Hela nedanstĂ„ende skrift pĂ„ engelska Ă€r frĂ„n ett tal av Leif Pagrotsky infĂ¶r den 10:e Ă„rliga konferensen om europeisk intergration. Kommentera och diskutera gĂ€rna. Jag vet att Leif lĂ€ser era kommentarer och blir diskussionen spĂ€nstig deltar han sĂ€kert ocksĂ„.
Prospects for European trade and prosperity
Opening address, 10th Annual Conference on European Integration in Swedish
“Ladies and gentlemen,
Thank you for inviting me here today to address this distinguished audience, and take part in what I hope will be fruitful and inspiring discussions.
As some of you may know, Iâve been actively engaged in European integration for the past 14 years. First as State Secretary for Financial Affairs, then as Cabinet Minister responsible for Trade, Industry and Energy policy, later as Minister for Culture, Higher Education and Research. The last two years, Iâve served as vice chairman of the Council of the Riksbank, following European financial integration and monetary policy, and as a member of the EU-committee in Parliament. I have represented Sweden in at least seven different Councils, from Ecofin to Competitiveness and Internal Market Councils.
I mention this to underline that I thoroughly share your interest in European integration. But my perspective is that of the practitioner, not that of the cool and systematic scientist. I draw conclusions based on what I have seen and experienced from European integration in practice, and I admit that makes me more subjective than neutral. But it also gives me the privilege of being more provocative.”
“Let me first of all declare, that â as I see it - the role of the EU in the world is weakening. I donât say that because Iâm a pessimist, but because I think we could do better â especially when it comes to economic policy.
When we decided to join the European Union in 1994, the EU was much admired around the world. The Union was an inspiration for people, businessmen and governments all over the world. The success of our economic integration had made people listen to what we said and take notice of what we did.
The way of life and the prosperity created by ever increasing cooperation and integration between our economies were envied the world over. As the worldâs largest economic actor, and the largest trading partner in the world, the EU was an economic superpower worth listening to.”
“Since then, we have continued to make remarkable and unprecedented achievements in important areas.
Just consider the enlargement from fifteen to today twenty-seven member states. It is an incredibly demanding but also historic and important task, where democracy and the market economy have been consolidated and the daily lives of millions and millions of people have been dramatically improved.
Another area where we as Europeans can be really proud is the leading role of Europe in combating global warming. The establishment of a cap on emissions combined with a system for trade in emissions rights, was true pioneer work. Imagine the differnce, if the EU had instead been passive, waiting for somebody else to find workable methods to tackle the emissions problem.
I dare claim that we would have seen global standstill in this extremely important area of policy, if it were not for the European ability to pull together and show leadership in face of this global challenge. This will be of enormous importance in the years to come.
My third example comes from my former portfolio as minister for higher education. You may be familiar with the Bologna process, which has joined forty-five European nations in order to create a modern, high quality European-wide University system that will meet the needs of demanding students and of the future labour market.”
“Through voluntary cooperation, academic studies in these forty-five countries are rapidly becoming compatible, facilitating exchange and academic cooperation across Europe, both in and around the EU. Because of this, employers will have a larger pool of talent, students will have a dramatically larger choice and universities will be pressed by competition to improve their standards. I am convinced this will have fundamental impact on the future of Europe, its economy and its culture.
I want to point at another three important areas where enormous political energy has been invested during this time.
The Lisbon strategy was established in 2000 with the reasonable ambition to make Europe the worldâs most innovative and competitive knowledge-based economy by the year 2010. In the Internal Market Council and the Competitiveness Council we spent every meeting for the next five years trying to live up to this goal â and we met almost every month â but I must admit that we failed.
On top of this, we have spent huge efforts and political energy to prepare and launch the European Monetary Union and the European Central Bank, which will celebrate its 10th anniversary next week. The currency union is now larger than anybody envisaged at the outset.
And the last few years, much time and effort has been put into reforming the Unionâs internal bureaucratic and institutional framework, resulting in the proposed new treaty that is currently being ratified in European capitals.
