William Hague commits UK to a reshaped EU

The European project must be completely recalibrated if it is to adjust to a changing geopolitical situation, the economic crisis and citizen demand for improved democratic legitimacy - British Foreign Secretary William Hague told an audience at a conference in Germany today. Speaking at the Körber Foundation in a session entitled Europe at a crossroads: what kind of Europe do we want, Hague said with no trace of irony that "it would be a grave mistake to turn inward as a result of economic difficulties' – something critics often accuse the United Kingdom of due to its Eurosceptic stance.

Although the Foreign Secretary was insistent that the planned UK audit of Britain's relationship with the European Union would help to reshape the partnership between country and continent, he admitted that he supported continued enlargement of the union. "It is profoundly in our collective strategic interest that Turkey continues on an EU track," said Hague. "And Moldova, Belarus and Ukraine are European nations. Their future lies with Europe. It is up to us to promote democracy and encourage them to embrace freedom fully."

He applauded EU cooperation on global issues including climate change and the single market, but warned: "That does not mean we should try to forge a single European position and voice on everything. We want British, German and Finnish national diplomacy – and international institutions like the North Atlantic Treaty Organisation to thrive alongside coordinated action at the EU level. The EU is part of but far from all of the solution to the fundamental challenges we face.

"Often important things will not be agreed or cannot be done through the EU. It would be neither right nor realistic to think that questions of war and peace could or should be decided by qualified majority voting. Indeed, just because some things work well in coordination with all of our European partners does not mean we should do everything at 27. A more effective EU does not have to mean a bigger, more expensive or more centralised EU. There are great problems of Europe's future we need to solve if we are to ensure that a wider union has the flexibility, the legitimacy and the agility to succeed in the 21st century."

Addressing the thorny issue of the ever-expanding EU budget, for which the European Commission has proposed another above-inflation increase despite the threat of a veto by the UK – Hague warned European partners that any deal would need to be "in touch with the real world". He added: "Britain is the second largest net contributor after Germany but we are having to reduce spending at home on every single area other than health and international development. In that context, people simply do not understand why there should be massive increases in the EU budget when all countries are trying to balance the books at home. Member states are €3.5trillion more in debt now than when the last EU budget was negotiated. The EU budget has to reflect these changed facts.

"We need to look afresh at some of the things the EU does. They have to make sense to our voters. That is why, over the next two years, the British government will be reviewing what the EU does and how it affects us in the UK: a constructive and serious British contribution to the public debate across Europe about how the EU can be reformed, modernised and improved. We are also looking at the right balance on Justice and Home Affairs given our distinct legal tradition."

Using the budget argument as a springboard to argue for a shift of decision-making powers back to national parliaments, in order to reintroduce a greater element of democracy in Europe, Hague warned: "Subsidiarity must really mean something. It is obviously in Britain's interests for the EU to succeed and for Britain to play a leading role in it. The eurozone countries must do what they must to resolve the crisis, but the way forward for the EU as a whole is not more centralisation and uniformity but flexibility and variable geometry that allows differing degrees of integration in different areas - done in ways that do not disadvantage those that do not wish to participate in everything and preserves the things we all value. 

"It will not be easy to achieve but this would be a Europe that thrives on its diversity and allows all of its peoples to fulfil their aspirations. It would be a Europe built on sustainable democratic foundations. And it would be a Europe which kept pace with the rapid changes in the world and the developing interests of each of its members, a Europe adapted to the 21st century."

Acknowledging the Nobel Peace Prize award to the EU for the first time – tellingly, no British minister responded to the news last week – Hague said: "As the Nobel Peace prize reminded us, the EU is about much more than just the eurozone. I understand what the euro means to its members but the EU's greatest achievements, the things that have the most real good for the peoples of Europe, are the establishment of the single market and the enlargement of the union. The EU, alongside NATO, has been an instrument of peace and reconciliation. It has helped to spread and entrench democracy and the rule of law across Europe. It has helped make armed conflict between its members unthinkable.

"The Single Market has opened up prosperity and opportunity to hundreds of millions of people. We must ensure that the solutions we adopt for the current crisis do not jeopardise the integrity and achievements of the EU as a whole. Globalisation and competition with hundreds of millions of highly-skilled, hard-working and determined people in the world marketplace mean that despite the huge new opportunities on offer equally developed nations cannot assume that the next generation will be better off than the present. The challenge for every European nation is how we earn our living and make our voices count in this new, more multipolar world. And the question for the union is how it helps us meet those two great challenges."

Calling for a rapid conclusion to a number of free trade agreements that the EU was negotiating with potential partner countries across the world, Hague continued: "Stronger trade relations with emerging powers present huge opportunities. The EU has free trade negotiations with countries including Canada, Japan, Singapore and India. If we completed all trade deals currently under negotiation, EU gross domestic product could be increased by up to €60bn a year. We should go further and try to achieve our ambition to conclude an EU-United States free trade agreement. We are all looking for economic growth. That would be serious economic growth and there is no other way to provide it.

"If we do not succeed in making our economies globally competitive and generating sustainable growth then whatever else we do, whatever treaties we sign, whatever structures we build, whatever declarations we sign, will all ultimately be irrelevant. There will be no social Europe; there will just be an excluded Europe. If Europe becomes a neighbourhood of economic decline, we will not matter in the world and we will have betrayed the peoples of Europe. I know that Germany and Finland understand this clearly. This is a mission for the EU27 and the UK will be at the forefront of this effort."

In a surprising admission of the EU's value as a global actor, Hague said: "It would be a grave mistake if we turned inward as a result of current economic difficulties. We should be confident and outward looking. As the Arab Spring proved again - our European values of freedom, democracy and the rule of law are universal values. Our open societies and open economies are the models for the future.

"In the broader European neighbourhood, the EU must still have a compelling offer for those who share our values and interests and continue with the mission of enlargement. We live in a world of networks. We can best attain our goals by exploiting all our networks flexibly and to the full. Each member state in the EU should make the most of its own special links around the world, whether Britain with countries such as Canada and Australia, Spain with the vast Spanish-speaking world and France with the Francophonie. The EU's most remarkable achievement is that its four freedoms have fostered vast and intense connections, although the health of these networks needs constant tending. Cooperation within the EU on the great global issues has allowed us to advance our shared interests and values with effect."

Responding to the speech, UKIP leader Nigel Farage questioned why Hague wanted to keep Britain "shackled" to Europe if he was "so aware of the British people's dislike of the EU". Farage claimed that it was "absurd" for Hague to claim that the UK could "single-handedly re-organise the EU to suit Britain". He added: "Time has proven we are no more than a cash cow whose interests are flagrantly ignored.

"It has become clear that Brussels wants to control everything, from determining national budgets to creating a European army. Eurocrats are enthusiastically overseeing the decimation of Greece and Spain, plunging thousands into poverty, in order to prolong an economic crisis that is allowing their federalist dream to be realised. This is not an organisation that cares about public perception and certainly not one that can be negotiated with."