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In Europe, we have done many things. We have got used to the idea that we– our societies and economies – are the model of success. We have thought that our way of living somewhat automatically guarantees prosperity and stability.
We have advised others how to develop a welfare state. It is assumed that when other countries increase their wealth, they also become ”more European or western”. I even remember someone talking about the end of history.
This is what we have done. But this is also something we cannot continue to do anymore as if nothing has changed. Because things have changed. Others have changed and we have changed as well. History is very much alive.
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The economic crisis in Europe has already taught some lessons. First, we have learned to evaluate others in a new way. Acknowledging that there are different ways to develop and different paths to success. I also assume that others – those who have weathered the storm of the crisis better than us – look at Europe and think about us differently.
During the past couple of years, new competitors have risen and enteredmarkets. In many cases, they compete with our companies and are even getting ahead in this competition. I do not want to talk about competition threatening us or about the threat posed by the emerging powers. We have praised the benefits of competition and encouraged others to establish economies based on market principles. If we really believe in our own wisdom, we should only welcome new competitors and consider them as a sign of success of our policies. But this will not always be easy.
A good record of company performance is no guarantee for future success.Another lesson is that the same is true about countries. Past achievementsdo not necessarily lead to a bright future. You may be able to survive a bad policy a while longer if you are rich, but eventually you will go bankrupt.
These two lessons are relatively easy to grasp. The third lesson is more painful. It means that Europe has to re-think and reform many things and structures that are a part and parcel of its old, iconic model of development. This is not very difficult to understand. But it is very difficult to accept, agree and implement what needs to be done.
What makes things even worse from the policy-makers perspective is the fact that Europe is facing a double-challenge. It has to manage both acute crisis and an uncertain future at the same time. Now it may feel that managing the ongoing crisis is the hardest thing. But it may well be that tackling the demands of the future is even harder.
I have to say that many correct – and some incorrect – moves have been made in order to save Europe from financial apocalypse. But on the whole, economic discussion in Europe has been disappointing and on the wrong track. We have been arguing about different ways of getting more indebted. We are discussing who is, or could be made, responsible for whose debt. In a way, we are choosing between elevators all going down. This demonstrates that we are only taking the first steps in re-establishing our competitiveness.
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Like European nation-states, the European Union is based on rules and there are plenty of them already. And yet new rules and laws are drafted to cope with the situation we are in. It is tempting to believe that stricter rules are necessary to fix the public finances. We see now clearly in theEurozone, what kind of problems follow if rules and agreements are not honoured.
But rules alone mean little unless necessary self-discipline and trust exist. It can be argued that we actually had a sufficient number and quality of rules. But many of us seriously lacked self-discipline and, consequently, trusteroded as well. We can design beautiful rules for ourselves, but they lead nowhere unless we can live according to them. A community of empty slogans would not stand the test of time. And history will test all of our slogans.
I am confident that revitalizing the EU and its competitiveness is not onlyabout economics. At its core, it is about politics. Our economic problems cannot be solved in a technocratic or juridical manner, however nice or handy that might sound. They have to be solved through a democraticpolitical negotiation within and between the European societies. Without thisour social cohesion and stability will be put at risk – and this would cause another wave of problems to emerge.
Of course, the political process will be demanding, uncertain and at times messy. But it alone can produce legitimate and therefore lasting results. The question is not if, but how to manage the politics.
While recognising the hard realities, it is necessary to recognise the power of Europe as well. The EU is still a global power of trade and investments. It continues to be the largest donor of development aid. Many European countries still stand at the top of worldwide competitiveness rankings.Europe is a major source of innovation and research. My own country, Finland, along with other Nordic states, has so far managed relatively well. But as I said, this is no guarantee for the future.
I would also like to add that issues of social justice, rule of law, democracy, human rights or environmental protection are not an antithesis to the economic prosperity in the future. They are issues that each and everynation will have to face at some stage, in a way or another. We in Europe may have done it according to Sinatra – my way – but these questions need to be addressed some way. These are global, common issues for all of us. They are not only European property. We do not have any monopoly over them.
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If Europe faces serious challenges, what about the others? Will they continue from a miracle to another? My humble estimate is that everyone will have to face his or her due share of testing times and even serious troubles.It is impossible to avoid or escape them in our inter-connected world. They will come in different shapes and sizes and at different speeds. Some will face more of them, some less.
Under these conditions long-term resilience and adaptability to change become crucial factors for success. More and more countries will reach at least relative prosperity, but the most resilient and innovative ones will form the new top class. Europe absolutely needs to maintain and strengthen these features.
Finally, the real issue at stake is not only about Europe or the rise of the others. It is not about we or them, it is about us. All of us are facing global challenges like climate change. Here the emergence of economies that catch us up is good news. A world with more frontrunners and advanced economies is better and stronger because there are more countries and companies that are able to invent and provide solutions to address the threats we are confronting as a mankind.
Dear friends,
We need to rethink and reform many things in order to revitalize the economic prospects for Europe. First of all, we need to recognise the depth of the challenge, however ugly the truth might be. We will need measures and rules, but above all courage, self-discipline and trust. They must be rebuilt within and between our societies through a political process. With these principles, we need to develop more resilient and innovative societies and economies capable of competing with others and shaping the common future together with them.