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Below is the Executive Summary of the report, highlighting particular outcomes and future recommendations.
 

Executive Summary

The state of Europe is dominated by the financial crisis in the eurozone and this was reflected in Friends of Europe’s eighth annual State of Europe roundtable, which brought together ministers and EU Commissioners, members of the national and European Parliaments, senior policymakers, business leaders and opinion-formers for a no-holds-barred discussion on prospects for rethinking the European “project”.

The discussion served to highlight the complexities of the issues and the disagreements and divisions on how to deal with the problems, whether between markets and policymakers; Northern and Southern eurozone members; those that are members of the euro and those that are not – both within and outside Europe; those that want “Brussels” to have more powers and those that want it to have less.

José Manuel Barroso, President of the European Commission, outlined what needs to be done – decisive action in Greece, beefing up the tools of the euro area, strengthening the banking system, improving economic governance and implementing the single market agenda.

But events since the roundtable highlight the practical difficulties of doing these things and why the EU is unable to move on to the other challenges it faces, from climate change to resource scarcity to the rise of Asia.

Policymakers are grappling with the twin issues of trying to prevent Greece’s problems from spreading to other countries and attempting to make the banks strong enough to be able to withstand a Greek default. Working out how to do this and in what order is giving politicians headaches, and is not helped by banks trying to pretend there is no problem nor by citizens protesting about the increasing burden they are being asked to bear.

It is widely recognized that solving the eurozone’s problems requires closer integration between its members, but there is a divide between those who say this should come about through changes to the Lisbon Treaty and those who point out that if members simply obeyed the existing rules, many of the problems would disappear.

Furthermore, putting treaty change on the agenda undermines the efforts that are being made under current rules, as Etienne Davignon, Chairman of the roundtable and President of Friends of Europe, pointed out.

More intractable is the issue of how to deal with the economic imbalances within Europe, which have been exacerbated rather than reduced by the euro.

Both sides feel they have been cheated, the successful “Northern” economies because they are being asked to bail out what they see as spendthrift, dishonest neighbours and “Southern” economies because the prosperity and stability that the euro and the EU at large promised has proved to be an illusion. Restoring trust between these two groups will not be easy.

A reinvigoration of the single market could be just the impetus that the EU needs, but persuading even the EU’s more successful economies to open up more will be difficult at this time, let alone the countries that are racked by debt and gripped by austerity.

Trust is vital to ensuring that confidence returns to the private sector. As Duncan Niederauer, Chief Executive Officer of NYSE Euronext, said: “trust is at the foundation of how markets work.” Business leaders and policymakers can contribute towards it by working closer together to promote investment and job creation. Until that happens, Europe’s economy will remain stuck in the doldrums, but mustering up confidence is proving difficult.

The crisis is having a huge social impact, calling into question many of the EU’s most hard-won achievements such as the freedom of movement and the freedom to work, as László Andor, EU Commissioner for Employment, Social Affairs & Inclusion, pointed out. The EU needs to stand up for itself, explain what it is for and why it is a good thing, he stressed.

However, the EU still struggles with its lack of connection to voters and its lack of legitimacy. This was not so much of a problem when it appeared to be creating win-win situations for its citizens, but today when that equation looks more like lose-lose it is more of an issue.

Making the Commission more accountable is one answer – it would make people feel they have a say in who runs Europe as well as increasing understanding about the issues.

However, the EU’s quietly effective foreign engagement may provide another avenue – Brussels is engaging more deeply with its neighbours, helping them with the transition to democracy and at the same time stressing the importance of values such as the rule of law, an independent judiciary and ensuring a peaceful transfer of power from one government to another – questions that many in Europe now take for granted.

“The more we build strategic alliances with other countries, the more opportunities we provide for our citizens,” explained Baroness Catherine Ashton, High Representative of the European Union for Foreign Affairs and Security Policy and Vice-President of the European Commission. After all, many of the EU’s member states used to be its neighbours. The EU is not very well thought of within its borders – perhaps by demonstrating what it stands for outside it can reconnect with its citizens.