Part 1 – REMARKS

On March 15, 2017, The Atlantic Council put together a panel to discuss why it is important for the US that Europe continues growing.

Remarks: Stuart Eizenstat (Former Ambassador to the European Union) Andrea Montanino (Director, Global Business & Economics, Atlantic Council) 

Stuard Eizenstat sustains that a strong Europe is vital to the United States, in terms of job growth and innovation as the EU is the largest recipient of goods and services. Because the EU is faced with significant uncertainties as it is subjected to populism, nationalism, the refugee crisis especially in Greece, the aftermath of the Brexit and the context in which numerous countries are holding elections this year.

The report the Atlantic Council released addresses the challenges of Europe, and the long-term plans for better integration. Several EU member states took right steps in fiscal policy and labor reform, which could be replicated by other countries. This report wants to indicate five main messages, through which the EU can have a positive influence.

To boot, he addresses one of the main issues European politicians have is that of blaming all their problems on Brussels, instead of taking responsibility themselves.

Andrea Montanino wants to point out that the road for Europe has bumps on the way, but it needs a vision and leadership and for actions now. The European economy is essential even for the United States. They are looking at how to achieve better results.

The speaker notes the reason why European Growth is important:

  1. Since the start of the convergence process, EU economy grew by 1% less than the US every year. The differences across are almost the same. Since the outset of the convergence store, the difference has been small. European citizens associated standard currency integration with slow growth as a single currency outcome. More growth is necessary to change the narrative. Political extremism defines unemployment over the next decade.
  2. Youth Unemployment (it is forecast that in future years there will be a significant increase in unemployment) they are trying to avoid a “lost generation.”
  3. Europe is in the middle of all the conflicts (Ukraine- Russia) (The Migration Crisis) (Terror attacks)

Montanino further emphasizes that there is needed to have more economic growth so that leaders gain more political capital and financial resources to handle threats and answer civil unrest. The speaker exemplifies five main reasons to why growth within the EU is essential to the US:

  1. Money – The export of goods and services from the US to its largest trading partners, the 27 EU countries. More growth in Europe means more demand and export for American companies.
  2. It is not just trade but investment that is important. Europe is the biggest investor in the US. More than 40% of US investment abroad have been in Europe. European companies invested massively in the United States. The section that related to EU 27 is nearly 50%. Many enterprises that invested in the US brought skills and technology.
  3. Geopolitical reasons. The EU is a major player in developmental aid. The 27 countries represent 42% of the development aid around the world. Together with the US, they play by far the largest role.
  4. Europe is important for Crisis Management. They need to be the frontline, otherwise, sooner or later the US will need to step in.
  5. There is a need for Global Economic Governance. Globalization shows that problems in a small per say island such as Cyprus has significant implications.

Montanino underlines that the long term ideas are implemented in the new cycle. The European Commission came out with a paper proposing scenarios. Leaders met in Paris, and there is mounting attention concerning providing a new institutional architecture in Europe. In July 2015, President Holland proposed a vanguard of countries that can move forward for more integration. They think it’s time to start thinking about how individual countries can be more integrated and other nations less integrated. They are thinking to move from a European geometry that includes different countries in a variety of ways to a concentric circle.

The inner circle (EFA countries) that move for more integration, in particular, more fiscal integration. The circle will be substantially comprised of countries of the Eurozone. If there is a subset of Eurozone countries should be allowed to join – but there should be different fiscal integration. There is a need to address the benefits of the integration – per say Italy and Germany.

Countries in the inner circle would have a European Fiscal Authority, that will have two main tasks:

  1. To issue common debt for growth – Eurobonds – not to mutualize public debt or finance current deficit but to fund infrastructure, human capital, and research and development. They will show European citizens that the EU is not just a bureaucracy that put rules, but they are giving an actual response.
  2. To manage the joint budget for stabilization purposes. Not just for symmetric shocks but also asymmetric shocks. The freedom to have some resources to stabilize the cycle. To avoid an adverse selection to have poorer countries going in the inner circle, the European Fiscal Authority needs to have the authority to enforce the right measures. It is a significant loss of sovereignty. Fiscal rules as they are today don’t work.

He thinks the EU is a story of success despite all the issues over the years. Europe has shown resilience over the years. There is a need for a long-term plan to start now with a vision and strong leadership.


Synthesis by: Patricia Besciu – all opinions are those of speakers

For more information visit: