13 March 2013

Beyond the eurozone crisis: the EU and the wider world

Chair: Sir John Holmes GCVO, KBE, CMG

(Berlin mini-conference 2013)

The aim of our discussion in Berlin was to lift our eyes beyond current preoccupations, around both the eurozone’s travails and Britain’s future place in the EU, to identify where the EU could play a bigger international role, and how.  The debate was divided into two halves: political and foreign policy issues, and economic questions. We did not have time to reach neat conclusions but some clear pointers to areas of both agreement and disagreement emerged. Agreement on both aims and methods was much more evident on the economic than the political side.

We were very grateful to the British Embassy, and in particular to the Ambassador, Simon Macdonald, for making the Embassy and Residence available; to the Auswärtiges Amt for their help and cooperation, particularly Wolfram Heinitz; and to State Minister Emily Haber for her stimulating remarks over dinner.

The EU’s political influence in the world

We started on the political side.  How was the EU performing now, and where could it do better?  Initial presentations suggested that, given the scale and depth of the eurozone crisis, the recent international track record was not as bad as might have been feared.  There had, for example, been EU-assisted progress in Myanmar, talks with Iran, and Somalia, and there were hopeful prospects between Serbia and Kosovo.  But the EU was doing much less well with other neighbours, in the east, and particularly the Middle East and North Africa, where the European response to the Arab Spring had often seemed irrelevant.  The European External Action Service (EEAS) was not as ineffective as many claimed, and Cathy Ashton was doing better than many suggested, but their efforts were still not taken seriously by the big countries, including the UK and Germany. They had also been hampered by Commission rivalry. 

One crucial test case for the EU was China.  The Chinese played divide and rule games to great effect because EU countries allowed them to, in search of commercial advantage.  Meanwhile the EU appeared to have no strategy or vision, even though we were inevitably affected by East Asian security fragilities, e.g. over North Korea.  We needed to use our collective bargaining power with the Chinese more toughly and effectively.

None of this was helped by UK semi-detachment, and an apparent German tendency to view foreign policy in some cases through too commercial a lens.  Germany also seemed to have gone backwards in readiness to contemplate the use of force overseas. 

All this added up to a lack of grand strategy and clear vision.  The absence of the common Soviet ‘enemy’ had encouraged member states to pursue their own interests, without bothering about a European world view. The EU was in consequence ill-prepared to deal with big contemporary problems like jihadism and nuclear non-proliferation, let alone the future surprises there would certainly be. EU member states were also still unwilling to take seriously US warnings about the consequences of lack of defence spending.  EU member state spending on diplomacy was also in decline. In other words the EU was not a serious player in many contexts, least of all where security was concerned.  The German response tended to be ‘more Europe’, in this as in other contexts. But what was that supposed to mean in practice?

These initial views prompted a lively debate.  Some asked whether it was at all sensible to expect the EU to have an effective foreign policy in present circumstances, given that it was not a country, like the US, and faced a grave internal crisis.  Others underlined that the EU did need to be able to engage strategically with countries like the US, China and Russia.  In any case the big member states were neither getting it right on their own, for example over Syria and North Korea, nor were they big enough to make a real difference in the world.  So a European foreign policy was needed, not least in an ‘Asian century’. But it was still early days, and expectations should be kept in check.

Some German participants rejected the suggestions that Germany took a more commercial view of foreign policy than other EU member states; or had gone backwards from 10 years ago on the issue of using force.  On the latter, German military participation in Afghanistan and the Balkans had been significant in all senses. But there was agreement that the international use of force did remain a complex issue in Germany: parliamentary and public opinion played a big part in the debate, and was usually reticent, to say the least, about international military involvement.  It was also argued that Germany did want the EEAS to succeed, and had made concrete proposals to this effect, which had not been accepted by others, notably the UK.

