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The Elements of Consensus: liberalising EC-Japan passenger car trade in the 1990s

The following is an extract from a longer article published in EU-Japan Relations, 1970-2012: From Confrontation to Global Partnership by Keck, Vanoverbeke and Waldenberger (Routledge 2013). It describes “the Elements of Consensus” – an arrangement between the European Commission and the Japanese Ministry of International Trade and Industry (MITI) which I managed in the late 90s.

 

The 1990s saw the evolution of the European car market from a grouping of several, more or less protected, individual markets to a liberalised, reasonably homogeneous single market.  By the beginning of the new millennium, the landscape of the European passenger car market had changed radically: the protectionist impulse had faded to irrelevance, a leaner, meaner car industry was driving a booming market supplied by traditional European and transplanted Asian manufacturers as well as by a steady flow of imports.  By the end of the decade European and Japanese manufacturers found themselves competing head-to-head on a level playing field and on a more or less equal footing.

While wider economic and political developments were at play, a number of regulatory initiatives accompanied and arguably fostered this evolution.  The establishment of the European Single Market in 1992 and the creation of European whole vehicle type approval transformed the European passenger car market, creating vast economies of scale and weakening the hold of so-called “national champions”.  The arrangement between the European Community and Japan to relax import restrictions gradually – known as “the Elements of Consensus” – was an essential part of the political package which allowed this liberalisation to take place.

The following account is written from the perspective of an official who managed the Elements of Consensus during its final years.  It seeks to describe the way in which the arrangement was implemented during this period, with a particular emphasis on the European side’s objectives and processes.  While this is placed in the wider political and regulatory context, the author does not set out to deliver an academic analysis of the arrangement and its significance for EU-Japan relations during this period.  Rather, by setting out at first-hand a subjective account of its implementation, I hope to leave a record on which others can draw.  In so doing I aim to describe an issue of relevance not only to students of EU-Japan relations but also to anyone with an interest in the practical mechanics of European government.  In the view of the author, the Elements of Consensus represents a fascinating example of the European Institutions’ flexible way of adapting regulatory means to achieve political ends within an ostensibly rigid legal framework.

The push for the removal of internal barriers to trade within the European Community and the creation of the European Single Market by 1993 inevitably implied the removal of existing national import restrictions on Japanese motor vehicles.  Five Member States had these: France, Italy, the UK, Spain and Portugal.  The creation of the Single Market made all sorts of people nervous, at home and abroad.  In Europe, a crowded automotive market with considerable manufacturing overcapacity, there were fears (particularly among certain Member States) that the dismantling of internal trade barriers and import quotas would push some of the more precariously-placed domestic manufacturers over the brink.  Meanwhile, in Japan (and elsewhere), there were fears that the move towards a Single Market, while liberalising internal European trade, would create a Fortress Europe to the exclusion of outsiders.  Fears of a new protectionism ran deep.  The task of managing these concerns in a way which did not undermine the establishment of the Single Market fell to the Commission.  The negotiations with the Japanese MITI and MFA which began in 1987 under the first Delors College culminated in an exchange of letters on 31 July 1991 between Martin Bangemann, Industry Commissioner in the second Delors Commission, and his MITI counterpart.  The agreement represented by this exchange of letters was known as the Elements of Consensus.

The agreement reached saw the immediate abolition of national import quotas; however MITI undertook to ‘monitor’ (i.e. restrain) exports to the five previously restricted markets during a transitional period ending on 31 December 1999.  MITI would also monitor exports to the European Community as a whole over the same period.  The EOC consisted of an agreed estimate of the overall size of the European market in 1999 and the a forecast of the level of Japanese exports to the EU in the same year; the EOC also included predictions agreed between the Commission and MITI on market share for Japanese exports in each of the five previously restricted markets.  For France, Italy and Spain the market share foreseen for Japanese exports would increase year on year; for the UK and Portugal it would actually decrease on the assumption that exports would be displaced gradually by locally-built Japanese brands (‘transplants’), though imports as a whole were forecast to increase in a growing market.  The Commission and MITI would meet twice a year to review demand and calculate the levels at which MITI should monitor exports.  The purpose of the transitional period was to give the European industry a window during which to restructure, after which the Single European Market would be ‘fair game’ to Japan’s car industry.  Both sides notified the arrangement to the GATT.

