Speech of Herman Van Rompuy at the University of Edinburgh - Europe beyond the watershed: How to turn fear into hope

This is the second time I have been invited to speak at this old and prestigious university. The first time was at the Montague Burton Lecture online two years ago, still in full Corona time. Today, I stand before you here in person. I thank the Edinburgh Europa Institute for this new invitation. Of course, I would have preferred to stand here as partners in the same European destiny called the EU. Hopefully, in the light of history, this decoupling is an 'accident de parcours', an accident of history. More than others, universities need to think longer term. We need to think about reuniting the U.K. with the Union. That is why I speak here tonight about our future, one day again, our common future. Nothing is evident in history, but nothing is unthinkable or impossible. Changes in all domains are now happening faster than ever. Nothing is eternal in these exceptional times.

1. We are living through times of confusion, uncertainty, and fear but also of flexibility and resilience.

Since 2008, we have been living in a kind of permanent crisis, a permacrisis. First, we were a few millimetres from an implosion of the world financial system, and then even the euro was at risk. As a result of these crises of trust came an economic recession that dragged on in Europe until 2014. The following year saw a refugee inflow of nearly 1.5 million people from the Near East. Separately, several cities, including Brussels, suffered murderous terrorist attacks. That same year, Russia annexed Crimea and de facto invaded the Donbas. Since then until February 2022, there have already been 13,000 deaths. That same year, Russia annexed Crimea and de facto invaded the Donbas. Since then, until February 2022, there have already been 13,000 deaths. In 2016, Brexit became a political reality, followed by another populist victory:  the election of Trump. In 2020, Covid-19 came over from China, which dramatically changed our way of life and killed millions around the world. When we got that pandemic under control here in Europe, Russia invaded Ukraine, and an energy war broke out on top of it. Inflation was brought to levels of the 1974 oil crisis with its economic cost. In between everything, it became clear that climate change was happening much faster than many thought or hoped for. That is the permacrisis in action. Many citizens are asking the question: “What is the next crisis? Much of what happened was unexpected and mostly from outside the EU. Each time, we had to react and adapt to new circumstances.

We also showed a lot of vitality and flexibility as a society. Think of how we avoided a disaster by teleworking and how we saved drastically on energy, how, despite inflation and energy prices, public opinion continued to support sanctions against Russia by large popular majorities.

Authorities also had to be very flexible. Numerous policy taboos were dropped. Think of budgetary rules, those on state aid to companies, Eurobonds, defence spending in the European budget, our China policy, Russian gas, nuclear energy etc. The role of the state increased during the pandemic and the war. Security dominated the political agenda and was even above economy and ecology, at least in the short term.

It is also very remarkable that the war has brought about the need for 'more Europe'. The way leading politicians talk about Europe today in member states has changed profoundly. I am thinking of Denmark, the Netherlands, Italy and others. There is a common enemy on the doorstep. Exit disappeared from the vocabulary on the continent, especially after the chaos and the long-term economic damage of Brexit

2. But what further hard lessons can we as Europeans draw from what has happened since 2008 and especially in recent years?

We have certainly come to the conclusion that one country alone can no longer handle the problems. The English thought Brexit was the solution. Today, a clear majority over there know that Brexit is the problem. For the 27 countries, Brexit was also an amputation, but we have discovered since 2016 that we could make decisions that were unthinkable with 28! I hope one day there will be a day of re-entry, but it will not be a formality.

The UK left the EU in 2016, of which it was not a member like the other 27. They were part of the single market and not of those two other pillars, notably the Schengen zone and the euro area. Moreover, since Corona and the Russian invasion, the Union has become even more political. Today's EU is different from the EU prior to Brexit.

No EU member state wants to know about an exit anymore. On the contrary, we have a string of countries that want to join the EU. The eurozone, the passport-free Schengen zone, and NATO continue to expand. Europe alone cannot handle the biggest problem of our time. We even need global cooperation to tackle climate change. After all, the EU today accounts for less than 10% of emissions.

The EU faced the various chapters of the permacrisis. Sometimes 'too little and too late' but not always! Apparently, crises help us to act in a united way. Many EU member states are often politically weak internally, but together in the Union, they surprise many in the world with their unity and decisiveness. Think of the big Recovery Fund (NextGenerationEU) of €800 billion set up in 2020 for a full pandemic, mainly focused on the ecological and digital transition. Think of the ten packages of sanctions against Russia and the almost complete disengagement from Russian gas and oil in less than one year. I certainly do not want to give the impression that there are no problems, but it is good to speak of our successes too. There is already enough pessimism and despair.