Turkey was another country where the EU had difficulty acting collectively and strategically.  This was a pity, since the Turkish role in the world was gaining in importance all the time.  It was good that the accession negotiations had recently made a small move forward, but sooner or later the EU was going to have to make up its mind whether it wanted Turkey in or out.  More widely the EU could still be a transformative power in its neighbourhood, e.g. the Western Balkans, and should not shrink away from this.  The EU still had a lot of soft power to deploy in the Arab neighbourhood too. 

There was also debate about policy towards Russia.  Was Germany now taking a less “starry-eyed” view than in the past, given negative internal developments in Russia and her particularly unhelpful role over Syria?  If so, as seemed to be acknowledged, this would make a coherent EU policy easier.

We agreed that there was a need to focus more on Asia, not least from a security point of view, and that the EU could and should play more of a role than now.  With China, we needed to get away from a tendency to leave difficult stuff like human rights to the EU institutions, while pursuing our commercial interests. And where countries did run into trouble, for example as the UK had over the Dalai Lama, the reaction needed to be solidarity, not schadenfreude.

There was sympathy for the idea that, even if the UK and Germany were likely to continue to differ about use of military force, we shared a commitment to building a rules-based world. This provided some common ground. The EU continued to have significant soft power, despite relative decline and the economic crisis, but was not using it effectively.

Was the E3 model an alternative to a foreign policy at 27, or a way of injecting dynamism into it?  We thought the latter, though clearly not everyone would agree.

The balance of the discussion clearly favoured a bigger EU collective foreign policy role in the world, and a focus on clearer strategies, not least with big bilateral partners. But it was recognised that some areas were always going to be more difficult than others, and that the EU could not behave like a single country when it was not likely to resemble one for many years, if ever. Nevertheless the differences of emphasis were clear, and seemed unlikely to disappear quickly. No-one was particularly optimistic about positive change in the short term.

The EU’s economic role in the world

We recognised that the eurozone crisis was bound to preoccupy members of the eurozone, and indeed the ‘outs’ as well. But the EU could not afford to focus on this to the exclusion of all else.  The real concern was EU competitiveness in the world, and here there were real worries.  Structural challenges were not being addressed, and the Lisbon targets had been comprehensively missed.  As Chancellor Merkel had pointed out, how sustainable was it for the EU, with 7% of the world’s population, to produce 40% of its GDP, and be responsible for 50% of global welfare payments?  In general the EU was stagnating, while other parts of the world were moving ahead.

One concern was whether there was a trade-off between more integration and less global competitiveness – views differed.  There were also fears that the eurozone could head in a more protectionist direction in the future, perhaps reflecting French instincts.  Meanwhile energy was an area where coherent policy was sadly lacking. For example the US was rapidly taking advantage of the cheap energy from the shale gas revolution, while EU member states were still dithering about fracking.

Some speakers suggested we were overdoing European economic gloom.  There were glimmers of light visible, including in the so-called periphery, and we should not either talk ourselves into a crisis, or convince the rest of the world that we were finished.
There was a lot of support for a new EU/US free trade deal, though we recognised the difficulties of this, and for other FTAs to be concluded.  They could help produce the jobs so desperately needed, without extra government spending, at a time where European austerity was producing neither growth nor jobs, and did not look likely to do so for the foreseeable future. This was an opportunity for the EU to create the international economic weather, since so much of world GDP was wrapped up in these potential agreements. Pursuing this could also help internal EU cohesion, including between the UK and Germany.

There was also a lot of support for preserving and extending the European Single Market, particularly in services. In this area above all, eurozone integration should not be at the expense of EU-27 cohesion.

We did not escape debate about the rights and wrongs of the current German-led approach to the eurozone’s problems. Several speakers, including some from the German side, pointed out that general austerity in Europe was unsustainable – we could not expect to be rescued by growth in China, and current policies could never produce 17 Germanies, all able to export their way out of trouble. Meanwhile the incentives for structural reform were reduced if the cheques kept coming. Germany could not achieve at the same time her three current objectives of preserving the eurozone, avoiding a transfer union, and keeping down inflation. Something would have to give.

