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Some Doubts about the EU´s Ever-Closer Future

English Pages, 8. 3. 2006

Ladies and Gentlemen,

Thank you for inviting me to speak here today; it is a real pleasure and privilege to have this opportunity.

On the other hand I have to confess that I – rather unusually – hesitated whether to accept the invitation. Certainly not because of underestimating the quality of this distinguished audience, or because of not knowing what to say. My reluctance was based on something else. For me, Luxembourg is the citadel of Europeanism and this country rightly considers its 50 years of participation in the European integration process as a tremendous success and as an effective way how to enhance the role of a relatively small country in the globalized world of today without being lost in it. I respect this position and do not want to be a disturbing factor or a dissonant voice.

The reason why my way of looking at the European integration process is somewhat different is probably connected with my (and our) historic memory, with my (and our) specific experience, especially with experience of the communist era. This determines my attitude to many issues. This gives me a special sensitivity or perhaps – for other people without the same experience – even oversensitivity. I will try not to overplay or overstate it. My today’s remarks may be, however, understood as a friendly and gentle wake-up call.

Looking back, this is not my first speech in Luxembourg. In December 1998 I participated here at the conference entitled “The Euro as a Stabilizer in the International Economic System” and already then I clearly stated my views concerning the EU, the Euro and the chosen form of the European unification. I also said that “I have a frustrating feeling that everything about the EU and EMU has already been said … and that there is definitely no lack of knowledge”. If it was true in 1998, it is even more true now. The problem was and is whether we use the existing knowledge sufficiently, whether we listen to the arguments of others, whether we are open to dialogue. I am afraid we do not and are not.

Twenty-eight days before the launch of the Euro I predicted that “its introduction would be very successful” but dared to raise questions about its long term consequences and warned that “we would be confronted with substantial costs”, mostly because of the rigidity of prices and wages and of immobility of labour in the Euro-currency area. I was also aware and afraid of the inevitable sequence which was set into motion: monetary union – fiscal union – political union, and I asked “Do we really want a political union?”. My answer was that “Europe doesn’t need unification but liberal order”. My current views remain consistent with the views presented here eight years ago. I hope this is not due to my intellectual rigidity or sterility.

What has happened since December 1998? I see four main changes:

1. The Euro was successfully launched but I don’t agree with the prevailing interpretation that the launching itself was a convincing proof of the positive contribution of this monetary arrangement to – however defined – social welfare in the Euroarea. The costs – demonstrable, for example, in the European economic growth slowdown in the last years – have not been recognized. It has been politically incorrect to even suggest such a link (or correlation).

2. The EU has been considerably enlarged by accepting ten new member states, mostly former communist countries in Central and Eastern Europe. This increased the transaction costs of the EU ruling, decision-making, and complying with these rules and decisions. It also increased the EU´s democratic deficit.

3. The EU has continued – at an accelerated speed – to expand the number of pages of its legislation which now deals with almost every aspect of human life and human activities.

4. The ambitious attempt to accelerate the unification process in the EU by the Constitutional Treaty has been rejected but creeping unification goes on as if nothing happened.

Some of you might describe the situation differently but these are the main facts of the last eight years as I see them.

The title of my today’s presentation – “Some Doubts about the EU´s Ever-Closer Future” – implicitly reacts to the main catchword of current Europeanism which is the slogan “ever-closer Europe”. We have to differentiate between Europe and the European Union and I am disappointed that these two terms are so easily substituted one for another. The Czech Republic entered the EU, not Europe, two years ago. I, therefore, don’t have the slightest ambition to speak about Europe, to criticize Europe, to build Europe or to expand Europe. Europe existed, exists and will exist independently of our ambitions to organize ourselves within it, to unite or divide ourselves or to make friends or enemies within it.

The European Union (not Europe) is a contemporary political project of some European countries which – regardless of all their historical, political, economic, cultural or religious differences – want to do some things together (or jointly). We should look at the successes and failures of this project, at its costs and benefits, analyze and evaluate them.

When I look back at the last half a century, I see two different stages of the European integration process, with two different integration models. At the beginning the liberalization model prevailed. The first stage was characterized by inter-European opening-up, by the overall liberalization of human activities, by the removal of barriers at the borders of the countries as regards the movement of goods and services, of labour and capital, and of ideas and cultural patterns. Its main feature was the removal of barriers and the continuation of intergovernmentalism.

The second stage, which I call the harmonization model, is defined by centralization, regulation from above, harmonization of all kinds of “parameters” of the political, economic and social system, standardization of conditions of production and consumption, homogenization of human life. Its main feature is unification orchestrated from above and the birth of supranationalism.

I am in favour of the first model, not of the second. I know, of course, that in reality we will always have the mixture of both models but the question is which one is the dominant one. There can be no doubt about where we are now. My position is clear. I am convinced that the unification of decision-making at the EU level and the overall harmonization of all kinds of societal “parameters” went farther than was necessary and more than is rational and economically advantageous. It is not an unqualified argument. I am aware of “externalities”, of “spillover effects” and of “continental-wide public goods”. These phenomena undoubtedly exist and should be properly reflected in European institutions and legislation. However, when I say “exist”, it does not mean that they dominate. The second stage of the European integration process has been based on the completely wrong idea that they do dominate. To artificially impose such an institutional solution is a mistake. We all lose, not gain.

We should do something about it. I suggest to redefine the whole concept of the European Union, not just to make cosmetic changes. I suggest going back to the intergovernmental model of European integration. I suggest going back to the original concept of attempting to remove all kinds of barriers, going back to the consistent liberalization and opening-up of all markets (not just economic ones). I suggest minimizing political intervention in human activities and where intervention is inevitable it should be done close to the citizens (which means at the level of municipalities, regions and states), not in Brussels.

EU needs transition. We have to go back to the liberalization model of the European integration and to get rid of the harmonization model which represents the basis of current European thinking. We have to forget the slogan “less of nation-states, more of internationalism” because the state is an unsubstitutable guarantor of democracy (opposite to all kinds of “Reichs”, empires and conglomerates of states). We have to wake up the European silent majority which does not know that the shift from the first to the second model represents a revolutionary, qualitative change. We should start to deal seriously with the details of the inevitable transformation process.

We should make our society free, democratic and prosperous. It will not be achieved by democratic deficit, by supranationalism, by etatism, by an increase in legislating, monitoring, and regulating us.

We need a political system which must not be destroyed by a postmodern interpretation of human rights (with its emphasis on positive rights, with its dominance of group rights and entitlements over individual rights and responsibilities and with its denationalization of citizenship), by weakening of democratic institutions which have irreplaceable roots exclusively on the territory of the states, by the “multiculturally” brought about loss of a needed coherence inside countries, and by the continental-wide rent-seeking of various NGOs.

We need an economic system which must not be damaged by excessive government regulation, by fiscal deficits, by heavy bureaucratic control, by attempts to perfect markets by means of constructing “optimal” market structures, by huge subsidies to privileged or protected industries and firms, by unproductive labour market legislation.

We need a social system which must not be wrecked by all imaginable kinds of disincentives, by more than generous welfare payments, by large-scale income redistribution, by all other forms of government paternalism.

We need a system of ideas which must be based on freedom, personal responsibility, individualism, natural caring for others and a genuinely moral conduct of life.

We need a system of relations and relationships of individual countries which must not be based on false internationalism, on supranational organizations and on a misunderstanding of globalization and of externalities but based on the good neighbourliness of free, sovereign countries and on international pacts and agreements.

Václav Klaus, The Bridge – Forum Dialogue, Jean Monnet Building, Luxembourg, March 8, 2006


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