I will continue on the theme of unanimity because if the EU is to defend its interests and values, it must be unanimous, legally speaking. A house divided goes down. As mentioned, we have mostly succeeded in this in recent years. Of course, there are always discussions. That is normal between 27 vibrant democracies. It is remarkable that the populist government in Italy continues to support the sanctions against Russia with conviction and does not follow the Orban line at all. Although, the latter had hoped it would. Deeply divided over the war in Ukraine, the Visegrad Group has fallen apart. Orban is obliged to support the sanctions.

Governing is difficult everywhere. Just look at how long it took the US to agree on the famous Inflation Reduction Act. One senator held the country hostage for months.

Another lesson is that the EU and Europeans need to be less naive. For too long, we thought that the rest of the world had the same view on peace and economic rationality as we have, that economic and sustainable progress is the most important thing, that international trade is in everyone's interest, and that radical nationalism is out of date. We were wrong. The war in Ukraine showed that unbridled nationalism does not look at economics or human suffering, that food and hunger, energy or fertilisers, are just instruments in a war. We also learned that trade wars can challenge the multilateral system, as in the Trump era. Many of our fellow citizens fear the current war may end in a nuclear conflict. Many investors and citizens already fear that Taiwan will be the next crisis moment after Ukraine, militarily and economically. Moreover, one shouldn’t forget that 50% of world trade and 70% of semiconductors pass through the Taiwan Strait.

The EU is now drawing its lessons from this. It wants to be more 'strategically autonomous'. We want to be less dependent on others for energy, food, batteries, semiconductors, rare earth, telecommunications, defence and others. We do not want a general  'de-coupling', which means no more trade except between countries that are allies, but we do want 'de-risking' so that we are not over-dependent on countries in strategic activities that are not friends. Autonomy does not mean autarchy. With Russia, we want de-coupling. Security may have an economic cost for us. For the EU, too, the order of political priorities has changed. The ambition to buy energy as cheaply as possible has driven us into the arms of Putin. Less dependence also means more diversification of supply lines. The EU does not want to make the same mistake with China, which is a 'friend of our enemy' on top of its status as a partner, a competitor, and a systemic rival. But the EU is also questioning what will happen in the US in the event of a possible return of Trumpism. Imagine if Trump had still been president when Ukraine was invaded last year; he who has not said a bad word about Putin in four years and even questioned NATO solidarity. Yes, the EU has become less naive. It has been a hard lesson. Incidentally, some countries needed time to draw all the conclusions from this. But we are learning!  Buying ammunition together is a totally new approach in Europe. In 2021, we showed that we could solve a serious European crisis by jointly purchasing vaccines against COVID-19.

However, much more is needed in that area. Among the shortcomings, I include the lack of strong Franco-German cooperation. Both are still too preoccupied with the ghosts of the past. With France, there is nostalgia for a geopolitical role separate from the US. For Germany, saying goodbye to Ostpolitik was difficult. But it did. Franco-German cooperation has also been weakened by domestic tensions. The balance of power in the EU is shifting away from the dominance of the two largest countries. It’s a fact of life.

Europe not only needs to be more sovereign, but it has to defend our interests more strongly against other global actors. That is why the EU has created a series of new tools to act against unfair competition or to protect strategic companies from 'hostile' takeovers. These sound protective but are therefore not protectionist, especially as our own companies are victims of discriminating practices in China, for example. Reciprocity is the issue here.

In addition to defensive, we need an offensive approach. A more offensive policy is to form alliances of companies and countries that allow us to be less dependent on Asian battery and chip producers by encouraging production in the EU itself. Semiconductors are a vital part of many consumer goods, such as phones, cars and refrigerators. They are also used for many military purposes. The most advanced chips are used in weapons. For rare earth, which is vital for manufacturing key technologies - like wind power generation, hydrogen storage or batteries, Europe is today 98% dependent on one country, China. Or take lithium. With just three countries accounting for more than 90% of lithium production, the entire supply chain has become incredibly tight. 60 % of lithium is processed in China. So, we need to improve the refining, processing and recycling of raw materials here in Europe. We can build a critical raw materials club working with like-minded partners - from the US to Ukraine - to collectively strengthen supply chains and diversify away from single suppliers.

