Future of Europe Jaroszynski Speech

 

Where Dreams and Reality Begin:The Future of Europe

H.E. Andrzej Jaroszyński
Ambassador of Poland

Open Forum UWS Parramatta, 29th March 2012

 

Today the common and fashionable perception in Australia is that of Europe in decline. Greece stands on the brink of yet more debt write-offs, Portugal is teetering on the edge of the abyss, and the UK and France could soon lose their AAA credit ratings. Some commentators now openly talk of dismantling the European Union, which is claimed to be too inflexible for the economies of some countries. Yet buried underneath this frantic media speculation is the story of one country defying the odds, the only European country to avoid a recession during the Global Financial Crisis - Poland.

Historical background

Poland regained full sovereignty in 1989 after a long period of mass-rooted and non-violent opposition led by the Solidarity movement. The process of democratic transformation in Central and Eastern Europe that culminated in the  fall of communist regimes, had been initiated in Poland by three breakthrough events: The Round Table agreements (April 6), the first in the Soviet bloc contested elections (4-18 June) won by the Solidarity’s coalition, and the establishment of the first non-communist government (6-12 September). The breakthrough had paved the way for democratic transformation by forming a model of transition that was subsequently – and very successfully – applied in the region. The effectiveness of this model – which combined a negotiated, peaceful method of change with the liberal democratic content and direction – allowed for a swift acceleration of change and a systemic transition into freedom and democracy.

A new Poland was faced with the immediate task of the whole of state modernization which was possible only in the environment of external security and internal stability. The membership of NATO (1999) provided the environment of security, the membership in the European Union (2004) offered a possibility of embracing open and accountable public institutions and free trade. The efforts to comply with the EU system and then the membership provided also a model for modernization in all spheres of public life assisted with substantial EU funds. It is important that Poland in the times of hard and costly transformation was not left alone, both as regards a pattern to follow and as regards extra funds to assist this process.

Psychologically significant was the common sense of a true return to Europe where we always belonged culturally and mentally. Thus, it may be said that if the EU had not existed when Poland became a sovereign and democratic state, there would have been every reason to reinvent it.

Has Poland achieved as part of the EU that it could not have achieved alone?

Undoubtedly, central to Poland’s recent success was its entry to the European Union. And benefits are plain to see. EU Member States currently account for two-thirds of our trade, and thanks to new funding we have been able to make vital infrastructure investments. It’s interesting to note that Poland has received the most EU regional development assistance. Since 2007 we have spent over EUR 16 billion.  We have managed to create an effective system that is used by corporate, institutional clients and private citizens alike. This translates into growing enterprises and new jobs, allowing entrepreneurs, local governments, and social activists to create numerous projects ranging from ring roads to educational programmes. So it was not merely European funds and its cohesion policy provided but their effective absorption, the innovative approach of Polish entrepreneurs and the determination to catch-up with the leading countries of Europe that constituted one of the reasons why Poland avoided the global financial crisis. Poland was the only country in the EU to register economic growth in 2009. This was due, apart from effective absorption of EU funds and open access to the European market, to large domestic consumption, lower dependence on foreign trade (34.7% in 2009), and a banking credit system stricter than in other countries. Poland rose to the 7th position in Europe in terms of FDI, up one notch from last year. It is worth mentioning that Poland as having good investment opportunities has recently drawn attention of Australian business. See, for example, the following press articles: "Poland plays it cool amid turmoil" by Marcin Sobczyk, in The Australian 10 August 2011; "Landlords see sweet spots in sour European economy - Australian retail groups are defying Europe's debt crisis" by Bridget Carter,  in The Australian 15 August 2011.

Today, it is the 20th largest economy in the world, and the 6th largest in Europe. Twenty years ago, Poland’s gross domestic product, in terms of purchasing power parity, was around USD 160 billion. Today, it is over USD 717 billion, or four and a half times greater.  Our GDP could grow by another USD 300 billion in this decade, reaching above 4%.

