions of all 27 member states aware of the public opinions in the other 26 states would be to have a genuine European Election for some of the seats in the European Parliament. This could be done by allocating the seats, soon to be vacated by UK MEPs, to a single constituency to elected on an EU wide basis. These seats could be filled from lists led by prominent figures who would have to campaign in all 27 EU states, and whose electoral programmes would have to be informed by the thinking in all of them too. It would harness democratic competition to build a shared understanding across national boundaries.
SECURITY THREAT AFFECT US ALL
In his speech, President Macron laid great stress on the security threats facing Europe, from terrorism of which France has had more than its share, and from the inevitable, if gradual, disengagement of the United States from European military security. He also raised the threat to EU security from civil wars in our neighbourhood and the resultant refugee flows.
As an island of an offshore island, Ireland has been able to take more relaxed view on some of these matters.
But there are fewer and fewer threats nowadays, from which the sea is a sufficient protection.
Cyber attacks can be used to disable critical infrastructure, to alter medical records, to spy on personell files and thus to create opportunities for blackmail.
As a highly internationalised high tech and service economy, Ireland is vulnerable to these threats, especially now that so much of our energy supply will come to us through a non EU member state.
Ireland should work to through the EU and Partnership for Peace to strengthen its cyber defences. President Macron envisaged a European Intelligence Academy, which is also something from which smaller EU states could benefit.
This conference is concerned with working and living conditions. These will come under increasing stress as our population ages, and as proportionately fewer people of working age find themselves having to pay for the health and pension entitlements of a ever increasing retired population.
Germany, the dynamo of the EU economy at the moment, will be hit by this problem sooner than most of us. The median age in Germany is 47, whereas the median age in the US is 38, and that affects relative dynamism. Like Italy it is getting older faster, and this is not fully taken into account by some commentators when they look to Germany to loosen its purse strings for the good of Europe.
President Macron suggested a European Labour Office to help achieve fair and equal pay for the same work. I expect your discussions here today will have made suggestions as to what this office might do.
He also recognised the competitiveness challenge that the EU economy faces.
THE NEED FOR INVESTMENT
Competitiveness is enhanced by investment, more so even than it is by wage restraint. In the past ten years in Europe, we have had wage restraint, but not enough investment.
One area of investment for the EU is the electricity grid. If renewable energy is to replace fossil fuels, we will have to greatly enhance our electricity grid across the EU quickly, and in a cost effective way. Ireland has something to learn here.
We will also need to ensure that the EU is in pole position in R and D. That is not the case now. Rand D spending is 2% of GDP in Europe as against 2.8% in the US and 3.5% in Japan.
The spin off from R and D is best if it takes place in clusters. These clusters are usually around big cities, where people can move from job to job, without moving house. And Europe has no technological clusters of this kind, whereas the US had two or three.
President Macron suggested the following, and I quote
“ I want Europe to take a leading role in this revolution through radical innovation. I propose that, over the next two years, we create a European agency for disruptive innovation in the same vein as the Defense Advanced Research Projects Agency (DARPA) in the United States during the conquest of space. This must be our ambition. Today, we have a unique window to do it. We must drive this ambition, finance research in new areas such as artificial intelligence, and accept risks. Such an agency would make Europe an innovator and not a follower.”
Objections will be raised to this.
Is a European Agency the best body to pick winning technologies? Will it become prey to national rivalries within Europe? Will firms that have non EU parents, of which there are many here, be eligible to participate?
But the idea is forward looking and its adoption would suggest that Europe is awake to the challenges of the modern world.
Another theme at the conference here today is the growth in income inequality across the world, not just in the west, but also in Socialist China. This divergence has been most rapid since 1988
The European Parliament’s Global Trends Report 2035 puts it this way
“Economic inequality has grown in the United States and Europe for most of the last thirty years in real terms and in political salience. The gap between the rich and poor was described as a “very big problem” by a majority of respondents in France, Italy, Spain, and Greece in a 2014 Pew survey.”
They measured this by comparing the share of income earned by the top 1% with the rest of society. From 1949 to the mid 1980’s that share actually fell slightly, but, since 1988, the gap has widened.
Of the countries surveyed the growth in inequality has been fastest in the United States and the UK, but significantly less in France , Netherlands and Sweden. I believe Ireland would be somewhere in between.
The factors causing increased inequality are identified, by IMF researchers ,as
- technological change,
- less union protection and
- tax policies.
Their view is that this problem will not solve itself over time. In fact it could get worse. New technologies, like artificial intelligence and driverless cars, will hit lower income jobs first.
A big challenge will be designing a combination of tax and social security measures that mitigate inequality without leading to the flight of capital and talent from the countries that take a lead in this field. I do not see the EU taking a prescriptive lead in this matter, but I do believe it should disseminate best practice.
It should also use its competition and state aid policies to ensure that the tax base is as wide as possible. The wider the tax base the lower can be the tax rate.
CAN EU POLICY MAKING BE IMPROVED?
I would like now to say a word about how the EU sets is policies.
Increasingly the agenda of the EU is being set by the 28 or 27 elected Heads of State and Government (HOSG), rather than by the European Commission, as might have been envisaged with the Monnet method.
This is because HOSGs face their electorates in way that Commissioners do not, and because much of the EU’s work combines EU and national action.
But there is a disadvantage, in that HOSG’s are part time Europeans. They have heavy domestic agendas. With 28 of them around the table, it must also be very difficult to brainstorm and avoid the tyranny of a pre set agenda.
Commendably, the Council President Tusk has set out a detailed rolling agenda for all the meetings right up to June 2019.
That gives civil servants time to prepare, but does it allow Leaders enough time to think?
Thankfully President Tusk has also increased the frequency of meetings, and that will give HOSGs more time to think together about the longer term issues.
Finally I will say a word about the euro. A lot has been done to underpin it. But private and public debt levels are still considerably higher than they were before the 2008 crisis.
I do not believe the EU needs an ongoing transfer union to underpin the EU. Transfers are already reaching 4% of GDP in some recipient countries.
But a facility is needed to help euro member countries that are hit by an asymmetric shock (a big migration surge, a technological shock, or even Brexit).
Some form of temporary top up from EU funds for Unemployment Relief might help.
A Limited form of European Bank Deposit Insurance would be good. It should be combined with a restriction of banks buying too many of their own countries bonds and thereby creating the risk of banks dragging down their own governments if they get into difficulty.
It is much better to allow the markets to discipline governments that borrow unwisely through interest rate differences than it would to try to achieve the same goal by threatening fines after the country that is already in trouble.
I thanks Eurofound for the contribution it has made to the EU since 1978 .
I pay tribute to our late President Paddy Hillery, whose initiative Eurofound was when he was Commissioner for Social Affairs.
I hope the deliberations today will help make a big success of the Social Summit of the EU in Gothenburg next week
Speech by John Bruton, former Taoiseach and former EU Ambassador to the United States, at the Gala Dinner of the Eurofound Forum in the State Rooms, George’s Hall, Dublin Castle at 7.30pm on Tuesday 12 November