General Market

Text adopted – EU strategy for liquefied natural gas and gas storage – P8_TA-PROV(2016)0406 – Tuesday, 25 October 2016 – Strasbourg – Provisional edition

The European Parliament,

–  having regard to the Commission communication of 16 February 2016 on an EU strategy for liquefied natural gas and gas storage (COM(2016)0049),

–  having regard to the Commission communication of 25 February 2015 entitled ‘A Framework Strategy for a Resilient Energy Union with a Forward-Looking Climate Change Policy’ (COM(2015)0080) and the annexes thereto,

–  having regard to the 2030 Energy Strategy, as outlined in the Commission communication of 22 January 2014, ‘A policy framework for climate and energy in the period from 2020 to 2030’ (COM(2014)0015),

–  having regard to the Commission communication of 23 July 2014 entitled ‘Energy Efficiency and its contribution to energy security and the 2030 Framework for climate and energy policy’ (COM(2014)0520),

–  having regard to the Fifth IPCC assessment report – Working Group I report, ‘Climate Change 2013: The Physical Science Basis’,

–  having regard to Directive 2014/94/EU of the European Parliament and of the Council of 22 October 2014 on the deployment of alternative fuels infrastructure(1) ,

–  having regard to the Paris Agreement reached in December 2015 at the 21st Conference of the Parties (COP 21) to the United Nations Framework Convention on Climate Change (UNFCCC),

–  having regard to the Commission communication of 15 December 2011 on the Energy Roadmap 2050 (COM(2011)0885),

–  having regard to the Commission communication of 8 March 2011 entitled ‘Roadmap for moving to a competitive low-carbon economy in 2050’ (COM(2011)0112),

–  having regard to the Third Energy Package,

–  having regard to the Commission communication of 16 February 2016 entitled ‘An EU Strategy on Heating and Cooling’ (COM(2016)0051),

–  having regard to Directive 2012/27/EU of the European Parliament and of the Council of 25 October 2012 on energy efficiency, amending Directives 2009/125/EC and 2010/30/EU and repealing Directives 2004/8/EC and 2006/32/EC,

–  having regard to the Special Report No 16/2015 of the European Court of Auditors, ‘Improving the security of energy supply by developing the internal energy market: more efforts needed’,

–  having regard to its resolution of 15 December 2015 entitled ‘Towards a European Energy Union’(2) ,

–  having regard to Rule 52 of its Rules of Procedure,

–  having regard to the report of the Committee on Industry, Research and Energy and the opinions of the Committee on Foreign Affairs, the Committee on International Trade, the Committee on the Environment, Public Health and Food Safety and the Committee on Transport and Tourism (A8-0278/2016),

A.  whereas gas can play an important role in the EU energy system for the coming decades, in industrial production and as a source of heat in buildings and as a support to renewable energy while the EU meets its targets on greenhouse gas emissions, energy efficiency and renewables and makes the transition to a low-carbon economy in which the role of gas will gradually decrease in favour of clean energies;

B.  whereas natural gas is a fossil fuel that can emit significant amounts of methane along its life cycle (production, transport, consumption) if not managed properly; whereas methane has a global warming potential significantly higher than CO2 on a 20-year timescale and thus has a considerable impact on climate change;

C.  whereas the European Union is committed to reducing greenhouse gas emissions to 80- 95 % below 1990 levels by 2050;

D.  whereas European gas import dependency in the upcoming years is expected to grow, and in certain Member States has already reached 100 % in cases where there are no or limited numbers of alternative suppliers or supply routes;

E.  whereas liquefied natural gas (LNG) presents an opportunity for Europe in terms of both increasing competitiveness by exerting downward pressure on natural gas prices and increasing security of supply; whereas natural gas is also a flexible backup to renewables in electricity production;

F.  whereas using natural gas in transportation (CNG and LNG), as provided for by Directive 2014/94/EU on the deployment of alternative fuels infrastructure, would generate great environmental benefits;

G.  whereas the EU should actively pursue the development of its domestic conventional gas resources, such as those discovered in Cyprus;

H.  whereas the EU, as the second largest LNG importer in the world, should play a more proactive role in the international energy diplomacy arena;

I.  whereas it is important to promote an integrated proposal for the use of indigenous energy sources, such as natural gas deposits in the Cyprus EEZ, and to support the creation of a LNG liquefaction terminal in Cyprus in order to exploit deposits from neighbouring areas also;

J.  whereas the EU is still not able to fully exploit the benefits of an integrated internal energy market, owing to a lack of sufficient interconnections and coherence and the incomplete implementation of the Third Energy Package;

K.  whereas the framework strategy for a resilient Energy Union with a forward-looking climate change policy defines five mutually reinforcing and closely interrelated dimensions, namely: energy security; a fully integrated European energy market; energy efficiency; decarbonisation of the economy; and research, innovation and competitiveness; whereas the strategy should also promote affordable energy prices for all;

Introduction

1.  Welcomes the Commission communication entitled ‘An EU strategy for liquefied natural gas and gas storage’; believes that an internal energy market which fully integrates LNG and gas storage will play a significant role in achieving the ultimate objective of a resilient Energy Union;

2.  Recalls that the EU strategy for LNG and gas storage is one element of the Energy Union, which aims to gives concrete expression to the EU’s ambition to bring about a quick transition to a sustainable, secure and competitive energy system, and also aims to end dependence on external gas suppliers; stresses that one of the goals of the Energy Union is to make the EU the world leader in renewable energies;

3.  whereas, in line with the COP 21 Paris Agreement, the EU gas policy needs to be adapted to comply with the concluded goal of limiting the global temperature rise to 1.5°C above pre-industrial levels; whereas gas is expected to continue to play a role in the EU energy system until 2050 when, in accordance with the Paris Agreement and the EU Energy Roadmap, greenhouse gas emissions will have to be reduced to 80-95% below 1990 levels, especially in industrial production and as a source of heat in buildings; whereas the role of gas will diminish and needs to be phased out in the long term as the EU meets its ambitious targets on greenhouse gas emissions, energy efficiency and renewables and makes the transition to a sustainable economy;

4.  Is of the opinion that energy security can be achieved in the most efficient way through better coordination of national energy policies, the establishment of a real Energy Union with a single energy market, and a common energy policy, as well as through cooperation among the Member States on the matter in accordance with the principles of solidarity and trust; believes, in this context, that further integration of energy policy should be for the benefit of the Member States, in line with EU targets and international obligations as well as with the stated objectives, and should not conflict with the interests of the Member States or their citizens; supports the efforts to forge a common EU position in multilateral energy institutions and frameworks;

5.  Considers that all EU citizens must have access to a secure and affordable energy supply; highlights, in this context, current developments in global LNG markets, where oversupply has led to lower prices, presenting an opportunity to deliver lower energy costs to EU consumers through relatively cheaper gas supplies; stresses that safe, affordable, sustainable energy is a key driving force in the European economy and is essential for industrial competitiveness; calls for the EU and its Member States, as part of the EU energy strategy, to give priority to eliminating energy poverty, and to enhance energy supply through the sharing of best practices at EU level;

6.  Stresses that an EU strategy for LNG must be consistent with the framework strategy for a resilient Energy Union, so as to contribute to increased security of energy supply, decarbonisation, the long-term sustainability of the economy and the delivery of affordable and competitive energy prices;

7.  Agrees with the assessment of the Commission that Member States in the Baltic Sea region and in central and south-eastern Europe, and Ireland – despite the huge infrastructure development efforts realised by certain Member States – are still heavily reliant on a single supplier and are exposed to supply shocks and disruptions;

8.  Acknowledges that the availability of LNG, including supporting pipeline infrastructure, in these Member States could significantly improve the current supply security situation not only in physical but also in economic terms, contributing to more competitive energy prices;

9.  Urges the Commission and the Member States to promote and incentivise a more efficient and better use of existing infrastructure, including gas storage;

10.  Draws attention to the potential of power-to-gas technology to store renewable energies and to make them usable as carbon-neutral gas for transport, heating and power generation;

11.  Stresses the need to make the EU gas system more diverse and flexible, thus contributing to the key Energy Union objective of a secure, resilient and competitive gas supply; calls on the Commission to develop a strategy that aims at lessening EU gas dependency in the long term, reflecting its commitment to reduce greenhouse gas emission to 80-95 % below 1990 levels by 2050, and stresses in this regard that treating energy efficiency as a ‘first principle’ and gradually phasing out fossil subsidies would significantly reduce the EU’s dependency on imported fossil fuels;

12.  Recalls that the Parliament has repeatedly called for binding climate and energy targets for 2030 of at least a 40 % domestic reduction in GHG emissions, at least 30 % for renewables and 40 % for energy efficiency, to be implemented by means of individual national targets;

13.  Stresses the need, before supporting new regasification terminals, to promote the most efficient use of existing LNG terminals from a cross-border perspective, so to avoid technology lock-in or stranded assets in fossil fuel infrastructure and ensure that consumers do not have to bear the costs of any new projects; believes that the Commission needs to carefully revise its analysis for gas demand and risks and needs assessments;

Completing missing infrastructure

LNG infrastructure

14.  Recalls that the EU as a whole is sufficiently supplied with LNG regasification terminals, and acknowledges that, owing to weak internal gas demand in past years and a relatively high global LNG price, several of the EU’s LNG regasification terminals are experiencing low utilisation rates; underlines that all Member States, especially those depending on a single supplier, should have access to LNG, either directly or indirectly through other Member States;

15.  Underlines that, in most cases, priority should be given to market-based solutions and to the utilisation of existing LNG infrastructure on a regional level; notes, however, that solutions can be different depending on national and market specificities, such as level of interconnectivity, availability of storage solutions and market structure;

16.  Stresses that in order to avoid stranded assets, it is necessary to carry out a careful analysis of LNG supply alternatives and options from a regional as well as an environmentally sustainable perspective, taking account of the Union’s climate and energy targets and the principle of geographical balance, before deciding on new infrastructure, in order to improve energy security and guarantee the most efficient use of existing infrastructure;

17.  Stresses the importance of regional cooperation when building new LNG terminals and interconnections, and underlines that Member States with access to the sea should cooperate closely with landlocked countries in order to avoid over-investment in unnecessary and uneconomic projects; stresses that, in this regard, a more optimal use of west-east and north-south corridors, with improved reverse flow capacity, would increase the LNG supply options; believes that knowledge and information could be developed jointly on issues such as energy storage facilities and tendering processes for LNG and interconnectors; strongly believes that the EU strategy has to ensure that LNG is accessible at regional level all over Europe;

18.  Urges the Commission and the Member States to put in place strategies to support facilities that can be used in the future to manage the transfer and storage of renewable natural gas;

19.  Stresses that the strategy should also include the use of LNG as an alternative to the development of gas distribution and transmission infrastructure in areas where it is not currently cost-effective; notes that small LNG installations can provide the optimal infrastructure for increasing the use of natural gas in areas where investments in gas infrastructure are unprofitable, including for increasing the use of gas to generate heat and thus curb so-called low-stack emissions;

20.  Urges the Commission and the Member States to fully implement key projects of common interest (PCIs), and to assign high priority primarily to the most economically and environmentally efficient projects identified by the three regional high-level groups; stresses that building LNG terminals which are necessary for and compatible with gas demand is not sufficient, and that supporting pipeline infrastructure with appropriate tariffs is indispensable for the benefits to be realised outside the receiving countries;

21.  Welcomes the fact that important LNG projects (e.g. the North-South corridor) are being defined as projects of common interest; calls on the Commission to fully include Balkan countries when planning the further reconstruction of the gas pipeline and TEN-E network to ensure a key role of the EU energy sector in the region;

22.  Supports the Commission proposal in the ongoing revision of the Security of Supply Regulation to review the existing reverse flow exemptions on interconnectors, and endorses the increased role of the Agency for the Cooperation of Energy Regulators (ACER) in the process; notes the understaffing and lack of resources of ACER; underlines the need to provide ACER with the necessary resources, in particular sufficient own staff, to allow the agency to fulfil the tasks assigned to it by the legislation;

Storage infrastructure

23.  Recalls that geology is a major determining factor when developing new gas storages, and notes the current excess capacities in European gas storages; stresses that regional cooperation and an adequate level of gas interconnections, as well as the removal of internal bottlenecks, could significantly improve the utilisation rate of existing gas storages; highlights the need to ensure the application of the highest environmental standards in the planning, construction and use of LNG storage infrastructure;

24.  Recalls that the cross-border accessibility of gas storages is one of the key tools to implement the principle of energy solidarity during gas shortages and emergency crisis;

25.  Emphasises that a more extensive use of Ukraine’s storage capacity will only be possible if an appropriate and stable commercial and legal framework and the integrity of supply infrastructure is guaranteed in Ukraine and provided the right level of gas interconnections is in place so that energy can flow freely across the borders without physical barriers; furthermore emphasises that as Ukraine’s gas-dependent industrial sector rebounds in the short term, additional gas supplies will have to be imported; considers that the EU should support Ukraine in transitioning from dependency on Russian natural gas to LNG;

Connecting LNG and storage to markets

26.  Emphasises the importance of the work of regional high-level groups, such as the Central East South Europe Gas Connectivity High Level Group (CESEC), the Baltic Energy Market Interconnection Plan (BEMIP) and the South-West Europe group; believes that this type of voluntary-based regional coordination is highly effective, and welcomes the facilitating role of the Commission in these arrangements; stresses the need for pragmatic and timely execution of the approved action plans, and urges close follow-up of implementation;

27.  Stresses the importance of finding cost-efficient and environmentally sustainable energy supply options to increase long-term security of supply for the Iberian peninsula, Central and South-East Europe, the Baltic states and Ireland, all of which are insufficiently connected to and/or integrated with the internal energy market and deserve the full support of the EU in the name of the principle of solidarity; also highlights the need to support the most vulnerable countries that continue to remain energy islands, such as Cyprus and Malta, in order to diversify their sources and routes of supply; stresses, in this context, that LNG and gas storage must contribute towards ending energy isolation of whatever kind that affects Member States and regions in the EU;

