Speech on the Future of Europe, 11 January 2021

Speech on the Future of Europe from Karl von Habsburg on his 60th birthday.

Karl von Habsburg, Speech on the Future of Europe

 

 

A round birthday should not only be a reason for celebration, but also an opportunity for critical reflection. My father always seized his birthdays as opportunities for taking a critical look at politics, trying to put European day-to-day politics into a larger context. In this tradition, I naturally like to start with a quote by him:

"Those who do not know where they come from do not know where they are heading, for they do not know where they are standing." Many of you, ladies and gentlemen, know this quote. I am deliberately using it as an introduction to this speech which bears the title "Speech on the Future of Europe". After all, the decisive question today is: can we shape the future of Europe if we do not know what are the foundations and what are the recipes for Europe's success? And by this I mean Europe as a whole and the European Union in particular. For the European Union is the nucleus of the all-important European unification.

In Europe, several attempts were made in the last century to create heaven on earth: nationalism, national socialism, communism, all these ideologies have failed. They have driven millions of people to violent death and have caused massive economic damage. Ideologies are supposed doctrines of salvation which they fail to bring about because they defy reason. Especially in times when people are threatened by crises, they obviously become susceptible to such doctrines of salvation. In Europe - but not only here - we take for granted, or want to take for granted, the peace and prosperity that we have enjoyed since the end of the Second World War within the European Economic Community, then the European Community and now the European Union.

We rule out crises as a matter of principle. And when they do come nevertheless- because crises happen in even the most peaceful of times - we rely on the welfare state that was established in Europe at the latest as from the 1970s starting in the west of the continent. With a critical look back at the time in which I grew up I would like to say that we developed this welfare state in the shadow of the Cold War.

We were able to develop this welfare state in the shadow of the Cold War due to at least two circumstances. Firstly, the military umbrella that the western superpower, the USA together with Nato stretched over the western part of Europe. Austria, although not a member of Nato, also benefitted as a consequence. The second circumstance is the policy that is still known today as the "economic miracle". It was a policy for which the focus was not on a planned economy but on a market economy. The state pursued a policy of order, not one of intervention. In Germany it was represented by Ludwig Erhard, in Austria by the Raab-Kamitz course. The sound monetary policy practicsed by the German Bundesbank helped to establish a solid middle class, which through diligence, saving and investing, both in the private and in the entrepreneurial sense, made sure that the following generation would be better off. I am saying this with gratitude and respect, firstly because I also belong to this generation and secondly because we can learn a lot from it.

However, and this must be put very clearly, the policies that generated the economic miracle, i.e. regulatory policy on the one hand, and the welfare state on the other, are opposing concepts. The policies that led to the economic miracle are based on the initiative of individuals and on achievement. The welfare state concept aims to make citizens dependent on the state – and in doing so uses their own money at that.

The evolution of this welfare state in the shadow of the Cold War also was the reason why the relevance of European countries in foreign politics slackened. A development that we observed both during the wars in the Balkans after the disintegration of Yugoslavia as well as with Russia's aggression against Ukraine. European politicians found it quite convenient to leave the really important decisions in foreign policy to the USA, including security policies.

William S. Schlamm, at that time one of the leading conservative publicists in the German-speaking world, summarised this negative development in an "obituary for the state". This obituary was published as early as in 1978 in "Zeitbühne" which Schlamm edited. Schlamm writes: "When the state turned a welfare state, it abdicated. For it seems that one can no longer ignore the fact that in the West no single state any longer conducts politics in the classical sense - that is, as a state. Politics in the classical sense applies legislative and executive means to enforce a concept - a specified, tangible and, in most cases, foreign policy objective. In the West, state policy was last practised by Charles de Gaulle; and his policies, too, were most ludicrously revoked by his successors Pompidou and Giscard d`Estaing. In all the other countries in the West over the past twenty years there has not been a single government that has practised or even understood politics in the classical sense." Schlamm then goes on to criticise the welfare state as a political community "whose entire state potency has been so completely consumed in welfare measures for the comfortable public that nothing has been left for state politics."