A couple of months before each round of consultations, the Commission’s Directorate-General for Industry (DG III) would gather market data from several consultants specialising in the automotive market and build a case for the evolution of demand in each of the five formerly restricted markets, in Germany, and in the EU as a whole.  The official responsible for the file would begin to prepare a detailed negotiating brief by initially identifying a realistic spread in the evolution of demand for each country and region, and then by assessing which level of demand would be of most help in achieving the Community’s negotiating objectives.  Depending on the country or region in question, this might be high, low, or somewhere in the middle to give us room to adjust our forecast during the course of negotiation if by doing so we could help achieve a better result on other markets. (footnote 1)

In this way, a set of negotiating positions could be assembled for each market and for the EC globally: some figures from which we could start; the figures where we would ideally settle; those which would be acceptable; and our bottom lines.  As the result for each market would influence our objectives in all the others, a ‘fourchette’ was given, but in reality calculations had to be made on the fly during negotiating sessions which often came down to horse-trading between markets, using data from consultants to justify demand predictions in certain markets which would in turn deliver the figures agreed between the two lead negotiators. (footnote 2)

The informal nature of the EOC relieved the Commission of any formal requirement to consult Member States on the preparation of the file or on its outcome.  Politically, however, it was necessary to keep stakeholders on board at all stages.  During the preparations for each round of consultations, Commission officials would be in regular contact with Member State officials to sound them out on potential outcomes.  This was particularly important in those cases where special treatment was likely to be required.  Industry representatives also maintained close contact with the Commission, through expert level contacts and also high level visits as well as letters.  The Commission also answered several questions in the European Parliament on the application of the arrangement.  Internally, too, it was important to satisfy interested parties that the arrangement was being managed appropriately.  DG III [Industry] would consult DG I [Trade] on the preparation of the mandate.  When in due course it was submitted to Commissioner Bangemann for his approval, his Cabinet would also consult Trade Commissioner Sir Leon Brittan’s Cabinet to secure their agreement before negotiations could begin.

The results of the biannual communications would be communicated to the Commissioner in the form of a detailed note.  The Commission would then issue a press release in which the agreed forecasts for demand and for exports in the five previously restricted markets and in the EU as a whole (EU15 after 1995) would be stated.  The Commission would communicate these figures to Member States in writing via COREPER, at which the breakdown between EU12 and EU3 would be given orally.

During its final years, the Elements of Consensus ceased to have the high political profile it had enjoyed at its inception.  This was due, in part, to the success of the Commission and MITI in managing its implementation.  Monitoring levels had not been breached; the supply to the EU as a whole had not been restricted; the formerly restricted markets had progressively opened; and difficult ad hoc issues had been resolved effectively.  Most importantly, the European industry had taken full advantage of this window to restructure.  The EOC looked increasingly anachronistic in an era of globalisation where European carmakers began to take the challenge to Asian manufacturers: who could have predicted in 1987 that by 1999 Renault would own a major stake in Nissan, or that Peugeot would build engines for Honda?  Or indeed that Toyota would export cars produced in its own French factory back to Japan?

The Elements of Consensus was a fascinating file for a young official embarking upon his career.  It was both highly technical and extremely political.  Its sui generis nature provided a deeply instructive insight into the workings of the European Union, demonstrating the Institutions’ ability to find innovative solutions to complex issues.  In hindsight, it seemed to mark the end of one kind of politics and the beginning of another.  For the EU and Japan it seemed to coincide with the end of an era of tension and the beginning of a new period of cooperation; and in many ways it represented that change.

 

(footnote 1 – It can readily be imagined how difficult it was to disentangle the objective on one given market from those on others, and from the global objective.  In my own case, I approached it initially by spending some considerable time devising a spreadsheet in which I could enter values for demand and see how they interacted with figures for other markets and globally; also how they affected overarching negotiating objectives such as the ‘disproportion’ – the difference between the rate of change in Japanese market share and the rate of change in the market as a whole.  The aim was always to see Japanese market share grow more slowly (or shrink more quickly) than the market as a whole.  This of course was an entirely mathematical calculation deriving from the agreed forecast of demand and on the global monitoring level agreed for the EU; and the spreadsheet was an invaluable tool in getting to learn how the figures interacted with one another.  Too high a forecast for demand in France, say, could make it hard to bring down the global monitoring level enough to preserve a healthy disproportion.  Conditional formatting flashed a comforting green number at me when we were well within our comfort zone; a cool blue when we were safely within our negotiating mandate; and red when we were at risk of losing our shirts.  While the use of software tools to model outcomes has since become standard, at that time in the mid ‘90s it was still something of a novelty.)