Others from amongst the German participation pointed out that Germany had done her homework to make herself competitive and expected others to do the same. Spending more government money could not be the right answer to the current problems. But there was a risk of a fundamental Franco-German divergence on these points.

Despite these disagreements, we were able to agree on some basic common aims on the international economic side

  • Keep the focus on competitiveness with the rest of the world, including by reducing entitlement spending
  • Preserve and extend the single market in the EU-27, notably in services and digital products
  • Keep European and global markets open
  • Push for rapid progress on the EU/US/Japan FTAs, and support the Trans-Pacific Partnership too
  • Rethink energy policy
  • Push hard economic links with the big new emerging economies, without undermining each other, and with Africa


CHAIR:  Sir John Holmes GCVO, KBE, CMG
Director, The Ditchley Foundation (2010-); Co-Chair, International Rescue Committee UK (2012-).  Formerly: Under-Secretary-General for Humanitarian Affairs, The United Nations, New York (2007-10); HM Diplomatic Service (1973-2006): HM Ambassador to France (2001-06); HM Ambassador to Portugal (1999-2001); Private Secretary to the Prime Minister Tony Blair (1997-99); Private Secretary to the Prime Minister Sir John Major for Overseas Affairs (1996-97); Head, European Union Department (External), Foreign and Commonwealth Office (1995-96).  A Member of the Board of the American and Canadian Ditchley Foundations.


Mr Camille Grand
Director, Foundation for Strategic Research (2008-). Formerly: Deputy Director of Multilateral Affairs and Disarmament, Ministry of Foreign and European Affairs (2006-2008); Deputy Diplomatic Adviser to the French Minister of Defence (2002-2006); Special Adviser on Nuclear Policy, Strategic Affairs Department, Ministry of Defence, Paris (1999-2002). Author focusing on European security and nuclear policy.

Dr Thomas Bagger
Head of Policy Planning, German Federal Foreign Office, Berlin (2011-).  Formerly: Head of Foreign Minister's Office, (2009-2011); postings to Washington DC (2006-09), Ankara (2002-06) and Prague (1996-98); Research Associate, Institute of International Affairs (SWP).
Mr Thorsten Benner
Co-founder and Director, Global Public Policy Institute (GPPi), Berlin (www.gppi.net).
Mr Wilhelm Bonse-Geuking
Chairman, BP Europe SE.  Formerly: Group Vice President BP Europe; Chairman, Foundation Charlemagne Prize Aachen.
Dr Ruprecht Brandis
Director External Affairs Germany and Head of External Affairs Office Berlin, BP Europa SE (2010-). Formerly: Senior Political Adviser External Affairs and Deputy Head of External Affairs Office  Berlin, BP Europa SE (2004-2009); Lawyer (1989-1990 and 2001-2003); Federal Chancellery (1996-2000); Federal Ministry of Economics (1990-1992, 1993-1996); German Embassy, Washington DC (1992-1993).
Mr Robert Dölger
Head of Near East Division, German Federal Foreign Office.
Mr Paul Freiherr von Maltzahn
Executive Vice President, German Council on Foreign Relations (DGAP).  Formerly: Ambassador, Minister-Counsellor at German Embassy, London (1996-2000).
Dr Arndt Freytag von Loringhoven 
Deputy Director General for European Affairs, Federal Foreign Office.  Formerly: Vice-President, German Federal Intelligence Service (BND) (2007-10); German Diplomatic Service: Head, Political Department, Embassy of Germany, Moscow (2002-05); European Correspondent, German Federal Foreign Office; Speech Writer for the Minister of Foreign Affairs.
Dr Ulrike Guérot
Senior Policy Fellow and Representative for Germany, European Council on Foreign Relations. Formerly: Head, European Council on Foreign Office Relations, Berlin; Senior Transatlantic Fellow, German Marshall Fund.
Dr Emily Haber
State Secretary of the Federal Foreign Office (2011-).  Formerly:  Federal Foreign Office (1984-); Political Director (2009-2011); Ambassador, Deputy Director-General, South-Eastern Europe (2006-2009); Head of the OSCE Division, Commissioner for Conflict Prevention and Crisis Management in the Euro-Atlantic Framework (2002-2006);Head of Political Affairs, German Embassy, Moscow; Head of Economic Affairs, German Embassy, Moscow; Deputy Head of the Parliament and Cabinet Division; Head of Cultural Affairs, German Embassy, Ankara.