In 2009 Poland’s GDP totalled EUR 332billion, with the agricultural sector accounting for 4.6%, the industrial sector 28.1%, and the services sector 67.3%. Our GDP amounts to one-third of Russia’s, but is two-and-a-half times that of the Ukraine, and thirteen times that of Lithuania. 

We are increasing our trade levels.  Polish exports have exceeded 1990 levels ninefold, and they are still higher than they were before the global financial crisis, reaching a record sum of USD 162 billion last year. Poland has also reached the largest volume in exports of agricultural goods in Europe. Polish foreign direct investments are already at a level of USD 27 billion.

 
But Poland’s role is not simply one of a passive recipient of aid. Firstly, enlargement has created growth and wealth all over Europe. The EU15 exports to the EU10 rose almost twofold in the last ten years. The total volume of trade between EU15 and EU10 amounted to EUR 222 bln in 2010.  Needless to add, it sustains a job or two in Old Europe. Secondly, apart from economic benefits, there are political ones. Poland’s our voice on relations with our eastern neighbours such as the Ukraine and Belarus are well heard in Brussels. Eastern Partnership Program – one of the priorities of Poland’s Presidency in the EU last year – is a good example in our active involvement in the EU policies.

Many commentators have recently divided Europe between the profligate Mediterranean countries and their northern neighbours, completely ignoring the incredible rise of Eastern European countries such as Slovakia, Bulgaria and Poland. But this did not come easily- in Poland’s case, successive governments took painful decisions, and the Polish people made big sacrifices. Privatisation, pension reform and opening our country to globalisation produced losers as well as winners. We were one of the first countries to introduce a public debt anchor in our constitution, and next year alone we intend to cut our budget deficit to 3% of GDP and overall debt to 52% of GDP. The retirement age will be lifted to 67 years for both genders and pension privileges will be cut and disability pension contribution will increase. By the end of 2013 Poland is hoped to fulfil the criteria of membership in the Euro zone. And we plan to be in it because we want the Euro zone to survive and flourish.

The Future of Europe


Our desired vision of the EU was presented by Polish Minister of Foreign Affairs, Radosław Sikorski, in Berlin last November. It is our opinion the current crisis is not only about debt but, above all, about credibility. We need better fiscal discipline, like we have displayed in Poland, but most importantly we need to restore trust among each other. The organising dynamic of the European Union has always been that of a well-conceived contract between the member states, with the inclusion of the citizens. It is clear that this contract that is now broken, and needs to be fixed. We must look again, as Poland has, to the traditional Western values of solidarity, accountability and credibility to once again restore Europe’s prestige and place in the world.

The Berlin speech starts with a reference to the break-up of Yugoslavia where the decision by Serbia to print its own dinars marked the end of the federal republic, and turned the country into impoverished backwaters. Minister Sikorski cited then the German philosopher Immanuel Kant, who argued that: the entire practice of lending money presupposed at least the honest intention to repay. If this condition were universally ignored, the very idea of lending and sharing wealth would be undermined. For Kant, honesty and responsibility were categorical imperatives: the foundation of any moral order. For the European Union, likewise, these are the cornerstones. I would point to the two fundamental values: Responsibility and Solidarity.

Then the Polish minister opposed the argument that enlargement is to blame for the euro zone's problems, reminding, among others, that Poland and Slovakia have been the two fastest-growing economies in the European Union in the past four years. Minister Sikorski maintained that the real cause of the financial crisis in Europe was confidence. In a pointed dig at his German hosts, he continued: Let us be honest with ourselves and admit that markets have every right to doubt the credibility of the euro zone. After all, the Stability and Growth Pact has been broken 60 times.  And not just by smaller countries in difficulty, but by its founders in the very core of the euro zone. He, of course, meant Germany as well.

Then Minister Sikorski discussed the fragility of the EU's institutions and procedures: they work "tolerably well" when times are good, but depend on "goodwill and a sense of propriety" that frays quickly in a crisis. The collapse of the euro zone would be just such a crisis, but far worse than any others in the EU in its history. 

