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University of Malta,

Valletta 10 July 2015

In these days everyone’s eyes are turned to Brussels and to Athens, trying to understand if the European Union is able to work out a credible solution on a crisis that seems a dialogue of the deaf.

Unfortunately, Greek situation has showed once more that selfishness is the prevailing sentiment among Europeans. I don’t care who was wrong first, or who was wrong more, in this context. I do not think this is only a Greek problem – even if the Greek problem did everything it could to worsen the context – as well as I didn’t think that last years crisis that spread across Europe was simply Portuguese, Italian or Spanish problem.

Athens is the most urgent and dramatic issue we shall address. But we should not borne ourselves to dealing with the emergency: it would be the last of a long series of mistakes. Look: the whole European Union seems paralyzed over the Greek question, forgetting that Greece is the most visible sign of a wrong architecture.

We cannot concentrate only on emergency. The European project was not conceived simply to overcome a single dramatic moment: it was the instrument to guarantee peace and growth across decades.

You know the famous quote: a politician thinks about the next election, a statesman about the next generation. Are the European leader thinking to the former or to the latter?

My point is simple: what can we learn from this situation? There are two outstanding lessons we should understand from the Greek case, regardless its current management.

First, nowadays the European Union is perceived by its own citizens like something of non-democratic. Academics, politician, experts: we have been discussing about the “democratic deficit” of the EU since its foundation. But the scenes of the Greek referendum show that now the distance between the people – our people – and the European institutions – our institutions - are wider than ever. Greferendum is the latest and best example to understand why Europe is not working well: a confuse and overhasty consultation had been the occasion to a landslide vote against what was perceived as the position of the “creditors”. One can think whatever he wants on the referendum, but putting aside political judgments, it is absolutely clear that there is a rupture between an undefined “we” and an undefined “them”. Think about it: a five-days-go poll showed that in Italy the percentage of citizens trusting the EU is 28%. Before the economic crisis, in 2006, it was 51%.

I am worried that this could be the perfect field to make populism thrive. Abraham Lincoln used to say that “demagogy is the capacity to wear minor ideas with major words”. Here is my point: how can we narrow the rift between institutions and people? How can we address major ideas with down to earth words?

The reality is that a European Union based on referenda is not viable. We saw referenda in Ireland, in France, in the Netherlands, and now in Greece. This is not the way a Union should work. We elect MEPs. We now do elect also the President of the European Commission: on one hand, we have demonstrated we have all the instruments to improve the democracy rate in the EU. On the other hand, all of this is not enough. We should re-start the European engine, narrow the democratic deficit and go ahead building a Union closer to its citizens.

And this brings me to the second point. The lack of democracy had a terrible impact, worsened by the combination with the economic crisis. The European Union found itself without the right instruments to fight the consequences of the crisis. We experienced economic recession, unemployment and deflation. We experienced social resentment, generations fighting each others, in a harsh contrast between the haves versus the have nots.

How did the European Union reacted to the crisis? Some measures have been undertaken by the European institutions – for example, the European stability mechanism, the banking union, strengthened fiscal surveillance, as well as the launch of unconventional monetary policies by the ECB. All of these instruments are extremely relevant in order to keep the EU safe from the possible future storms. But in my opinion, all of this is not enough to improve the European project.

The current EU predicament reminds us that we are not completely out of troubles. First, as I mentioned, we are still struggling to find a sustainable solution to the Greek situation. Second, the overall economic performance of the area is disappointing, pointing to persisting very low levels of growth. The impact of the crisis on growth potential, also due to the dramatic fall in investment and to the deterioration of unemployed human capital, is expected to last for a long time, even evoking the risk of secular stagnation.

Let me be clear on this point: until we won’t delete the word “austerity” from the European vocabulary, we cannot say that a new Europe is ahead. There is something very important at stake: the future of the European Union and its single currency.

All of this brings me to the heart of the problem: is the architecture of the European union and of the Euro zone strong enough to guarantee an adequate future to European citizens? A future in which social security, investments, growth, employment will replace, as keywords, budget consolidation, bureaucracy, output gap and similar? A weak and fragmented European Union will not be able to tackle future, increasingly complex challenges.

This is the reason due to I very welcome what the European Commission put in action to foster economic growth and social security. The European investment plan, for example, is a positive step, even if I hoped it could be more ambitious. The reason lies in the acknowledgement that fifteen years after the Lisbon Agenda we should do more on knowledge-intensive initiatives, focusing on more investment in research, innovation and high-level education, as investments with the highest growth potential. The same could be said about interconnecting infrastructures, or eco-sustainable projects.

The Italian government, during our semester of presidency, put great emphasis on the launch of the investment plan. Why? Because we believed it could be the first and fundamental step in order to foster the economic growth.

In last years we have been told hat fiscal responsibility had to be the fundamental aim of our policies. Now we clearly understand that without investments and socially balanced reforms, fiscal responsibility is not enough to speed up the recovery of our economies.

That’s why we are fighting for a change of perspective: more attention on growth, more attention on social issues. European member states should enhance the coordination of economic policies, in order to tackle inequalities between and within countries in the EMU. The reason is that we want to guarantee the sustainability of our welfare states. We do want to ensure budget balancing, but not at any cost. Our goal for the EMU is economic stability, social cohesion and full employment.

Since 1992, we have been working on one pillar: the monetary policy. More than 20 years later, this pillar alone is not enough. We need to build and enforce other pillar: the path that led to the banking union is a good example of how to work, now it’s time to concentrate to another pillar, the fiscal capacity of the Euro zone. It’s not a possibility: it’s a priority for us.

The development of a European fiscal stance is at the core of our proposal: beginning from the necessary dealing of asymmetric shock, we should go ahead and increasing degrees of fiscal integration and cross-country transfers financed by a common fiscal capacity.

When I talk about the reform of the Euro governance, I often address the following objection: what can be done in the short term, meaning without any modification of the Treaties? Let me cite an example.

If we do activate the specific clause in the Lisbon Treaty about the enhanced cooperation, it would become an appropriate frame for a gradual transfer of sovereignty to better managing economic coordination without requiring Treaty changes. Enhanced cooperation means a further integration for some member states, without the possibility of vetoes by other member states.

A new European governance should take care of this and promote the use of the enhanced cooperation as an instrument of strengthening the EU, by reducing barriers between citizens and institutions.

The challenge we are facing is the hardest but also the most fascinating of all. We have the responsibility to re launch the European project, the single currency project, keeping our eyes on the present – and the present has a name, Athens – without forgetting that the lands of the future are incredibly larger than we may even imagine.

And let me conclude with a quote from one of the most famous current rock band on the stages, the Muse. One of their first and best songs has a title we all should keep in mind: “Time is running out”. European time is running out: not only for Greece, but for every single European citizen. Let’s engage now to build a better Europe in the future.

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