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Udenrigsministerens tale på Columbia University

Udenrigsministeren holdte tale på Columbia University mandag den 23. september: “Reforming Europe Out of the Crisis to get Jobs and Growth – Nordic and Danish Perspectives and Solutions”

Ladies and gentlemen, honored guests, academic staff and students. First and foremost thank you for inviting me to speak here today at the School of Global Economic Governance. It is an honor and a pleasure.

With such a broad academic field I could speak about many things. But I think in this moment in time, it is interesting for you to hear about the state of play in the European economy and how we have responded to the crisis in a way that has made Europe emerge both sounder and stronger. Also, I will use this opportunity to tell you about how Denmark is approaching the jobs and growth agenda and how this has served us very well during the last years of economic difficulties.

But first, let me pause a short moment on the global developments which have changed the political and economic framework. A lot has happened since the fall of the Berlin Wall. New powers have moved into the fray. New challenges have emerged. Global competition has become more fierce and the Western

world is no longer the innovative force by definition. On top of all this, climate change has proven to be a major challenge that we need to take very seriously.
Despite setbacks and troubles, the world today is a better place than it was 50 years ago. Democracy and freedom has progressed, and human rights are spreading. In many countries, people have seen economic growth and improved social conditions. Millions of people have escaped poverty and international trade flows reach wider than ever before. These are all necessary components of global progress, as security, political stability, economic progress and development go hand in hand.

In this changed global setting, the transatlantic relationship has proven its worth and demonstrated its tenacity. Individually and together, Europe and the US have played key roles in promoting such developments, inspired by our own democracies, our common values and not least the progress we have made in our home countries. In this new multipolar world, Europe and the US together make up an inescapable balancing force in both political and economic developments.

In this setting of almost constant progress, I think it is fair to say that we were all unprepared for the hardship that hit us as a result of the financial crisis. In Europe, we had come to take our welfare models and relative wealth for granted. Suddenly, this had to change.

As the crisis evolved, it was clear that deep reforms were needed not only in the form of surveillance mechanisms and stronger economic coordination but also in the structure of our individual economies. In many countries, the normal way of life was threatened. People all over Europe have experienced hardship and tough times. And across Europe, our solidarity is put to a test. Politicians in every country had to demonstrate strong leadership and make necessary but unpopular policy choices. Only this way could we prevent the crisis from spreading and pave the way for a return to sound public finances. And thereby achieve our main goal – to create more growth and jobs.

I know that Europe has often been criticized for doing too little too late. But I actually believe that what we have done has been rather impressive! The nature

of European decision making is not lean and swift. The European Union is made up of 28 countries. And this means 28 parliaments and 28 peoples who had to make tough policy choices while unemployment skyrocketed and the value of ordinary people’s savings evaporated.

And yet we did manage to make important and significant reforms: We have introduced new financial regulation and is currently working on developing a banking union inside the EU. We are expanding and refining the internal market to help businesses grow and create new jobs across Europe. We have strengthened our economic surveillance mechanism and tightened and expanded our economic cooperation. And we are carefully prioritizing our resources so that we do not strangulate growth and employment in our efforts to consolidate our economies.

Last month, we saw the first signs of the Eurozone emerging from the crisis. This is wonderful news, but it is not yet time to rest on our laurels. We must stay focused on implementing the reforms we have agreed on, and on maintaining economic discipline. We still have a long way to go to restore acceptable employment levels and regain our competitiveness.

This is where the Danish experience is very relevant. Just like the other Nordic countries, we have had our welfare model for many decades. And it has clearly demonstrated that low taxes and unregulated markets is not the only way to economic growth. Some of you may have read The Economist’s recent feature article on this.

In short, the Danish welfare model is a system where high taxes provide the funding for relatively high unemployment benefits, free education from kindergarten to graduate school, a generous child and family policy, comprehensive care for disabled or socially marginalized citizens, and free, universal and equal access for all Danes to our health care system. The idea is that everyone contributes according to ability and benefits according to need. We have a very high level of tax income relative to GDP and one of the largest income distributions. Put in a different way, it is difficult to become very rich but even harder to become very poor.

Still, Denmark consistently ranks among the most competitive nations in the world. Our workforce is well-educated and Danes switch jobs and start new business at rates far above those in other welfare states. This is often attributed to the success of our Flexicurity system that combines flexible rules for hiring and firing with financial security in case of unemployment, all of which takes place within a framework of an active labor market policy.

Despite the relative success of the Nordic and Danish model, we know that we have to keep reforming in order to stay competitive and maintain our welfare system. My government has done just that, but we have tried to do it in a way that maintains Denmark as a socially inclusive and egalitarian society. The main aim of the reforms have been to secure our prosperity and welfare model on a high level. It has not and is not easy – but is has to be done.

Just like we have shown that economic and social policies can successfully go hand-in-hand, Denmark has also proved that economic and environmental policies can complement each other. Since 1980, our economy has undergone a green transition and we have become a global leader in the development of new sustainable technologies and solutions. Meanwhile, our economy has grown by almost 80 pct. while our energy consumption has remained constant and our CO2-emissions have been reduced. So don’t let anyone fool you: Being green doesn’t have to mean giving up economic growth! We continue to pursue the green agenda and are aiming at being completely independent from fossil fuels by 2050. Our green policies are thereby helping both our economy and the climate and environment. It is also good for our health – about half of all the Copenhageners bike to work or other activities daily.

As a small open economy, we are strong believers in free trade and level playing fields for our businesses across the world. So for many years, we have been pushing for an EU-US free trade agreement. The Transatlantic Trade and Investment Partnership has huge potential. This is why we should strive for a quick and ambitious outcome of the ongoing negotiations.

The figures speak for themselves. Together we have more than 50 pct. of the global GDP. 2/3 of top research and development companies are located in our countries. And we trade for more than 650 billion US dollars each year. But calculations show that our exports to each other could increase by two-figured percentages if an agreement is reached.

This alone is reason enough to be ambitious. But another reason is that an agreement will further align our standards and regulation and ensure more mutual recognition. Given the size of the transatlantic market, this will inspire others and pretty much dictate global standards. In this world with new rising economic powers, this is in our strong interest! None of us could do that alone. We both need each other!

A strong transatlantic relationship is crucial for us to improve, develop and safeguard our economies and societies. The crisis has demonstrated to all Europeans the value of standing by each other and the importance of being big. These are considerations that should also guide us in the trade negotiations between the US and Europe.

Standing together, we have much greater impact globally. This is true economically and politically. The world needs our leadership to ensure that we continue the progress I mentioned in the start of my speech so the world develops in a peaceful, sustainable and socially acceptable way. It can be done, let’s make it happen.
Thank you.