In 2000 the expansion of the internal market was imminent due to Enlargement, the millenium boom of dot-com seemed to promise a new era in the global economy and the position of European Community in the WTO raised ambitions of running the global trade from Brussels/London. Ten years after Europe has not become the most dynamic and knowledge-based economy in the world. The global economic crisis has extinguished all hopes to meet Lisbon targets on employment and R&D investment. One can argue that the crisis is indeed to blame, as until 2008 the indexes of economic growth and employment in EU27 have picked up and were showing signs of the strategy slowly vindicating its assumptions. Then came the bang. Perhaps the strategy wasn‘t just crisis-proof enough. But knowing that after any crisis things are never turn the same again, will the new European economic agenda be?
The idea to secure stable economic growth while maintaining full employment and high European standard of social security proves to be ever more difficult to defend in today‘s global economy. So far what keeps Europe attractive as a market is a high purchase potential of its western part, and what keeps it attractive as an investment ground are the low salaries and production costs in this eastern part (a gap that the latter is eager to close as soon as possible) Without government reassurances, it is already quite a toil to keep European ground competitive for investment vis-a-vis the emerging economies, which will continue to offer cheaper labour and lower production costs. New tools, like European Globalisation Readjustment Fund are a short-term remedy and don‘t produce sustainable results to keep production in Europe. The seventh Framework Programme poured billions of Euros into random industry sectors that have produced little output and less employment than expected, and often digested the money on the spot rather than turned it into a long-term benefit.
The idea to secure stable economic growth while maintaining full employment and high European standard of social security proves to be ever more difficult to defend in today‘s global economy.
What are European politicians planing to do different this time? Not much creativity out there compared to Lisbon 1.0: subsidies and in-depth reforms of welfare systems and labour law. Most notably though, more and more stress is put on the open method of coordination (OMC) in social, employment and industry policies across the Member States while allowing more „national ownership“ in the implementation of the strategy. Isn‘t it contradiction in terms? How can there be a sense of responsibility for the targets of the strategy across the EU without a clear framework for viable political and economical commitments?
I dare say, this cannot work out. A strategy can work effectively only with a genuine central management attributed with an enforcement authority over its sub-contractors. This neither the Commission, not the European Council can do, not in the EU as it is. The common market with its four basic principles has proven to be a success. Without a next step it will bring the European socio-economic model to a doom, where uncoordinated national policies of subsidy and re-distribution will keep on moving from sector to sector in attempts to reanimate it, hijacking investment from one Member State to another. An economic plan for Europe must address the phenomenon that lays at the root of Europe‘s growing unemployment, i.e. the detachment of production from the consumption. It is a pan-European problem and it should be addressed at the Union level. Guy Verhofstad, once Belgium‘s Prime Minister and now head of European Parliament‘s ALDE group has seen into this. He has realised that EU needs to make another step towards closer integration and merge national policies into a proper European economic policy. In his statement on January 8th he blamed the failure of Lisbon 1.0 on the fact that it offered no instruments of target enforcement. Without structures tasked to ensure credible commitments and oversee compliance any new strategy can only remain a wish list. There is something to Belgian Prime Ministers‘ ideas on European integration. Already in the 70‘s, after the Community finally overcame own resources impass, Mr Tindemans drew a report that was followed by establishing direct elections to the EP and the Single European Act, and that gave the Community a definitive push towards completing the common market. Now the common market needs the completion of the common economic policy. It doesn‘t mean that EU should bind itself to a specific economic doctrine and lay down rigid limits of economic intervention. Socialist, neo-liberal or revised Keynesianism - anything goes, as long as it is clear and co-ordinated. An internal EU competition between different social and fiscal models proves ever more detrimental as it is paralleled with the global one.
EU needs to make another step towards closer integration and merge national policies into a proper European economic policy.
Europe is not an isolated castle. It will continuously face challenges from the emerging economies and it must act in front of these states as a state, not as an economic block. Fierce opposition to further social and fiscal harmonisation by some Member States has long been based on the assumption that lower taxes and social security contributions keep their national economies more competitive - this accounts mainly for the Anglo-Saxon club and the new Member States. On the other hand, the governments of Member States with the continental social-fiscal model defend their high standards as an unparalleled achievement worth conservation. Elected in national suffrage, governments hide themselves behind the socio-economic mandate of their voters. Perhaps if there was a genuine European government directly accountable for its actions, it would be easier to understand what citizens across the EU really want and what sacrifices they are willing to make, if indeed any. Perhaps if political parties presented European economic programmes, citizens across the EU would be able to make a concrete choice. Perhaps the discussion on an EU-tax could take a completely different turn if it were coupled with the transition of certain policies to the European level, instead of just adding another burden to the citizen‘s yearly return sheets. Perhaps.
Who is out there to draw up a new Roadmap for Europe? Who is courageous enough to point out that EU cannot afford to cannibalise on its own welfare achievements? Europe must understand that its welfare comes with a high maintenance cost and in order to defend its standards common efforts and viable commitments must be made. In the end, it will be the citizens to face the consequences of the current situation or make an effort towards a change, as it is them to try to keep their workplaces, their salaries, their companies, their benefits. Politicians‘ main effort is to discuss „on the citizens‘ behalf“. How about they came up with a proposal on their own behalf: a report, a European legislation, a (potentially binding) roadmap, and let the citizens discuss and decide? What‘s the point of Lisbon 2.0 if there is no clear direction of a common European political economy?
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