Ambassador's Corner

WEEKLY MESSAGE FROM AMBASSADOR JOHN BRUTON

October 22, 2008

I was delighted to meet during their recent visits to Washington two people who have played a leading role in the European Union's response to the current financial crisis. Both were here for the meetings of the World Bank and the IMF [International Monetary Fund].

Jean-Claude Juncker

Jean-Claude Juncker has been the Prime Minister of Luxembourg since January 1995 and the country's Finance Minister since 1989. He is the longest serving holder of the office of Prime Minister in Europe.

I knew Jean-Claude before he became Prime Minister through the European People's Party and he was Prime Minister of Luxembourg when I was Taoiseach (Prime Minister) of Ireland. He played a big role in the success of the Dublin-EU Summit in 1996, which I chaired, when we agreed the terms of the European Growth and Stability Pact, which underpins the Euro. At that time there were differences between France and Germany as to how rigorous the terms of the Stability Pact should be in regard to deficits. Germany, which was giving up its very strong currency the Deutsche Mark in order to facilitate the creation of the Euro, wanted to be reassured that the Euro would be managed in a way that would minimize inflation by ensuring strict monetary and fiscal policy. Other countries favoured a slightly more accommodative approach to allow room for stimulating the economy if it was slowing down.

I remember that we reached a point in the meeting where the formal discussions across the table were not moving towards a compromise. So we took a coffee break and during this break Jean-Claude Juncker deployed his immense political and linguistic skills to help broker a compromise.

He has also shown tremendous political courage in his support for the European Union. After France and the Netherlands held referenda, which rejected the proposed EU Constitution, Jean-Claude Juncker was determined that the process of ratification of the Constitution would not be halted.

He decided to go ahead with the prearranged referendum on the Constitution in Luxembourg, notwithstanding the results of the French and Dutch referenda, and he said that he would resign as Prime Minister if his own people did not accept the Constitution that he had negotiated on their behalf.

This was a particularly brave step to take, showing deep personal conviction on European issues, and as a result of it, the Constitution was approved by the Luxembourg voters by a 56% majority with a voter turnout of 88%.

Joaquin Almunia

Another important recent visitor to Washington was EU Commissioner for Economic and Monetary Affairs, Joaquin Almunia. Joaquin Almunia has helped craft the package of measures, adopted by the European Union, to stabilize the banking system and restore inter-bank lending. The European Union's package of reforms agreed by 27 Member States has provided a model, and an impetus, for action in other jurisdictions.

As the President of the Commission, José Manuel Barroso, told the European Parliament:

"There is no national road out of the crisis, our economies are too intertwined." 

Joaquin Almunia has also contributed to the EU decision to set up a Committee, chaired by Jacques de Larosière, to improve the supervision of cross-border banks within the European Union. The current system of supervision of banks by their home country's regulators  is inadequate because so many banks now operate in several countries.

Part of the response to the current crisis has been to encourage the takeover of some banks by banks from other EU countries, and thus towards a concentration of finance in fewer and bigger banks, some of which might be considered "too big to be allowed to fail." So better cross-border supervision of banks in future will be absolutely crucial.

I expect that there will also be an increased emphasis on ensuring that future banking activity is of a kind that is transparent and easier to supervise. Supervision usually takes place after decisions have been made, so simplicity and transparency will be essential if supervisors are to spot difficulties in good time.

Among the members of the de Larosière Committee are Leszek Balcerovicz, former Polish Finance Minister, and Onno Ruding, former Dutch Finance Minister.

Joaquin Almunia was first elected to the Spanish Cortes in 1979 and was his Party's candidate for Prime Minister in 2000. He was appointed a Member of the European Commission in 2004. Prior to entering public life, he worked as an economist with the Trade Union movement and with the Chambers of Commerce.

Educational Systems Compared – Finland, Spain, Ireland and the United States

Last week, I visited Commissioner Almunia's home country of Spain to address a meeting in Madrid organized by the Foundation Rafael del Pino. The topic was Ireland's economic successes since the 1960's, and particularly the contribution of education.

Since the 1970's, both Ireland and Spain have doubled the proportion of their population entering the work force with a higher education qualification. In the USA and Germany, the proportion has remained almost the same since the 1970's. Both Spain and Ireland have been singled out for praise by the OECD for having equitable access to higher education. Forty percent of entrants to higher education in Spain come from what the OECD describes as a "blue collar" background.

Obviously the success of higher education rests on the foundation laid by the educational system for children of younger ages. In this respect, Spain, Ireland and the United States all have room for improvement.

The OECD organises testing of students in 32 countries, including the USA, at the age of 15 to compare their competence in science, mathematics and reading.

In science, where the OECD average score is 500 points, Ireland obtains 506 points, Spain 488 and the USA 489. But Finland has the best score with 563.

In mathematics, where the OECD average is 498, Ireland gets 501, Spain gets 480, the USA 474 and Finland is again much better with 548.

In reading, where the OECD average is 484, Ireland gets 517, Spain 461 and Finland again is well ahead with 547 points. There are no figures for reading for the USA.

I explained to my audience in Madrid that the big improvement in Irish education, and Ireland's subsequent economic growth, can be traced to decisions taken as early as the 1960's. These included introducing free second level education, free school transport, a new school curriculum and the establishment of a network of Regional Technology Institutes separate from the Universities. These were all inspired by a study of Irish education conducted by the OECD, entitled Investment in Education, and much of the funding for their successful implementation came from EU regional funds, a very concrete example of the advantages to Ireland of EU membership when it was far less wealthy than it is now.

There is much discussion here in the United States about how to improve public education. It is my personal opinion that the US might benefit from having an external examination of its educational systems done by an international body, like the OECD, of which the US is a member. Even a country as big and successful as the USA can learn from comparisons with other countries, and an external examination sometimes allows the parties involved to agree to changes that they might be reluctant to agree to if the suggestion for the changes came only from within their own country. 

The Role of Teachers and Parents

My own view is that a key to a successful education system is a well motivated, well respected, well trained and well paid teaching profession. This is more important than the size of the classes they teach. Ireland's teachers are amongst the better paid in the OECD, but Irish class sizes are also larger than in many other countries and this does not seem to have impeded performance.

Perhaps the most important of all factors influencing educational success is the active support of parents. If parents do not believe education is worthwhile, it is unlikely that their children will succeed. Parental support for education is often determined by cultural factors. For example, it is traditionally stronger in the West of Ireland than in parts of the East. Culture may also explain why one of the highest rates of transfer to higher education in Spain are found in the Basque country, which is not the most prosperous part of the country.

Salamanca

During our visit to Spain, my wife Finola, our daughter Juliana, who is studying at the Carlos Tercero University in Madrid, and I, visited Salamanca to see my wife's niece Alix who is studying in the University of Salamanca.

Salamanca is one of the most remarkable cities in the world and its Plaza Mayor [left, below] is one of the most beautiful city squares I have ever seen. The University of Salamanca [right, below] was founded in 1218, and is Spain's oldest university.

Salamanca Cathedral

We visited the Irish College, part of the University, which was founded in 1592 to allow for the education of Irish men for the Roman Catholic priesthood, something which was impossible in Ireland at that time. The college continued until 1951.

Please send me your comments about this or any of my weekly messages or other EU matters. I look forward to hearing from you!