Such a welfare state needs a constantly growing state apparatus to administer the communitarised funds. In doing so, however, it consumes ever greater resources from the tax pot in order to sustain its own bureaucracy. This leads to what the unfortunately almost forgotten economist Felix Somary describes in his "20 Social Laws of Wrong Proportions". In law number 4 he says, "The more functions a state assumes, the harder it becomes to keep control of its administration." And in law number 5 he goes on, "The bigger and the more comprehensive the state, the less influential the people." Such a state increasingly turns into an inward-looking bureaucracy. To put it in William S. Schlamm's words: "Domestic politics requires good accountants, foreign politics statesmen."

It is not the task of accountants - to stick with this example - to conduct geopolitics. But it is the task of European politics to conduct geopolitics for Europe. If Europe fails to conduct geopolitics itself, others conduct geopolitics with Europe. And Europe in this context means Europe, and not individual nation states in Europe. In today's political reality, none of the individual EU member states has the strength to meet this challenge on its own.

Felix Somary, the crisis seismographer already quoted, also testifies that the assumption that the welfare state puts an end to all crises is just an illusion. In his analysis one of the sure signs of a crisis is a policy of cheap money. It cannot be denied that practically all major central banks, in the service of politicians, pursue such a policy of cheap money. "The more economists request that interest rates be raised, the more interest rates are cut by politicians," Somary summarises in the 20 social laws of inverse proportions.

The problem is that today politics no longer overcomes crises, but that instead news in the media about new crises simply substitute those on older crises and this is also reflected in the public debate. The so-called euro crisis, to give a well-known example, has not yet been solved. Let alone the over-indebtedness of the states. The Corona pandemic has only pushed everything else out of public perception.

Ladies and Gentlemen, let me now return to something I mentioned briefly at the beginning but that I have not yet elaborated on: the foundations of Europe which we must bear in mind if we want to shape the future of Europe.

Most often at this point reference is made to the founding fathers of the European Coal and Steel Community, to the Schuman Plan. However, it was as early as after the end of the First World War  that a very specific concept for European unification was shaped, namely the Pan-European idea of Richard Coudenhove-Kalergi. Almost 100 years ago, he analysed what was going on in Europe and drew conclusions from that situation.

1918, the end of the First World War, was a historic turning point for Europe and for world politics. Until then, there had been a European order. Not in the sense that Europe had been a political entity, but world politics had been synonymous with the politics of European powers. For as long as they could meet at congresses to maintain the established order or to create a new one, conflicts had at least been curbed. Thus, in the decades leading up to the First World War, Europe had enjoyed an incredible economic boom which had also benefitted from international trade and an international division of labour, i.e. what we now call globalisation. In 1918, what none of the leading politicians at the time, no matter in which of the countries involved, had ever envisaged in their considerations, happened.

In Central Europe a cultural area that had evolved over centuries was dismembered. Nationalism took over. 1918 also saw the end of the idea of supranational states. However, what was dismembered was not just a cultural, but also an economic area. Each individual state tried to solve its problems through isolationist policies, protectionism and nationalism, but in reality only made them worse.

So what then were the lessons of the turning point in 1918 for Richard Coudenhove-Kalergi? Europe, fragmented into small countries, would become the plaything of non-European powers - he mentioned Russia and the USA – and he clearly analysed that the policy of protectionism would only increase the damage. Consequently, he said, Europe must find a way to unite, as otherwise it would plunge into another devastating war. And today we know how clear this vision was back then in the 1920s, and what followed.

His approach at the time was geopolitical. He was concerned with redefining a European order. Not in the sense of what even at the time would have been an unrealistic return to the old order, but as a structure that would re-establish Europe as a global political entity and not turn it into a plaything of non-European powers.

Therefore his thoughts were focused first and foremost on a European foreign policy – so as to not be dominated by others on the stage of world politics -, secondly a European security policy - in order to not become dependent on others and thus dominated in this regard, or to be drawn into a new intra-European war -, and thirdly the dismantling of all intra-European customs barriers. Today, this would be called a free internal market, i.e. Europe as a free trade zone. In addition, there also was  the idea of a common currency, which in Coudenhove's concept was based on the gold standard still used at the time, and of a European federal court, i.e. today’s European Court of Justice.