The EU is also working on deals with Argentina and Chile that will widen the bloc's access to critical minerals and key strategic metals like the lithium required for electric vehicle batteries. Geo-economics in action. Germany discovers Latin America and the importance of an FTA with Mercosur (Brasil, Argentina). Some countries block the agreement for domestic reasons related to beef imports! Too bad for geopolitics.
 
China is so far ahead in making batteries for electric cars that the rest of the world may take many years to catch up, despite billions in Western investment. China is not an innovator but a manufacturer.

We need to address our digital backlog, especially in the field of artificial intelligence. Among the world's 15 biggest digital companies, there is no European one. We have neither the big companies like the US nor one strong state like China. We Europeans are strong on privacy and protection against disinformation regulations, but each time they are services provided by non-European companies. We have lost the battle for personal data but not for industrial data.

But the challenge for our industry is even greater.

3. We live in complicated times. We need to enable several existential transitions simultaneously. In that context, I want to say something about climate, energy and competitiveness.

The most important is the one towards climate neutrality by 2050. As an intermediate goal, there is now a legal obligation to emit 55% less greenhouse gases on average by 2030. By 2035, the EU even wants new cars to be fully electric. That will require colossal investments and, at the same time, a different business model for many companies and a different way of life for many citizens.

We are not sitting still preparing for this major transition. To get ahead of the competition, we need to keep investing in strengthening our industrial base and making Europe more investment- and innovation-friendly.

We have to differentiate between bottom-up and top-down innovation. The former describes a process through which innovation emerges more or less naturally from individual businesses competing in the free market, while the latter is a more goal-oriented process where the State defines a problem and then looks for solutions. One could not exclusively rely on the bottom-up approach. Especially with the necessity of the green transition, there was a set of obvious problems that needed solutions.

Here in Europe, we moved first with the European Green Deal -launched by the European Commission, a public authority- to set the path to climate neutrality by 2050. We have cast our net-zero target into law to provide the predictability and transparency business needs. We followed it up with the investment firepower of NextGenerationEU, our EUR 800 billion investment and recovery plan and the Just Transition Fund and other instruments across the economy. Clean tech is now the fastest-growing investment sector in Europe.

But again, we need fair competition. We need to protect ourselves from countries that do not have the same standards as us on climate. The Carbon Border adjustment mechanism (a levy) is to level the playing field for EU producers and avoid companies moving their production over lower climate standards - so-called carbon leakage. It is an example of how a measure to protect us can be seen as protectionist.

Competitive disadvantages directly threaten a number of industrial activities.

There is a need for a European industrial policy. 'Tout pour l'industrie, tout pour elle'.  ‘Everything for the industry, everything for it’. If Europe is not competitive, then it cannot be strategically autonomous either. If it is not sovereign, we cannot play a geopolitical role. It is as simple as that. Until a few years ago, the word "industrial policy" itself was taboo, especially in Germany. That is different now. Germany needs to change its business model, even in the automotive sector, with slower economic growth as a transitional cost.

Europe finds itself at an “inflexion point” where old infrastructures had to be exchanged for new, more sustainable versions. We have infrastructures that need an upgrade. I mention the 5G mobile infrastructure, energy systems, public transportation systems, and buildings. The public sector can play a leading role. It can accelerate the investments of private businesses as well.  

Such a European industrial policy is much more than the addition of national policies. It must be as it was in the fifties at the time of the European Coal and Steel Community treaty, about a truly European policy. I should add that energy policy now is very much a national competence, unlike the time of the ECSC. Today it is about wind, heat pumps, solar, clean hydrogen, storage and others - for which demand is boosted by our NextGenerationEU and REPowerEU plans. 

The climate transition should take place while the cost of fossil energy has increased enormously. I am not talking about the spikes in gas prices last summer, so the price was ten times higher than for Corona. Even today, the cost is still twice as high as a few years ago and much higher than, e.g. in the USA.

The future of industry in Europe is at stake. We are winning the energy war with Russia on supplies but losing the one with the US on prices. This energy price gap represents a major competitive disadvantage for European companies and may undermine the attractiveness of the European market for large investments by multinational groups. The temptation to outsource energy-intensive activities is strong and already underway.

