This page has been archived

6. 1. 2012 15:50

Prime Minister Petr Nečas' Address at the "New World" conference in Paris

Your Excellencies, Ministers, Ladies and Gentlemen,

It is an honour and a great pleasure for me to open the last panel of today’s conference. The topic for many fellow speakers here will be Europe and its role in the new international balance. The subject is extremely present and acute, as the current development in Europe leaves no doubt that the continent’s position in the international community is undergoing radical shifts.

We are confronted with a great array of challenges. The search for new geopolitical balance with respect to international security is one of them. We cannot hope, for instance, that the threat of international terrorism will diminish in the years to come. The turbulent events of the so-called Arab Spring in northern Africa have so far been very good news for Europe and the whole democratic world. The movement’s message is clear: desire for freedom and democracy are universal and the development to their accomplishment will not cease anywhere. However, democracy, particularly in its nascent phase, is always quite fragile and requires great care, endurance and determination. Otherwise, it may bring many risks for stability and security both within the states and in the region. Helping to prevent these risks from threatening the foundations of these young democratic states based on the rule of law will be the task of Europe and of the EU.

Global security is naturally threatened by many more issues. Neither the European Union, nor any of its Member States possess the strength to play the role of a world hegemon. Nor do we want to be a “world’s policeman”, which, on the other hand, does not mean that Europe should surrender an active role in the so called “Concert of Powers”. Nonetheless, retaining our position cannot be achieved through political centralisation or excessive armament; notwithstanding their importance for removing security threats. The heart of world power is shifting above all to economic centres. Most risks our citizens face today are quite different from those we know from the 19th and 20th centuries. I believe that present unpredictable economic development and turbulences of financial markets pose a more pressing risk. An economic crisis can destabilise and damage a state more than anything else. Furthermore, it can rapidly increase the potential of other threats and I don’t need to take examples from history.

Let us not delude ourselves that the current crisis is a global one. Although, until recently, big world economies have economically relied also upon demand from Europe, they can, as we see, do without it as well. By the way, the whole interdependence between the EU and the BRIC countries [Brazil, Russia, India, China] is lower then we might think. Take, for instance, Germany, the EU largest exporter. In 2010 German trade with EU partners exceeded five times its exchange with the BRIC states. The caution with which the key actors approach the discussion about helping the EU is, after all, a signal that they are also counting with a possibility of an economic decline of the Old Continent and its departure to the periphery of world development. Therefore it is not possible to comfort ourselves with false ideas that the world cannot exist without a strong Europe. It is not the case any longer.

On the other hand, we must not view other world economies as opponents or rivals. In recent years, I have read numerous warnings in European media crying about the increasing strength of the emerging markets and about the flooding of Europe with cheap goods from all over the world, especially Asia. An answer to this issue, which I have noticed, is a rising wave of protectionism in many parts of Europe. And this is perhaps also the reason for lower attention paid by Europe to Asia, as compared to other regions. It is emblematic that, unlike the USA or Russia, the EU was not participating in the last East Asia Summit. Moreover, in the last two years, EU High Representative for common foreign and security policy turned down invitations to attend the ASEAN Regional Forum.

However, the problem, in my opinion, lies not in opening our markets for foreign goods, but in the declining competitiveness of European economies. Recourse to protectionism and too strong orientation on domestic demand are not viable strategies. What Europe needs today to secure her specific position in the world are comprehensive and complex reforms. The differences in the EU are too big in this respect. On the one hand, six European countries belong among the “top ten” competitive economies, according to the Global Economic Forum. On the other hand, other Member States are having huge competitiveness difficulties.

Our ultimate goal must be the enhancement of competitiveness across whole Europe and orientation on high-quality products and cutting edge technologies. Nonetheless, besides expenditures on projects with high added value, significant savings are equally necessary. I am not talking only about reduction in the public sector, but predominantly about lowering labour costs, effective labour taxation and the cost of production in general.

However, I am a bit sceptical regarding competitiveness and growth, as we have already heard a great many slogans about the necessity of strengthened economic coordination and about the so called “economic governance”. Personally, I prefer the term “economic government”, which has a structure with clearer responsibilities. But the important thing is the real content and functioning of this economic coordination.

Quite recently, I have read an interesting article in The Economist that the present reality of the EU is not a Europe of two speeds, but rather a Europe of two beliefs. One has a tendency to protectionism; the other strives for further liberalisation and Internal Market development. Paradoxically, many euro area Member States, commonly perceived as the higher speed area, are inclined towards decelerating the progress of the Internal Market. This has negative effects on the competitiveness of the EU as a whole. Just one clear example: EU Member States still exclude four fifths of services from the internal market.

I believe that approach to the Internal Market agenda will to a great extent show, whether the EU truly wants to endeavour on the path of competitiveness and growth, and, in doing so, remain a significant world player, or whether it will isolate from the rest of the world and wither. What we need is a system of economic policy coordination focused on competitiveness and a return to the very foundations of European integration, namely to liberalisation and reduction of barriers to growth. What we certainly do not need are new taxes, limited to the EU, further petrification of social security systems or introduction of more and more antidiscrimination directives, which only burden entrepreneurs and rigidify our labour markets.

Europe has its important tradition of social state which it need not abandon. But, of course, even our social model must be based on the solid foundations of a competitive economy; otherwise it cannot last for very long.

Ladies and gentlemen, thank you for your attention.

print article   email   facebook   twitter