28.  Calls for gas production in the Mediterranean, Black Sea and Caspian regions, as well as for interconnecting landlocked countries in Central and South-East Europe to these new capacities in order to diversify supply sources in those regions; notes that this will allow for competition between gas from multiple sources and will replace imports of natural gas volumes under oil-indexed contracts, thus increasing Member States’ bargaining power; stresses that no single energy source will ever fulfil the EU’s energy needs and that diversity in the case of both domestic and foreign markets is essential; considers, therefore, that the development of the domestic conventional gas resources discovered in Cyprus should be actively pursued;

29.  Supports the Commission’s ambition to provide more information and assistance to project promoters on various project financing options, such as the European Fund for Strategic Investments (EFSI), the Connecting Europe Facility (CEF), the European Structural and Investment Funds (ESIF), and on various technical solutions;

30.  Notes that finding cost-efficient and environmentally sustainable solutions should be a key principle in reaching the EU and regional optimum, and calls on the Commission, the Member States and the national regulatory authorities to allocate the limited resources available to the development of critical infrastructure so as to attract private investment for LNG infrastructure and interconnectors;

31.  Expresses concern at the fact that gas imports from Russia were 7 % higher in 2015 than in 2014, and at the fact that 41 % of gas imports from outside the EU in 2015 came from Russia; highlights the vital role of LNG and gas storage, in addition to increased efficiencies and renewable energy deployment, in reducing dependence on Russian gas;

32.  Expresses concern at the proposed doubling of capacity of the Nord Stream pipeline, and the counterproductive effects this would have on energy security and diversification of supply sources and the principle of solidarity among Member States; highlights the geopolitical implications of the project and the underlying principles of a fully integrated, secure, competitive and sustainable Energy Union, stressing that as such it should not benefit from EU financial support or from derogations from EU law; underlines that a doubling of the capacity of the Nord Stream pipeline would give one company a dominant position on the European gas market, which should be avoided;

33.  Considers that if, contrary to European interests, Nord Stream 2 were to be built it would necessarily require a sound assessment of LNG terminals’ accessibility and a detailed state of play on the North-South Gas Corridor;

Completing the internal gas market: commercial, legal and regulatory aspects

Making the EU an attractive market for LNG

34.  Urges the Member States to fully implement the Third Energy Package and gas network codes;

35.  Highlights the important role that well-interconnected liquid gas hubs play on the gas markets, that would ensure a single integrated market where gas can freely flow across borders in line with market price signals;

36.   Stresses that significant gas reserves in the North African countries and recent discoveries in the Eastern Mediterranean provide the region with an opportunity to emerge as a vibrant centre for transporting gas into Europe; believes that new LNG capacity being developed in the Mediterranean could form the basis of an infrastructure hub;

37.  Insists that the completion of the internal gas market and the elimination of regulatory obstacles would greatly improve the liquidity of gas markets; urges stakeholders to finalise the network code on rules regarding harmonised transmission tariff structures for gas as soon as possible;

38.  Recalls the continuous need for active cooperation between governments, national regulatory authorities and main stakeholders on cross-border investments, keeping always in mind a European perspective besides the national interests;

Gas storage in the internal market

39.  Highlights the need to develop harmonised tariff structures across the EU and to increase transparency in tariff definition in order to achieve a higher utilisation rate of existing gas storages; takes the view that the network code on rules regarding harmonised transmission tariff structures for gas should take into consideration the need for harmonisation;

40.  Supports the Commission’s proposal to enable the deployment of bio-methane and other renewable gases which comply with relevant EU quality standards in gas transmission, distribution and storage; recommends, in this respect, the consideration of technical parameters, gas quality, cost efficiency, economies of scale and possible local or regional grid solutions;

41.  Urges the Member States to fully implement the third energy package, particularly in relation to the provisions on granting access to bio-methane to the grid and to storage facilities; highlights in this regard Directive 2009/73/EC, according to which Member States should ensure that, taking into account the necessary quality requirements, biogas and gas from biomass or other types of gas are granted non-discriminatory access to the gas system, provided such access is permanently compatible with the relevant technical rules and safety standards;

42.  Encourages LNG and storage operators, in cooperation with national regulatory authorities, to develop new flexible products and services, compliant with the EU current legislation, in order to make LNG regasification and storing more attractive and maximise the utilisation of existing LNG and storage facilities;

Optimising the role of storage for security of gas supply

43.  Highlights the role of the immediate, high-flexibility services that gas storage offers in certain Member States, and points out the different role that storage can play during a supply disruption compared to LNG where logistics in the supply chain might not grant the same responsiveness;

44.  Underlines the importance of eliminating regulatory barriers to developing regional storage concepts; believes that certain storages could offer tailor-made international services, i.e. storage services tied with cross-border transportation; proposes that the regional high-level groups cooperate more extensively to find innovative solutions on how to use strategically valuable assets effectively at regional and European level;

The EU as a player on international LNG markets

45.  Notes the emerging global trend of increasing liquefaction capacity and its potential impact on the European gas markets;

46.  Considers that, through its emergence as an important market, the EU can contribute to the evolution of gas trading rules with a view to improved flexibility and the convergence of global gas markets;

47.  Supports the Commission, the European External Action Service and the Member States in their active engagement in energy diplomacy in order to promote a rule-based, transparent and well-functioning global gas market;

48.  Stresses the importance of reducing or removing the EU’s gas and oil dependence on imports from authoritarian regimes that violate human rights, in keeping with the EU’s founding values and the effectiveness of EU external action;

49.  Calls for greater institutional convergence and synergy, and, in particular, for the better integration of external energy security priorities in policies pursued by the Vice-President of the Commission/High Representative of the Union for Foreign Affairs and Security Policy (VP/HR), and for better coordination between the VP/HR and the responsible Commissioners; calls on the VP/HR, along with the Member States, to enhance existing means and establish new means of energy cooperation with current and potential suppliers, as well as with transit states and other key players; calls, in this context, on the VP/HR to inform Parliament regularly on the implementation of the EU Energy Diplomacy Action Plan;

50.  Stresses the necessity of eliminating all barriers to global free trade in LNG, the production of which must be sustainable; in this context, urges US policymakers to increase investment certainty by introducing clear criteria and deadlines in the authorisation process for gas exports to non-FTA countries;

51.  Underlines the need to raise awareness of the environmental, climate and social impacts of imported LNG in global free trade fora; underlines, in particular, the need to ensure that fugitive methane emissions are minimised;

52.  Stresses that the use of LNG may also lead to a reduction in greenhouse gas emissions from maritime and road transport, provided that all effective measures are taken to minimise methane slip throughout the lifecycle of the fuel, including the production, distribution, and combustion phases; calls, therefore, for adequate measures to minimise methane slip in the overall LNG chain through the use of the best available technologies, and to ensure adequate R&D financing for that purpose;

53.  Stresses that trade plays a key role in energy security, and that strong energy partnerships, reinforced by the inclusion of energy chapters in the EU’s trade agreements, are essential tools; considers it of key importance that the EU’s trade policy should enhance the Union’s and Member States’ energy diversification and reduce their dependency on imported energy from too few suppliers; stresses that the EU should explore new partnerships, review its existing ones and hold specific energy talks with other partners in areas such as – but not limited to – Central Asia, North Africa and the Americas; notes that the EU should play a more proactive role in the international energy diplomacy arena; calls for greater coherence between the EU’s trade and energy policies; underlines the need to increase transparency in international negotiations on LNG; believes that current and future negotiations with partners such as the US and Australia should include a strong energy component; underlines that the EU should collaborate closely with international partners towards a competitive and transparent global LNG market;

54.  Recalls that in order to meet the current challenges and implement its energy and climate change objectives in the context of global constraints in those policy fields, the EU and its Member States must, on the basis of existing legal frameworks and multilateral conventions, also take common action on the international stage by raising energy security and sustainability issues in international trade forums, including with partner countries dependent on gas imports; stresses that, at the same time, the EU should support and promote energy efficiency;

55.  Considers that trade policy generating significant opportunities for EU Member States’ private and public companies in clean, secure and energy-efficient technologies is particularly important, especially in light of the growing global energy demand; calls for tariffs on clean technologies to be reduced significantly within the Green Goods initiative and also within EU free trade agreements, which must tackle non-tariff barriers to trade in energy sources;

56.  Highlights the importance for EU energy security of the ‘Energy and Raw Materials’ chapter of the Transatlantic Trade and Investment Partnership (TTIP) agreement; welcomes the Commission’s work towards removing export restrictions on US gas to the EU;

57.  Considers that the 12,2 billion cubic metres per year being added to the market in 2016 through Sabine Pass LNG on the US East Coast, along with potentially a further 74 billion cubic metre capacity being added through various US projects before 2020, represents a significant opportunity for Europe to increase energy trade links with the US; believes that the conclusion of the work on the ‘Energy and Raw Materials’ chapter of TTIP will significantly boost EU gas supply options;

58.  Considers that European companies should not be restricted from operating on third countries’ energy markets under the same conditions as domestic companies; stresses that third-country companies operating on European energy markets must comply with European law; stresses that such entities must have a transparent structure making it possible to track their shareholders;

59.  Stresses the need to ensure the highest environmental protection in the planning, construction and use of LNG as well as in the exploitation of indigenous reserves and sources, and to respect the international labour standards on occupational health and safety; underlines the need to raise awareness of the environmental, climate and social impacts of imported LNG; reiterates the need to involve local communities and to rely on realistic assessments regarding consumption and – in the event of construction –the planning of new infrastructures; emphasises the potential offered by the transition to LNG for ending the dependency of maritime transport on coal; calls for the EU to provide financial support for European projects for this purpose;

60.  Points out that, given the prospects for growth in the supply of LNG in coming years, this strategy may be complemented by an assessment of needs, in terms of LNG-carrying vessels and measures to enable the EU shipbuilding industry to seize this opportunity, thereby contributing to the target of increasing the industry’s share of GDP to 20 % in 2020; calls for safety standards so that the transport of LNG can be monitored and, if necessary, subjected to more stringent conditions in the context of measures to prevent terrorism;

Sustainability and the use of LNG as an alternative fuel in transport, heat and power

61.  Acknowledges the potential of LNG as an alternative fuel, both in road and maritime transport; underlines that wider use of LNG in freight transport could contribute to the decrease of global CO2 , SOx, and NOx emissions, especially through using more LNG engines in maritime transport;

62.  Underlines the fact that the network of fuelling infrastructure is a prerequisite for substantive deployment of LNG as an alternative fuel in the transport sector; calls, in this regard, on the Commission and the Member States to ensure full implementation of Directive 2014/94/EU on alternative fuels, including the establishment of LNG refuelling points across the TEN-T corridors and at maritime and inland ports, replacing more polluting conventional fuels; underlines, however, in this regard that LNG should not take the place of renewable energy sources, so as to ensure consistency with sustainability goals;

63.  Calls for the development of maritime routes, notably in the archipelago of the Azores which, given its geographical situation, could serve as a key fuel station for the transatlantic routes of LNG; urges the Commission to make funds available to support European projects to this end;

64.  Asks the Commission to create, jointly with the Member States and their regions, a common project of ‘LNG Blue Corridors for Islands’ for the maritime sector, including ports of the TEN-T Comprehensive Network, in order to establish the necessary LNG infrastructures and link this network to the TEN-T Core Network;

65.  Calls on the Member States, in addition, to ensure the implementation of Directive 2014/94/EU as regards the establishment of CNG refuelling points, so as to ensure that motor vehicles running on that fuel can circulate in urban/suburban agglomerations and other densely populated areas, and at least along the existing TEN-T Core Network, thus ensuring that those vehicles can circulate throughout the Union;

66.  Stresses the need to establish common technical specifications for LNG refuelling points for seagoing ships, inland waterway vessels and motor vehicles, as provided for in Directive 2014/94/EU; calls for rigorous harmonised safety rules and training for LNG storage, bunkering and on-board use throughout the Union, allowing also the possibility of simultaneous bunkering and cargo operations; notes that this work should be carried out in close cooperation with the International Maritime Organisation (IMO) and EMSA;

67.  Stresses the need to ensure adequate R&D financing for the development of improved technologies for inland waterway vessels, seagoing ships and motor vehicles with the aim of swiftly shifting to a lower-carbon fleet, as well as for the development of unmanned systems for the installation of LNG refuelling points; also calls on the Commission and the Member States to create incentives for the development of vessels and motor vehicles running on LNG, or retrofitting those running on conventional fuels to enable them to use LNG;

68.  Calls on the Commission and the Member States to create incentives for the transport of LNG by rail, as this will on the one hand reduce road transport and on the other hand contribute to the environmentally sound and safe transport of a fuel which is low in pollutants;

69.  Calls on the Commission, after consulting the stakeholders, to consider whether, alongside Regulation (EC) No 443/2009 setting CO2 emission performance standards for new passenger cars, it might establish a CO2 equivalent for hydrocarbon emissions, not least with a view to informing consumers;

70.  Notes that the use of small-scale LNG technology in certain areas, such as long-range transportation or industrial high-performance applications, could not only contribute to climate policy objectives but also result in significant business advantage;

71.  Notes that LNG, and in particular CNG, is also a viable solution for public transport, which is already available and can help reduce air and noise pollution, thus improving living conditions, especially in urban agglomerations;

72.  Notes that although LNG and CNG can present viable transitional solutions to reduce the environmental impacts of transport, their long-term benefits will be only realised if a smooth transition towards the use of liquefied biogas (LBG) and other forms of renewable energy is simultaneously promoted by also ensuring the interoperability of LNG and LBG systems; emphasises that the EU strategy for LNG needs to fit into the wider European climate and energy targets and priorities, and correspond to the COP21 agreement, with a focus on reducing demand, improving energy efficiency and phasing out fossil fuels;

73.  Emphasises that an efficient network of refuelling infrastructure is a prerequisite for the substantive deployment of LNG as an alternative fuel in the transport sector; calls on the Commission and the Member States to create incentives for the development of such infrastructure in order to close the existing gaps in provision and create a complete supply network;

74.  Stresses the importance of LNG infrastructure at maritime and inland ports in terms of promoting multimodality, as such infrastructure can be used by seagoing ships, inland waterway vessels and trucks for the further overland transport of the fuel; urges national and regional operators to cooperate closely with the aim of enhancing the multi-functionality and exploitability of this infrastructure;

75.  Considers that fostering the use of natural gas as an alternative fuel in transport is an important global challenge, and calls for a commitment to achieving emissions reductions to be obtained through the International Civil Aviation Organisation (ICAO) and the International Maritime Organisation (IMO);

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76.  Instructs its President to forward this resolution to the Council, the Commission, the Member States, the Energy Community Secretariat and the Contracting Parties of the Energy Community.