We already had to deal with dumping practices because of China, but now the US has started protective measures. We are far from the Obama era when we negotiated a "Transatlantic Trade and Investment Partnership" (TTIP) that would be a kind of free-trade agreement.

4. It is a commonplace to say that we face huge internal societal challenges related to demographics and democracy.

I talked about the huge financing needs to enable industrial reconversion, but we have to do this while the costs of an ageing population are mounting, which is only the beginning. I do know that the tasks for China, Japan and Russia are even greater, but that does not help us. A country like Italy will have one-third less population by the end of this century. People over 65 account already now for 24.1% of the total population. Another example: Finnish women gave birth to an average of 1.32 children in 2022, the lowest fertility rate since the figures were first recorded in 1776. Filling this up with migrants then poses other societal problems.

Migration remains a very important issue internally in member states and within the EU. For some people, there is too much (irregular) migration for the economy; there is too little in the face of labour market tightness in almost all countries. On migration, there is agreement within the EU only on securing external borders (autonomy) but not on the redistribution of refugees or asylum seekers across the Union (solidarity).

Of course, migration must take place in conditions where one does not lose control, especially if one has Africa as a neighbour, where the population at the end of the century may reach four billion compared to 1.2 billion today.

A major challenge is the future of democracy. The Union that likes to call itself the homeland of democracy has to fight for the rule of law and freedom of opinion, even internally within the Union itself. However, we as a Union are acting increasingly vigorously against it. But up to one-quarter of our population at home thinks a ‘strong leadership’ should be possible. A quarter of Belgians want to abolish the current parliamentary democracy and replace it with another system. Democracy is no longer taken for granted, at least among a section of citizens. Nothing is acquired in history. But the paradox is that the same anti-democrats on Twitter loudly use their democratic freedom of opinion and cannot imagine that they would no longer have it. They want to continue using democratic freedoms to fight for democracy! Often, that opinion is expressed disrespectfully to others, with aggressiveness. Violence always starts with words or with pen and ink. In this sense, we should advocate a different culture of dialogue, of tolerance, of moderation, of respect, back to basics.

Our democracies are functioning with increasing difficulty. With individualisation and the political translation of it, i.e. fragmentation of the political landscape and the volatility of voters, classical political parties, in particular, are becoming smaller and smaller. It is becoming harder for them to serve the common good, given their own struggle for survival. Implementing reforms becomes a big electoral risk. Populist parties in power are certainly not reform-minded. A populist wants to be popular.

Our civilisation lives too much in the 'here and now'. Memory and history are increasingly absent. Yet 'history is the teacher of life'. When I read how little young people know about the Holocaust and the way it is thought and especially not thought about, I am almost scared. Twenty-three percent of young Dutch people born from 1980 onwards doubt the persecution of Jews during World War II. It also appears that a third to more than half know little about the genocide. Memory, attachment to the past, knowing our place in time are also, in a sense, values we need.

5. We live in a dangerous world.

The general distrust between the US, China and the EU also contributes to the fact that international institutions now function poorly, such as the G20, the WTO and the UNO. Until recently, the COP conferences on climate change escaped this, but the last one in Sharm-el-Sheikh was not really a success. It would be a miracle if that mistrust were to have an exception, especially for climate. The climate obviously deserves it, given the stakes for the human race, but will it succeed? Nevertheless, international agreements are concluded on bio-diversity and on oceans.

Economic globalisation continues, but it has past its peak. The world is in a process of "geo-economic fragmentation" argues a group of economists from the International Monetary Fund (IMF): a decoupling of economic blocs, reduced trade between them due to higher barriers and drying up of money and investment flows. If fragmentation gets out of hand, the damage could amount to 7 per cent of GDP. The number of trade-restricting measures or new import tariffs increased eightfold in the ten years to 2022.

However, the globalisation of migration, the internet, sports, culture, fashion, music, lifestyle, and women's rights is accelerating. Young people all over the world are looking more and more alike. This will certainly lead to resistance in authoritarian regimes. In that climate, nostalgic nationalism such as Brexit is an anachronism.

Is there a geopolitical rivalry between democracies and authoritarian regimes like the Cold War was a conflict between communism and the free world? Communism itself as an organising principle of a society and an economy is dead even though there are powerful communist parties. The binder between China and Russia is the hostility towards the West, especially with the US.