Ambassador Dr Hans-Dieter Heumann
President, Federal Academy for Security Policy, Berlin (2011-).  Formerly: Permanent Representative of the Federal Republic of Germany to the Council of Europe (2009-2011); Visiting Professor, Georgetown University, Washington and Transatlantic Fellow at the German Marshall Fund; Minister, Political Department, German Embassy, Washington (2005-2008); Minister, German Embassy, Paris (2000-2004); Head of Division (NATO) Policy Planning, Ministry of Defence (1998-2000); Federal Foreign Office (1980-1998).
Dr Ronja Kempin 
Head of Research Division, EU External Relations, German Institute for International and Security Affairs. Formerly: Fritz Thyssen Fellow, Weatherhead Center for International Affairs, Harvard University (2009-2010); Senior Associate, Research Division International Security, German Institute for International and Security Affairs (2002-2009); Research Fellow at the Copenhagen Peace Research Institute (COPRI) and the Institut des Relations Internationales et Stratégiques (IRIS) in Paris (2001-2002); Research Fellow at the German Bundestag (1999-2000).
Mr Hubert Knirsch 
Head of Division, International and Economic Policy, Department for Economics and Sustainable Development, German Federal Foreign Office.
Mr Peter Littger 
Chairman, King Edward VII Foundation (London) and König Eduard VII. Britisch-Deutsche Stiftung (Hamburg), (www.KE7.net).  Country Director Germany, Innovation Media Consulting, London.
Dr Hans-Dieter Lucas
German Federal Foreign Office: Political Director (2011-).  Formerly: Representative of Germany to the Political and Security Committee of the European Union, Brussels (2010-11); Special Envoy for Eastern Europe, Caucasus and Central Asia; Head of Division, Bilateral Relations with the States of Central, Eastern and South-Eastern Europe, Central Asia and Transcaucasia, Federal Chancellery, Berlin.
Dr Hartmut Mayer 
Official Fellow and Tutor in Politics, St Peter's College, University of Oxford.
Dr Claudia Schmucker 
Head of Program, Globalization and World Economy, DGAP German Council on Foreign Relations (2001-).
Mrs Claudia Schur
Public Affairs Manager, the office of Mr Stephan Mayer, Member of the German Bundestag and Chairman of the German-British Parliamentary Group (2010-) and Deputy Manager of the Europe Union Berlin.  Formerly: Managing Editor, Zehnder Verlag, Switzerland.