General Market

East Asia and the Pacific: America's Pacific Future Is Happening Now

KARL EIKENBERRY: Welcome, welcome, everyone. I am truly very proud to be standing up here today to have the honor of introducing the current United States Assistant Secretary of State for East Asian and Pacific Affairs, Danny Russel. I’ve known Danny for almost 20 years now. We first met when Assistant Secretary Russel was the Chief of Staff for the Undersecretary of State for Political Affairs, Thomas Pickering.

Now, there’s all kinds of definitions of what makes a skilled diplomat, so let me try this one with you. For those that live here in the bay area you’ll, I think, appreciate this. The definition of a skilled diplomat is somebody who’s sitting at a baseball game being played between the San Francisco Giants and the Oakland Athletics, and on one side is a San Francisco Giant’s fan, on the other side is an Oakland Athletics fan, and the skilled diplomat can get them to talk about ice hockey.

Truly by all measures, Danny is an extraordinary diplomat and more, he’s a superb strategist as well. He has given almost all of his adult life in the service of our nation as a career member of the Senior Foreign Service of the Department of State. Prior to his current post, Assistant Secretary Russel served in the White House as a Special Assistant to the president, and as the National Security Council senior director for Asian affairs. And in that capacity, he played a very key role in formulating and then implementing President Obama’s strategic rebalance to the Asia-Pacific region – something that I think the Assistant Secretary will talk to us about today.

His deep expertise in the Asia-Pacific region is evident from a very quick review of his previous assignments as a career diplomat. These included Director of the Office of Japanese Affairs in the Department of State, assignments in critical positions in U.S. Embassy – Seoul, and in U.S. Embassy – Tokyo, where he served at one point as an Assistant for Senator, then Ambassador, Mike Mansfield, our Ambassador to Japan – one of many distinguished Ambassadors to Japan, with another one sitting in our front row here, Mike Armacost.

Danny also served in the U.S. Consulate in Osaka, Japan, where he was the Consul General and interestingly served also in a previous assignment as the Branch Office Manager in Nagoya, also in the Consulate General in the Consulate in Osaka. And no one could charge Danny of overspecializing in the Asia-Pacific region because he managed to find time throughout this long and distinguished career to also serve as our Deputy Chief of Mission at the U.S. Embassy in The Hague in the Netherlands.

It also is the Deputy Chief of Mission in our Embassy in Nicosia, Cypress. He also went global well before the world went global when he was a Political Adviser to the Permanent Representative of the U.S. Mission to the United Nations, which I believe was also Thomas Pickering at that time.

So I could go on and on, but everyone’s eager to use the limited time that we have this afternoon to hear directly from Assistant Secretary Russel. So I’d like to give a warm Encina Hall welcome to a great diplomat and a very good friend of so many of us in this audience, Danny Russel.

ASSISTANT SECRETARY RUSSEL: Well hello, everybody, and thank you very much, Karl. That was a very generous introduction. Actually, the honor really is mine to be here with so many great diplomats and friends and seniors, certainly you and Ambassador Armacost and Ambassador Kathy Stephens, my diplomatic colleagues from around Asia. And I think I see my brother is here, who works here at Stanford. My mother wanted us to go here so, he got here a lot sooner than I did.

My working definition of a diplomat doesn’t involve sports. It’s the old Will Rogers line that a diplomat’s a guy who could tell you to go to hell in a way that makes you look forward to taking the trip. But this is – this is fun for me and diplomacy is fun for me. I know most people would rather be hanging out in Stern field but at least some of you share my sense that this is what makes for a good time.

I am a career diplomat, Foreign Service guy who was seconded to the White House, to the National Security Council, at the very beginning of the Obama Administration. And that meant that I had a ring-side seat and in some cases, a chance to influence a bit the development of our strategy and our policy towards Asia. And the fact is that over the course of the last seven and a half years, America’s relationship with the Asia-Pacific region has changed.

Changed in a number of important ways. And, you know, when you think about a decade in which the U.S. was so heavily focused on other parts of the world for understandable reasons, and when you think about the environment when President Obama took office where the world was grappling with a devastating economic setback, the world economy was in distress, what it meant was we had a president and a team that came into office determined to use our foreign policy in a way that advanced America’s interest in the first instance, our economic interest.

The Obama team that arrived in the White House in January of 2009 wanted to make sure that we were investing in a dynamic region that offered tremendous opportunities for economic and for other interests, opportunities to create jobs and to enhance our security to invest in the future. And the region is Asia, or to be more precise, the Asia-Pacific rim. And I want to spend a minute explaining the rationale behind this rebalance.

First, it was the simple economics of shared prosperity. We recognized that the world’s economic center of gravity had been shifting to the Asia-Pacific, that Asia’s not just a workshop, it’s not just a growing consumer of American products; it’s increasingly a co-innovator, a partner in developing new solutions to the big problems that we all face.

We, the United States, are overwhelmingly the source of most of Asia’s external foreign investment. And U.S. companies benefit immensely from the youthful demographics and the rapid rise of the expanding middle class there.

The second feature, really, was the pressing necessity of shared security. So North Korea’s recent tests are reminders, dangerous reminders, of a threat posed by their pursuit of nuclear weapons and ballistic missile capabilities. The tensions in the South China Sea reflect a risk – a different kind of risk — where a coercive and a unilateral approach to long-standing maritime disputes is raising a great deal of tension.

A third factor was President Obama’s recognition of a long-term importance of institution building. Strong institutions promote a rules-based order. And that in turn serves as a break on the strong, and creates space for the small. The more rule-setting there is by consensus, the less rule-breaking there is by unilateral actors. And what follows from that is that there’s less risk that the U.S. will be forced, as we’ve been in other regions and as we did in Asia seven decades ago, to intervene at great cost to ourselves and our nation.

The fourth driver was our stake in supporting and defending universal values, rights, freedoms. America’s support for those who promote justice, promote good governance, promote fairness, is something that gives us a tremendous amount of influence. And the fact is that where democracy and human rights prevail, we find ourselves with reliable friends and stable partners.

Now let me just run through what we’ve done about each of these four areas over the course of the past seven and a half years of the rebalance. First of all, we’ve taken our role as an economic power and as a model of openness very seriously. We’ve worked to promote innovation and entrepreneurship along with the rule of law. In 2009 we responded to the global economic downturn not by protectionism, not by jingoism, but by upgrading and completing the KORUS agreement, the U.S. – Korea Free Trade Agreement, and we used that to open more trade, to increase investment.

We’ve pursued initiatives to expand economic relations with China. That includes the ongoing negotiations on a bilateral investment treaty. And working with China, we championed the WTO’s information technology agreement which has really profound long term benefits. We supported the new ASEAN Economic Community, which is that region’s mechanism for integrating and for connecting the ten countries of Southeast Asia. And we are promoting economic growth and liberalization through the trade liberalization work that we do at APEC and through important agreements like TPP – which I’ll come back to. Well in fact, let me just tackle that straight on.

You know, I know that people’s concerns about trade agreements – and this is increasingly a feature of the current electoral scene here in the United States – and even trade advocates themselves recognize that more help is needed for communities that have been adversely effected by globalization. But I think it’s worth taking a minute to explain what’s so good about TPP and why this agreement is different from previous trade agreements in some key ways.

I work closely with Mike Froman, the U.S. Trade Representative who’s a former colleague of mine – and I see Ambassador Mike McFaul in the back, we also worked closely – in the early stages of TPP, both the construct and the negotiation, and one of the things that is lost in the debate is the fact that even if there were no trade provisions whatsoever in TPP, it would be by far the single best environmental agreement ever reached by the United States or other partners. It would be the single best labor rights agreement ever reached. It would be the single best Internet freedom agreement ever reached. But it is a trade agreement, and it gives protections not only for workers and the environment, but it creates protections that supersede a lot of corporate interests. It has labor standards that will bring wages and working conditions in other countries closer to our own level instead of provoking a race to the bottom that we’d be certain to lose. In TPP’s environmental provisions that I said are not only good in their own right, but they will prevent companies from going around our regulations, from going abroad, to escape the kinds of provisions that we in the United States have put in place.

It has provisions that will help small business export to replace jobs that have previously been lost, and it has protections for intellectual property so that you smart Stanford grads can hold on to the rewards of your hard work. But beyond the environmental or the labor or the trade rationale, there’s a compelling strategic case for TPP. There’s a good reason why Secretary of Defense Ash Carter says – and he means it – that TPP is more valuable than another aircraft carrier strike group. It’s because high standards and economic integration produce a stabilizing and a positive dynamic.

Creating employment and creating opportunity through trade with safeguards for rights and for the environment is a recipe for peace and stability. And not only will economic benefits flow to both sides of the pacific, but the role of the United States at the center of this trading network is something that reinforces the credibility of America’s commitment to the region; it reinforces our leadership. And within the region, the agreement raises standards – standards for good governance, standards as I said for labor rights and environmental safeguards, standards for data protection, and all of that leads to rising living standards; it creates more consumers for our products and it has a lot other benefits. But all of this progress, whether in democratic terms or in economic terms, depends on the maintenance of an adequate security arrangement in the Asia-Pacific region.

Peace doesn’t come naturally to a region that has that level of division, of diversity – ethnic divides, cultural divides, historical divides, geographic divides, religious divides. And the United States, and particularly the Obama Administration, has taken our traditional role as security guarantor in the Asia-Pacific region very, very seriously.

So early in 2009 we started not with China, but with our friends. We started with our allies and our long-standing security partners. We modernized our alliances with Japan and Korea, and with Australia. We developed enhanced cooperation and agreements that increased rotational presence of U.S. forces in the Philippines, in Australia.

We stepped up joint exercises and training and capacity building to help our partners respond to natural disasters, to crises, to threats – and let’s face it, there are real threats in the region – threats to peace and security. North Korea’s nuclear missile programs are the most pressing ones. Tensions in the South China Sea over maritime and territorial disputes are very much in the news and very much on our minds – a big part of my life. The risk from violent extremism in Southeast Asia is real and it’s something that we work closely with our partners to try to get ahead of. And I’ll be happy in the discussion period to engage on any of those challenges.

But in terms of our overall strategy for dealing with these kinds of problems, the point I would make is that the old 20th century kind of hub-and-spoke alliance system where we work bilaterally with partners and allies but they didn’t do much with each other, is pretty much over. What that has evolved into is, increasingly, an integrated network system that allows us to work trilaterally; it allows us to work in sort of plural-lateral, multilateral, and ad hoc mechanisms. We do a great deal of it with allies like Japan and Korea and Australia, but we also work plural-laterally with other partners, including and increasingly with Chi – with India.

Despite what many Chinese officials believe or at least say, this kind of cooperation isn’t directed at China. We do not have a containment strategy. In the Cold War, we did have a containment strategy, and it looked very, very different than the way that we deal with China today. We’re not recreating the Cold War through our policies vis-a-vis China. We are not pursuing a zero sum strategic rivalry.

The U.S. and our allies, our partners, work with China – not just on North Korea but on combating piracy off the coast of East Africa, in providing humanitarian assistance when Ebola broke out in West Africa; we would collaborate on a whole host of transnational threats, proliferation, other challenges. Moreover, I can attest that the military-to-military relationship between the U.S. and China has grown to the point where the PLA’s Navy is now included in our major Pacific Ocean exercise RIMPAC; developed to the point where our top officials, including the Chairman of the Joint Chiefs of Staff, PACOM Commander, the Secretary of Defense, and Chinese counterparts routinely exchange visits and communicate. And let me also point out that the network of security partnerships that we’ve built and that we’ve refreshed are demonstrating their importance in the region’s prosperity.

We are the security partner of choice for nearly every nation in Northeast Asia and Southeast Asia, and in the Pacific. Our presence, our military activities, are welcomed by virtually all of the nations in the region. Even the Chinese, who raise questions about specific operations, are in great pains to say that they don’t seek to supplant or exclude the United States and that they recognize the stabilizing role that the U.S. Navy and the U.S. military play.

Why is that? It’s because as strong as we are – and we are very strong – we accept the limits placed on us by international law. And that brings me to the third priority in our rebalance, which is building up institutions. We’ve done this through the President’s participation in the East Asia Summit, the grouping of 18 nations in the Asia-Pacific region, who meet at the leader level.

We’ve done it through extensive other forms of engagement with the ten ASEAN countries, including the summit hosted by President Obama in February at Sunnylands with those ten leaders; by working through and revitalizing through APEC, through the G20, through the G7 – which will be held in China and Japan this year – and by a host of other multilateral initiatives that foster compromise and foster coordination.

