'A Europe of Olympic rings' could be the way forward, says Frieden

Thursday was "rentrée" time for members of the British Chamber of Commerce in Luxembourg who met for a lunchtime event on Brexit and the future of the European Union with Luc Frieden.

In his speech, Chairman of Banque Internationale a Luxembourg (BIL), Chairman of Luxemburger Wort and Partner at Elvinger Hoss Prussen, Frieden discussed about the fallout of Brexit, the challenges it imposes and the union's future.   

Frieden referred to British Prime Minister Edward Heath's speech from 1972 when the UK joined the European Economic Community (EEC) and argued that his speech "is especially true today".

It was on 22 January 1972 that the UK Delegation signed the Treaty of Accession to the European Economic Community (EEC) in Brussels. On this occasion, Prime Minister Edward Heath, focused on the new role of the European Community on the international stage.

"Clear thinking will be needed to recognise that each of us within the Community will remain proudly attached to our national identity and to the achievements of our national history and tradition."

"We have all come to recognise our common European heritage, our mutual interests and our European destiny."

"Imagination will be required to develop institutions which respect the traditions and the individuality of the Member States, but at the same time have the strength to guide the future course of the enlarged Community."

Frieden believes that this is indeed the challenge that we are facing now in light of UK's departure from the union. 

While an agreement between the UK and the EU will take place, he warns that the UK-EU relationship will be different. 

Although "the UK will survive", Frieden added that "it will be more difficult for the UK than for the EU in the short run because it will have to build its relations with the EU as Europeans continue to evolve."

And the biggest problem around Brexit is time. 

Agriculture, financial services, trade, the rights of British people, all these need to be discussed and negotiations take time. 

He argued that "we don't have much time to prepare such decisions," given that the UK is set to leave the EU by March 2019.

In addition to this, Frieden outlined that Michel Barnier, the EU's Chief negotiator for Brexit, has to negotiate on behalf of EU27. "This process will be cumbersome, it will take a lot of time and the outcome is uncertain".

“   The UK was never a wholehearted member of the European Union.   

Looking at the future, Frieden highlighted the need to keep good relationships with the UK although access to the single market will no longer be the same.

"It's important  that we, as Luxembourgers, but also as Europeans, continue a partnership with the UK and we find new solutions."

In the meantime, Frieden argued that many companies are aware of the uncertainty that Brexit brings and have already decided to set a bigger foot in the EU to make sure they will continue to have a broad access to the single market.

While "the UK was never a wholehearted member of the European Union" he believes that if a second Brexit referendum were to take place, the result would be different.

Reflection on EU membership

But for Frieden the Brexit debate has also brought "something positive" because "people start to think why are we members of the European Union and what does it mean if we are not in the EU". 

The discussion about EU membership was also reflected in the outcome of the Dutch and French elections where populism failed to convince the electorate.

"It's certain what you get if you are a EU member state, but you don't know what you have if you leave", he argued.

Advocating for a strengthened debate on EU membership in the next two years, Frieden argued that the three key aspects based on which the EU was founded - peace, prosperity and freedom - are still relevant today.

“  No country, no matter how large or small, can resolve the issues of today alone.  

Peace is related to security issues, prosperity translates into the single market and freedom is about building relationships and the liberty to move within the Union.

"The European Union is a Europe of values, it's not just about the economic dimension", he argued, referring to human rights and the rule of law that define the European Union.

How do we build Europe?

He talked about the enlargement of the European Union in 2004 and explained that it wasn't only about uniting the East and the West, but also about increasing the number of players at the negotiation table which changed the nature of the union.

Frieden warned that the EU must define mid and long term objectives together, which must be done step by step because this is how the eurozone and the Schengen agreement have been achieved.

Two-speed Europe

He doesn't "completely agree" with the idea of a two-speed Europe and argued that this would bring a Europe "à la carte".

He is proposing "a Europe of Olympic rings" as an alternative.   

Member states in the first ring would continue to work on integration, security and foreign affairs. 

The second ring would include all member states that want to be in the single market together with the three main pillars on which the single market was founded. 

The third ring would consist of countries such as the UK or Switzerland and the remaining rings would be for more distant countries.

“  We should give Luxembourg the voice it deserves.

Reforms needed

Frieden argued that the Eurogroup must draw the lessons from the financial crisis and make major reforms to economic policies or "the so-called structural reforms".

He is also calling for more harmonised fiscal policies and more aligned economic policies.

He argued that while budgetary policies and fiscal policies are always to fall under national jurisdiction, there will always be room to create alignment on certain topics across member states. He insisted on the need to have a cross-border infrastructure.  

While respecting identities of regions or states is important, Frieden believes the EU must look at common issues such as security or climate because "these issues don't stop at the border of a country". 

And Luxembourg can play an important role in shaping the future of Europe as a reformed union, drawing and shaping rules especially on cross-border issues.

"We should give Luxembourg the voice it deserves" he said.

Luxembourg's role in a reformed EU

Frieden stated that in the future, the Grand-Duchy must remain attractive and offer a friendly environment.

 "We should remain a country in which it's nice to live and make business" he said, outlining that "we have to think cross-border" and "make our voice heard at European level".

He further added that no country, no matter how large or small, can resolve the issues of today alone and that it's important to collaborate.

While Europe must continue to develop and reform, Luxembourg can play a significant role in how the future of the union is being shaped.

"I strongly believe in Luxembourg's role in a strengthened Europe" he said, reminding the audience that the EU is "a democratic construction", that "nobody is forcing member states to stay in the union and that leaders, directly or indirectly, are elected by the public". 

(Roxana Mironescu, roxana.mironescu@wort.lu, +352 49 93 748)