Ambassador's Corner

WEEKLY MESSAGE FROM AMBASSADOR JOHN BRUTON

May 19, 2009

Senator Jim DeMint

Last week I met Senator Jim DeMint of South Carolina. He is a key Republican figure in the Senate and serves on the Banking Committee, the Commerce, and Science and Transportation Committee and the Foreign Relations Committee.

Our discussions focused on EU policy in favour of creating an open competitive market for airline services including the 50 States of the United States and the 27 States of the European Union. The EU has already concluded an ambitious Open Skies Agreement with Canada and would like to see the benefit for consumers of full competition between airlines extended to include the United States as well.

Jim DeMint is a strong supporter of free trade policies and he gave a good reception to the suggestions I made.

Jim De Mint was first elected to the Senate in 2004, having served in the House of Representatives since 1999. Prior to entering politics he ran a market research company. He was recently ranked the Senate’s most conservative member by the National Journal. He has expressed concern that interest rates may eventually rise as a result of present Federal borrowing policies.

Leading Finnish politicians in Washington, DC

Last week I was delighted to renew acquaintance with a colleague with whom I worked closely during my time as Taoiseach, Paavo Lipponen, Prime Minister of Finland from 1995 to 2003. I have a vivid recollection of the discussions Paavo and I had during the Irish Presidency of the European Union in 1996, as part of my tour of EU capitals, when I visited him in his home in Helsinki. Although Finland was at the time only a recent member of the European Union, Paavo, a Social Democrat, had a deep commitment to making the Union work for all its members, big and small, prosperous and less prosperous. This commitment by leaders of each Member State to the good of all EU members is vital to the success of our project.

Paavo Lipponen was visiting Washington for a meeting of former heads of government to discuss the huge investment that will be needed to enable the world to adapt to the inevitable change in the climate that is already underway. Very substantial sums of money will be needed, and some governments of poorer countries will need a lot of help in finding the funds they will need to adapt to the effects of changes in the climate, changes to which their own people will have made little or no contribution.

Subsequent to his time as Prime Minister of Finland, Paavo served as speaker of the Finnish Parliament. He is currently writing his memoirs.

Also in Washington last week was the currently serving Foreign Minister of Finland, Alexander Stubb. He became Foreign Minister of Finland on his 40th birthday on 1 April 2008. Prior to that, he was a Member of the European Parliament. A member of the National Coalition Party, he was educated in the United States as well as in Finland and he is exceptionally articulate in several languages. He is strongly committed to European integration, also to a close relationship between the EU and the US. He believes in maintaining contact with the general public to explain his work as Foreign Minister. For example, he continues, as Foreign Minister, to maintain an active podcast and blog.

An Honorary Doctorate from the University of Missouri

Last week I visited Missouri to receive an Honorary Doctorate of Laws from the University of Missouri at the convocation on the University campus in Columbia. Hundreds of students received degrees, and the total attendance at the event came to 5,000 people.

I have had an association with the University of Missouri since my time as Taoiseach (Prime Minister).

I went to Missouri as Taoiseach in 1995 to visit Festus, where my Great Grand Uncle Jim Brierton settled after emigrating from Dunboyne, County Meath, in 1856. As part of this visit, I also asked to visit some farms in the State. These farm visits were organized for me by the Extension Service of the University and in the course of them I learned a lot about the pioneering work being done by F.A.P.R.I., an institute of the University[Food and Agricultural Policy Research Institute], in predicting global agricultural prices and trends.

It immediately struck me that Europe, and Ireland in particular, would benefit from sharing in some of this work. I asked the University to send representatives to Ireland to see if we could cooperate more closely. They came over within a matter of weeks, and a close bond has since developed between the University of Missouri and Universities in both parts of Ireland and with Ireland's Agricultural Research Institute, Teagasc. It was in recognition of the development of these links, to which many others in both Ireland and Missouri contributed, that the degree was awarded to me.

 In the course of my address at the ceremony in Columbia, I said that those graduating should see themselves not only as citizens of their state and country, but also as citizens of the world. The big problems we face today are global problems. Yet our democratic systems of government are confined within individual states. I said I believed we needed to develop forms of global or regional democracy beyond the confines of the nation state.

This theme was also taken up in a recent address by President of the European Commission, José Manuel Barroso, at a Conference on Global Governance. He said the EU was a model for systems of democratic government above the level of the nation state. As he put it, the EU is:

“a union of states, peoples and citizens based on democracy, the rule of law, human rights and open markets with free competition. It has rejected traditional international politics, based on the threat of violence, in favour of international relations based on supranational laws and institutions.”

Globalization requires nation states to cooperate with one another. Globalization cannot be turned back because it arises from technological changes that cannot be reversed. If democracy is to be real and relevant in the 21st century, it must be extended above and beyond nation states. As the world's only multinational democracy of 27 sovereign states, the European Union is an example of how this might be done.

St. Louis

While in Missouri I visited the city of St. Louis, where I addressed the World Affairs Council and gave a live interview about the EU on KMOX radio’s Charlie Brennan Show.

I met with the 28 Aldermen of the city of St. Louis in one of their public sessions. This was arranged by the Chairman of the Board of Aldermen, Louis Reed and the Honorary Consul of Ireland in St. Louis, Joe McGlynn. I was introduced by Alderman Stephen Conway. I noticed that a number of members of the Board of Aldermen had flags of different European countries on their desks, emphasizing the continuing recognition by elected representatives of the city of St. Louis of their European heritage.