And nowhere has this been more important than in Southeast Asia, where the U.S. works so closely with the ASEAN and the member states on things like climate change, on public health, food security, tolerance, trafficking in persons and wildlife, education, employment, counter-terrorism, disaster preparedness. These are issues that really matter. They matter today, and they matter to all of us – to the people on both sides of the Pacific.

And it’s not only the U.S. government that is so engaged. American businesses, American NGOs, and institutions are very, very active partners. Stanford in fact works with USAID to strengthen rule of law in ASEAN through projects like the Council of ASEAN Chief Justices.

Now, I mentioned the values agenda as a fourth area of focus and I’d like to just talk through briefly some of what we’ve done here. First of all, we have supported the extraordinary, dramatic advance of democracy in Burma–Myanmar. And we’ve done that through a mix of diplomatic engagement, of public and private programs, economic tools, support and funding for civil society, and the formation of a cleanly elected civilian government that took office on April 1st this year, marks a huge milestone in Asia.

I’m very proud to have been part of a group that played a role in supporting that. We’ve used all of these diplomatic and development tools also to give practical support to pluralistic societies like Indonesia, Mongolia, like the Philippines – and we’re seeing incremental but still significant progress in other Southeast Asian and other Pacific Island states.

We have worked just as hard and in many cases even harder where governments have gone backwards on freedom and on human rights, including with dear, dear friends like Thailand and Malaysia, with one party states like Vietnam, and Laos, and their next door neighbor, Cambodia. We’ve continued to push forward in a respectful but in a determined way. I visit these countries frequently and I’m not being Pollyannish in saying that there is progress to report. And even when it comes to North Korea, which has probably the world’s worst record on human rights, we have at least focused international attention on the plight of the North Korean people. And the increased pressure on the DPRK regime from strong resolutions at the UN General Assembly and the UN Human Rights Council have at least caused North Korea to close some of its political gulags.

Now, that’s not much, but it’s not nothing either. And neither are we giving up on this. So before we open up the discussion, I’d just like to offer one closing thought.

Tomorrow is Earth Day. Representatives of something on the order of 130 countries are going to gather in New York at the UN to sign the Paris Climate Agreement. No question that it’s a global agreement, but the Asian-Pacific countries really have stood up in support of this in important ways. When the – you know, think back when the Kyoto Protocol was being negotiated. The Asia-Pacific region was badly divided between developed and developing, the haves and the have-nots, North and South. But this time, the Asia-Pacific region which not only has many if not most of the truly vulnerable front line states, but also has the biggest offenders – the biggest emitters like the U.S., like China – exercised leadership.

Japan stepped up with a huge 1.5 billion dollar commitment to the Green Climate Fund. South Korea stepped up in a very important way to host that fund. Pacific states that are at such risk used, in effective ways, their moral authority to really drive the process forward. And China turned around in an extraordinarily important way. You know, in the past, China categorically refused to commit to specific emission reduction targets under the Kyoto Protocol. But in 2014, more than a year before the conference – and I think based on some intensive diplomacy by Secretary Kerry and others – President Xi Jinping decided to join President Obama in jointly announcing very significant and very ambitious reduction targets. What was so important about this is the signal that it sent through the developing world that we can work together. And that signal was, I think, hugely important to the ultimate success in Paris.

So this is emblematic of what the United States can do with partners throughout the Pacific, big and small; how we can undertake to build a Pacific region, a Pacific century, that’s based on rules and respect for the law. It’s based on opportunity and support for an adherence to universal rights. These are not Western values, these are universal values. A century in a region that’s based on the principle that the voice of every country should be heard and the voice of the people in every country should be heard, based on a spirit of cooperation and ambition.

That’s what we have been working and will continue to work to build. So to the students in the audience, and this is black humor but if the reports in the newspaper are accurate, anybody who works in intel, I hope you will join us. I hope you will join – think seriously about a career in the foreign service. As many of the distinguished diplomats here can attest, there really is no more satisfying vocation or endeavor than public service. So I’ll end there. Thank you very much.

KARL EIKENBERRY: Danny, thank you very much. You gave us a lot to think about. Now we’ll open – we’ll start a conversation here. And we have back there Debby – if you’d raise your hand. Debby has got a microphone so when we open it up to questions, if you raise your hand with the microphone, if you’d please stand up and identify yourself and where you’re from. And what I would like to do, then, Danny, if I could, is to ask both the last question and the first question. We will end sharply at 1:15. The last question, I’m going to come back to just how you ended at the podium – you have Stanford students here, I’m going to do the last question I’m going to ask you at about 1:13 – is if you can expand on that a little bit more. If you were a Stanford student and talking to a Danny Russel and would like some advice, why should I consider joining the foreign service?

So let me come to the first question. You’ve laid out in your very brief remarks a framework for a policy in the Asia-Pacific region. Now I know that many here will want to get more specific about particular issues, so let me start – there’s only so much you could talk about in 25 minutes. Could we turn to the Korean Peninsula, and it just seems, Danny, that nothing works there. We try – we tried olive branch, it doesn’t work. We try more of a coercive approach, it does not work – it doesn’t seem like things are moving in the right direction. We’re taking measures. Could you talk a little bit more about our policy?

And we have from the Consulate General of the Republic of Korea, diplomats here – could you talk about our diplomacy in conjunction with the Republic of Korea and especially with China, who we have representatives of here in this audience.

ASSISTANT SECRETARY RUSSEL: Well thanks, Karl. As you say, the bad news is that the North Korean nuclear missile program continues, and it’s moving briskly in exactly the wrong direction. It constitutes a very significant threat to the national security of the United States, the ROK, Japan, and other neighbors. The good news is that that threat is – been a galvanizing factor that’s drawn the U.S., and the ROK, as Ambassador Stephens and Dave Straub can attest, as well as Japan – very, very close together.

And that unity among, in the first instance, the three allies is a major strategic bulwark against North Korea because it eliminates the seams that they have typically exploited in the past. At the same time, the cooperation with China has significantly improved. There are probably a lot of reasons behind it, but I think the bulk – the lion’s share of the credit — goes squarely to Kim Jong-un whose impetuous, risky, threatening, worrying, destabilizing behavior is hard for China to pardon.

Now, there are a lot of different ways of unpacking the North Korea problem. I – having negotiated, successfully, with the North Koreans as part of Bob Gallucci’s Agreed Framework team, and seeing other administrations and other colleagues make progress with North Korea – I do know what it looks like when the North Koreans have decided that they better make some kind of a deal. Maybe both hands are crossed behind their back. Maybe they undertook various commitments without a genuine intention to implement it.

But we have in the past gotten them to negotiate real deals and undertaken to implement them. We haven’t lost hope and we keep the door open to real negotiations, meaningful negotiations, on the problem issue, on the nuclear issue, based on the important agreements that we have reached in the past with them that they’ve solemnly committed to, particularly the 2005 Joint Statement.

But I think the way to look at the issue is this: from North Korea’s perspective, when you look at its two stated objectives – to be recognized and accepted by the world as a nuclear state, and to build a prosperous society with a thriving economy and the proverbial chicken in every pot – the question is, how are they doing?

They’re oh[zero]-for-two. The entire world is absolutely solid in rejecting North Korea’s desire to be accepted as a nuclear state. And is equally determined, as you see through the implementation of sanctions under the UN Security Council Resolutions, to ensure that North Korea can’t gain access to the international economic infrastructure. Certainly because it’s going to use them, that infrastructure, to fund its threatening programs, but also because it has prioritized these threats over the welfare of its own people.

So to paraphrase, you know, Ronald Reagan: is North Korea better off than it was four nuclear tests ago? The answer is, “no.” And I would argue that a full blown integrated regimen of sanctions and pressure is not the same old. It’s unprecedented. And I’ve made this analogy before but, you know, like the administration of medication, you just keep upping the dose to try to achieve the necessary effect. Now, we’re not trying to kill the patient. We are not out to bring North Korea’s leaders to their knees. We are trying to bring them to their senses.

War is a really messy thing and avoiding war on the Korean Peninsula remains an absolute priority for us, for the Republic of Korea, for Japan – for the region. But the way to avoid war is not to appease the North Koreans, and we believe that the firm application of real pressure, which we’re seeing increasingly the Chinese willing to do, combined with a neon blinking arrow that points to a negotiated exit… is the way to go.

KARL EIKENBERRY: Thanks, Danny. Let’s open it up. Please in the – no, right behind you, there you go.

QUESTION: Good afternoon, sir. Holly Barton in Stanford Hoover Institution. You mentioned earlier the concept behind the national security strategy and the interests that lie in the region. My question is, how would you characterize the overarching concept? Would you – I know you mentioned in a cooperative arrangement; would you characterize it as cooperative security, engagement, security cooperation; what overarching concept? Thanks.

SECRETARY RUSSEL: Well, I’m more of a practitioner than a theorist. But the – the driver for our national security strategy is outlined in the unclassified version that was released in 2015 in the run up to President Obama’s trip to Asia is U.S. national interests – our economic and security interests.

And so rather than approach the region from the perspective of applying a doctrine of engagement or security cooperation, what we are attempting to do is to build on and to modernize both the alliances and the institutions that exist or are taking shape in the region; to tether together like-minded countries, and their ranks are growing; to use economic agreements as well as economic diplomacy promoting innovation and entrepreneurship – something that is a hallmark of not only Stanford but of this region; creating a tradition of adherence to international law; and looking for opportunities to collaborate with willing partners in addressing the emerging 21st century challenges.

So high on that list is global health. We learned from the Ebola crisis that we need to have strong health infrastructure because the pace of global travel means that a communicable disease can flash across the world, really in the space of a few days. It means addressing the challenge and problem of ISIL and radical ideologies, violent extremism, which prey on disaffected youth and others, but that also don’t know geographic borders and could potentially easily spread to Southeast Asia and elsewhere. I hope that – I hope that helps.

QUESTION: Hi, I’m Marcus Kunilakis, also with the Hoover Institution, visiting. Could you, a year later, reflect on any lessons that we’ve learned and any critique you might have regarding the Asian Investment Infrastructure Bank and how we look at it, and both our role in not participating?

ASSISTANT SECRETARY RUSSEL: Sure. Well, I think that I would describe the U.S. approach as sound policy, flawed public diplomacy. Our messaging was terrible. And we generated, or at least tolerated, the impression that the U.S. was out to block China, that we were out to kill the AIIB, that we were chasing down friends and partners and warning them off – and that simply was not true.

And I have done a scrub and there is not a single statement by the President, the Vice President, Jack Lew the Treasury Secretary, John Kerry, anyone, opposing AIIB or warning other countries to stay away. But there’s a reason why that image came into being and is so durable and that is this: that in the early stages of the presentation of the idea of an Asian infrastructure development bank from the Chinese side, there was a dearth of specifics and a great deal of smoke and mirrors.

This began as a very vague concept with no reassurance whatsoever that this bank would choose as its starting point the hard-won, high-water mark of good standards, and responsible practices, and safeguards that are now the norm for international development banks. And it appeared to us and to many in the early stages that in the absence of specifics and given the degree to which the AIIB appeared to be tethered to very specific One-Belt, One-Road, construction-oriented initiatives, that this looked a lot more like an instrument of Chinese national interest than it did a bonafide development.

And we raised those concerns repeatedly at a variety of levels, both directly with the Chinese and in consultation with a range of partners who wanted to discuss the idea of the bank with us. And we discussed it in the context of the World Bank, IMF and ADB as well.

I think, now, there is abundant reason to hope that AIIB will become a success story, that the net effect not only of what the U.S. message, but what many if not all of the other members of the bank pushed for and insisted on, has led to a structure in the AIIB that’s much, much closer to what the norm of responsible MDBs are throughout the world. And that the fact that the AIB is beginning by partnering with the ADB in its initial projects, I think also augers well for the bank. Everybody always knew that there’s a crying need for more infrastructure lending in Asia. What they didn’t know was whether this bank would be controlled by China primarily, or whether it would be a bonafide multilateral bank; whether it would adhere to important rules and safeguards in terms of transparency, integrity, environmental responsibility, or not. And it has moved dramatically in the right direction and I’ve got my fingers crossed.

QUESTION: Hi, my name is Hannah Wong. My question is, why China is not included in TPP?

ASSISTANT SECRETARY RUSSEL: TPP is made up only of 12 countries that each of whom came together and announced that they wanted to be in and negotiated with one another to get an agreement and to meet the standards and the conditions. So nobody went out and sent letters of invitation to individual countries and decided to exclude China. Now, there are quite a few countries that have stated publicly that they want to negotiate entry into the TPP agreement once the agreement comes in to force and we move to a second tranche. The Republic of Korea, the Philippines, Indonesia, Taiwan – a number of others have expressed strong interest. And generally speaking, the U.S. and the other 11 TPP partners have welcomed them.

I remember being in a meeting with President Obama and Chinese a leader several years ago when the Chinese side was very, very hostile toward and critical of TPP. But a year later, I remember being at the East Asia Summit with Premier Li Keqiang in which he expressed interest and, at least in principle, support for TPP. That’s a very positive and encouraging turnabout.

I think that the world would be a much better place if China eventually got to a point where it could meet the very, very high standards of openness, of – just a variety of high standards that would be necessary for China to enter into negotiations on TPP.

KARL EIKENBERRY: Danny, on the topic of trade and investment, if I could ask a quick question here. That is that China and TPP, that no one would think that that would occur within the next several years. Important bilaterally though, we do have a negotiation for a bilateral investment treaty. Is it important that we get a good treaty, and what’s the prospects?

ASSISTANT SECRETARY RUSSEL:Yeah. Well, the bilateral investment treaty, or the BIT, is something that had been on the table for a few years. You know, in many respects the BIT is similar to the first chapter – the investment chapter – in TPP itself. And we’ve concluded investment treaties with other countries that are prospective members of TPP, precisely as a stepping stone. In the course of the last year, year and a half, I think that the negotiations between the U.S. and China on a bilateral investment treaty have really accelerated. And both sides, as recently as March 31st when President Obama and President Xi Jinping met in Washington on the margins of the Nuclear Security Summit, have committed to making best efforts to accelerate those negotiations even further.