I don't believe in a replay of the 'Thucydides trap' like the one between Athens and Sparta at the time, the struggle between old and new powers. Besides, the US is far from being ‘old’ or ‘in decline' both economically and militarily; however, the society is deeply divided internally.

However, the dichotomy between democracy and authoritarianism needs a nuanced approach. There are large democracies like India and Indonesia that do not belong to the Western camp. India is, however, strongly anti-China, with which it even has military conflicts. Therefore it belongs to the anti-China Quad group (together with Japan, the US and Australia).

Globally, there is a large group of countries in the world that do not want to take sides in that conflict because they are still living with the colonial trauma, with anti-Western sentiments, but without therefore supporting the war. The group of non-aligned countries that had been formed in Bandung, Indonesia, in 1955 during the Cold War is coming back in an unstructured way but more or less in the same composition. Yesterday's world is not reviving, but some of today's behaviours remind us of it.

To some extent, there is a return to a kind of Cold War, but this time results in a real war. Russia, however, is no longer a geopolitical rival. For that, it is no longer strong enough economically (3% of the world economy, half of which is based on fossil energy with no long-term perspective; the relative part of China is 18,7%, the USA 15,8 and the euro area 12,0%) and Russia has been heavily overrated militarily. The geopolitical rival has become China, with whom Russia has been living in a 'friendship without limits' for more than a year now. In fact, we live in some kind of a bi- polar world with a different composition from what it was before the fall of the Berlin Wall. The war in Ukraine has given the West and NATO a second life. The ‘pivot to Asia’ of President Obama has changed dramatically. There is now also a ‘pivot to Europe’. 

Today's world is dangerous because nuclear war has not been completely ruled out or a nuclear disaster around nuclear power plants.

Tomorrow's world will be more complicated than today's bi-polarity. Climate and demographics will create real shocks in all domains that are unforeseeable today. Domestic developments within today’s leading global countries are an unknown of equal magnitude. No regime or empire or world order is eternal. The implosion of the Soviet Union taught us that. Like everything in contemporary times, everything is moving faster, both rise and fall - even climate change.

I know that Europeans are naturally sceptical of their own institutions. However, when I look around me, I wonder who is in decline. Is the cruel war not a sign of the moral decay of Russia and all who support them? We know little about public opinions that are used to obeying or remaining silent until the bomb bursts. That happened in 1989 and may be repeated elsewhere.

The war in Ukraine is more than a power struggle.

It is a clash of civilisations and a confrontation between two views of humanity, between the value of every human being and the glory of the nation and the state, a confrontation between freedom and obedience. This is why the West is so determined in NATO and the G7.

The war in Ukraine is not over, and so peace is not near. Usually, a war ends in a winner and a loser. It happened after the two world wars or, as recently, in Afghanistan. It is a mistake to think that a war can be stopped by peace negotiations. Usually, those negotiations come after the war itself ends. The other possibility is a de facto 'frozen conflict' that permanently destabilises countries and even prevents them from restarting with reconstruction.

In any case, work needs to be done on Ukraine's candidacy for Union membership. Of course, the required accession criteria must be met, but we must also learn to think strategically and geopolitically. Domestic objections to Union enlargement in the Western Balkans and Eastern Europe outweigh the geopolitical advantage. Geopolitics starts at home, and Europe is our home. If there is a widening of the EU, there must also be a deepening to make it more democratic and efficient in decision-making. War can bring us a stronger Europe. Unfortunately, war is the father of many things, as the ancient Greeks already said, but Herodotos added that war is unnatural because in wartime, fathers bury their sons, and in peacetime, sons bury their fathers.

6. In conclusion

The EU must find its place in this new world economically and politically. Strategically more autonomy is a prerequisite for a geopolitical role. Sovereign but in close cooperation with allies and friends all over the world. We need more of them, by the way. We are not prisoners of the past consumed by nostalgia or revanchism but also without naivety about the true intentions of authoritarianism. To be strong externally, we need stronger societies, stronger citizens and stronger democracies internally.

The end of the EU and the euro has been predicted many times but in vain! The EU caravan moves on. Europeans themselves are convinced that we need  ‘more Europe’ precisely in these dangerous times. I share this conviction. Despite everything, there are plenty of reasons to remain hopeful.


This speech was delivered at the University of Edinburgh on 22 May 2023. The event was co-organised with the Scottish Council on Global Affairs.