On July 3, 2012, the Berlin office of the German Marshall Fund of the United States, in partnership with the German Council on Foreign Relations, hosted Estonian President Toomas Hendrik Ilves for a lecture on “Austerity vs. Growth.” Welcoming remarks were provided by Ivan Vejvoda, Vice President of the German Marshall Fund, and Peter Eigen, founder of Transparency International. Sylke Tempel, editor-in- chief of Internationale Politik, moderated the discussion.

In his speech, President Ilves provided a Baltic perspective of the Euro-crisis. He highlighted the post-Cold War transition of Eastern European countries that, along with hopes of a democratic future, also brought fundamental economic reforms that imposed strict rules and budgetary discipline. This fact remains, according to Ilves, underappreciated by many in Western Europe. Instead, countries such as Estonia are asked to assume shared liability for their Western and Southern neighbors, where similarly necessary reforms have not been undertaken but where social welfare remains higher than in the East.

President Ilves also stressed the unviability of a two-speed Europe, which a set of separate rules for the Eurozone would ultimately create. Instead, he emphasized the need for creating joint rules spanning all EU countries. In the ensuing discussion, Sylke Tempel pointed to the still unresolved enforcement problem at the EU level of such a proposal, and the necessity of creating institutional mechanisms that are activated in situations where “peer pressure is not enough.”

Regarding the loss of impetus in the transatlantic relationship, President Ilves pointed to causes on both sides of the Atlantic: on the European side, lack of political will has created a truncated Common European and Defense Policy which now sits uneasily with existing NATO structures. The United States, for its part, saw Eastern European integration as “accomplished” with the EU enlargement in 2004

Overall, the discussion added an important Eastern European and Baltic perspective to the current debate about Europe’s future –a perspective all too often missing from discussions on either side of the Atlantic.