It’s not easy. My own personal view is that the – the forces of reform in China see the BIT negotiations as an important vehicle for getting reforms done and getting past some of the special interests that are resisting change. I believe that the Chinese leadership knows that it has to reform and rebalance its economy away from a heavily export dependent model to a more consumer driven model, and that a bilateral investment treaty is key. The United States welcomes foreign investment, but we want a level playing field and the BIT is the important path for getting there.

QUESTION: Collin – so this is –

KARL EIKENBERRY: Can you speak into the microphone, please? Thanks, Collin. And if you could identify yourself.

QUESTION: Sure. My name is Collin Scott, I’m a second year law student. My question is also about foreign investment and about CFIUS, The Committee on Foreign Investment in the United States, and kind of dovetailing with professor Eikenberry’s question about the BIT – how does that Committee and the fact that it’s done more investigations on China than any other country impact diplomatic relations and, I guess, economic relations?

KARL EIKENBERRY: Collin, can you explain CFIUS for those that don’t –

QUESTION: Sure. So, the Committee of Foreign Investment of the United States reviews covered transactions when foreign purchasers are acquiring assets in the United States. I’m sure you know a lot more about it than me. But for the rest of the audience, so it’s an interesting kind of intersection of diplomatic and economic relations, and just – your opinion, I guess.

ASSISTANT SECRETARY RUSSEL: Okay. Well I mean, I think CFIUS is used as sort of a boogeyman by China and others. The fact of the matter is that very, very, very few transactions – and these are only physical acquisitions – very, very few ever come before the CFIUS review board. And when they do come, what the United States does is to propose a remedy.

So if a Chinese company decides that it wants to buy a stretch of land that just happens to overlook the NSA facility in Fort Meade, well we’re going to review that purchase. But we don’t say how long, we say, here’s a mitigation strategy: what if you invested this property – what if you spun off that company? And I think less than one percent of transactions that are reviewed by the CFIUS board, which is in itself a tiny, tiny number, are rejected. So when you contrast that with the sweeping blanket prohibitions that prevent U.S. investors and U.S. companies from acquiring properties or companies, doing business in their own right in China, it is just wildly, wildly disproportionate and different structure. If China had the equivalent of CFIUS, U.S. companies would be a lot richer.

QUESTION: Hi, I’m Emmett Berg from Reuters. Can we talk again about the South China Sea? I’m wondering how additional aggressive tactics by China in those waters might change U.S. diplomacy. And on a related question: the Philippines is pursuing an arbitration case in The Hague, and a ruling on that matter could come within about a month or so – about a month; I’m wondering how that might change U.S. stance on diplomacy as well. Thank you.

ASSISTANT SECRETARY RUSSEL: Well, there’s a tremendous amount of concern in the region about much of the Chinese behavior in the South China Sea. That includes the unprecedented, large scale destruction of coral reefs, the vacuum cleaner fishing, the reclamation, the construction, of outposts; and then the militarization of those outposts with either dual use or obviously military capable runways, and ports, and other facilities. And what’s particularly troubling there is that this is all occurring in very sensitive and deeply contested areas that have been the subject of ongoing diplomatic efforts, both among the claimants and between China and ASEAN for years. And this behavior is occurring, notwithstanding, agreements reached between China and ASEAN in 2002 in the Declaration of Conduct to forswear these kinds of activities that make it harder to reach a settlement or that raise tensions.

So there are tremendous concerns. These concerns vary among the – well, the countries concerned. So for example, the other claimants – the Philippines, Vietnam, Malaysia, Brunei, Taiwan – have understandable concerns because China says, “Our claims are indisputable,” in the face of the fact that they’re being disputed by the other claimants, and uses its military might and its economic leverage and other coercive means to try to create facts on the ground and unilaterally change the status quo. What are they to do? And that is one of the factors that drove the Philippines, having failed to get a – where bilateral design efforts through the multilateral ASEAN process, to bring a case against China in the tribunal under the law of the sea.

Beyond the claimants, the ASEAN ten countries are understandably concerned in some cases about practical matters such as the large scale fishing, often illegal and unregulated fishing, by these massive Chinese fishing fleets, but also by a general climate of intimidation or of threats. Our concern is not over who owns what. We don’t take positions on whether Country A or Country B’s sovereignty claims are right or wrong anywhere in the world, and certainly not in the South China Sea.

So we’re not arguing for the Philippines claim or the Vietnamese claim or arguing against the Chinese claim, but here’s what we are arguing – number one: claims need to be made in a way that is consistent with international law and all claimants, not only China, should clarify what their claim is and what the basis of it is. But that said, territorial claims are notoriously hard to solve. So number two: countries should pursue their claims peacefully without recourse to the threat or use of force, without bullying, without coercion. Third: regardless of the claim, the conduct and the operation on the high seas is subject to international law, conventional maritime law, and is particularly reflected by the law of the sea.

Now, the joke is that the U.S. abides by UNCLOS, signed it, but never ratified it. China signed and ratified UNCLOS, but doesn’t abide by it. Now, that’s a joke. We will see, because under the Law of the Sea Treaty, the decision of the tribunal that’s meeting now in The Hague is binding without appeal on both parties – in this case, the Philippines and China. And it would be a devastating blow to China’s image, its reputation, and the prospect of China adhering to the rule of law, if as many Chinese officials have previewed, China were to simply reject a treaty obligation; reject a determination by the tribunal. The good news for China – and we make this point in our ongoing discussions – is that the tribunal decision, whatever it is, won’t have any impact on China’s ability to make its sovereignty claims because you can only claim sovereignty to a land feature, not to water. The rules over the water are going to be impacted by the decision, but most people think in a way that can be helpful, because it will narrow the scope of the disagreement and open the door to some diplomatic progress.

Our commitment, in addition to maintaining peace and security, is to the universal principles and rights of freedom of navigation and of unlawful – excuse me – and of unimpeded, lawful commerce. And these are not rights that a coastal country bestows on those who sail the seas nearby. These are universal rights that belong to all countries and cannot and must not be abridged or impeded. That’s why Secretary Carter has said again and again that we will sail, fly, and operate wherever international law allows. And international law allows all countries, all navies, to operate consistent with the Law of the Sea Treaty on the high seas and even to transit territorial waters.

Now we, the United States, don’t claim or exercise any right that we don’t also respect for China or for the other states. So yes, we will sail through territorial waters that either belong to China or are claimed by China and others, but we do so legally.

And when the Chinese Navy – without any notice during, coincidentally, a visit by President Obama to Alaska – sailed through U.S. territorial water in the Aleutians with five warships, what did we do? The U.S. Navy put out a public statement asserting that we respect China’s right to transit our territorial water legally, as they did. That’s the way that we would like China to behave.

QUESTION: Thank you, I’m Chris Lawrence and I’m a security fellow at CSAC. With North Korea, you talked about a blinking arrow towards an exit. So can you talk about what that path – how you envision that path? So when North Korea said you envisioned kind of a phase approach, or is it that you – can you put it as a front and then talk about the relationship? And then on the U.S. side, what are the things the U.S. and the international community need to do in order to add credibility to that path?

ASSISTANT SECRETARY RUSSEL: Well, the good news is that the answers are laid out in black and white in the 2005 September Joint Statement issued by the Six Party negotiators. And subsequently, through the incredible work of my predecessor Chris Hill and through the work of Ambassador Stephens and Dave Straub, and others, Tom – we, with the other partners and with the North Koreans, sort of fleshed out what it would look like.

Now, what’s important about the existing record is this: that the U.S., the ROK, Japan, the others, have already made a commitment to North Korea that as progress is made on denuclearizing the entire Korean Peninsula – and by the way, there are no nuclear weapons in South Korea – that we are committed to non-aggression – in other words, negative security assurances – that we are committed to working towards normalizing diplomatic relations, providing economic assistance, and in a separate path – separate channel, pursuing a successor agreement to the armistice. In other words, a peace arrangement. And there are more working groups within the Six Party process.

So we removed any mystery or doubt about whether the U.S. and the ROK and Japan were prepared to have diplomatic relations, to provide economic assistance, to give North Korea assurances that it was not – their security was not at risk. These have been on the books now for 11 years, and we have reaffirmed them in public, in private, directly, indirectly, everything short of a full page in the Rodong Sinmun. So the issue that’s – that’s the carrot side of the equation, what’s on the table. Those proffers all remain.

And we’ve demonstrated our bonafides and our commitment repeatedly. On the other side of the equation, the issue I think is less on a elaborate mechanism for in what sequence what happens, and the favors and so on, and more of a simple matter of whether or not the DPRK leadership has come to the decision that they will begin a negotiating process to halt, account for, roll back, and ultimately eliminate their nuclear program and their nuclear stockpile. Getting there is going to be incredibly difficult and Chris Hill has shown how starting down that road would proceed.

That’s not the hard part. The hard part, and the simple part, is this: that North Korea walked out of the process. North Korea rejected denuclearization. North Korea, today, won’t even use the word “denuclearization.” They’ll talk about an amorphous concept of disarmament and suggest that if the U.S. would withdraw its troops from South Korea, end joint exercises, and basically cede South Korea to them, then maybe, but maybe, we could start talking about denuclearization.

That’s not serious and that’s not a sustainable position. And so the – the intent and effect of this blinking arrow, reminding the DPRK that there is not only a negotiating record but a willingness on the part of the other Six Party partners to negotiate if North Korea will get serious is, as I said before, part of an effort to complement the pressure and the sanctions with an undertaking to bring them to their senses.

KARL EIKENBERRY: Again, the time has flown by fast. We’re to that last question. So the question from the Stanford American student that ask you, why should they consider a career in the foreign service?

ASSISTANT SECRETARY RUSSEL: You mean, besides the wealth and the glory?

KARL EIKENBERRY: Yes.

(Laughter)

ASSISTANT SECRETARY RUSSEL: Well, we in the diplomatic service are in the people business. And we engage hand-to-hand with people throughout the world on problems that really matter, and that they care about. And many of us are graced with that rare opportunity to actually do something for other people and do something about the problems that we all face. We’re in the information business.

And the ability to learn, not only learn languages, but to learn about the world, to learn about societies and about issues, is a lifelong joy and an incredible driver of personal and professional growth. We’re in the communications business. Much of what we do in diplomacy is to figure out how to listen and how to explain; how to persuade, not to bully, not to demand, not to cajole, not to coerce, but to persuade.

There’s another definition of a diplomat by, I think also, Will Rogers says, a diplomat’s the guy who says, “nice doggy, nice doggy,” as he’s reaching for a big stick. It’s a joke but the “nice doggy” is what we’re all about, not the stick. The challenge of diplomacy is to get someone willingly to do something that you want them to do but they don’t, and that’s not easy, but it’s possible and we’re in the possible business.

It’s also, we’re in the communications business in the sense that we have to, and have the honor of, interpreting what we’re seeing and hearing and presenting it to America’s leaders as practical policy options. And you know, trust me, if a no-goodnick like me can make it all the way to advise the President of the United States, you Stanford people can do a whole lot better.

And then lastly, we’re in the ideas business. And it is rare in life to be able to confront a problem, explore ways forward, come up with a creative idea, often as part of an inter-agency team that will engage on the security side, the commercial side, and present that idea and see it implemented; help make it work. Those are extraordinary opportunities, so you can pick which business of diplomacy suits you best, but it’s an incredibly satisfying career.

KARL EIKENBERRY: Thank you. Well this event was hosted by the Asian Pacific Research Center and the U.S. Asia Security Initiative. And I don’t think it’s a surprise to anybody here that these chairs did not just magically appear, and the sandwiches magically appear out in the hallway. A lot of people make those things happen.

We have a wonderful team here at APARC. Debbi Warren and Lisa Lee did a lot of work, and many others whose names are too many to mention. I think that Lisa Griswald is back there, who helped out very much on the communications front, and then the assistant director for the U.S. Asian Security Initiative, Linda Yomis, really pulled all of this together. So before we thank Danny, I’d like a round of applause for all of those people. And Danny, last for you, you talked at the end about foreign service officer and you talked about a diplomat being persuasive; I think I speak for everybody here that you’ve persuaded this audience that we’re all well served, not just in the United States but throughout the Asia Pacific Region with you as the Assistant Secretary of State for East Asian Pacific affairs. Thank you very much.

Danny has said that he might be able to stay here for just a few minutes. I’d ask, though, if you talk to Danny, respect that there’s others that want to talk to him so, not to monopolize his few minutes available.

General Information

State of the Union 2015: Time for Honesty, Unity and Solidarity

Mr President,

Honourable Members of the European Parliament,

Today is the first time during my mandate as President of the European Commission that I have the honour to address this House on the State of our European Union.

I would therefore like to recall the political importance of this very special institutional moment.

The State of the Union address is foreseen explicitly by the Framework Agreement that governs the relations between the European Parliament and the European Commission. This Agreement provides that [e]ach year in the first part-session of September, a State of the Union debate will be held in which the President of the Commission shall deliver an address, taking stock of the current year and looking ahead to priorities for the following years. To that end, the President of the Commission will in parallel set out in writing to Parliament the main elements guiding the preparation of the Commission Work Programme for the following year.”

The State of the Union address requires the President of the Commission to take stock of the current situation of our European Union and to set priorities for the work ahead.

And it launches the interinstitutional process leading to a new Work Programme of the European Commission for the year ahead.