“Nevertheless, in spite of this intense activity over the past 15 years, I dare claim that the EU is less listened to today in the world community. Let me illustrate this bold statement by giving you a few examplesâŠ
When the dollar now depreciates and the Euro rises in value and the EU hits severe problems of eroded competitiveness, it is no longer any use to go to the European-led IMF to look for support, or to ask ECB to do something. Instead a unique high-level group was dispatched to Peking to ask for measures of support, cap in hand.
When American or Swiss banks hit the wall and risk collapsing, nobody gets the idea to approach Europeans for support. Instead they go to the Middle East, Singapore or China to ask for lifelines.
After centuries of European companies owning more and more companies in the developing world, the trend is now reversing. Indian, arab and other owners are now expanding rapidly as owners of major companies in Europe, so far in areas like, steel, cars and stock exchanges. Russia and China are also preparing to become more active with their vast resources.
European influence in Africa has been almost like a monopoly. Now that is challenged by China. More and more often European offers and demands are turned down as Chinese alternatives are more attractive and sometimes also perceived as less humiliating.
“So, the international clout of the EU has decreased over the past 15 years. I believe there are several reasons for this. They are based on my conviction that the strength of the economy is of fundamental importance for your standing in the world, for how you are listened to and regarded by others.
First of all, of course, we have seen a rise of emerging economies that have increased their share of the world economy. Their expanding economic weight also gives them a more important voice in international relations overall.
But itâs not all about them growing and catching up. Europe has contributed to its relative decline by itsâ own actions â and inactions. Itâs not because of others that growth in the Eurozone rarely crawls above three percent. Itâs not only because of others that the EU 15 share of the world economy is decreasing. According to the IMF our share of global GDP has diminished from 19 Âœ per cent of world GDP in 1994 to 16 per cent 2007 and only 14 per cent in a few years time.
Despite the Lisbon agenda, despite European enlargement, and despite the establishment of the Eurozone, overall economic performance has not picked up.
How can this be?
Well, the establishment of the Euro as the common currency took a lot of effort.
Preparing for the monetary union, fiscal and monetary policies where tightened in order to get budgets and inflation in good shape. The depressing effects on growth in the 90âs would be followed by rewards once the monetary union was in place, we were told.
Well, the first decade of monetary union has not yet made those rewards visible. Only rarely can we see growth numbers of three per cent, and Europeâs relative slide continues.
Today, I donât regard the monetary union as a very dramatic change in the lives of European states. From a macro perspective, some unnecessary costs have appeared, some signs of free-rider behaviour have shown up, but these difficulties so far seem to have been possible to manage without public upheaval in member states or a breakdown in cooperation. Perhaps the scientists of the future will find that the EMU was more about state building than about economics.
However, together with the political energy that had to be put into the project of negotiating what has now become the proposed new treaty for the European Union, the EMU has contributed to a European Union that concentrates on grand and prestigious internal projects. That would perhaps be ok, if we had not at the same time neglected dealing with numerous basic and everyday issues that could make the European economy work better. This is why the Lisbon agenda is not delivering the results we wished for.
Let me give you three examples.”
EU still spends far more of its resources on subsidising old declining sectors than preparing fr the future. Although research is allowed to grow in financial terms, resources are still minimal compared to agriculture
We failed to introduce a truly independent European Research Council that would ensure that funding was allocated solely on scientific merit. The expanded research budget has also been used as a general source of funding for prestige projects with limited or no connection to science, like Galileo or EIT.
Competitiveness on the global market is still hampered by fragmentation of our resources. The Take-Over Directive has not been modernised to facilitate cross-border mergers to build world champions. European companies are still handicapped by this on the global market place. This is further aggravated by labour market practices that impedes flexibility by locking in labour in individual companies through old fashioned corporate based social benefits.
In times of rapid international economic development and competition, we cannot afford to be this careless about improving our economic base. The European Union has been an economic underachiever for fifteen years now. Our unimpressive economic development gives us a weaker voice in international relations overall.
