Former UK Prime Minister Tony Blair said Western governments must be able to make difficult changes right now if they want to maintain their ways of life.
Speaking Wednesday night at the opening dinner of the KPMG Legends Tennis Tournament at Blue by Eric Ripert at The Ritz-Carlton, Grand Cayman, Mr. Blair said this was a time “for big decisions for big decision-makers” in the Western world.
“This is a moment for some fundamental decisions on the economy and on security,” he said. “Right now we have two huge challenges, both of which I think need fundamental decisions. One on the economy, particularly in Europe, and the other in respect to security and what’s happening out in the Middle East and the Arab revolution going on there.”
Speaking specifically about the crisis to maintain a single currency in the European Union, Mr. Blair said the monetary union was devised politically, but was economic in nature.
“The problem with it is … that although it was politically motivated it had to be economically correct in order to survive,” he said. “What has happened in the last months is that the myth that the Italian economy and the German economy is the same has been somewhat cruelly laid bare. And now the fate of the single currency hangs in the balance.”
As a result, fundamental decisions must now be made.
“The decisions … have to deal with the fundamental issue at the heart of monetary union,” he said. “That means that any short term measures have to be set within a framework of long-term credibility. It means … that Europe and the creditor nations and European Central Bank [have to] make it clear they stand behind the single currency absolutely – as any other Central Bank would say it stand behind their currency.”
He said new measures of fiscal coordination and the reform of the European social model were “absolutely essential and fundamental”.
“It’s going to be really tough,” he said. “And for those countries like Greece and Italy having to make these fundamental reforms – the things that people have considered their way of life – that is going to be fantastically difficult. On the other hand, if they don’t do that and the single currency breaks apart, it is going to be catastrophic in its effects for all of those countries and for Europe.”
Mr. Blair said he could sympathise with countries like Germany.
“Suppose you’re a creditor nation,” he said. “You’re going to put your money behind the debtor nations on the basis they will reform when these countries often have shown no appetite for reform in previous years. It’s a big thing to ask a country to do. I totally understand why it’s hard to come to this view. The point is this, the alternative is … break the thing up.”
Mr. Blair said the single currency crisis had exposed and accelerated the need for change, but had not created it. He said all of the Western world was dealing with the same issues.
“We’re dealing with a situation in which the world around us is changing so fast, we’re going to have to change,” he said, noting the world is more interdependent than ever before.
“There’s an absolute necessity to recognise that if we want to keep up the modern world, we’re going to have to undergo some difficult change,” he said. “When you look at America right now, they’ve got the same challenge. They’re going to have to stabilise their debt situation and reduce it. They’re going to have to reform their tax code. They’re going to have to reform their systems of welfare and government. And if they don’t do that … they are going to be long-term problems with their economy.”
Mr. Blair said government had to realise that when the world changes, they have to change.
“We’re going to have to make decisions of a fundamental nature that allow you to change with it,” he said. “And right now, muddling through … is not going to work.”
Calling the situation “politics of the grand plan” Mr. Blair said the time to make the decisions was soon.
“We can’t carry on postponing them. It’s not a moment in which you can simply go out there and try to persuade people things are ok if they’re not. These are decisions that have to be taken and have to be taken now. And they’re urgent.”
Although he said the West needed to get its “mojo back”, Mr. Blair said he remained optimistic the West could still play a prominent role in shaping the 21st century.
“But we need to count our blessings and opportunities and we need to be prepared to rise to the challenge of change,” he said. “Change is the toughest thing that any leader has to do – whether it’s a company or civic organisation or politics – but change is what we need. We have to face up to these decisions and we’ve got to take them. Because if we don’t, we will find the economic consequences are severe, our security situation worsens and then it will be an open question as to whose values shape the 21st century.”
He said the absence of a decision is just a different type of decision.”
“I always felt that people preferred in the end to be led,” he said, adding it was his experience that voters will forgive anything, but the failure to make a decision.
“The leaders who survive this economic crisis will be those who have a clear plan and stick with it.”
Views on Cayman
Before speaking at the dinner at Blue, Mr. Blair attended a reception at Camana Bay.
“I’ve wondered why people always said they wanted to come to the Cayman Islands; I think I am discovering why,” he said, looking out at the Crescent. “This is my first visit here and I’m only here a short time, but I think it’s a place where I would like to come back.”
When officially welcoming Mr. Blair before he spoke at the dinner, Premier McKeeva Bush said “You are finally here”.
Later Mr. Bush joked: “I am sorry Mr. Brown wouldn’t let you visit while you were prime minister”, referring to Mr. Blair’s Chancellor of the Exchequer Gordon Brown, who later succeeded Mr. Blair as prime minister.
Mr. Bush urged Mr. Blair to get some Cayman sand between his toes and to get to know the Cayman Islands.
“You won’t forget us,” he said. “You can tell your friends, if you still have friends in the Labour Party, that the Cayman Islands is a good place.
Mr. Blair said he was only in Cayman for the day – he left later that evening.
“But I feel very anxious and desirous of a return visit,” he said. “It seems a very beautiful place.”