Together with Frans Timmermans, my First Vice-President, this morning I sent a letter to the Presidents of both branches of the European legislator: to President Martin Schulz, and to Luxembourg’s Prime Minister Xavier Bettel, who currently holds the rotating Presidency of the Council. This letter sets out in detail the numerous actions the Commission intends to take by means of legislation and other initiatives, from now until the end of 2016. We are proposing an ambitious, focused, and intense legislative agenda that will require Commission, Parliament and Council to work closely and effectively together.

I will not go into the details of our legislative agenda now. We will have a structured dialogue with the Parliament and the Council on this in the weeks to come.

But I feel that today is not the moment to speak about all this.

I am the first President of the Commission whose nomination and election is the direct result of the outcome of the European Parliament elections in May 2014.

Having campaigned as a lead candidate, as Spitzenkandidat, in the run up to the elections, I had the opportunity to be a more political President.

This political role is foreseen by the Treaties, by means of which the Member States made the Commission the promoter of the general interest of the Union. But the crisis years have diminished this understanding.

This is why I said last September before this House that I wanted to lead a political Commission. A very political Commission.

I said this not because I believe we can and should politicise everything.

I said it because I believe the immense challenges Europe is currently facing – both internally and externally – leave us no choice but to address them from a very political perspective, in a very political manner and having the political consequences of our decisions very much in mind.

Recent events have confirmed the urgent need for such a political approach in the European Union.

This is not the time for business as usual.

This is not the time for ticking off lists or checking whether this or that sectorial initiative has found its way into the State of the Union speech.

This is not the time to count how many times the word social, economic or sustainable appears in the State of the Union speech.

Instead, it is time for honesty.

It is time to speak frankly about the big issues facing the European Union.

Because our European Union is not in a good state.

There is not enough Europe in this Union.

And there is not enough Union in this Union.

We have to change this. And we have to change this now.

 

The Refugee Crisis: The Imperative to Act as a Union

Whatever work programmes or legislative agendas say: The first priority today is and must be addressing the refugee crisis.

Since the beginning of the year, nearly 500,000 people have made their way to Europe. The vast majority of them are fleeing from war in Syria, the terror of the Islamic State in Libya or dictatorship in Eritrea. The most affected Member States are Greece, with over 213,000 refugees, Hungary, with over 145,000, and Italy, with over 115,000.

The numbers are impressive. For some they are frightening.

But now is not the time to take fright. It is time for bold, determined and concerted action by the European Union, by its institutions and by all its Member States.

This is first of all a matter of humanity and of human dignity. And for Europe it is also a matter of historical fairness.

We Europeans should remember well that Europe is a continent where nearly everyone has at one time been a refugee. Our common history is marked by millions of Europeans fleeing from religious or political persecution, from war, dictatorship, or oppression.

Huguenots fleeing from France in the 17th century.

Jews, Sinti, Roma and many others fleeing from Germany during the Nazi horror of the 1930s and 1940s.

Spanish republicans fleeing to refugee camps in southern France at the end of the 1930s after their defeat in the Civil War.

Hungarian revolutionaries fleeing to Austria after their uprising against communist rule was oppressed by Soviet tanks in 1956.

Czech and Slovak citizens seeking exile in other European countries after the oppression of the Prague Spring in 1968.

Hundreds and thousands were forced to flee from their homes after the Yugoslav wars.

Have we forgotten that there is a reason there are more McDonalds living in the U.S. than there are in Scotland? That there is a reason the number of O’Neills and Murphys in the U.S. exceeds by far those living in Ireland?

Have we forgotten that 20 million people of Polish ancestry live outside Poland, as a result of political and economic emigration after the many border shifts, forced expulsions and resettlements during Poland’s often painful history?

Have we really forgotten that after the devastation of the Second World War, 60 million people were refugees in Europe? That as a result of this terrible European experience, a global protection regime – the 1951 Geneva Convention on the status of refugees – was established to grant refuge to those who jumped the walls in Europe to escape from war and totalitarian oppression?

We Europeans should know and should never forget why giving refuge and complying with the fundamental right to asylum is so important.

I have said in the past that we are too seldom proud of our European heritage and our European project.

Yet, in spite of our fragility, our self-perceived weaknesses, today it is Europe that is sought as a place of refuge and exile.

It is Europe today that represents a beacon of hope, a haven of stability in the eyes of women and men in the Middle East and in Africa.

That is something to be proud of and not something to fear.

Europe today, in spite of many differences amongst its Member States, is by far the wealthiest and most stable continent in the world.

We have the means to help those fleeing from war, terror and oppression.

I know that many now will want to say that this is all very well, but Europe cannot take everybody.

It is true that Europe cannot house all the misery of the world. But let us be honest and put things into perspective.

There is certainly an important and unprecedented number of refugees coming to Europe at the moment. However, they still represent just 0.11% of the total EU population. In Lebanon, refugees represent 25% of the population. And this in a country where people have only one fifth of the wealth we enjoy in the European Union.

Let us also be clear and honest with our often worried citizens: as long as there is war in Syria and terror in Libya, the refugee crisis will not simply go away.

We can build walls, we can build fences. But imagine for a second it were you, your child in your arms, the world you knew torn apart around you. There is no price you would not pay, there is no wall you would not climb, no sea you would not sail, no border you would not cross if it is war or the barbarism of the so-called Islamic State that you are fleeing.

So it is high time to act to manage the refugee crisis. There is no alternative to this.

There has been a lot finger pointing in the past weeks. Member States have accused each other of not doing enough or of doing the wrong thing. And more often than not fingers have been pointed from national capitals towards Brussels.

We could all be angry about this blame-game. But I wonder who that would serve. Being angry does not help anyone. And the attempt of blaming others is often just a sign that politicians are overwhelmed by unexpected events.

Instead, we should rather recall what has been agreed that can help in the current situation. It is time to look at what is on the table and move swiftly forwards.

We are not starting anew. Since the early 2000s, the Commission has persistently tabled legislation after legislation, to build a Common European Asylum System. And the Parliament and the Council have enacted this legislation, piece by piece. The last piece of legislation entered into force just in July 2015.

Across Europe we now have common standards for the way we receive asylum seekers, in respect of their dignity, for the way we process their asylum applications, and we have common criteria which our independent justice systems use to determine whether someone is entitled to international protection.

But these standards need to be implemented and respected in practice. And this is clearly not yet the case, we can see this every day on television. Before the summer, the Commission had to start a first series of 32 infringement proceedings to remind Member States of what they had previously agreed to do. And a second series will follow in the days to come. European laws must be applied by all Member States – this must be self-evident in a Union based on the rule of law.

Common asylum standards are important, but not enough to cope with the current refugee crisis. The Commission, the Parliament and the Council said this in spring. The Commission tabled a comprehensive European Agenda on Migration in May. And it would be dishonest to say that nothing has happened since then.

We tripled our presence at sea. Over 122,000 lives have been saved since then. Every life lost is one too many, but many more have been rescued that would have been lost otherwise – an increase of 250%. 29 Member States and Schengen Associated countries are participating in the joint operations coordinated by Frontex in Italy, Greece and Hungary. 102 guest officers from 20 countries; 31 ships; 3 helicopters; 4 fixed wing aircrafts; 8 patrol cars, 6 thermos-vision vehicles and 4 transport vehicles – that is a first measure of European solidarity in action, even though more will have to be done.

We have redoubled our efforts to tackle smugglers and dismantle human trafficker groups. Cheap ships are now harder to come by, leading to less people putting their lives in peril in rickety, unseaworthy boats. As a result, the Central Mediterranean route has stabilised at around 115,000 arriving during the month of August, the same as last year. We now need to achieve a similar stabilisation of the Balkans route, which has clearly been neglected by all policy-makers.

The European Union is also the number one donor in the global efforts to alleviate the Syrian refugee crisis. Around €4 billion have been mobilised by the European Commission and Member States in humanitarian, development, economic and stabilisation assistance to Syrians in their country and to refugees and their host communities in neighbouring Lebanon, Jordan, Iraq, Turkey and Egypt. Indeed just today we launched two new projects to provide schooling and food security to 240,000 Syrian refugees in Turkey.

We have collectively committed to resettling over 22,000 people from outside of Europe over the next year, showing solidarity with our neighbours. Of course, this remains very modest in comparison to the Herculean efforts undertaken by Turkey, Jordan and Lebanon, who are hosting over 4 million Syrian refugees. I am encouraged that some Member States are showing their willingness to significantly step up our European resettlement efforts. This will allow us very soon to come forward with a structured system to pool European resettlement efforts more systematically.

Where Europe has clearly under-delivered, is on common solidarity with regard to the refugees who have arrived on our territory.

To me, it is clear that the Member States where most refugees first arrive – at the moment, these are Italy, Greece and Hungary – cannot be left alone to cope with this challenge.

This is why the Commission already proposed an emergency mechanism in May, to relocate initially 40,000 people seeking international protection from Italy and Greece.

And this is why today we are proposing a second emergency mechanism to relocate a further 120,000 from Italy, Greece and Hungary.

This requires a strong effort in European solidarity. Before the summer, we did not receive the backing from Member States I had hoped for. But I see that the mood is turning. And I believe it is high time for this.

I call on Member States to adopt the Commission proposals on the emergency relocation of altogether 160,000 refugees at the Extraordinary Council of Interior Ministers on 14 September. We now need immediate action. We cannot leave Italy, Greece and Hungary to fare alone. Just as we would not leave any other EU Member State alone. For if it is Syria and Libya people are fleeing from today, it could just as easily be Ukraine tomorrow.

Europe has made make the mistake in the past of distinguishing between Jews, Christians, Muslims. There is no religion, no belief, no philosophy when it comes to refugees.

Do not underestimate the urgency. Do not underestimate our imperative to act. Winter is approaching – think of the families sleeping in parks and railway stations in Budapest, in tents in Traiskirchen, or on shores in Kos. What we will become of them on cold, winter nights?

Of course, relocation alone will not solve the issue. It is true that we also need to separate better those who are in clear need of international protection and are therefore very likely to apply for asylum successfully; and those who are leaving their country for other reasons which do not fall under the right of asylum. This is why today the Commission is proposing a common EU list of safe countries of origin. This list will enable Member States to fast track asylum procedures for nationals of countries that are presumed safe to live in. This presumption of safety must in our view certainly apply to all countries which the European Council unanimously decided meet the basic Copenhagen criteria for EU membership – notably as regards democracy, the rule of law, and fundamental rights. It should also apply to the other potential candidate countries on the Western Balkans, in view of their progress made towards candidate status.

I am of course aware that the list of safe countries is only a procedural simplification. It cannot take away the fundamental right of asylum for asylum seekers from Albania, Bosnia and Herzegovina, the former Yugoslav Republic of Macedonia, Kosovo, Montenegro, Serbia, and Turkey. But it allows national authorities to focus on those refugees which are much more likely to be granted asylum, notably those from Syria. And this focus is very much needed in the current situation.

I also believe that beyond the immediate action needed to address current emergencies, it is time we prepare a more fundamental change in the way we deal with asylum applications – and notably the Dublin system that requires that asylum applications be dealt with by the first country of entry.

We need more Europe in our asylum policy. We need more Union in our refugee policy.

A true European refugee and asylum policy requires solidarity to be permanently anchored in our policy approach and our rules. This is why, today, the Commission is also proposing a permanent relocation mechanism, which will allow us to deal with crisis situations more swiftly in the future.

A common refugee and asylum policy requires further approximation of asylum policies after refugee status is granted. Member States need to take a second look at their support, integration and inclusion policies. The Commission is ready to look into how EU Funds can support these efforts. And I am strongly in favour of allowing asylum seekers to work and earn their own money whilst their applications are being processed.

A united refugee and asylum policy also requires stronger joint efforts to secure our external borders. Fortunately, we have given up border controls between the Member States of the Schengen area, to guarantee free movement of people, a unique symbol of European integration. But the other side of the coin to free movement is that we must work together more closely to manage our external borders. This is what our citizens expect. The Commission said it back in May, and I said it during my election campaign: We need to strengthen Frontex significantly and develop it into a fully operational European border and coast guard system. It is certainly feasible. But it will cost money. The Commission believes this is money well invested. This is why we will propose ambitious steps towards a European Border and Coast Guard before the end of the year.

A truly united, European migration policy also means that we need to look into opening legal channels for migration. Let us be clear: this will not help in addressing the current refugee crisis. But if there are more, safe and controlled roads opened to Europe, we can manage migration better and make the illegal work of human traffickers less attractive. Let us not forget, we are an ageing continent in demographic decline. We will be needing talent. Over time, migration must change from a problem to be tackled to a well-managed resource. To this end, the Commission will come forward with a well-designed legal migration package in early 2016.

A lasting solution will only come if we address the root causes, the reasons why we are currently facing this important refugee crisis. Our European foreign policy must be more assertive. We can no longer afford to be ignorant or disunited with regard to war or instability right in our neighbourhood.

In Libya, the EU and our Member States need to do more to engage with regional partners to make sure a Government of National Accord is in place soon. We should be prepared to help, with all EU instruments available, such a government to deliver security and services to the population as soon as it is in place. Our EU development and humanitarian support will have to be immediate and comprehensive.

I would also like to point out that we are entering the fifth year of the Syrian crisis with no end in sight. So far, the international community has failed the Syrian people. Europe has failed the Syrian people.

Today I call for a European diplomatic offensive to address the crises in Syria and in Libya. We need a stronger Europe when it comes to foreign policy. And I am very glad that Federica Mogherini, our determined High Representative, has prepared the ground for such an initiative with her diplomatic success in the Iran nuclear talks. And that she stands ready to work closely together with our Member States towards peace and stability in Syria and Libya.

To facilitate Federica’s work, today the Commission is proposing to establish an emergency Trust Fund, starting with €1.8 billion from our common EU financial means to address the crises in the Sahel and Lake Chad regions, the Horn of Africa, and the North of Africa. We want to help create lasting stability, for instance by creating employment opportunities in local communities, and thereby address the root causes of destabilisation, forced displacement and illegal migration. I expect all EU Member States to pitch in and match our ambitions.