(footnote 2 – Here again, the benefit of access to a spreadsheet which could give an instant snapshot of the overall result for any set of figures was a huge benefit to our side in responding quickly to developments in the negotiations.  The use of this spreadsheet had its risks, though, as well as its benefits.  Any errors in data entry could have serious consequences down the line.  If the author may be forgiven an anecdote, the following demonstrates this.  During one round of consultations, in Brussels, both sides found themselves at a stalemate: the Japanese side seemed unable to move beyond a global monitoring level which (according to our calculations) would seriously erode the disproportion; and as we pushed them, they became visibly frustrated to the point that they looked ready to walk out at one stage.  Finally, in the small hours, careful scrutiny of our figures showed an error in a small but crucial entry made some weeks earlier in the spreadsheet.  Once corrected, the figures fell into place and we were able to offer MITI a much more acceptable proposal which was readily accepted.  However, the author still lies awake at night sometimes wondering what would have happened had the data entry error been in MITI’s favour, rather than the Commission’s.  The episode also sheds an interesting light on the working methods of the Commission and its heavy reliance on individual experts.)


What Kind of Sovereignty? Examining Alternative Governance Models in the South Caucasus

This is a speech which I gave to the Partnership for Peace consortium meeting in Reichenau, Austria, November 2013 (pdf).  It has been edited to improve readability.

 

The subject matter of our workshop is challenging, to say the least. But creative thinking is needed. There is a great temptation to accept the status quo in the South Caucasus as the norm – this is reflected in the language we use: “protracted”… “frozen”. But this would be a serious mistake. Resolution must be found to these unsustainable situations if we are to mitigate genuine, ongoing suffering and avert greater instability.

Of course, this is ultimately the responsibility of the parties to these conflicts. Sustainable solutions cannot be imposed from outside; nor can they be implemented without the consent of all those directly involved. But we outsiders have an interest and also, I would argue, a moral responsibility to provide whatever assistance we can to help the parties resolve their differences. We owe our presence here this evening to the readiness of our hosts to take on that responsibility.

I am here this evening as a representative of the European Union’s institutions. Although I am responsible for coordinating EU policy towards the South Caucasus, I don’t claim to be an expert in conflict resolution, nor indeed in the history or politics of the conflicts in this region. So I thought I would talk about the European Union itself, and what its experience can tell us about governance and the thorny issue of sovereignty.

The EU: an experiment in conflict resolution

Let me start with two quotations.

The first was made by Sir John Boyd Orr, a Scottish statesman of the mid-20th century who won the Nobel Peace Prize in 1949 for his work in setting up the institutions of the United Nations. He said:

“We are now physically, politically, and economically one world and nations so interdependent that the absolute national sovereignty of nations is no longer possible.”

The second quote comes from the current President of the European Commission, Jose Manuel Barroso. He said that:

“In the age of globalisation, pooled sovereignty means more power, not less.”

Orr was of the generation of Europeans who saw that an alternative had to be found to the national rivalries which had diverted so much energy into warfare. Men such as Jean Monnet, Robert Schuman and Altiero Spinelli dreamed of, and then delivered, a new form of governance which pooled sovereignty in a way which made centuries of terrible European conflicts – which had become our status quo – a practical impossibility. They saw that a radical departure from the nation state was required. The result of their efforts was the establishment of the European Communities, which over the subsequent sixty years has evolved into the European Union. Not only did the EU’s new institutions put control of the machinery of total war beyond the control of any one member state; the architecture of this new concept in governance brought officials and politicians from former enemies together in a systematic way so that the notion of a new war between these ancient, traditional rivals became simply inconceivable. It was this pooling of sovereignty which changed the reality of life on the European continent; it was this which earned the European Union the Nobel Peace Prize in 2012. The Nobel Committee’s decision was controversial, also within Europe itself – but I firmly believe that it was deserved. When one looks at today’s European Union – at the daily rhythm of committees, working groups, Councils and subcommittees, bringing officials and politicians together from all across Europe and at all levels – it is hard to imagine the circumstances that allowed our parents’ and grandparents’ generations to launch wars of total annihilation against each other.

In our system, national officials are always meeting their counterparts in other nations, and at the European level. It is these daily contacts, these habits of collaboration, which in my view constitute the real strength of the EU as a force for peace in Europe.

