Davos-Klosters, Switzerland – Europe needs to move forward with structural political reforms if it is to resolve its sovereign debt crisis and put to rest doubts about its unity and viability, German Chancellor Angela Merkel said in an address to participants in the opening plenary session of the World Economic Forum’s 42nd Annual Meeting. At the core of the crisis are weaknesses in the competitiveness of many European countries, she remarked, noting that deficits have accrued over the years. “There is a clear lack of political structures and underpinnings to make this work,” Merkel acknowledged. “We are not going to become faint of heart. But we will not be able to wave a magic wand to address this. Yet at some point in time we have to do something about these weaknesses.” Concluded the German leader: “The question is: Do we dare to have more ‘Europe’? In the year 2012, yes, we do dare.”

In her speech, Merkel called for structural reforms that would allow for genuine labour mobility in Europe so that people can move to where jobs are and be able to take their pension rights and insurance with them. She said that, while Germany strongly supports the single European currency, it is not prepared to make any guarantees. “It is not that we don’t wish to show solidarity and have binding commitments. But what we don’t want is to promise something that we can’t fulfil.” Merkel added that she would like to see the G20 pursue the agenda for growth and employment set out by Mexico, the chair this year. G20 countries will also need to work on financial market regulation and securing free trade against increasing signs of protectionism, she said.

Prior to Merkel’s speech, Eveline Widmer-Schlumpf, the President of the Swiss Confederation and Federal Councillor of the Federal Department of Finance of the Swiss Confederation, welcomed participants. She stressed that countries have to address the long-term challenges of chronic fiscal imbalances and climate change. “Both of these issues will affect future generations,” Widmer-Schlumpf declared. “We must not burden the young with the problems that we have created.”

With record participation of over 2,600 leaders from government, academia, business and civil society, the theme of this year’s Annual Meeting is The Great Transformation: Shaping New Models. “We have a vision gap in the world,” Klaus Schwab, Founder and Executive Chairman of the World Economic Forum, said in his opening remarks. “My wish is threefold – that we build by searching for constructive new solutions and models, that we bond by looking for long-term vision, and that we bind by creating the necessary underpinning framework of shared values.”

At the end of the session, Schwab welcomed to the stage about 70 members of the Global Shapers, the World Economic Forum’s newly launched community of exceptional individuals under the age of 30 who have demonstrated great potential for future leadership. Nobel Peace Prize laureate and former archbishop of Cape Town Desmond M. Tutu, who is the Chair of The Elders, an organization of elder statesmen from around the world, stood among the group. He encouraged them to “go on dreaming God’s dream of a world where war is no more and poverty is history” and to “dream of a world that is more compassionate, more gentle, more caring.” Tutu cheered: “And God is saying that I have no one but you to make my dream – God’s dream – a reality. Go for it!”

Earlier, Hilde Schwab, Chairperson and Co-Founder of the Schwab Foundation for Social Entrepreneurship, presented the World Economic Forum’s Crystal Award to three artists who have used their talents to improve the state of the world: French filmmaker, screenwriter and producer Luc Besson, Founder of EuropaCorp; South African singer Yvonne Ntombizodwa Chaka Chaka, President of the Princess of Africa Foundation; and Japanese-American classical violinist Midori, Founder of the Midori Foundation. Hilde Schwab said the Crystal Award is “an appeal to think about fundamental values and purpose in life”.