Photo © ÖVP/Jakob Glaser
Michael Spindelegger is the current Vice Chancellor and Foreign Minister of Austria.
Challenges never cease. Today it is globalisation and the European financial crisis. Austria benefited enormously from its accession to the European Union. For the last ten years, Austria has significantly outperformed the EU average growth and this trend continues in 2012. It is one of the 11 net contributors to the EU budget and has been able to establish itself as an important investor in the Central, Eastern and South-Eastern Europe, continuously looking to new frontiers: Therefore Austria is today the biggest foreign direct investor and played a pioneering role in Croatia, Serbia, Bosnia and Herzegovina and Macedonia. Also for the last 3 years, 2009 through 2011, Austria has been the single biggest direct investor in Turkey - whose population is about 10 times higher than the Austrian.
So, one could probably say that Austria is well off, but it would be thoughtless to believe that Austria’s outstanding economic performance is written in stone. It was and is challenged by the crisis in the Euro zone. The Euro is embedded in the Economic and Monetary Union which was designed about 25 years ago. Monetary integration subsequently evolved faster than economic integration. This gap is also one of the reasons for the current crisis. To counter the crisis, the EU has implemented a number of unprecedented policy measures during the last two years, measures of enhanced financial, fiscal and economic cooperation, discipline and solidarity.
The EU has also agreed to a series of significant Governance Reforms: in future, Government budgets, by constitutional provisions, will have to be balanced or in surplus. Eurozone members will coordinate more closely on their economic and budgetary policies. European institutions will oversee the budgets and implementation of fiscal policies of member states. Economic growth will be the key driver to resolving the crisis. Hence, a European „Pact for Growth and Employment” was adopted at the European Council in June this year.
Structural changes in the Eurozone countries will take their time to be fully realized – currently, crisis countries are expected to see a decline in economic output both this and next year. On the other hand, we see that the massive structural reforms are bearing their first fruits. Allow me to remark that despite all the negative financial news of these last weeks and months, the euro remained pretty strong. This proves the resilienceof our currency.
However, the crisis has revealed how insufficient the existing banking supervision is. We must end the vicious circle between sovereign debt and bank debt. There should be a single rule book for financial services. Therefore I believe that we need to create a Single European banking supervision, a Banking Union. We need to complete and deepen the EU Single market. This should comprise better regulation, support for small and medium-sized enterprises, and in particular EU funds for job creation. Trade and double-taxation agreements with third countries, including the United States, are also of key importance for progress.
At the same time, national measures are necessary, such as structural reforms, fight against unemployment and modernisation of administration. This includes reforming social policies, in particular health and pension systems. Austria is taking steps in this direction. I am deeply convinced that the euro crisis is not putting the future of the European Union at risk. On the contrary, out of what may have been the biggest challenge the European Union had to face so far, an opportunity for an even better and stronger EU may arise. During the last 60 years the EU had to master already a number of serious challenges and mostly came out stronger in the end.