ON EUROPEAN UNION delivered to the Jubileumcongress of the European Movement on 4th October 1997 in The Hague I was asked to address some very interesting and very important questions. What idea of Europe can convince the Europeans of the coming generations? What image can mobilize them to carry on the work of the past fifty years? These are questions that have exercised me greatly. I am a firm believer in the need for a European Union and I am greatly concerned, as I believe most of us are, that the momentum which has driven the union forward is being lost because public support is dissipating. The idea of a union was very appealing, but now that the idea has become a reality, people find the realization of the idea, the way the European Union works, far less inspiring. I have asked myself, what is wrong with the way the European Union is currently organized? The answer seemed obvious: the union is an association of states and the states tend to put their own interests ahead of the common interests which are supposed to bind the union together. The executive power rests largely with the Council of Ministers; the European Commission is subordinated to it. That means that every decision represents a bargain among different national interests. It also means that the bureaucracy is dependent not on one government but on as many governments as there are member states. This multiplies the deficiencies of the bureaucracy by the power of 15. No wonder that the Brussels bureaucracy is vilified, although or exactly because, the responsibility is not theirs. Unfortunately, this is not a situation which is easily rectified. The obvious solution would be to have a European government directly responsible to the people of Europe. But this amounts to some kind of federal structure and that is unacceptable at present because federalism has become a dirty word, particularly in Britain. In probing deeper, I discovered another deficiency in the way the European Union is currently constituted. This defect is far less obvious. The government of the European Union is a rules-based government. The decisions of the Council of Ministers are just like treaties: they are difficult to reach and difficult to alter. A rules-based government sounds good because it sounds like the rule of law. It implies transparency and impartiality. But that is not the case. The process by which the rules are made is anything but transparent and the rules themselves are often far too detailed and rigid and inappropriate to changing circumstances. Life is far too complex and changeable to be governed by fixed rules. Let me give a practical illustration. The Maastricht Treaty laid down in great detail the conditions to be met and the timetable to be followed in introducing a single currency. At the time the Treaty was concluded it couldn't be foreseen that Europe will suffer a prolonged period of high unemployment. To reduce government spending is not the right kind of policy to follow during a recession. Admittedly, the European economies needed to make some structural adjustments but the emphasis on an overall reduction in budget deficits was misplaced. It would have been easier to make the structural changes in the midst of prosperity. The Maastricht rules have probably prolonged the recession. I want to make it clear that I support the single currency, but I am worried because I think that its design is flawed. To have an independent central bank that determines the common monetary policy and then to have a stability pact which imposes rather rigid rules on fiscal policy deprives the governments of the necessary tools for macroeconomic management. There are those who believe that you don't need any macroeconomic management, that if you have a stable currency everything will take care of itself. But in my student days I did study Keynes and even if he is out of fashion, I think he shouldn't be forgotten. What worries me most is that I don't see the proper mechanism for correcting error. The European Union was constructed by having a limited goal and a firm timetable. When that goal was reached it became obvious that another step was needed and public support was mobilized for the next step forward. That is how the Union progressed, step by step, and it has come a very long way indeed. It has been perhaps the greatest feat of social engineering in history. It is clear to me that the common currency will have to be followed by a common fiscal policy including, I am afraid, the harmonization of taxes on the earnings of capital. But such measures would be extremely unpopular. The European idea held great attraction as long as it was an idea. But the European Union has become a reality and the reality is not nearly as attractive as the idea. We may have therefore come to the end of the road because public opinion is disenchanted with Europe. If that is so, the common currency may end up destroying the European Union because its deficiencies cannot be corrected by taking another step forward. But enough of these negative remarks. The task before us is to try and find a positive idea that can inspire the European Union. I have a candidate for that role and I have come here with the express purpose of proposing it to you. My negative remarks, particularly about the inadequacy of a rules-based system, were meant to prepare the ground. I want to propose the idea of the open society as the inspiration and the organizing principle for the European Union. As you probably know, the concept of the open society was first introduced by Henri Bergson and it was developed more fully by Karl Popper but it never became well understood, or even widely known. This is not surprising because it is a rather abstract, philosophical idea and our age is not very interested in philosophy. I am not necessarily the best person to present it because I am far too conscious of the difficulties inherent in the concept. But the idea has inspired me ever since my student days. It has led me to set up a network of foundations which now covers some 30 or 31 countries and I believe that it could also be the inspiration for Europe, if only it were properly understood. In 1984, when I set up a foundation in Hungary, I had no difficulty with the concept of open society. Everybody knew what I meant, even if they hadn't heard the term before. It was a welcome alternative to the closed society in which they were living. Nor did I have any difficulty when I extended the network to other formerly communist countries. Those whom I wanted to attract to the foundation knew exactly what it was all about. Indeed, in the spirit of the open society, I left it to them to determine the policies of the foundation. The situation was very different in the West, where many people, particularly in the Anglo-Saxon countries, believed that the conflict had been between capitalism and communism not between open and closed societies. There was no great surge of support for the people who had been recently liberated from communist oppression. There was no equivalent to the Marshall Plan. I discovered, to my chagrin, that the open societies of the West did not care about open society as a universal concept and they were certainly not prepared to make any great sacrifices to help others to become open societies. And now that the communist menace has disappeared, the unity of the West is also disintegrating. Europe in particular is in dire need of a unifying idea. What is the open society? In a superficial sense, it is just a way to describe the positive aspects of democracy: the greatest degree of freedom compatible with social justice. It is characterized by the rule of law, human