Interview with JAVIER SOLANA

Javier Solana, President of ESADE Center for Global Economy and Geopolitics and distinguished senior fellow in Foreign Policy at Brookings Institution Interview: Marcus Balogh

It is very hard these days to get a stable reading of the eurozone: one day it’s green shoots, and the next day the fragile recovery is at the mercy of Spain. Where exactly are we? The deterioration of economic prospects in countries such as Spain and Italy calls into question the aus- terity prescribed as a means to fight the recession. At present, excessive cuts in public expenditure are causing the economy to shrink still further, while they have a negative impact on the public deficit and investment.

Right now, the implementation of structural reforms is of key importance in order to guarantee sustain- able economic growth in the long term, but in the medium term Spain needs to become more competi- tive, export more and take action to reduce the unemployment rate. This requires combining reforms with incentive policies designed to promote economic growth.

Pundits are predicting no recovery in the EU without growth. But where will growth come from? Further integration is essential to provide legitimacy of the EU in the eyes of its citizens. We need more solid institutions that have greater powers, in order to meet the challenges that our economies have to face. And we must not lose sight of the importance of pursuing growth at this time. To this end, it is of fundamental importance to have 1) an effective European fund that seeks to drive growth and 2) the ongoing support of the Central European Bank. Without economic growth, it will be very difficult to continue along the path of reforms and to transmit international credibility.

What is the nature of European dependence on emerging countries and, in particular, China? The nature of our dependence is essentially in the economic level. A recent study revealed that in the year 2050, the GDP of China, India, Brazil, Russia, Indonesia, Mexico and Turkey will be 25% greater than that of the United States, , Japan, the , France, Canada and Italy.

The will continue to be an important player. We will learn lessons from this economic crisis, and one of them will in fact be that the present economic crisis is not a global crisis, but a Western crisis. When we emerge from the crisis, we will find ourselves in a new world with new challenges. And the dominant pattern will be the economic convergence of countries. If at present the European Union has 4 of the 10 largest economies worldwide, in 2050 it will only have 2.

If we wish to be a player with a voice and a vote in the international arena, and to lead the transition to- wards governance of a multipolar world, we need to be more united and to take co-ordinated and effec- tive steps to revitalise our economy and to energise our political systems.

In what sense is that a good or a bad thing? Changes of such significance have not occurred very frequently in the course of history. Today’s situation differs considerably from the rise of the Western world in the 16th century. Then, the powerful nations controlled the centres of power and defined the rules. Today, this supremacy is being challenged. New countries are emerging strongly and a multipolar world is taking shape, with different outlooks on sover- eignty, law… and with strong geopolitical aspirations. This situation should not be seen as something negative. If we succeed in managing this new order correctly, there is the possibility of a world of peace and calm. It will be a multipolar world, but one that is also more multilateral (more favourable towards building governance structures that allow continued progress). And the European Union can certainly help lead the process when it comes to building struc- tures of governance.

How do you reconcile the general resistance of European countries to immigration with the region’s dire demographic problems? Cultural diversity has been a constant feature of European history. It has been the source of many of our continent’s greatest successes. However, when it has been managed inappropriately, it has also played a part in some of Europe’s greatest tragedies.

Today, we live in a global, dynamic world, due to a considerable extent to the improvement in connec- tions and transnational networks. And there is no turning back. The 21st century will be culturally more diverse.

Furthermore, if we analyse demographic trends in Europe, we will see that there is a great need for peo- ple in order to energise our economy. If in the year 2000 our population represented 12% of the world’s population, in 2050 this figure will fall to 7% and it will continue to fall thereafter. Globalisation has cre- ated a lot of competition and it is to our direct advantage to manage the attraction of human resources and talent as best we can.

Even to a optimist, the EU’s governing structure appears lumbering: 27 states and 754 parliamentarians compared with, say, the 50 states of the US and their 435 representatives. What would better political integration mean? At present, the most important thing is to work to ensure that the Member States and the citizens of the European Union have complete confidence in the central institutions of the European Union.

One proposed solution for keeping the EU together and solvent would, paradoxically, be a flex- ible mechanism that would allow countries in distress to drop out for a while (or be expelled) until they got their financial house in order. How realistic is that? We all knew that the euro lacked a solid structure. There was a need to continue making progress on the taxation front and to insist more strongly on the fulfilment of the Stability Pact agreements. The only op- tion now, in the midst of a crisis, is to continue advancing towards greater integration and greater gover- nance, because the alternative is fracture.

Europe has excellent science and technology facilities – CERN and ESA are just two examples – and universities that look more sophisticated than their US counterparts. But Europe lags the US in ideas. What is the European scientific mindset? What could the region do to better ex- ploit its intellectual potential? And how key is that to the future of the EU? Since I was a professor of physics in my former life, I place intrinsic value on science and its relationship with our progress. Today, the emerging countries are growing, and they are doing so without our help. In this growth, the knowledge economy, innovation and a commitment to education form a triangle whose construction is essential if we are to compete in the 21st century. This is something that the Asian countries have understood very well. If we wish to continue competing and leading, we will have to work towards joining these three points of the triangle with a much greater degree of intelligence and effec- tiveness. At Davos, in January, Angelika Merkel asked, “Do we dare more Europe?” What would you an- swer, and why? If we wish to be a recognised player of importance, we need to work to overcome the crisis and to be much more united. Otherwise, we will not be able to play the role that corresponds to us in a world where there have been so many changes of power in recent years.

What do you see as the single biggest risk to the EU? Re-nationalization

What do you consider your greatest achievement as EU foreign policy chief, and why? To have put the European External Action Service in its place; the engagement of the European Union at the regional and international level; as well as the EU civil and military involvement in major peacekeeping and humanitarian operations around the world.

Your own hopes and dreams aside, where do you see Europe in 20 years’ time? I would like to see a European Union that employs the same mechanisms, manners, values, principles and potential that we have constructed in the past. I imagine a more integrated European Union, in which the Member States are willing to cede more sovereignty in favour of the European project, and whose institutions are of benefit to the citizens, the region and the world (because in today’s world there is a need for the European Union and its molecular way of doing things, so useful and necessary in a multipo- lar world that requires effective governance structures).