Selfish EU governments are putting the continued survival of the European Union at risk, Ireland’s former taoiseach John Bruton has warned, as he told IPE the UK was likely to be the only outlier in a two-speed Europe.
Bruton, who headed a coalition government from 1994 to 1997, also said greater integration of the euro-zone was not a choice at this point in time, but inevitable to avoid the end of the single currency.
Giving the keynote address at the IPE Conference & Awards in Vienna, Bruton told delegates they needed to be aware of the risks of climate change and said the issue would impact pension funds’ investment portfolios.
“To protect that investment, pension funds have an obligation to contribute to mitigating climate change,” he said, calling for all funds to measure the environmental impact of investments and how investment activity is helping to mitigate climate risks.
Bruton, who also spent five years as the EU ambassador to the US, called on European governments to re-discover the sense of reciprocity – “that you give a little to get a little” – and accept measures that may be detrimental for one country but benefit the EU as a whole.
“That sense of reciprocity is what has kept the European Union going for 50 years, and it’s being lost, progressively, thanks to the national selfishness, the national egoism that has been generated by the financial crisis,” he said.
Asked his view on the future of the EU, he predicted a two-tier system splitting those that were part of the single currencies, and those that had stayed outside the euro.
“Integration in the euro-zone is not a choice at this stage, unless one is ready to contemplate the collapse of the euro,” Bruton said.
Asked after his speech by IPE which member states would form the outliers in a two-tier European system, he said: “It may be only the UK. If we can get the banking union right, and if we can, for example, underpin the banking union with a European deposit guarantee scheme, then banking in euros will be better than banking in pounds [sterling], and Britain may at that time even decide it’s in its interest to join the euro at that stage.”
Bruton said such a step would still be in the distant future, as much work was needed to improve the structure and performance of euro-zone economies.
The veteran politician, who was first elected to Parliament aged 22 and stood down as a member in 2004, took aim at a number of European governments, notably those of Angela Merkel and David Cameron.
He said the UK Conservative Party’s desire for a single market without a single set of rules was “impossible” and lamented the loss to the EU were Britain to leave the Union.
However, his scorn was reserved for the German government, which he said was least likely to implement structural reforms agreed at the European level, despite insisting on them for other countries.
Bruton questioned the German approach to fiscal policy and argued it was nonsensical to leave the next generation “a tidy balance sheet if [the] roads are full of potholes”.
“That’s not a good legacy to leave your grandchildren,” he said.
“Germany is not investing in infrastructure, and if it did, that would benefit Germans, but it’d also benefit all over Europe as well.
“And it would preserve that great German achievement, the achievement for which the Germans deserve more credit than anyone else – that great achievement, the EU.
“But without reforms, it won’t happen.”
Bruton went on to praise Germany’s role as a founding nation of the
single currency, and stressed how the country had benefited from the euro-zone.
“Many Germans don’t recognise [these advantages], and they don’t recognise that for these good things there has to be some measure of risk-sharing, over and above the risk-sharing now being undertaken.”
Brutan said, in hindsight, the decision to burden Ireland with its banking debt was the pragmatic one, taken to avoid banking collapse on a much wider scale. “That wouldn’t have been in anyone’s interest, including in Ireland’s interest.”
However, he said that now was the time for some European solidarity. “Now that we have the leisure to look back, it is appropriate for the rest of Europe to take account of the fact Ireland did bear a disproportionate burden. And I don’t get the sense that is happening.”
He also backed the current Irish government’s plans to build social housing by attracting institutional capital, noting the social housing “deficit” in Dublin and the growing problem of homelessness.
“We need more investment in Ireland and elsewhere in Europe, but we also need to apply strict financial rate-of-return criteria to that,” he said.
“Certainly, there needs to be a significantly positive economic return that you can measure.”