rights, democracy, respect for minorities and minority opinions, and a market economy. The principles of an open society are admirably stated in the Declaration of Independence. But the Declaration starts by stating that "these truths we hold to be self-evident" while the principles of the open society are anything but self-evident; they need to be established by common consent. There is a strong epistemological argument in favor of open society. Our understanding is inherently imperfect; the ultimate truth, the perfect design for society is beyond our reach. We must therefore content ourselves with the next best thing: a form of social organization which falls short of perfection but holds itself open to change and improvement. That is the open society. Unfortunately, the epistemological argument is not universally accepted. On the contrary. It has not even been properly considered. Most people would acknowledge that our understanding is imperfect but few of them are aware of all the implications. For instance, it implies that you can't govern by rules alone because it is impossible to anticipate all the contingencies. The rules established by the Maastricht Treaty for introducing the common currency provide a good example: who could have foreseen in 1989 that Europe was about to enter into a period of high unemployment? The European Union is a Cartesian construct. Descartes proclaimed the supremacy of reason. Although we have now had two centuries to discover that reason has its limitations, we have not yet come to terms with our fallibility. When I speak of Europe as an open society I am thinking about a construct which recognizes the limitations on our ability to understand and predict our situation. In many respects, Europe is even better suited than the United States to be a prototype of the open society. It has diverse nationalities, cultures and traditions which are nevertheless not too far removed from each other to be compatible. There is a reasonable balance between the states that comprise it, although after reunification Germany has become a little too strong for comfort. All that is missing is a proper understanding of the concept of the open society. What would Europe look like as an open society? There would be a European Union, with a common market, a common currency and a common fiscal policy. Once we recognize our fallibility, we must accept that the European Union cannot be governed by treaties and rules alone: it must have a government accountable to the people whom it governs. The present arrangements are quite inadequate. Making the European executive power subordinate to national governments has all the defects I mentioned before: rigidity, lack of transparency, lack of responsiveness to changing circumstances; and it also stands in the way of expanding the membership of the Union. The present rigid structure has already been stretched to its limits as the membership has been expanded from 6 to 15; it cannot accommodate any further expansion. Yet the Union must be open to new members, especially from among the formerly communist countries, if it is to fulfill its mission of serving as an institution of open society. The problem has been recognized and the task has been assigned to an Intergovernmental Conference. But the IGC failed to address the issue. It merely tinkered with the existing structure. This is not surprising. The national governments are the cause of the trouble: they are unlikely to curb their own powers in order to provide a solution. The impulse must come from elsewhere. Society needs to be mobilized. But that is difficult, given the public mood. Introducing the concept of open society may help. It would minimize the role of government and stress the role of civil society. As far as government is concerned, there is no escaping the need for a federal structure and, as I said earlier, federalism has become a dirty word particularly in Britain. To make it more palatable, it needs to be combined with subsidiarity, a British invention. And the rights of the individual need to be safeguarded by a Bill of Rights and an independent judiciary. I am hopeful that the New Labour Government in Britain will have the drive and imagination to take the lead. A society open to improvement: that is what New Labour stands for. Britain is in a quandary whether to join the EMU; yet it needs to affirm its commitment to Europe. What better way than to address the issue which looms beyond EMU? Injecting a dose of British empiricism into a Cartesian project could do Europe a lot of good. How would Europe as an open society deal with foreign policy? Foreign policy was meant to be the second pillar of the Maastricht Treaty but it collapsed before it was built. It may sound iconoclastic, but in my opinion the second pillar ought to be abandoned as a failure. This would make room for better arrangements. The EU already has a common external policy for trade and aid and unless the euro project fails it will have one for currency too. At the same time there are many economic issues which involve national interests and it would be inappropriate to deal with them on a federal level. For instance, both Britain and France want to have their own relations with ASEAN as an organization and why shouldn't they? When it comes to security issues, they tend to involve the common interest rather than the interests of individual countries so there needs to be a common policy. But the common interest includes not only the European Union but the open societies in general and the United States in particular. The conflict in Bosnia did not impinge on the national interests of any one country; yet it was and remains of vital importance not just to Europe but to all open societies. It was grievously mishandled because it was not treated as an open society issue. We do have an effective security organization, NATO, which is desperately looking for a mission. The concept of open society could serve to define that mission. Now that the cold war has ended, the threats to our security do not come from a hostile superpower but from would-be dictators who seek to establish internal dominance by fostering external conflict. Milosevic and Tudjman are partners in crime. By projecting its military power into the surrounding areas, NATO could become a powerful instrument in preventing conflicts. But crisis prevention must start much earlier, and the earlier it starts, the less force it needs. The creation and preservation of open society ought to be recognized as a prime objective of foreign policy. By building a new transatlantic alliance around this principle, we could justify NATO expansion and prevent a new division of Europe. At the same time, by excluding security issues from the scope of the European Central Government and making it a transatlantic concern we would prove that the European Union is not meant to be a superstate. I want to emphasize, however that NATO itself is not suited to pursue open society policies. It is a military alliance and all previous attempts to impose a political dimension on it have failed. There has to be an Atlantic Alliance that operates parallel to NATO. These ideas need a lot of elaboration but it is not for me to produce a blueprint. It is for the people of Europe to discuss these ideas and to decide what kind of Europe they want. The European Union as it is currently constituted increasingly fails to meet the needs and aspirations of the people. But what is imperfect can be improved. An open society is a society open to improvement. That is the kind of European Union the people of Europe ought to opt for if they understood the principles of open society. George Soros