I do not want to create any illusions that the refugee crisis will be over any time soon. It will not. But pushing back boats from piers, setting fire to refugee camps, or turning a blind eye to poor and helpless people: that is not Europe.

Europe is the baker in Kos who gives away his bread to hungry and weary souls. Europe is the students in Munich and in Passau who bring clothes for the new arrivals at the train station. Europe is the policeman in Austria who welcomes exhausted refugees upon crossing the border. This is the Europe I want to live in.

The crisis is stark and the journey is still long. I am counting on you, in this House, and on all Member States to show European courage going forward, in line with our common values and our history.

 

A new start for Greece, for the euro area and for the European economy

Mr President, Honourable Members,

I said I want to talk about the big issues today. This is why this State of the Union speech needs to address the situation in Greece, as well as the broader lessons from the fifth year of Greek crisis the impact of which continues to be felt in the Eurozone and in the European economy and society as a whole.

Since the start of the year, the talks on Greece have tested all our patience. A lot of time and a lot of trust was lost. Bridges were burnt. Words were said that cannot easily be taken back.

We saw political posturing, bickering and insults carelessly bandied about.

Too often, we saw people thinking they can impose their views without a wayward thought for another’s point of view.

We saw democracies in the Eurozone being played against each other. The recovery and creation of jobs witnessed last year in Greece vanished during these months.

Collectively, we looked into the abyss.

And it was once more only when we were at the brink that we were able to see the bigger picture and to live up to our responsibilities.

In the end, a deal was reached, commitments were adhered to and implemented. Trust has started to be regained, even though it remains very fragile.

I am not proud of every aspect of the results achieved. However, I am proud of the teams in the European Commission who worked day and night until late in August, relentlessly, to bridge the gap between far-flung positions and to bring about solutions in the interest of Europe and of the Greek people.

I know that not everybody was happy with what the Commission did.

Many Greek politicians were not happy that we insisted on reforms in Greece, notably as regards the unsustainable pension system and the unfair tax regime.

Many other European politicians could not understand why the Commission continued to negotiate. Some could not understand why we did not simply leave all the talks to the technicians of the International Monetary Fund. Why we sometimes also spoke about the social side of programme commitments and amended those to take account of the effects on the most vulnerable in society. Or that I personally dared to say again and again that the euro, and membership in the euro, is meant to be irreversible.

Mr President, Honourable Members,

The Commission’s mandate in negotiations with a programme country such as Greece has a very clear basis: it is the Treaty on European Union which calls on the Commission to promote the common interest of the Union and to uphold the law. The same law includes the Treaty clause, agreed by all Member States, that qualifies membership in the euro as irrevocable.

As long as Member States have not amended the Treaties, I believe the Commission and all other EU institutions have a clear mandate and duty to do everything possible to preserve the integrity of the euro area.

The Commission has also been explicitly entrusted by the European Stability Mechanism (ESM) Treaty, ratified by all euro area Member States, with conducting programme negotiations with a Member State. We have to do this in liaison with the European Central Bank and, where possible, together with the International Monetary Fund. But we have a clear mandate to do so.

Where the Treaties talk about the Commission, I read this as meaning the Commission as an institution that is politically led by the President and the College of Commissioners. This is why I did not leave the talks with Greece to the Commission bureaucracy alone, in spite of their great expertise and the hard work they are doing. But I spoke personally to our experts regularly, often several times per day, to orient them or to adjust their work. I also ensured that every week, the situation of the negotiations in Greece was discussed at length and very politically in the meetings of the College.

Because it is not a technical question whether you increase VAT not only on restaurants, but also on processed food. It is a political and social question.

It is not a technical question, but a deeply political question, whether you increase VAT on medicines in a country where 30% of the population is no longer covered by the public health system as a result of the crisis. Or whether you cut military expenditure instead – in a country that continues to have one of the highest military expenditures in the EU.

It is certainly not a technical question whether you reduce the pensions of the poorest in society or the minimum wage; or if you instead levy a tax on Greek ship owners.

Of course, the figures in what is now the third Greek programme had to add up in the end. But we managed to do this with social fairness in mind. I read the Troika report of the European Parliament very thoroughly. I hope you can see that we have drawn the lessons from this, that we have made, for the first time, a social impact assessment of the programme. Even though I admit frankly that the Commission also had to compromise sometimes in these negotiations.

What matters to me, is that, in the end, a compromise was found which could be agreed by all 19 euro area Member States, including Greece.

After weeks of talks, small progress, repeated setbacks, many crisis moments, and often a good dose of drama, we managed to sign a new Stability Support Programme for Greece on 19 August.

Now that the new programme is in place, I want it to be a new start, for Greece and for the euro area as a whole.

Let us be very honest: We are only at the beginning of a new, long journey.

For Greece, the key now is to implement the deal which was agreed. There has to be broad political ownership for this.

I had the leaders of all the mainstream Greek political groups in my office before the final agreement was concluded. They all promised to support this agreement, and they gave first proof of their commitment when they voted for the new programme and for the first three waves of reforms in the Hellenic Parliament. I expect them to stand by their word and deliver on the agreement – whoever governs. Broad support and timely delivery of the reforms is what Greece needs, so that confidence can return both among the Greek people and to the Greek economy.

The programme is one thing, but it is not enough to put Greece on a path of sustainable growth. The Commission will stand by Greece to make sure the reforms take shape. And we will assist Greece in developing a growth strategy which is Greek owned and Greek led.

From the modernisation of the public administration and the independence of the tax authority, the Commission will provide tailor-made technical assistance, together with the help of European and international partners. This will be the main task of the new Structural Reform Support Service I established in July.

On 15 July, the Commission also put forward a proposal to limit national co-financing in Greece and to frontload funding for investment projects short of liquidity: a €35 billion package for growth. This is urgent for recovery after months of financial squeeze. This is money that will reach the Greek real economy, for businesses and authorities to invest and recruit.

The Commission worked day-in, day-out to put this on the table. National Parliaments met several times throughout the month of August. I therefore hope that the European Parliament will also play its part, in line with previous commitments. Our programme for growth in Greece has been on the table of this House for two months. If adopted, it will still take several weeks until the first euro will reach the real economy of Greece.

I call on you to follow the example of the Council, which will agree on this growth programme by the end of this month. The European Parliament should be at least as fast as the Council on this.

I said I wanted the new programme to be a new start not just for Greece but for the euro area as a whole, because there are important lessons we need to draw from the crisis that has haunted us for far too long.

The economic and social situation speaks for itself: over 23 million people are still unemployed today in the European Union, with more than half without a job for a year or more. In the euro area alone, more than 17.5 million people are without a job. Our recovery is hampered by global uncertainties. Government debt in the EU has reached more than 88% of GDP on average, and stands at almost 93% in the euro area.

The crisis is not over. It has just been put on pause.

This is not to say that nothing is happening. Unemployment figures are improving, GDP is rising at its highest rate for years, and the financing conditions of households and companies have recovered significantly. And several Member States once severely affected – like Latvia, Ireland, Spain and Portugal – which received European financial assistance are now steadily growing and consolidating their economies.

This is progress but recovery is too slow, too fragile and too dependent on our external partners.

More fundamentally, the crisis has left us with very wide differences across the euro area and the EU as a whole. It has damaged our growth potential. It has added to the long-term trend of rising inequalities. All this has fuelled doubts about social progress, the value of change and the merits of belonging together.

What we need is to recreate a process of convergence, both between Member States and within societies, with productivity, job creation and social fairness at its core.

We need more Union in our Europe.

For the European Union, and for my Commission in particular, this means two things: first, investing in Europe’s sources of jobs and growth, notably in our Single Market; and secondly, completing our Economic and Monetary Union to creating the conditions for a lasting recovery. We are acting on both fronts.

Together with you and the Member States, we brought to life the €315 billion Investment Plan for Europe, with a new European Fund for Strategic Investments (EFSI).

Less than a year after I announced this plan, we are now at a point where some of the first projects are just taking off:

40,000 households all over France will get a lower energy bill and 6,000 jobs will be created, thanks to Investment Fund-financed improved energy efficiency in buildings.

In health clinics in Barcelona, better treatment will be available to patients through new plasma derived therapies, funded by the Investment Fund.

In Limerick and other locations in Ireland, families will have improved access to primary healthcare and social services through fourteen new primary care centres. This is just the beginning, with many more projects like these to follow.

At the same time as we deploy our Investment Plan, we are upgrading our Single Market to create more opportunities for people and business in all 28 Member States. Thanks to Commission projects such as the Digital Single Market, Capital Markets Union and the Energy Union, we are reducing obstacles to activities cross-border and using the scale of our continent to stimulate innovation, connecting talents and offering a wider choice of products and services.

But we will fail in our efforts to prosper if we do not learn a hard lesson: we have not yet convinced the people of Europe and the world that our Union is not just here to survive, but can also thrive and prosper.

Let us not fool ourselves: our collective inability to provide a swift and clear answer to the Greek crisis over the last months weakened us all. It damaged the trust in our single currency and the EU’s reputation in the world.

No wind favours he who has no destined port – we need to know where we are headed.

This is the essence of the report I presented in June with the other Presidents of the European institutions on the completion of our Economic and Monetary Union.

It was self-evident for me to include President Schulz in this important work. After all, the Parliament is the heart of democracy at EU level, just as national Parliaments are the heart of democracy at national level. The European Parliament is and must remain the Parliament of the euro area. And the European Parliament, in its role as co-legislator, will be in charge of deciding on the new initiatives the Commission will propose in the months to come to deepen our Economic and Monetary Union. I am therefore glad that for the first time, we have written not a ‘Four Presidents’ Report’, but a ‘Five Presidents’ Report’.

Despite months of late-night discussions to find an agreement for Greece, we wrote this report in May and June to set out the course for a stronger future. The Five Presidents of the leading EU institutions have agreed a roadmap that should allow us to stabilise and consolidate the euro area by early 2017; and then, on the basis of a renewed convergence of our economies, to achieve more fundamental reform and move where we can from crisis resilience to new growth perspectives.

As we had expected, the Five Presidents’ Report has triggered a lively debate across Europe. Some say we need a government of the euro. Others say we need more discipline and respect of the rules. I agree with both: we need collective responsibility, a greater sense of the common good and full respect and implementation of what is collectively agreed. But I do not agree this should mean the multiplication of institutions or putting the euro on auto pilot, as if new institutions or magic rules could deliver more or better.

You cannot run a single currency on the basis of rules and statistics alone. It needs constant political assessment, as the basis of new economic, fiscal and social policy choices.

The Five Presidents’ Report includes a full agenda of work for the years to come, and I want us to move swiftly on all fronts – economic, financial, fiscal and political Union. Some efforts will have to be focused on the euro area, while others should be open to all 28 Member States, in view of their close interaction with our Single Market.

Allow me to highlight five domains where the Commission will present ambitious proposals swiftly and where we will be expecting progress already this autumn.

First: the Five Presidents agreed that we need a common system to ensure that citizens’ bank savings are always protected up to a limit of €100,000 per person and account. This is the missing part of our Banking Union.

Today, such protection schemes exist, but they are all national. What we need is a more European system, disconnected from government purses so that citizens can be absolutely sure that their savings are safe.

We all saw what happened in Greece during the summer: Citizens were – understandably – taking out their savings since they had little trust and confidence in the financial capability of the State to support its banking system. This must change.

A more common deposit guarantee system is urgently needed, and the Commission will present a legislative proposal on the first steps towards this before the end of the year.

I am of course fully aware there is no consensus on this yet. But I also know that many of you are as convinced as I am of the need to move ahead. I say to those who are more sceptical: the Commission is fully aware that there are differences in the starting positions of Member States. Some have developed and well-financed their national systems of deposit insurance. Others are still building up such systems. We need to take these differences into account. This is why the Five Presidents’ Report advocates not full mutualisation, but a new approach by means of a reinsurance system. We will present further details on this in the weeks to come.

Second: we need a stronger representation of the euro on the global scene. How is it possible that the euro area, which has the second largest currency in the world, can still not speak with one voice on economic matters in international financial institutions?

Imagine yourselves in the daily work of the International Monetary Fund for a moment. We know well how important the IMF is. Still, instead of speaking with one voice as the euro area, Belgium and Luxembourg have to agree their voting position with Armenia and Israel; and Spain sits in a joint constituency with Latin American countries.

How can it be that we – Europeans – are jointly major shareholders of global institutions such as the IMF and the World Bank and still end up acting as a minority?

How can it be that a strategically important new Infrastructure Investment Bank is created in Asia, and European governments, instead of coordinating their efforts, engage in a race who is first to become a member?

We need to grow up and put our common interests ahead of our national ones. For me, the President of the Eurogroup should be the natural spokesperson for the euro area in international financial institutions such as the IMF.

Third: we need a more effective and more democratic system of economic and fiscal surveillance. I want this Parliament, national Parliaments, as well as social partners at all levels, to be key actors in the process. I also want the interest of the euro area as a whole to be better reflected upfront in EU and national policies: the interest of the whole is not just the sum of its parts. This will be reflected in our proposals to streamline and strengthen the European Semester of economic policy coordination further.

In the future, I no longer want our recommendations for the economic orientation of the euro area as a whole to be empty words. I want them to provide real orientation, notably on the fiscal stance of the euro area.

Fourth: we need to enhance fairness in our taxation policies. This requires greater transparency and equity, for citizens and companies. We presented an Action Plan in June, the gist of which is the following: the country where a company generates its profits must also be the country of taxation.

One step towards this goal is our work on a Common Consolidated Corporate Tax Base. This simplification will make tax avoidance more difficult.

