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Notes for the London Speech

English Pages, 12. 1. 2001

1.                 For me (and for us in Central and Easter Europe) the debate about the future of Europe has two crucial dimensions – the evolution of the type (or model or blueprint) of the European integration process and the dealing with or perhaps the absorption of new members.

2.                 As someone from a non-member country I have to argue that – unfortunately – membership or non-membership in EU has become a differentiating factor suggesting who is and who is not a “normal, standard (or standardized), mature, decent, obedient European” country. Despite the fact that it is unfair, for me difficult to swallow, it has been widely accepted. Because of that, we have no other alternative than to make a maximum effort to become members as soon as possible – regardless our views about the currently realized model of European unification and about ideology behind it.

3.                 Speaking about EU enlargement, we live, however, in the world of asymmetric motivations. As I said, non-members are motivated to enter. However, I am convinced that it is of interest of member countries to prolong status quo as long as possible. Rhetorics aside, they already have a full access to the non-member countries, they are there and have a full possibility to realize their own comparative advantages in a one-sided, for them painless, way.

4.                 As I see it, the only respectful ambition in Europe, which most of us would support, is to expand, enhance and guarantee freedom and democracy for the people of Europe. In this respect, the relevant question is the following: Will the freedom and democracy in Europe be increased by

-          minimizing the role of one, undisputably genuine and natural level of human organization, called “nation state”;

-          extending the distance between individual citizens and relevant decision-making bodies (regarding both legislative and executive powers);

-          harmonizing (or unifying) rules and policies instead of preserving competition of different rules and policies?

To seriously tackle these questions is the only way how to avoid aprioristic statements such as: Europe First, Down with Nationalism, etc. We all know that the issue is subtle and fragile and to answer the above-mentioned questions is not simple. It is, nevertheless, unavoidable.

5.                 I am deeply frustrated that these issues have not been seriously debated in Europe. Silent, uninvolved majority of Europeans does not care or does not see the importance of these issues. Pro-european activists – an apparent minority – claim to be the exclusive owners of truth. They dismiss all objections to their struggle for supranationalism and ever closer union as undemocratic, nationalistic and reactionary, and denounce all those who disagree with them as potential Lukasenkos or Milosevices.

6.                 My answer to these questions is clear and straightforward:

-          I wish my country remains a self-governing nation within the European Union;

-          I am convinced that it will be counterproductive to create an artificial European state;

-          I hope that the balance between intergovernmentalism and supranationalism will not be fundamentally shifted;

-          I believe that efficiency and strength will not come from uniformity but from experimentation, diversity and competition. 

7.                 As regards EMU, as an economist I have been, repeatedly, trying to argue that Europe is not an optimum currency area (in the standard economic definition). The arguments are well-known. It will have the following consequences:

-          the costs of the European monetary union will exceed its benefits;

-          economically weaker regions, not protected by changeable exchange rates and by appropriate interest rates, will be either left behind or will require huge fiscal transfers;

-          to realize such fiscal transfers will be impossible without fiscal unification;

-          fiscal unification is impossible without political unification.

Such unavoidable consequences of EMU have not been, however, explained to European citizens. It is our task to do it.

8.                 I have a very special expertize on monetary unions. I happened to be the last minister of finance of a dissolving monetary union called Czechoslovakia. And I know something about the inevitable fiscal transfers and about the impossibility of doing them without a strong political background. (Our original ambition was to keep the monetary union, but it collapsed in several weeks.)

10 years ago we witnessed another monetary unification, called Germany. It was an artificial, not genuine unification. Costs have been enormous. (2000 fiscal transfers from Western to Eastern Germany exceed Czech GDP.)

It reinforces my theoretical arguments and reservations.

9.                 The position of candidate countries is rather ambivalent.

They need more flexibility than can be found in the straitjacket of EMU (but perhaps not more than a Euroland country Greece needs).

They  (as my country) are economically connected with Germany and are or will be very soon part of a German economic area whether we like it or not. They will be in a position of Austria or The Netherlands in the 80´s and 90´s.

Václav Klaus, 9.1.2001