The freedom of citizens, individual responsibility, and a state that limits itself to setting the framework conditions in the fashion of constitutional states were a further basis of his considerations for European unification at that time.

European security policy also was the basis at the start of real European unification after the Second World War. Far too little thought is probably given to the fact that the founding fathers of the European Union considered it as a basic principle to create a large security area that would make another war among the European countries impossible. The division of Europe at that time by the Iron Curtain made it necessary to limit this security area to the free west of the continent for the time being. The founding fathers back then also realised that it was not possible to create this security space directly by military or political means right then. After the Second World War as yet the time had not come for such a development. They therefore knew that it would be necessary to create this space on an economic level aiming to have the political and also the security institutions follow at a later point.

The core idea of European unification is the creation of a common zone of freedom, security and justice. This core idea naturally applies to the whole of Europe, so it is based on the principle that each European country must be entitled to join European unification. The respective criteria are defined.

The fact that European unification was limited to Western Europe in its initial phase was due to the geopolitical situation in Europe at the time. It would be completely absurd, however, to infer therefrom any kind of privilege of the six founding countries of the then Coal and Steel Community. One cannot blame the Slovaks, Ukrainians or Kosovars that they were cut off from European culture by an Iron Curtain back then.

A broad consensus prevailed across party and national borders - apart from a few small parties, in the sense of a pan-European approach, to integrate those countries into the EU that had not previously had the opportunity to do so. In addition to the three neutral countries of Finland, Austria and Sweden, these were above all the Central European states of the former Eastern Bloc and some of the successor states of the former Yugoslavia. This was modelled on an approach already taken with the adhesion of Spain and Portugal: integration was supposed to consolidate democratic institutions, whereas any return to authoritarian regimes or totalitarian dictatorships was to be prevented.

Today, the focus is on the integration of the six countries in South-Eastern Europe that are not yet EU members. In its latest reports on enlargement, the EU Commission rightly states that the admission of Albania, Bosnia-Herzegovina, Kosovo, Macedonia, Montenegro and Serbia to the EU is a "geostrategic investment in peace, security and economic growth throughout Europe". The geostrategic importance of the region is clear to anyone familiar with its history. And in politics there is no vacuum . If Europe withdraws from the region, there will be all the more room for other powers to advance their interests in Southeast Europe. In addition to actors like Russia and Turkey who have been connected to the region and its politics throughout history, today above all China but also Saudi Arabia for instance with its Wahabism exert massive influence. The interests of these actors do not coincide with European security policy interests.

Europe itself must formulate and defend its own security interests.

And when I mention Russia and China, it is clear that this is primarily a matter of geopolitical interests. This should also be borne in mind by those EU member states that keep blocking this enlargement out of mostly petty national or even nationalistic interests.

But we must also look to the East, where a country like Ukraine with the Euromaidan or the so-called Revolution of Dignity has made it clear that its citizens see their future in Europe rather than under Russian dominance. Undoubtedly there still are major problems in all these countries regarding, for instance, the rule of law and corruption, but they are European countries nevertheless. Anyone who takes European unification seriously must make it possible for every European country to join the European Union. That is why I also advocate upgrading the current neighbourhood policy towards Ukraine into a concrete accession perspective policy.

Even though the European perspective is of no real relevance in the democracy movement in Belarus, it is our duty to support this democracy movement wherever possible. If Europe, if the EU emphasises the rule of law and democracy the way it does, these principles must also apply towards Belarus.

 

Ladies and gentlemen,

Considering what has been said, it is of course necessary to draw conclusions and develop concrete political instructions. Before I get to that, however, I would like to touch on two points that I would also like to call fundamental principles of Europe, and which are currently also hotly debated and argued over again and again.

These are the rule of law and freedom.

Let's go back to Greek mythology. Europa was a beautiful Phoenician princess. Zeus, the Greek father of the gods, transformed himself into a fragrant bull to take Europa to Crete. There they had several children together. Two of them went down in the history of Crete as the justest of rulers because they respected the law.

Seen in this light, the rule of law indeed was right there at the beginning of the European idea.