The choice, he said, was either deeper integration or collapse. Mr Sikorski outlined a fiscal federation, with tough rules ("almost impossible" to block by political means) for backsliders, in return for the European Central Bank becoming a real central bank, and acting as a lender of last resort. That should happen, he argued, even before the necessary laws are fully in place.

He also supported dramatic changes in the political governance of the EU, including pan-European candidates’ lists for the European Parliament, fewer commissioners and perhaps a directly elected EU president. In return, the EU would stay out of everything to do with national identity, culture, religion, lifestyle, public morals, and rates of income, corporate and VAT.

Then came the crunch, headlined "What does Poland ask of Germany?” First came six points Mr Sikorski wanted Germany to acknowledge.

  • Germany is the biggest beneficiary of the current arrangements and therefore under the biggest obligation to sustain them.
  •  it is not the "innocent victim of others' profligacy"
  •  the crisis has lowered Germany's borrowing costs
  •  if its neighbours' economies implode, it will suffer
  • the danger of collapse is greater than the danger of inflation
  •  "your size and your history" mean a "special responsibility to preserve peace and democracy on the continent".

The biggest threat to Poland's security and prosperity, Mr Sikorski said, was not terrorism or the Taliban (and certainly not German tanks). It was not even the Russian missiles that the Kremlin is threatening to deploy on Poland's border. A far greater threat would be the collapse of the euro zone.


Minister Sikorski concluded: I demand of Germany that, for your sake and for ours, you help [the euro zone] survive and prosper. You know full well that nobody else can do it. I will probably be the first Polish foreign minister in history to say so, but here it is: I fear German power less than I am beginning to fear German inactivity.


He ended his speech with these words: We are standing on the edge of a precipice. This is the scariest moment of my ministerial life but therefore also the most sublime. Future generations will judge us by what we do, or fail to do. Whether we lay the foundations for decades of greatness, or shirk our responsibility and acquiesce in decline.

The speech deserves the attention it has brought. Whether or not it makes Germany change (or accelerate) course remains to be seen. But the historic moment is clear: to see a Polish foreign minister addressing a Berlin audience as a political heavyweight, with serious ideas and serious demands, is a huge change from the days when Poland was seen as a difficult and needy recipient of Western largesse.

Poland's foreign minister attracted favourable headlines with a speech in Berlin .Chancellor Merkel praised Mr Sikorski's suggestions and Die Welt carried lengthy extracts from the speech.

There were interesting voices coming from bloggers. For instance, Thomas Kleine-Brockhoff, a German GMFUSer, berated Mr Sikorski's audience for complacency: Radoslaw Sikorski said what needed to be said. And he said it where it needed to be said and when it needed to be said. Will the Germans hear him?

Another GMFUS blogger was still more glowing. John Richardson wrote from Brussels: This was the speech of a politician who knows his history, does not want to repeat its mistakes, and has the strength and the clarity of mind to formulate a convincing message of hope for the future based on mutual trust between the European nations, which the crisis has so far called into question. It is also a demonstration of authority, personality, and charisma.

During a recent discussion in Warsaw (January 10) on the future of Europe, Minister Sikorski was even more blunt. He said,”Instead of acting to maintain standards of living for Europeans I propose something more ambitious: playing for greatness, so that the EU will become a superpower. Today, capitalism’s enemy is not communism but authoritarian capitalism.  And we have to find a response to it. We cannot do it as national states. So, either we will afford an act of ambition, or we will not be able to protect what we possess.”

In key orientations of foreign policy, Poland’s vision of a united Europe can be described by three catchwords: competitiveness, solidarity, and openness. Pursuing deeper European integration, both economic and political, is important. European institutions should also be strengthened so that they can effectively implement their tasks. Hopefully, the European Union will eventually become a political union. This vision should not be regarded as a super state that wipes out economic or identity interests of individual Member States. From Poland’s point of view the following elements are needed: an efficient and effective single market, including a single digital market and a single energy market; an effectively operating labour market, without barriers to the free movement of workers when it comes to recognising their professional qualifications or the transfer of their pension rights; creating a European research space; an ambitious EU budget.

To conclude, we believe that Poland will be better with more Europe, than less