Lucinda Creighton TD, Minister of State for European Affairs


The Eurozone crisis is complex, that’s no surprise given the European Union, and the Eurozone itself, are among the most complex political and economic frameworks in the world. They involve a difficult balance between 27 member states (17 in the case of the Eurozone) as they work together to take crucial decisions every day – decisions that impact on their citizens and on the rest of the world.

Why is it all so complicated? The many conspiracy theorists out there might suggest that this is because of a dangerous Machiavellian plan to strip countries like Ireland of our sovereignty, to vest in ‘faceless bureaucrats’, undemocratic powers to set our tax rates and send us to war. They might claim that certain countries are trying to dominate others or worse, take over the continent completely.

I don’t share any such conspiracy theories. The EU is complex and often laborious by necessity. Bringing 27 Member States together to take common decisions on key issues such as economic policy, energy policy, foreign relations and so on is not easy. 27 sovereign countries, with 27 governments and 27 parliaments to whom they are accountable, have 27 distinct sets of national priorities. Negotiation and decision-making are arduous, painstaking and often much slower than we might like. This is not due to any grand conspiracy on the part of a so-called elite, but rather is a reflection of the immense task of trying to broker agreement among so many countries.

A legitimate question, then, is; is it all worthwhile and would we be better off being released from the shackles of the EU decision-making process, with more flexibility and autonomy, and a lot less compromise with others? The answer to that of course is an unequivocal no.

There are two very simple but compelling reasons for Ireland and the other European countries to continue sharing sovereignty, making sacrifices in exchange for common gain. One is historical, though I think it is worth reiterating, the other relates to the present and the future, and is of absolutely vital importance to all countries in the European Union.

On the first point, it is always worth recalling the genesis of the European project. Too many people take for granted the stability and peace we enjoy in Europe. It is too convenient to forget about the bloodshed and slaughter that characterised the first part of the 20th century. We have worked hard to build peaceful cooperation in Europe.  It has always involved sacrifice and difficult decisions.

Sometimes, we like to think that the idea of compromise is a new one. It’s not. It was from compromise that European cooperation was born, and the massacre and economic obliteration of the First World War and Second World War was left behind.

It is worth remembering the words of Winston Churchill speaking in Zurich in 1946 where he described the tragedy of a broken continent: “over wide areas a vast quivering mass of tormented, hungry, care-worn and bewildered human beings gape at the ruins of their cities and homes, and scan the dark horizons for the approach of some new peril, tyranny or terror.”

Compromise is tough, but it bears fruit. If those who today advocate pigheadedness, divisiveness and isolation, had had their way in 1951, there would be no peace in Europe, we would not have enjoyed the economic growth and prosperity that characterised the EU for the past 60 years, we would not be able to live and work and study all over the Union, we would not have benefitted from structural funds and the common agricultural policy.

The politics of ‘No’ achieves nothing. The politics of engagement shapes the world and makes the unimaginable become reality.  Besides the historical successes for Ireland and all of Europe in pursuing a path of deeper integration, there are obvious, but often underrated, reasons to continue on this path of cooperation. In this increasingly globalised world, we need each other. We Europeans take our position of dominance for granted. The United States and Europe have ruled the roost for as long as any of us can remember. We have enjoyed economic might that set the global agenda. It may not always feel like it, but we have enjoyed wealth and prosperity that could only have been dreamed of in countries like India, Brazil and China. Our standards of living are far above the rest.

Just one stark example of this is that the European Union Member States spend more on social supports than the rest of the world combined, including the United States of America. This European social model is under serious pressure, and we must urgently realise that if we wish to protect it, we desperately need one another. I don’t just mean the small countries. Even the ‘big’ countries of the EU, France, Germany are small potatoes in today’s global economy. They are dwarfed by China, Brazil and others. They also have a rapidly aging population and are challenged by countries that are far more productive and competitive than they are. This is a common challenge, which the EU countries must face together.

Alone we cannot hope to compete with emerging economies. Together we can realign and reshape our European economy, so that European citizens, including Irish citizens can continue to enjoy a decent standard of living, with, most importantly, prospects, opportunities and hope for future generations. This is not just an aspiration of mine. I consider it to be the absolute moral duty of our government and our counterparts in positions of authority all over the European Union.

So that brings me to the question contained in the title of this session. ‘Is Fiscal Union the only solution to the Eurozone Crisis’? If I may say so, the title is a little limited. The Eurozone crisis is only a symptom of a much greater problem and challenge which we face. That is, how do we reshape our European Union, and thereby our country, to meet and measure up to the unstoppable force that is the emerging economies? How do we create a European Union and a currency union that is robust, that can take decisions fast, that is competitive, that sets standards for the rest of the world and that caters to the economic and social needs of its citizens? That is a burning question, and one which only in a very small part can be answered by the creation of a Fiscal Union.