From European history, however, we know that it was not always self-evident. The so-called papal revolution of the 11th to 13th centuries was a historical process that made a significant contribution to the emergence of constitutional principles. This process suffered a setback only during absolutism. For absolute rulers equality before the law applied to their subjects only whereas the rule of law principle equally subjected the rulers themselves to law. In more recent times, the Congress of Vienna for me is a kind of turning point as from which the rule of law became established in Europe. The rule of law provided Europe with a stable foundation subsequently allowing for a very positive development.

This is the foundation for other pillars such as private property, personal liability for failure as well as success, and with it private entrepreneurship which must focus on innovation ´for its success. Legal certainty of course is a basic prerequisite for private property, and private property is a basic prerequisite for prosperity and the creation of a middle class. The prosperity that Europe has thus generated is certainly the result of this rule of law principle. It is no coincidence that these principles developed in a culture that is clearly Christian.

This emphasis on law is so important because particularly in Europe there are repeated calls for a primacy of politics. Everything should be politically regulated. The more this happens, however, the deeper the conflict with law turns out to be. This conflict is getting sharper and sharper as it is increasingly less often the rule of law principles that govern - that is the rule of law - but rather power relations. In the long term, this conflict is detrimental to Europe.

Another essential element of European identity is freedom. Let me quote Richard Coudenhove-Kalergi: "The European ideal is freedom - European history is one slow struggle for personal, spiritual, national and social freedom. Europe will exist for as long as it continues this fight; as soon as it abandons this ideal and becomes unfaithful to its mission, it loses its soul, its meaning, its existence. Then its historical role in history will have come to an end."

European unification, however, European politics should not aim to bring an end to Europe's historical role, but to make use of it!

Freedom is not a given. Freedom must be won again and again. Freedom is inseparably linked to responsibility. And we cannot delegate this responsibility for freedom to the state.

To define the concept of freedom, I have to resort to the English language for it has two terms for what we call freedom: Liberty and Freedom. Both terms refer to different things. A good definition comes from Murray Rothbard, a classic representative of the Austrian School of Economics. He said: "Living in Liberty allows each of us to fully enjoy our Freedom". In other words, only when we live in an external system of freedom can we actually enjoy and live out our inner freedom. Liberty in  English means the external construct of freedom, that is what actually creates freedom for us, while Freedom means inner freedom. For example, the freedom to think what I want. The inner freedom that no one can actually take away from me. Enjoying this inner freedom requires an external construct. It is also quite clear that implementing this concept of external freedom, Liberty, is one of the most important tasks of politics.

Protecting freedom is therefore the supreme task of politics. It is not about sustaining and exercising power, as is so often claimed nowadays, but serving those eternal values: justice, freedom, and benevolence. Safeguarding them is the essence and justification of the state. "The three concepts - individualism, freedom, legal order - are expressions of the same deeper reality which we can call the spiritual-cultural substance of Europeanism", to use a quote by my father Otto von Habsburg.

Ladies and Gentlemen,

You know that beautiful saying: Rome was not built in a day. European unification is not completed in a day either; it is a process marked by progress and setbacks. What is important here is that we do not forget the foundations of Europe, but make sure they are reflected again and again in daily politics. And it is equally important to take the right steps to be able to meet the specific challenges.

Earlier I spoke at length about foreign and security policy, about the need for EU enlargement and about the geopolitical challenges - which are not getting smaller - and the weaknesses that the EU still has in this area. This also translates into on very specific request:

It is precisely in this foreign and security policy issue that European sovereignty is needed. In this specific case, sovereignty means the ability to act and to shape. In terms of potential, European policies would here bring clear added value compared with purely nation-state policies. To put it more precisely: the European Union needs a European foreign policy. European foreign policy does not mean coordination of the foreign policies of 27 member states by the High Representative for the Common Foreign and Security Policy (who at the same time also is one of the Vice-Presidents of the European Commission), and where individual countries can block a European position on important issues such as human rights policies in China, for example, but rather an EU foreign ministry headed by a foreign minister (male or female).

To this end, we need a core of a European constitution specifying precisely this foreign policy competence for the European Union. One point, by the way, that would also meet all the requirements of subsidiarity.