Dr Constanze Stelzenmüller
Senior Transatlantic Fellow (2009-), formerly Director, Berlin Office (2005-09), German Marshall Fund of the United States.  Formerly: Die Zeit: Defence and International Security Editor (1998-2005), Correspondent on Human Rights, Refugee Crises and the UN (1994-98).  A Governor, The Ditchley Foundation.
Professor Michael Stuermer 
Chief Correspondent, Die Welt and Welt am Sonntag (1998-); Professor Emeritus of Medieval and Modern History, Friedrich-Alexander-Universität, Erlangen-Nürnberg (1973-); Member, German Advisory Council, J P Morgan Bank (1990-). Formerly: Adviser, Common Foreign and Security Policy, EU Commission, DG1A (1993-98); Neue Zürcher Zeitung and Financial Times (1994-98); Director, Stiftung Wissenschaft und Politik, German Institute for International and Security Affairs (1988-98); Columnist, Frankfurter Allgemeine Zeitung (1984-94). Author.
Mr Wolfram von Heynitz 
Research Commissioner of the Federal Foreign Office and member of its Policy Planning Staff (2008-). Formerly: private Office of the Minister for European Affairs, Office of the Federal President; postings to Azerbaijan (1999-2002, Deputy Head of Mission) and Israel (2005-2008); lecturer in philosophy at the Free University of Berlin (1990-1995).
Mr Gebhardt von Moltke 
Chairman of the Board, Deutsch-Britische Gesellschaft, Berlin; Formerly: German Foreign Service (1968-2003); Ambassador/Permanent Representative of Germany, NATO Council, Brussels (1999-2003); Ambassador to the UK (1997-99);  Assistant Secretary General, NATO, Politcal Affairs, Brussels (1991-97); Head, US-Section, Foreign Office, Bonn (1986-91); Washington Embassy (1982-86); Yaunde/Cameroon Embassy (1975-77); Moscow Embassy (1971-75).
Baron Dr Hermann von Richthofen GCVO 
Formerly: Chairman, German-British Association (1999- 2004); Co-Chairman, British-German Königswinter Conference (1999-2004); Ambassador to the UK (1988-93); Permanent Representative of the Federal Republic of Germany to North Atlantic Council;  Political Director, Foreign Ministry (1986-88).  An Honorary Governor, The Ditchley Foundation.
Professor Antje Wiener PhD AcSS
Professor of Political Science and Global Governance, University of Hamburg.

Mr Pawel Swieboda
Founder and President, demosEuropa, Centre for European Strategy (2006-).  Formerly: Director, Department of the European Union, Polish Ministry of Foreign Affairs (2001-06); Head, Office for European Integration, Office of the President (2000-01); Advisor to the President of Poland on EU issues (1996-2000).

Mr Mats Persson 
Director, Open Europe (2010-); advisory board member of Open Europe Berlin gGmbH. Formerly: political consultant, Washington DC.