We are also working hard with the Council to conclude an agreement on the automatic exchange of information on tax rulings by the end of the year.

At the same time, we expect our investigations into the different national schemes to yield results very soon.

And we are fighting hard to get Member States to adopt the modalities of a Financial Transaction Tax by the end of the year.

We need more Europe, we need more Union, and we need more fairness in our taxation policy.

Fifth: We have to step up the work for a fair and truly pan-European labour market. Fairness in this context means promoting and safeguarding the free movement of citizens as a fundamental right of our Union, while avoiding cases of abuses and risks of social dumping.

Labour mobility is welcome and needed to make the euro area and the single market prosper. But labour mobility should be based on clear rules and principles. The key principle should be that we ensure the same pay for the same job at the same place.

As part of these efforts, I will want to develop a European pillar of social rights, which takes account of the changing realities of Europe’s societies and the world of work. And which can serve as a compass for the renewed convergence within the euro area.

This European pillar of social rights should complement what we have already jointly achieved when it comes to the protection of workers in the EU. I will expect social partners to play a central role in this process. I believe we do well to start with this initiative within the euro area, while allowing other EU Member States to join in if they want to do so.

As said in the Five Presidents’ Report, we will also need to look ahead at more fundamental steps with regard to the euro area. The Commission will present a White Paper on this in spring 2017.

Yes, we will need to set up a Euro Area Treasury over time, which is accountable at European level. And I believe it should be built on the European Stability Mechanism we created during the crisis, which has, with a potential credit volume of €500 billion, a firepower that is as important as the one of the IMF. The ESM should progressively assume a broader macroeconomic stabilisation function to better deal with shocks that cannot be managed at the national level alone. We will prepare the ground for this to happen in the second half of this mandate.

The European Union is a dynamic project. A project to serve its people. There are no winners or losers. We all get back more than we put in. It is one, comprehensive project. This is also a message for our partners in the United Kingdom, which I have very much in my mind when thinking about the big political challenges of the months to come.

A fair deal for Britain

Since I took office, things have become clearer as regards the United Kingdom: before the end of 2017, there will be a referendum on whether Britain remains in the Union or not. This will of course be a decision for voters in the United Kingdom. But it would not be honest nor realistic to say that this decision will not be of strategic importance for the Union as a whole.

I have always said that I want the UK to stay in the European Union. And that I want to work together with the British government on a fair deal for Britain.

The British are asking fundamental questions to and of the EU. Whether the EU delivers prosperity for its citizens. Whether the action of the EU concentrates on areas where it can deliver results. Whether the EU is open to the rest of the world.

These are questions to which the EU has answers, and not just for the sake of the UK. All 28 EU Member States want the EU to be modern and focused for the benefit of all its citizens. We all agree that the EU must adapt and change in view of the major challenges and crisis we are facing at the moment.

This is why we are completing the Single Market, slashing red tape, improving the investment climate for small businesses.

This is why we are creating a Digital Single Market – to make it such that your location in the EU makes no difference to the price you pay when you book a car online. We are modernising the EU’s copyright rules – to increase people’s access to cultural content online while ensuring that authors get a fair remuneration. And just two months ago, the EU agreed to abolish roaming charges as of summer 2017, a move many tourists and travellers, notably from Britain, have been calling for, for years.

This is why we are negotiating trade agreements with leading nations such as the Transatlantic Trade and Investment Partnership. This is why we are opening markets and breaking down barriers for businesses and workers in all 28 EU Member States.

It is my very personal commitment to improve the way in which the Union works with national Parliaments. I have inscribed a duty to interact more closely with national Parliaments in the mission letters of all Members of my Commission. I am convinced that strengthening our relationship with national Parliaments will bring the Union closer to the people that it serves. This is an ambition that I know Prime Minister David Cameron also shares. I am confident that we will be able to find a common answer.

Over a year ago, when I campaigned to become President of the Commission, I made a vow that, as President, I would seek a fair deal for Britain. A deal that is fair for Britain. And that is also fair for the 27 other Member States.

I want to ensure we preserve the integrity of all four freedoms of the Single Market and at the same time find ways to allow the further integration of the Eurozone to strengthen the Economic and Monetary Union.

To be fair to the UK, part of this deal will be to recognise the reality that not all Member States participate in all areas of EU policy. Special Protocols define the position of the UK, for instance in relation to the euro and to Justice and Home Affairs. To be fair to the other Member States, the UK’s choices must not prevent them from further integration where they see fit.

I will seek a fair deal for Britain. I will do this for one reason and one reason alone: because I believe that the EU is better with Britain in it and that Britain is better within the EU.

In key areas, we can achieve much more by acting collectively, than we could each on our own. This is in particular the case for the tremendous foreign policy challenges Europe is currently facing and which I will address in the next part of this speech.

United alongside Ukraine

Europe is a small part of the world. If we have something to offer, it is our knowledge and leadership.

Around a century ago, one in five of the world’s population were in Europe; today that figure is one in nine; in another century it will be one in twenty-five.

I believe we can, and should, play our part on the world stage; not for our own vanity, but because we have something to offer. We can show the world the strength that comes from uniting and the strategic interest in acting together. There has never been a more urgent and compelling time to do so.

We have more than 40 active conflicts in the world at the moment. While these conflict rage, whilst families are broken and homes reduced to rubble, I cannot come to you, almost 60 years after the birth of the European Union and pitch you peace. For the world is not at peace.

If we want to promote a more peaceful world, we will need more Europe and more Union in our foreign policy. This is most urgent towards Ukraine.

The challenge of helping Ukraine to survive, to reform and to prosper is a European one. Ultimately, the Ukrainian dream, the dream of the Maidan is European: to live in a modern country, in a stable economy, in a sound and fair political system.

Over the past twelve months, I have got to know President Poroshenko well, at a Summit, over dinner at his home, during many meetings and countless phone calls. He has begun a transformation of his country. He is fighting for peace. He deserves our support.

We have already done a lot, lending €3.41 billion in three Macro-Financial Assistance programmes, helping to broker a deal that will secure Ukraine’s winter gas supplies and advising on the reform of the judiciary. The EU and all its Member States must contribute if we are to succeed.

We will also need to maintain our unity.

We need unity when it comes to the security of our Eastern Member States, notably the Baltics. The security and the borders of EU Member States are untouchable. I want this to be understood very clearly in Moscow.

We need more unity when it comes to sanctions. The sanctions the EU has imposed on Russia have a cost for each of our economies, and repercussions on important sectors, like farming. But sanctions are a powerful tool in confronting aggression and violation of international law. They are a policy that needs to be kept in place until the Minsk Agreements are complied with in full. We will have to keep our nerve and our unity.

But we must also continue to look for solutions.

I spoke to President Putin in Brisbane at the G20, in a bilateral meeting that went on into the early hours of the morning. We recalled how long we have known each other, how different times had become. A spirit of cooperation between the EU and Russia has given way to suspicion and distrust.

The EU must show Russia the cost of confrontation but it must also make clear it is prepared to engage.

I do not want a Europe that stands on the sidelines of history. I want a Europe that leads. When the European Union stands united, we can change the world.

United in Leadership in Addressing Climate Change

One example of where we Europe is already leading is in our action on climate change.

In Europe we all know that climate change is a major global challenge – and we have known for a while now.

The planet we share – its atmosphere and stable climate – cannot cope with the use mankind is making of it.

Some parts of the world have been living beyond their means, creating carbon debt and living on it. As we know from economics and crisis management, living beyond our means is not sustainable behaviour.

Nature will foot us the bill soon enough. In some parts of the world, climate change is changing the sources of conflict – the control over a dam or a lake can be more strategic than an oil refinery.

Climate change is even one the root causes of a new migration phenomenon. Climate refugees will become a new challenge – if we do not act swiftly.

The world will meet in Paris in 90 days to agree on action to meet the target of keeping the global temperature rise below 2 degrees Celsius. The EU is on track and made a clear pledge back in March: a binding, economy-wide emissions reduction target of at least 40% by 2030, compared to 1990 levels. This is the most ambitious contribution presented to date.

Others are following, some only reluctantly.

Let me be very clear to our international partners: the EU will not sign just any deal. My priority, Europe’s priority, is to adopt an ambitious, robust and binding global climate deal.

This is why my Commission and I have been spending part of this first year in drumming support for ambition in Paris. Last May I was in Tokyo where I challenged Prime Minister Abe to work with us in ensuring that Paris is a worthy successor of Kyoto.

In June at the G7 summit, leaders agreed to develop long-term low-carbon strategies and abandon fossil fuels by the end of the century.

Later I met Chinese Premier Li Keqiang to prepare Paris and to launch a partnership to ensure that cities of today are designed to meet the energy and climate needs of tomorrow.

And, in coordination with the High Representative, the members of the College have been engaged in climate diplomacy efforts. Today Commissioner Arias Cañete is in Papua New Guinea discussing the plans for Paris with the leaders of the Pacific Islands Forum. If corrective action is not taken to tackle climate change, the tide will rise and those islands will be the proverbial canary in the coalmine.

However, if Paris delivers, humanity will, for the first time, have an international regime to efficiently combat climate change.

Paris will be the next stop but not the last stop. There is a Road to Paris; but there is also a Road from Paris.

My Commission will work to ensure Europe keeps leading in the fight against climate change. We will practice what we preach.

We have no silver bullet to tackle climate change. But our laws, such as the EU Emissions Trading Scheme, and our actions have allowed us to decrease carbon emissions whilst keeping the economy growing.

Our forward-looking climate policy is also delivering on our much needed Energy Union goals: it is making us a world leader in the renewable energy sector, which today employs over one million people across the EU and generates €130 billion turnover, including €35 billion worth of exports. European companies today hold 40% of all patents for renewable technologies and the pace of technological change increases the potential for new global trade in green technology.

This is why a strategic focus on innovation and on interconnecting our markets is being given in the implementation of the Energy Union.

This is what I promised you last year and this is what this Commission has delivered and will continue to deliver.

The fight against climate change will not be won or lost in diplomatic discussions in Brussels or in Paris. It will be won or lost on the ground and in the cities where most Europeans live, work and use about 80% of all the energy produced in Europe.

That is why I have asked President Schulz to host the Covenant of the Mayors meeting in the Parliament next month, bringing together more than 5,000 European mayors. They have all pledged to meet the EU CO2 reduction objective. I hope that all members of this House will lend their support to the action that communities and localities across Europe are taking to making Paris and its follow up a success.

Conclusion

Mr President, Honourable Members,

There were many things I did not and could not mention today. For example, I would have liked to talk to you about Cyprus and my hope, my ambition and my wish to see the island united next year. After I met for a long talk with Presidents Nikos Anastasiades and Mustafa Akinci in the middle of the Green Line in July, I am confident that, with the necessary vision and political will from the two leaders, this is feasible under the current conditions and with continued good coordination between UN and EU efforts. I will offer all my support and assistance to help achieve this objective. Because I believe that walls and fences have no place in an EU Member State.

I have not spoken about Europe’s farmers who were protesting this week in Brussels. I agree with them that there is something wrong in a market when the price of a litre of milk is less than the price of a litre of water. But I do not believe that we can or should start micromanaging the milk market from Brussels. We should compensate the farmers who are suffering from the effects of sanctions against Russia. And this is why the Commission is putting a €500 million solidarity package for farmers on the table. And European and national competition authorities should take a close look into the structure of the market. Something has turned sour in the milk market. My impression is that we need to break some retail oligopolies.

There is much more to be said but in touching upon the main issues, the main challenges confronting us today, for me there is one thing that becomes clear: whether it is the refugee crisis we are talking about, the economy or foreign policy: we can only succeed as a Union.

Who is the Union that represents Europe’s 507 million citizens? The Union is not just Brussels or Strasbourg. The Union is the European Institutions. The Union is also the Member States. It is national governments and national Parliaments.

It is enough if just one of us fails to deliver for all of us to stumble.

Europe and our Union have to deliver. While I am a strong defender of the Community method in normal times, I am not a purist in crisis times – I do not mind how we cope with a crisis, be it by intergovernmental solutions or community-led processes. As long as we find a solution and get things done in the interest of Europe’s citizens.

However, when we see the weaknesses of a method, we have to change our approach.

Look at the relocation mechanism for refugees we put on the table for Greece and Italy in May: the Commission proposed a binding, communitarian solidarity scheme. Member States opted instead for a voluntary approach. The result: the 40,000 figure was never reached. Not a single person in need of protection has been relocated yet and Italy and Greece continue to cope alone. This is simply not good enough.

Look at intergovernmental solutions like the 2011 Fiscal Compact to strengthen fiscal discipline or the 2014 Agreement setting up a common bank resolution fund. Today, we see that not a single Member State has completely implemented the Fiscal Compact. And only 4 out of 19 Member States have ratified the agreement on the bank resolution fund, which is meant to be launched on 1 January 2016.

This is simply not good enough if we want to cope with the present, immense challenges.

We have to change our way of working.

We have to be faster.

We have to be more European in our method.

Not because we want power at European level. But because we need urgently better and swifter results.

We need more Europe in our Union.

We need more Union in our Union.

All my life, I have believed in Europe. I have my reasons, many of which I know and am relieved are not relatable to generations today.

Upon taking office, I said I want to rebuild bridges that had started to crumble. Where solidarity had started to fray at the seams. Where old daemons sought to resurface.

We still have a long way to go.

But when, generations from now, people read about this moment in Europe’s history books, let it read that we stood together in demonstrating compassion and opened our homes to those in need of our protection.

That we joined forces in addressing global challenges, protecting our values and resolving conflicts.

That we made sure taxpayers never again have to pay for the greed of financial speculators.

That hand in hand we secured growth and prosperity for our economies, for our businesses, and above all for our children.

Let it read that we forged a Union stronger than ever before.

Let it read that together we made European history. A story our grandchildren will tell with pride.