We need a more ambitious and comprehensive solution than that. We need a competitive federal Europe. Often, the word federal is deemed in Ireland to be a bad word. I fundamentally disagree. Federalism is a very pure and transparent form of democracy. It means adhering to principles guided by a commitment to governing at the level closest to the people. It means decision making at the most appropriate level. It is based on a transparent social contract entered into by states. I am passionately in favour of this type of governance in the European Union.

If the economic crisis has taught us anything it is that the EU system we have is too slow and too difficult to cope with the fast moving pace of our globalised world. We have repeatedly lamented that fact in Ireland. We complain that there is no leadership and that ‘Europe’ has failed to act swiftly to deal with the crisis. The crib is legitimate, in the sense that European response to the crisis has been too slow and too disjointed. But we have to face the fact that we have not empowered Europe or our European leaders to take action. If we want a European response, we have to change the system of decision making because we are the ones who can and must enable the EU to act. Only we, the citizens and the sovereign states of the European Union, can give the authorization necessary for swift action. The word ‘federation’ comes from the Latin word foedus, which means pact or contract, and is an agreement by which states assume reciprocal and equal commitments to perform certain specified or enumerated tasks.

I don’t advocate a federation like that in the United States of America. That would not work in a union of sovereign states as we have in Europe. Rather I favour a federation of nation states, one which is built on the basis of the diversity of its members. I see a new federal system as providing a vehicle for Member States to assert their economic sovereignty in the global economy. They may even regain some of the sovereignty that they’ve lost to globalisation through greater coordination and added economic might. States would benefit from such a federation as they would in fact gain for themselves more rights, more liberty, more authority, more opportunity than they might abandon.

The time for muddling through is long past. This is sadly not the first time I have said this, but time is running out. We need an ambitious redesign of the European Union and especially of the Eurozone if we are to secure its future for our citizens. What can a federalised system of governance in Europe achieve? Firstly, it can enhance the democratic legitimacy and transparency of the European Union. It could bring Europe closer to its citizens.

Crucially, it would enable the EU to address some of the shortcomings in the currency union and the single market. Many of the changes we need, and we know we need, are currently either impossible, or will take too long to achieve. Time is not on our side.

Most people accept that the euro project was flawed from the beginning, not because it was a bad idea, but because the economic and fiscal integration that was needed to make it a success was absent. We now need to inject urgency and impetus into this process. A federalised system would make it much easier to achieve progress in areas that are vital to the survival of our currency. It would reduce the potential for countries to veto important decisions and make it easier to progress vital ‘big ticket’ initiatives like a European bank resolution scheme, a bank deposit scheme and a mechanism for debt mutualisation such as Eurobonds – all of which are proposals that I consider to be vital to achieve stabilisation of our currency and to secure its long term future.

Let me be frank. The entire conception of the single currency was predicated on the presumption that the governments would be prudent, the good times would roll on and eventually everyone would join the club. The rules were weak but synergy, both political and economic, would sort that out later.

The time has arrived to finally put in place the architecture required to secure the currency. Key to the solution is a strong, democratically accountable political centre, an adequate central budget with access to its own resources acting as a shock absorber and, as I mentioned, a true banking union.

A federalised system would also help to promote swift decision making in areas vital to the European Union as a whole, not just the Eurozone. The most obvious example here is the single market. The single market is one of the European Union’s greatest achievements. Restrictions between EU countries on trade and free competition have been eliminated, with the result that standards of living have increased. The single market has been the greatest driver of growth in the EU, and holds the key to future growth. However, progress on the single market in recent years has been frustratingly slow and much of the momentum has been lost. On a simple issue like a unitary EU patent, it took the Council decades to arrive at a decision on its creation and location, and the saga is not over yet. Bickering and protectionism on the part of certain member states held up an initiative that was of vital interest to the economic development of the Union as a whole.

We cannot continue to limp along, with 27 member states, struggling to take decisions in an environment which forces them to value short term national gain over medium and long term Europe-wide gain. A form of constructive and competitive federalism can, on the other hand, give birth to a proper political and social Europe, whose institutions can ensure a balance between fiscal and monetary policies, an economic growth agenda, the structural reforms needed to enhance competitiveness, and greater social cohesion. This is the sort of long term vision we need.  The survival of the Eurozone requires robust economic governance and a workable European growth agenda. Federalism is the only way to avoid the disastrous consequences of the potential disintegration of the European Union and the Eurozone and thus disintegration of our standards of living. It will pave the way for a Europe of justice, solidarity and democracy, capable of holding its place in the world.

Now is a time when solidarity and unity at European level are more vital than ever. At times of crisis it is a risk that we retreat into ourselves or withdraw behind our borders. This would be the very worst option for Ireland and for Europe. To survive this storm, we must jointly forge a course with our European neighbours. Isolation is not an option. I will conclude with the famous words – So powerful is the light of unity that it can illuminate the whole earth.


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