It must be clear to all of us that this step will not be that easy. It will take a lot of convincing to actually establish a European position in foreign policy. And it will be necessary to master one of the biggest obstacles to unanimity - that obstacle is the indebtedness of public budgets.

Perhaps the connection is not so clear at first glance. But if we look at the recurring disputes over budget, funds, or most recently the disputes over a rule of law mechanism and blockades on this, it is clear that the issue of budgets can be used again and again to block progress in individual areas. Let us just think of the mockery of the so-called frugal four in the budget negotiations last year.

Even those countries in the EU that are not part of the Eurozone are impacted by decisions about the financial future of the EU through the Fiscal Compact and EU budget issues. When it comes to money, there is always a lot of explosive power. An unregulated break-up of the Eurozone would probably massively impact the functioning of the entire EU in a negative way, or maybe even cause it to collapse altogether. A danger that should definitely not be taken lightly considering the geopolitical challenges.

Ladies and gentlemen, we must therefore consider and prepare very specific steps for reducing debts in the Eurozone.

The Fiscal Compact which should have lightened the debt burden has failed. Despite legally established balanced budget amendments many European countries have incurred higher debts. With the Corona crisis, this situation has become even worse. With its policy the ECB is counteracting debt reduction. This is true for both the zero interest rate policy and the purchase of government bonds. Such policies do not create any incentives to reduce debt; on the contrary, higher debt becomes attractive.

However, it is necessary that interest rates form freely on the market as a basis for a free economy. If interest rates cannot form freely, the market economy will be undermined in more and more areas and degenerate into a politically controlled state economy. A scenario that ideologists of a socialist planned economy may dream of, but which is definitely not in the interest of a Europe of freedom.

Three steps are necessary, in my view, to implement debt relief in the Eurozone and to then again re-establish a healthy economic system. Three steps which means that these three steps are actually implemented as an overall concept.

First, the ECB should take the sovereign debt of the euro countries onto its balance sheet. Secondly, it would have to guarantee the citizens of the Eurozone secure bank deposits through full coverage with central bank money as well as create a digital euro as full money. And thirdly, market-based migration pressure must be created by allowing competing private currencies, which would stabilise the euro through the practical possibility of emigrating from it.

The first step has already been initiated, albeit not in full, by the ECB through its bond-buying programme. The moment it is fully implemented, the biggest divisive factor in the EU, government debt, will be eliminated at a stroke. The other two steps are necessary to make the transition to a market-based monetary order possible. Banks can then go bankrupt without any problem because bank deposits will not perish thanks to central bank money. The respective bank customer only has to inform the resolution authority to what other bank his deposit should be transferred.

Important in this concept is the implementation of all three points and it must be noted that not all digital euros are the same.

Ideas for a digital euro have also already been presented in publications by ECB staff and have been tested internally by the ECB since October. However, these concepts are not aimed at transforming our fragile monetary and banking system into a market-based monetary order; on the contrary, they are intended to preserve the existing fragile monetary system.

Here digitisation is not used to solve problems, but rather to further delay them. Such kind of digital central bank money would de facto be nothing other than the beginning of the abolition of cash. Cash, however, is freedom in action.

Such a concept would perhaps fit in China, where a central authority would then determine on the basis of social credit points who may buy what, or may buy or must not buy anything at all. Such a totalitarian concept is prevented by allowing competing private currencies, such as cryptocurrencies.

 

 

Ladies and Gentlemen,

Already last year, the European institutions the Commission, the Parliament and the Council announced a conference on the future of Europe. It is to discuss the most important future issues for European unification. Apart from such conferences, it is always important to discuss the future of Europe, if necessary also controversially, and also with ideas and approaches that are perhaps not so much on the agendas of the meetings of the institutions.

Even though it is currently a small but dangerous virus that dominates the headlines on a daily basis, we should address the necessary reforms.

Even though we can hold this event only in digital format, even though we cannot debate the contents over a glass of wine or water after this speech, the world around us will not stand still. If we as Europeans do not take our destiny into our own hands, others will do it for us.

 

My priority here is quite clear. We must take the future of Europe into our own hands!

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

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