It would be wrong of me to talk about this process of integration without also tackling the issue of consent. The degree to which the countries of the EU have pooled their sovereignty is not universally popular. Many of the EU’s citizens still see the EU as an elite project which erodes their country’s sovereignty. The EU’s raison d’être – the sustainable resolution of Europe’s conflicts – loses its potency over the generations, as our collective memory of the World Wars fades and as we grow to treat our peaceful coexistence as the natural order of things. In a way, we are a victim of our own success, and this in itself brings the risk of new instability. We must acknowledge this and bear it carefully in mind when we draw lessons from the EU’s experience and seek to apply them to the South Caucasus.

The EU’s experience in tackling regional conflicts

Turning then to the South Caucasus, what can the EU’s experience over the last sixty years tell us about the role of sovereignty in tackling this region’s conflicts?

One place to start is to look at the regional conflicts which exist within the EU’s own territory. Two bitter and bloody conflicts with historical roots going back centuries are those in Northern Ireland and in the Basque region. In both cases, it looks as if we have witnessed a genuine end to violence and a move towards a sustainable, negotiated settlement. I will leave it to experts to draw detailed conclusions on why this has happened, and I don’t want to overstate the influence of the European Union. But it does seem to me that the EU has had some role to play in creating the conditions which have allowed the parties to these conflicts to overcome their differences and choose the path of peace. The EU has helped to mitigate some of the factors which got in the way of conflict resolution. Communities in these regions felt that they were at risk of losing their unique identity. They felt disenfranchised, they felt that they were unfairly treated, and they felt that they did not have a voice in government. There was distrust on all sides. In many ways, small and large, participation in the great experiment of pooling national sovereignty at the European level has helped to address these issues over time. Gradually, in addition to their regional or national identities, people have begun to identify themselves also as European citizens, with the same rights and freedoms under the Treaty. Many EU policies have contributed to this process. People have become accustomed to seeing decisions taken at various levels – regional, national, European – and subsidiarity has been established in the Treaty as a fundamental guiding principle. The old logic of absolute national sovereignty no longer seems to hold, and this sheds a new light on the question of what constitutes a nation. At a practical level, if the same rules and the same values apply across the EU, the case for separatism becomes less urgent. Within the EU, people to people links are promoted. Students from one region or country spend time studying elsewhere; members of civil society meet their counterparts; cooperation at regional level is promoted. As I’ve already argued, the sheer bureaucratic process of running the EU itself contributes to a new reality: civil servants meet regularly; they get to know one another. Old animosities might not always die away completely, but they fade in the face of familiarity. Both in the case of Northern Ireland, and in the Basque region, I believe generational change has contributed to an altered perception of what constitutes normality, and that has in turn contributed to a shifting of red lines.

Of course, the process of European integration does not mean the homogenisation of the continent’s cultural diversity, or an end to the desire for national self-expression – far from it. But it provides a context in which these natural desires can find more sustainable, less conflictual expression. Next year, for example, we will watch as the people of Scotland vote whether or not to reassert their national independence after over 300 years of union with England and Wales. A vote for Scottish independence would be momentous, no doubt about it; but, within the EU, the practical implications would be less drastic than they might otherwise be. By contrast, in many ways, a decision by the UK (with or without Scotland) to leave the European Union – also a real possibility – would have far more serious implications.

The EU as a model for the South Caucasus

So the EU’s experience tells us that the pooling of sovereignty can offer a relatively safe way to address the concerns of minorities in conflict regions without necessarily crossing red lines – such as territorial integrity, or self-determination. But it has taken the countries of Europe a long time – and a great deal of suffering – to get to this point. And many continue to harbour doubts over this surrender of national sovereignty to a supranational organisation. Some of Europe’s leaders are seriously advocating a repatriation of powers from the European to the national level. So why should the countries and regions of the South Caucasus copy the EU’s model?

The South Caucasus was itself of course the scene of an earlier experimentation in the transfer of national sovereignty – as part of the Union of Soviet Socialist Republics. This experiment ultimately failed, and one might expect that those countries that went through the experience would have no appetite for further experimentation. But the story of the Baltic States which joined the EU in 2004 suggests otherwise. Some “eurosceptics” in my home country call the European Union the “EUSSR” – but of course this is not a fair reflection of the reality. There are key differences which mean that the pooling of sovereignty – while not universally popular – has been able to deliver in crucial ways. The most fundamental of these is the rule of law: the Treaty clearly defines what the EU can and can’t do, and provides mechanisms and institutions to ensure that the rules are applied fairly. The Treaty also sets out the EU’s fundamental values, enshrining the rights of its citizens. Furthermore, the Treaty establishes a series of checks and balances to ensure than no one country becomes too dominant, and to deliver a high degree of democratic accountability. Of course, it is not perfect, but it does seek to tackle these key issues head on. The same issues would need to be addressed in the context of the South Caucasus. The rule of law, and due process, are essential for a successful conflict resolution process; so, too, are fundamental freedoms. Steady implementation of reforms, including the building of democratic state institutions, must be a priority.