I attended a baseball game between the St. Louis Cardinals and the Milwaukee Brewers in the magnificent Busch stadium. This stadium was completed in 2006 and is a remarkable work of architecture, which frames the famous St. Louis Arch and other memorable parts of the St. Louis skyline in the background as the spectator looks out to on the park. It was good to visit with Cardinal’s Manager Tony La Russa [right] and broadcaster Mike Shannon.

I was invited to make the first pitch in the game. Notwithstanding some practice, my performance was not of a kind that I expect to be offered a contract by the Cardinals!

As it was the weekend, I also took the chance to visit some of the attractions of St. Louis. The Forest Park in the middle of the city was originally developed as the site for the 1904 World's Fair and the 1904 Olympics – the second Olympic Games of modern times.

The World's Fair was brought to St. Louis to commemorate the centenary of the purchase of the Louisiana territory (which includes most of the centre of the United States) by the US from France in 1804. One can understand why Americans would want to celebrate this land deal, as the entire territory was bought for US$ 15 million. The St. Louis World's Fair of 1904 was also the only World's Fair ever to have made a profit, showing Americans were still able to do good commercial business 100 years after the Louisiana purchase! The hot dog was invented at the World Fair, as was the ice cream cone (or so I was told).

I visited the Basilica of St. Louis which has some of the most beautiful examples of religious mosaics in the world and is worthy of a visit by anybody who travels to the American Midwest. The Basilica is of special interest to me as it was built by Cardinal John Joseph Glennon, who was born in the parish of Kinnegad in County Meath, which used to be part of my constituency. Some of his relatives are still living in the area.

Which countries will have to dig deepest to provide pensions and healthcare for the elderly?

Last week the European Commission hosted the Brussels Economic Forum. It discussed the current economic crisis, with a special emphasis on the problems that will arise from the ageing of the population in many western countries.

EU Commissioner for Economic and Monetary Policy, Joaquín Almunia, called for a full disclosure of banking losses so that government support can be provided in the most efficient manner. He said that the economic crisis would never be solved simply by pouring vast amounts of money into an ailing banking sector.

The discussion on ageing and its effects on public finances illustrated wide differences between individual European Member States, and between different parts of the world.

It is projected that in the United States the old-age dependency ratio (the number of people over 65 years as a percentage of the working-age population) will rise from under 20% to over 35% by 2050; the ratio in China will rise from 10% to almost 40%; and that in the EU from about 22% to almost 50%. In Japan, the old-age dependency ratio could reach almost 80%. ["Population Aging, Public Expenditures and Financial/Economic Crises: (Re-)establishing priorities?" Robert Holzmann, p. 4]

In stark contrast, the old-age dependency ratio in Africa will only reach 10% by 2050, and that in India will barely touch 20%.

I believe that these long-term trends in the dependency ratio are a good guide to where economic growth will take place in the next 40 years. It will tend to be concentrated in countries with relatively young populations and relatively low costs in pensions and healthcare for the dependent elderly.

The high figures for old-age dependency for China in 2050 should give pause to those who argue that country will be the dominant economic power for the entire 21st century. One of the reasons that China is now anxious to invest its savings in assets that will not be devalued is that it knows it will need their savings to support a population that will begin to age rapidly from 2030 onwards.

Projections for individual EU Member States of their total cost to the national budget of the ageing of their populations between now and 2060 also showed that the budget costs of ageing could rise by nearly 5 percentage points of GDP in the EU on average. But the increases for individual countries vary enormously. ["The economic consequences of ageing populations: projections for the EU27 Member States (2009 Ageing Report)," Gert Jan Koopman & Henri Bogaert, page 11]

Luxembourg is projected to see an increase in its costs due to ageing of 18% of its GDP, Greece an increase of 16%, Slovenia of 13% and Cyprus of almost 11%. This money will have to be found by taxation or cuts in other forms of spending.

In contrast, Poland is projected to see its costs associated with ageing actually fall by 2.5% points of Polish GDP, and the increases in Italy, Denmark, Sweden and France were all well below the EU average. These differences are explained by the fact that pension reforms have been undertaken in some countries but not in others. ["The economic consequences of ageing populations: projections for the EU27 Member States (2009 Ageing Report)," Gert Jan Koopman & Henri Bogaert, page 14]

The projections are, of course, all based on assumptions. One of the assumptions is, I presume, that there will be little or no increase in the birth rate between now and 2060. But if birth rates were to increase, the impact on the size of the workforce would be felt by 2030. It would also make a difference if young people started earning and paying taxes at an earlier age and/or if older people retired later.

There is nothing inevitable about demographic change. It is the consequence of choices people make and of the way in which tax and welfare systems are designed. If, for example, no tax allowances are given for children, it should not surprise us that families will have fewer children.

European farmers come to town

I was delighted to see some familiar faces in Washington last week. Padraig Walshe [extreme left, below], President of the Irish Farmers Association since January 2006 and recently elected President of the European Farmers Union, COPA, was here for a round of meetings with members of the new Administration and Congress as well as some commodities groups.

These are tough times for farmers everywhere. In the more than half century COPA and IFA have been in existence, the number of farmers has declined across Europe and the role of agriculture in our economies has changed. Accepting the Presidency of COPA in April, Padraig Walshe reminded farmers that agriculture was once the cornerstone of European integration under the Common Agricultural Policy (CAP), and that Europe's model of agriculture had been good for consumers, food safety, family farms and the environment. Padraig Walshe is the first Irish President of COPA and was accompanied by COPA's Secretary General Pekka Pesonen, COPA's Chief Policy Advisor in Brussels, Shelby Matthews, IFA's new Secretary General Pat Smith (from my home county of Meath) and IFA's able Brussels veteran Michael Treacy. 

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