European Union ambassador: 'We are coming out of the woods'

The Europe Union is “coming out of the woods” after a sovereign debt crisis took hold of its members, an encouraged Joao Vale de Almeida told a University of Iowa crowd Wednesday afternoon.

But Almeida, the European Union's ambassador to the United States, warned that much work remains in restoring and maintaining fiscal trust and stability in some of its 27 member nations.

“I said we are coming out of the woods, I didn't say we are out of the woods yet,” Almeida said during his visit to the UI, which was hosted by the university's Center for International Finance and Development.

“It's been a very difficult time,” Almeida said. “And we cannot be complacent about the difficulties we had and still have. Some countries are still going through the difficult process of readjusting.”

The European debt crisis has exposed a major flaw of the European Monetary Union, according to Enrique Carrasco, UI professor of law and director of the Center for International Finance and Development.

Relaxed fiscal rules let several European countries amass massive, unsustainable public debt with no ability to pay it back, requiring intervention from Eurozone countries and the International Monetary Fund, according to Carrasco.

Austerity measures have caused economic stagnation and unemployment in some countries, and Almeida said Wednesday that the way forward in Europe is through growth, not retreat.

“If you look at what we have been doing in the past few months, all the measures have been going in one direction and that is to further integrate the European Union,” he said. “We are not destroying and not going backwards. It's how fast and how far we want to go forward.”

Almeida said the past few months of economic news have been more positive than expected, and the European Union has a plan of how to proceed.

“I'm more optimistic today than I was in November,” he said. “We have dealt with the most urgent situations. Now we are just talking about the aftershock of the financial crisis.”

Greece was among the hardest hit countries by the crisis, and Almeida said the union had to focus urgent attention on that country's problems.

“We had to look at a system to prevent future problems from occurring,” he said. “It's been a small revolution in the way we govern. We have a new treaty, new fiscal compact and new fiscal rules that apply.”

As the European Union resolves to learn from its past and forge a better way forward, Almeida said, its relationship with the United States is strong.

“We are best friends, best partners and best customers,” he said. “But we know we need to adapt and we need to adjust the way we produce.”

Almeida said the United States and the European Union are still realizing the full potential of their relationship as they both emerge from the economic crisis.

“We are optimistic and positive about the trans-Atlantic relationship,” he said, “and your city and your state are not isolated from this event.”

In a joking tone, Almeida told the UI crowd that, “There is no such thing as the middle of nowhere.”

“We are all in the middle of the world now,” he said. “Everything that happens in Greece affects you. That is the major lesson I hope we have learned from the 2008 financial crisis.”

And, he said, Americans can rest assured that the European Union's players are making the tough decisions and sacrifices necessary to emerge from crisis stronger than before.

“Europe is showing determination, courage, consistency in the way we are dealing with this,” he said. “We are on the right track.”