 Thank you very much, Mr. Chairman My task is really complicated because this panel has been cleverly designed to be extremely cyclical There's an economist and the political scientist and then another economist So the kind of the kind of political science view gets squeezed into The economists view and that's not trivial because in in economics things are clear Many economists know what is right and what is wrong, but in political science the basic message is there is no right and wrong It's very diffuse. It's about perceptions is about Dynamics of processes it's about Leadership and followership and all of these can be theorized about but not to the precision Of economic reasoning so what I would like to do briefly Is speak a little bit about the politics of rescuing the euro because I believe that there is a great Dose of politics in there. It's not just the question. When do policymakers begin to apply what is already known And when they when do they begin to draw the right conclusions from the evidence that is there In politics and in political science we know that evidence-based politics is just another one of those terms To control veto players in there really very rarely politics and political decisions are basically And exclusively funded on evidence mostly they are based on circumstance much more than anything else Now in the fall of 2011 after the summer break of 2011 You you saw a shift in the debate about how to approach the euro crisis over the midterm From an approach that said we would basically we need technical instruments and we need to apply them fine-tuned to the current Depth or pressure of the crisis the debate shifted towards the idea to say we may need more In terms of governance in terms of rules and in terms of processes in order to solve the issue over the longer term And this came very late in the debate and why did it come so late? A because it raises some uncomfortable questions and B it does require policymakers to step out of the rhetoric And the narratives they had established in the crisis so far In general deeper political integration to save the euro which is the key word there Which is also a mantra for saving the fundamental ambition of the integration project or of the European project Is driven by three recognitions of previous non-recognition First one is policymakers had underestimated the longer term implications of economic globalization And how that would change the environment in which they would be deciding How that would change external actors impacting on their choices with a speed and a power that they had not factored in Because they were not part of the political decision-making process B it was the recognition that one had overlooked the low convergence on economic and fiscal governance Actually the low convergence on public governance inside the eurozone The idealistic or maybe you could say naive expectation of the Maastricht Treaty was that the treaty in itself And the common currency in itself would bring about a fundamental re-evaluation of the way in which public affairs would be run in member states In order to not only at a certain point but to continuously be able to perform and exist under the regime of the Maastricht Treaty And the pacts and agreements that followed it 20 years were lost in this non-recognition Understandably so because the focus was on meeting the criteria first and afterwards enjoying the benefits for another decade It was in many parts of the union not seen that already as part of the preparation of EMU the EU had already strengthened Its transfer quality transfer systems were much expanded and politically the union existed on the argument of solidarity There was an underestimation of the civic dimension of this process It was widely believed that also in the countries of the south The pull of economic efficiency and monetary stability would pull along the entire public sector and the entire relationship between the citizen and the state And it was underestimated that this relationship in a number of countries most notably in Greece was deeply disturbed or was deeply out of touch with the social, political and economic realities of that country at the time it entered and existed under the euro And thirdly as we have seen in these over 20 summits since the beginning of the crisis The processes, the patterns, the cleavages of negotiations among member states were underestimated It became clear that the initial argument of the Maastricht Treaty there can be no bailout in a system which has sovereign actors as members Shifted towards the recognition possibly you can only sustain a no bailout policy if members are not sovereign But as long as they are sovereign and as long as you are tied in this kind of political historic argument about putting your destiny together and practicing solidarity No bailout wasn't simply sustainable any longer And the crucial point in many of these negotiations then became what the economists call moral hazard Or put in another way the lack of trust among members in the reliability of their messages of their signatories to agreements And fundamentally the lack of trust in compliance with the system at large Now two options out of that following this line that has developed since the fall of 2011 up to the summit that is concluding today The one option to go ahead along these lines of deeper integration is what I would call the backdoor option It is what has been practiced since September 2011 is the six pack is part of it Gradually strengthening the ability of joint processes to have impact on member state decisions Reversing the decision making sequence on sanctions Creating more permanent institutions instead of ad hoc guarantee packages as a means to reinforce what was already put down in the agreements before Or in the latest phase conceiving a banking union thus reversing a decision of earlier periods where the London authority was established And it was denied all of the competences and powers that it would have had to have if it was to be an effective complement for the European Central Bank to watch the European banking landscape The political approach was to step by step move into a direction that would prepare member states to consider their sovereignty over national spending as limited And as more limited as it already was under the treaties and engage in a practice of actually adhering to joint processes such as the European semester And at the same time to gradually get a public which particularly in the so-called north of the European Union is skeptic about transfers In a skeptic and largely also ignorant about the degree to which they already committed to a transfer scheme get used to the fact that governance will have more of a Brussels aspect to it Will be less country A reminding countries BC and D with some robust instruments that it has obligations but rather shifting towards a process where countries A, B and C together would assess the situation and then take decisions This small step approach this bypassing the public skepticism strategy and this idea of kind of sliding slowly into deeper integration that's what I call the backdoor option The four presidents have not really departed from that strategy if they had I will argue in a minute their last package on democratic accountability would have had to be much more explicit and much more thought through than these few rather trivial lines that end their report Their approach I read mostly as putting the label front door onto the backdoor Now what's then the front door option that the four presidents are seemingly taken but while staying in line of this incremental process Clearly the front door option is to say we're at a point where we have exhausted the incremental logic of the previous process and where we need to build a political union if we want to sustain the European project In a fiscal union is not identical a fiscal union is part of a political union That's one of the points of departure I have with the president's reports The political union is not an appendix to fiscal union but fiscal union functions within a political union that's essentially what political union is about It means to actually pool the sovereignty of member states about their spending In particular about the deficit spending that they run Built on the argument that this sovereignty of national parliaments has effectively been lost already Most visibly in the countries in deep crisis Less visibly but actually also the case in the countries such as the Netherlands, Austria, Finland or Germany for that matter Political union would be about to pool sovereignty in order to overcome this lack of northerness in the European Union That one very strong group in the EU believes is at the root of the problem And northerness should not bear any flags or names but should mean reliability Rule-based procedures, effective administrations, a modern welfare state that has a sustainable financial base A civic culture of reliability and of engagement This is what I believe is the political project of political union And it will then take its most visible element in the pooling of sovereignty over national spending Now such an approach means an entirely different discourse about what Europe is Because it would require over the term of the next three to five years a major treaty revision With major debates in member states about ratification With constitutional changes in member states because of the limitation of the sovereignty of national parliaments And it would require referenda possibly also in member states that previously have not had one This last weekend, Wolfgang Scheubler, the German Finance Minister came out with an observation exactly into that direction Saying that he would sometime ago not have believed that he would have seen something but now he believes it's closer than he had ever thought before In such a discourse policy makers need to be arguing in a much different way It is not about transferring sovereignty to Brussels That is about getting back sovereignty as a collective process Because we are all Brussels It's not Brussels is not a third entity like it is often portrayed Because then you can put the blame on Brussels but Brussels is us But in another aggregation It would mean to openly communicate the shortcomings of your decisions Ever since the Maastricht Treaty no single revision, no single major decision has been sold on its true merits They have all been oversold Just as every summit is, that's public policy Has a tendency to be oversold as the solution to a problem until the next summit comes It is in a way a make or break scenario that policy makers would fail They would have to argue against the tide of public opinion To wage a major reconsideration of the European Union at a time when the diffuse support to the Union is at its low I think that's at the same time the opportunity You can lose it and I don't make any predictions whether such a battle could be won or not But it seems to me that if you want to renew the idea of the European project of European solidarity And combine it to the idea of a modern effective efficient, in that sense, northern European Union You've got to go that way. Thank you very much