Which brings me to the role of the European Union itself in the process of conflict resolution in the South Caucasus. The EU and its member states have a clear interest in finding a sustainable solution to these regional conflicts. The Caucasus, where Europe meets Asia, is a region of immense geo-strategic significance. Instability in this region affects the stability, security and prosperity of the whole of Europe. Energy security is of course a major concern, but far from the only concern. Using the EU’s instruments to promote the resolution of the South Caucasus’ conflicts is a high priority for the European Union.

The Eastern Partnership

For a number of years, the EU has adopted a number of policy approaches to strengthen its links to the South Caucasus and to promote conflict resolution.

Some of these will be very familiar to you: for example, the appointment of an EU Special Representative for the South Caucasus and the Conflict in Georgia – a roving Ambassador dedicated to assisting the process of conflict resolution. I know that Ambassador Lefort has attended this event previously, and many of you will know him well.

Additionally, the EU deploys a civilian mission under its Common Security and Defence Policy – the EU Monitoring Mission – in Georgia, to help secure the ceasefire brokered by President Sarkozy after the 2008 conflict in Georgia. This, and the EU’s ongoing co-chairmanship of the Geneva Talks, are a demonstration of the EU’s commitment to resolving these regional conflicts.

The EU also deploys a host of other policies to deepen its relationship with the South Caucasus. They range from financial assistance to sectoral cooperation (transport, health, education, environment, energy, etc) to mobility, and so on.

In the first half of the last decade, most of these were swept up into the new European Neighbourhood Policy, the umbrella policy which defines the way in which the EU interacts with its new neighbours to the East and South following the ‘big bang’ enlargement of 2004. Over the following few years, a consensus emerged that the EU should develop a more targeted policy towards its eastern neighbours. This was launched as the Eastern Partnership at a Summit in Prague in 2009. The six countries of the Eastern Partnership are Ukraine, Belarus and Moldova, and Georgia, Armenia and Azerbaijan.

The Eastern Partnership gives us a framework for our relations with these six countries. The aim is the political association and economic integration of the six Eastern Partnership countries with the EU. This allows us a higher degree of ambition, locking us into a regular rhythm of Summits – every two years, the next coming up in three weeks’ time in Vilnius – and a roadmap of concrete projects. Perhaps the most concrete of these is plan to replace the now ageing Partnership and Cooperation Agreements which currently give us the legal basis for our bilateral relations. Over the past four years, the EU has negotiated Association Agreements, including Deep and Comprehensive Free Trade Areas, with Moldova, Ukraine, Georgia, and Armenia. At Vilnius we hope to sign the agreements with Ukraine and initial the Agreements with Moldova and Georgia. We are also negotiating an Association Agreement with Azerbaijan. Additionally, we are pursuing visa facilitation and ultimately visa liberalisation within the Eastern Partnership with a view to improving mobility and building people to people contacts.

Since 2012, the Eastern Partnership has been founded firmly upon the objective of building deep democracy. It sees that the purpose of the Neighbourhood Policy – to build security, stability and prosperity in the EU’s Neighbourhood – can only be fulfilled sustainably within a context of respect for fundamental freedoms and core values. So EU assistance and cooperation is focused on building institutions which deliver the rule of law. Under the so-called “more for more” principle, partners who meet or exceed our agreed reform targets benefit from additional EU assistance.

So the same processes which have been at work within the EU over the past six decades are already at work in the South Caucasus. The progressive implementation of the Eastern Partnership will see the region increasingly integrate into European structures. These will alter existing governance models and change the context within which conflict resolution takes place. We will see this first of all in Georgia, as it finalises and then implements the new Association Agreement and Deep and Comprehensive Free Trade Area. The reforms required to deliver this will have far-reaching implications for Georgian society.

Let’s be clear: we are not talking about membership of the European Union. While we acknowledge Georgia’s desire for a future with the EU, there is still a long way to go before this can be contemplated. But the reality is that full implementation of these new agreements will effectively deliver many of the benefits of EU membership. There will indeed be some pooling of sovereignty; but, as President Barroso said, this can deliver more, not less, power. This changes the status quo and offers a real opportunity to break the stalemates which block progress in the resolution of the region’s conflicts.