European leadership is effective, when Europe leads by example. Look at European leadership on curbing carbon emissions. Or look at the establishment of the internal market. We are judged by our deeds, not our grand plans or words. Therefore, the unglamorous everyday work of getting our economy to work better and more efficiently deserves more attention and effort.
In the future, I see a few areas in particular, which we need to concentrate on.
Firstly, as the Union has enlarged, countries that used to be far away have become our new neighbours. To them, access to the EU market is a priority. We must not turn them down. Rather, we should have an ambitious and bold policy to widen the internal market inclusion zone, and avoid creating new divides between recent EU members and their old neighbours. Iâm talking about working with unglamorous tools like tariffs, standards and regulation of markets. And Iâm talking about areas like Russia, North Africa and maybe the Mercosur countries in South America and Africa south of Sahara. And Iâm talking about cooperation in research and in education.
Secondly, within the EU, the motivation of members to put in place and implement new reforms on the internal market has weakened. The grand plans drawn up by prime ministers at European Council meetings are often ignored by Ministers in charge of concrete actions. Just look at the Lisbon strategy, and you know what I mean. Policy coherence must improve.
Thirdly, too often special interests are allowed to determine policies to the effect that agreed long-term EU objectives are overruled. Time and again, our common community interest is pushed aside by powerful lobbying groups that want to slow down the speed of reforms. We need to give priority to the future-oriented branches of the economy, not on defensive interests.
Forthly, it should be obvious that an EU that is internally divided, cannot be a strong and influential global actor. If the citizens of Europe feel that European cooperation is all about benefiting the already privileged, forget popular support for continued integration. So far, the tearing down of national barriers has created a situation in which employees â wage earners - are the sole group forced to pay taxes. Iâm impressed by Angela Merkel trying to do something about this, but ashamed as a Social Democrat that it took a right wing politician to finally start challenging the financial establishment in this respect.
Fifthly, I am convinced that all these inconsistencies contribute to creating a general scepticism among the citizens of Europe, who cannot trust that funds are always used wisely, and who cannot be sure that the best people get into key positions. (Just look at the present scandal of how the new head of EBRD was selected and you understand what I mean). Therefore, we must be tougher on corruption and mismanagement, and better at keeping the interests of the citizens of the EU in mind when creating EU policy.
“Recently, I think the European Court has contributed to uncertainty and scepticism among the general public in a most unfortunate way. The court ruling on the so called Laval case, regarding the conditions for Latvian construction workers employed in Sweden, and the similar Ruffert case in Germany, has created a huge question mark about the rules on the internal market. I doubt very much, that the citizens of Europe will support measures to strengthen a Union which rests on the assumption that local working conditions can no longer be decided locally.
As we proceed with European economic integration, it is crucial that we watch out for and stop those kinds of unnecessary tendencies of centralization. A dynamic and successful Europe is not a one-size-fits-all kind of Europe. European integration must not become a goal in itself, but remain a powerful means to create sustainable growth and prosperity.
At this time of failures in Iraq and on Wall Street, when the US has lost its role as model and inspiration for many people in the world, I regret that Europeâs standing is also weakened. This opportunity to offer an alternative to look up to and find inspiration from, for policymakers and young people all over the world, appears to be lost.
It hurts to read how one of Asiaâs most prominent diplomats and academics, Kishore Mahbubani of Singapore, describes the European Union:
- The Europeans are irrelevant to the worldâs great issues, obsessed by internal process, culturally arrogant, craven in the face of the US and blind to the rise of Asia. (FT May 20, 2008).
This is a challenge for us to do better. The EU must focus more on the everyday nitty-gritty issues that make a concrete difference in peoplesâ lives. At the same time, we must solve the most important problem of our time â that of global warming. And we should spend less time at creating prestigious and grand scale internal projects that consume all our energy and attention.
If we stick to that principle, the EU has a chance at continuing itsâ historical success, and regain admiration and influence in the world. To put it in an economistâs words: we need to deal more with the micro challenges of Europe in the years ahead.”
MĂ¶lle 20 May, 2008
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