The Lord Aldington
Trustee, Institute for Philanthropy (2008-); Vice President, National Churches Trust (2008-); Trustee, Royal Academy Trust (2003-); Chairman, 2019 Committee, New College, Oxford.  Formerly: Chairman, Deutsche Bank London (2002-09); Chairman, Stramongate Ltd (2007-11); Member, Chairman's Committee, British Bankers' Association (2003-09); Member, Council of the British-German Chamber of Commerce and Industry (1995-2008).  A Governor and a Member of the Business Committee, The Ditchley Foundation.
The Rt Hon Douglas Alexander MP 
Member of Parliament for Paisley and Renfrewshire South and Shadow Secretary of State for Foreign and Commonwealth Affairs.  Formerly: Secretary of State for International Development (2007-2010); Secretary of State for Transport and Secretary of State for Scotland (2006-2007); Minister of State for Europe (2005-2006);  Minister of Trade, Investment and Foreign Affairs (2004-2005); Minister for the Cabinet Office and Chancellor of the Duchy of Lancaster (2003-2004); Minister of State at the Cabinet Office (2002-2003); Minister for e-Commerce and Competitiveness at the Department of Trade and Industry (2001-2002).
Sir Michael Arthur KCMG 
UK Chairman, Koenigswinter. Formerly HM Diplomatic Service (1972-2010); Ambassador to Germany (2007-2010).  Formerly: British High Commissioner, New Delhi (2003-07); Director General, EU and International Economic Issues (2001-03); Minister and Deputy Head of Mission, Washington DC (1999-2001); Director, Resources (1997-99); Political Counsellor and Head of Chancery, Paris (1993-97).
Mr David Davies MP
Member of Parliament for Monmouth.  Chair, All-Party Parliamentary British-German Group.
Mr Alexander Ellis
HM Diplomatic Service (1990-); Director for Strategy, Foreign and Commonwealth Office. British Ambassador to Brazil from July 2013. Formerly: Ambassador to Portugal (2007-10); Adviser to the President of the European Commission (2005-07).
Mr Simon Gallagher 
Counsellor EU/Economic, British Embassy, Berlin.
Mr Charles Grant CMG 
Co-Founder and Director, Centre for European Reform (1996-); Member, International Council, Terra Nova; Advisory Board Member, Moscow School of Political Studies; Advisory Board Member, Centre for Economic and Foreign Policy Studies, Istanbul.  Formerly: Board Member and Trustee, British Council (2002-08); Defence Editor and Brussels Correspondent, The Economist.  Chairman of the Programme Committee and a Governor of The Ditchley Foundation.
Mr Hans Kundnani
Editorial Director, European Council on Foreign Relations.
Sir Michael Leigh KCMG
Senior Adviser, German Marshall Fund of the United States.  Formerly: Director General for Enlargement, European Commission, Brussels; Deputy Director General (European Neighbourhood Policy, Eastern Europe, Southern Caucasus, Central Asia), Directorate-General for External Relations (2003-06); Director (Turkey, Bulgaria, Cyprus, Malta, Romania), Directorate-General for Enlargement (2000-03).
His Excellency Mr Simon McDonald CMG
HM Diplomatic Service (1982-): British Ambassador to the Federal Republic of Germany in October (2010-).  Formerly: Prime Minister's Foreign Policy Adviser and Head of Foreign and Defence Policy, Prime Minister's Office (2007-2010); Director, Iraq, Foreign and Commonwealth Office; Ambassador to Israel; Principal Private Secretary to the Foreign Secretary; overseas postings including Washington and Riyadh.
Mr Andrew Noble 
Deputy Head of Mission, British Embassy, Berlin.
Mr Quentin Peel 
Chief Correspondent, Berlin, Financial Times.  Formerly:  Financial Times:  International Affairs Editor (1998-2010); Foreign Editor; Correspondent in Johannesburg, Brussels, Moscow and Bonn.
Mr John Peet
Europe Editor, The Economist.  Formerly: Business Editor; Brussels Correspondent; Executive Editor; Finance Correspondent; Washington Correspondent; Britain Correspondent.
Ms Sarah Puntan-Galea 
Deputy Director, The Ditchley Foundation.  Formerly: Political Attaché, British High Commission, Malta; Editor, The Sunday Times of Malta magazine; Columnist, Economic Update; Assistant Editor, The Sunday Times of Malta; Political Correspondent, The Independent of Malta; Deputy Editor, Unilever in-house publications; Assistant Producer, Sky TV; President, Liverpool Guild of Students.
The Rt Hon Lord Robertson of Port Ellen KT GCMG Hon FRSE 
Deputy Chairman, TNK-BP; Adviser, Cable and Wireless Communications plc; Senior Counsellor, The Cohen Group, Washington DC; Joint President, Atlantic Council of the UK; Chairman, Commission on Global Road Safety (2006-); Joint President, Chatham House (2001-2012). Formerly: Secretary General, NATO and Chairman, North Atlantic Council (1999-2003); Secretary of State for Defence (1997-99); Member, House of Commons (1978-99).  Chairman of the Council of Management, The Ditchley Foundation.
Mr Hugo Shorter
Head of Europe Directorate-External Department, Foreign and Commonwealth Office.  A career diplomat, recent postings include Paris and Brasilia.
Mr Philip Stephens 
Associate Editor and Chief Political Commentator, Financial Times.  Formerly: Financial Times: Economics Editor, Political Editor and Editor, UK Edition; Correspondent, Reuters, London and Brussels; Author.  A Governor and Member of the Council of Management, The Ditchley Foundation.

Mr Seth Winnick
Minister Counselor for Economic Affairs, United States Diplomatic Mission to Germany.