We must also acknowledge that not all our Eastern Partners are alike, and they don’t all share the same vision. Azerbaijan does not seek a European perspective; and Armenia has decided to join the Moscow-led Customs Union. It may be that this correspondingly limits the potential of the EU to influence the conflict resolution process in these two countries. But there is still a great deal that we can accomplish together. The EU remains committed to supporting the reform process in both countries, and we will pursue our engagement with them. This includes enhanced mobility and other people-to-people links; a focus on institution building, regional cooperation, and support for reforms which underpin deep democracy. This engagement can itself deliver results in the field of conflict resolution, directly and indirectly.

Conclusion

Some people, when they look at the South Caucasus in 2013, see a stage for a geopolitical struggle between two great power blocs. I would argue that this anachronistic thinking fundamentally misunderstands the nature of the European Union. The EU is itself a great experiment in delivering regional stability by redefining sovereignty. Sixty years of peace and stability on most of our continent are a testament to the power of this alternative governance model. While it is perhaps too much to expect that it can be lifted and transposed perfectly to the South Caucasus, it does nevertheless represent a model which might offer a way forward to tackle the long-term challenges facing the region. The EU’s experiments in policy solutions could be emulated in the South Caucasus, building confidence and trust across national and regional boundaries, and establishing processes which gradually shift the entire context of the conflict resolution process. But, perhaps even more significantly, the EU’s offer of political association and economic integration can fast track this process, creating new realities as our partners align themselves to the European Union. I think that Europe’s history over the last half century gives us grounds for optimism.


The EU: peace, or prosperity?

In 2009, I ghost-wrote an article for Commission President Barroso on “security, freedom and wealth”, his contribution to a collection of essays edited by Karl von Wogau. It predates the Euro crisis, but I think its arguments still stand, and will stand. This is an extract from an early draft:

If one were to identify a single theme to define global preoccupations over the last decade, that theme might be ‘security’. To some, the quest for greater security has come at the expense of certain freedoms. If wealth has a role in this trade-off, it is as a divisive force, providing the means to bolster the security of a few, while its absence is seen as a root cause of insecurity for the many.

I believe that this perceived trade-off is fallacious, and that security, freedom and wealth mutually reinforce each other in a virtuous circle which can raise the quality of life for whole populations. There can be no greater demonstration of this than the European Union. The driving force behind European integration has always, first and foremost, been security. The present EU was born out of the destruction of two catastrophic wars in order to ensure that Europe never again fell prey to such devastation. We have sought to assure the future security of our continent by bringing our people together in a community which guarantees their fundamental freedoms and generates wealth. We have extended membership to our neighbours emerging from the shadow of totalitarianism, binding them into our union for the sake of our mutual security, and doing so by sharing with them our wealth while safeguarding their freedoms.

The result is a community of healthy democracies, membership of which has brought both stability and prosperity to us all. The European experience is a model for other regions around the world. Security does not have to be bought by sacrificing freedom; on the contrary, security guarantees freedom, which in turn generates wealth.

The EU’s founding fathers were committed to making it impossible that the countries of Europe should ever go to war against each other again. They saw that to do this they had to bind the economies of Europe’s core countries together in such a way that it would be impossible to mobilise them for war against each other. They also saw the importance of binding the shattered populations emerging from the nightmare of national socialism into a wider community of democracies. That this experiment was a success is self-evident: we have enjoyed an unprecedented period of peace and prosperity in Europe over the last half century, and the original community of six has grown over successive enlargements to include twenty-seven countries. Many of these countries, including my own, emerged from dark periods in our history where fundamental freedoms could not be taken for granted. By joining the European Union, we sought to cement this hard-won freedom in an irreversible manner: we sought security. Our partner Member States in turn saw their own security interests served by bringing these new democracies into the union.

A crucial tool in this extension of security and freedom was the integration of Europe’s economies. The new democracies of southern and eastern Europe often lagged behind economically. Their partners had the vision to agree to huge transfers of wealth from the richest to the poorest regions in a spirit of solidarity. The resulting investments have transformed some of the poorest regions of Europe into some of the wealthiest. The knock-on effect has been to raise prosperity levels right across Europe. New wealth and new markets create jobs and opportunities for all.

Unsurprisingly, other regions have witnessed our success and sought to emulate us. However it must be emphasised that Europe’s economic success is not and has never been purely about wealth creation. While economic success is an end in itself it is also the means by which we achieve our twin goals of freedom and security; two sides of the same coin. This is the model which we offer the world.