The Lisbon Strategy for growth and jobs, the European Commission’s flagship policy agenda for the past five years, has a "branding problem" and needs to be revisited, according to a top EU official.

Gerard de Graaf is head of unit for the Lisbon Strategy's 'Strategic Objective Prosperity' at the European Commission.

To read a shortened version of this interview, please click here.

Swedish Prime Minister Fredrik Reinfeldt, whose country is about to take over the rotating EU presidency, said the Lisbon Agenda had been a failure. There is still a year to go until the 2010 target. What is the Commission's assessment? Where did the strategy succeed and where did it fail?

I think the Lisbon Strategy has neither been a failure, nor a success - it is somewhere in between. 

Where we have made progress is to focus more on the number of critical issues for the European Union, and in terms of governance compared with previous years, especially if you compare the period from 2005 with the period before. I think it is better organised, the division of responsibilities is much clearer, the role of the member states is better defined. The partnership is a more constructive way of working together.

We think that good progress has been made, but not by all, and not in all policy areas. The problem is less one of direction, although there are important questions in light of the economic crisis that will weigh on the decision we have to make on how to re-orient the strategy.

But the fundamental problem is one of pace. Therefore, anything we will consider and propose in terms of modification to the strategy after 2010 has to answer the question, 'is this going to speed up the pace, and ensure a similar pace of reforms across the EU, and across policy areas?', because if that's not the case – we see some countries making good progress and others making hardly any progress at all – this means that we miss out on some important benefits, given that our European economy is so interdependent, and it also causes some strains, which we are now seeing within the euro zone. 

In terms of policies we want more innovation, for example, and we want to make good progress on labour markets, but if we do this and fail to make good progress on the business environment, for example, we're not going to be successful. We need progress on all these fronts. We need to push many buttons at the same time, and pushing a few is not good enough.

Could you mention a few policy areas that have been successful, and a few that have not?

Again we have to speak with a kind of nuance. Fortunately in the area of macroeconomic policy we've been able - maybe not as much as we would have liked - to at least put ourselves in the position where we are now able to provide some fiscal impulse, of course dependent on the fiscal space of member states, to weather the storm, to give support to our economies. Also if you look at debt levels, if you look at deficits in the period before, we are in very much better shape. It could have been in even better shape. But at least the glass is even more than half full.

On labour market policy I think we have made progress. Again this is a long process when we are talking of structural reforms. The issue of flexicurity is on the agenda of every member state. This was not the case before. I think that we should not underestimate the capacity of the Lisbon Strategy to be an agenda setter, a driver of policy, which it has been particularly good at for flexicurity. We're seeing some promising developments there, and we like to think that labour markets so far have held up relatively well. 

Of course, the situation is very worrying, and the situation in the labour market is going to get worse before it gets better. But the capacity of the labour market to retain people has made progress. 

Where we have seen less progress than in the macroeconomic and employment areas has been in the microeconomic areas: the business environment; the role of the single market; innovation; research and development. We don't seem to be able to really convert political will into decisive action in these important areas.

Precisely: that lack of enforcement is widely seen as having been one of the weaknesses of the Lisbon Strategy. There are some areas such as research and innovation where the Commission has little competence. Do you think that strengthening this enforcement aspect could be one of the major drivers behind the renewed Lisbon Strategy?

I think enforcement is certainly one area where discussion is necessary. Clearly the implementation of these areas is to some extent dependent on the pressure that can be put on government; pressure at the national level, pressure at the local level, and also pressure that we in the European Union can bring to bear on governments. 

We have used instruments, for example, country-specific recommendations under the treaty. These are treaty-based, so these have at least a strong political value, and also a legal value. 

But obviously we cannot impose a particular design on member states in areas for which they are largely competent, and it is a process of working with member states in a partnership and convincing them that this is the right way to go. 

The extent to which people give more teeth to the Lisbon Strategy will certainly be an important part of the debate. In that context you will need to think about benchmarking; can we use the instrument of benchmarking more? Can we get member states to set targets that are more suitable to their own national situation? 

I think one thing we really have to take into account, particularly since enlargement, is that we have a very diverse group of member states. Some, if you take R&D, are at the top of the league, and others still lag behind. If we have targets, which are more suitable, more differentiated, with a stronger political commitment behind it, and with benchmarking, or some kind of smart scoreboard, then that could help bring more pressure to bear. So these are certainly issues that in the next phase of the strategy will get a lot more attention.

Perhaps you could shed some light on the process itself. Can you confirm the timeline and tell us how you will involve the different stakeholders, both governmental and in the private sector? What methods you will use to involve stakeholders?

The preparations for the strategy after 2010 already began last year. In the spring of last year, the European Council asked the Commission to start the reflection together with the national Lisbon coordinators. Hence, we have had a number of discussions with the national Lisbon coordinators on the impact of the strategy thus far; what challenges the European Union can be expected to deal with, and how we can best adjust the strategy to ensure that the EU will reach its goals. 

So this process has already started. It is not something we have only started to think about. But obviously the process will now accelerate. Our target is the 2010 spring European Council during the Spanish Presidency. But if by that time the Lisbon Treaty is in force, then obviously there will be a president of the European Council. 

We would expect the new Commission to make proposals in time for the spring European Council. But we know the uncertainty about the starting date of the new Commission. The new Commission will need a bit of time to reflect, and take ownership of the proposals that it will make. Whether this is at the end of the year, or early next year, it is a bit early to say. But it will have to be in time enough for the March European Council 2010 to take decisions, and then there are some further decisions that need to be taken in June. For example, if there is a modification to the integrated guidelines, then that is maybe something that cannot be agreed on in March, but can only be agreed in June. Who knows, there maybe more of those, more implementing decisions, that will need to be confirmed after the spring European Council.

We are, of course, now waiting to see who the next president of the European Commission will be. Hopefully, we will get a decision on that relatively shortly. Then, of course, an important event will be the vote of confidence in the European Parliament by the middle of July. As obviously the strategy after 2010 will be a very important part of the work programme of the Commission for the next five years, you can imagine that in that speech before the European Parliament in the middle of July, some of the main issues will already be touched upon. 

Then after the summer, and if President Barroso is confirmed as the president of the next Commission, he has already made it clear that he wants to have a wide-ranging public consultation on the Lisbon Strategy. This will probably begin towards the end of September and run until the middle of November. Naturally, we will still need to decide on the exact dates.

This will be a consultation, which will be wide-ranging using the most modern instruments like the Internet, but there will also be opportunities for people to come and give input. Our hope, and our expectation, is that the member states will also actively engage with their stakeholders, their citizens, to debate the future of the Lisbon Strategy, because it is actually a very important way of ensuring stronger ownership of the strategy. 

One of the criticisms that is often heard, which is a justified criticism, is that in some member states not all of the civil society and social partner stakeholders have been sufficiently engaged with the strategy. That is something that we have to change, because political ownership is very important for effective delivery of the structural reforms. If there is no political ownership then it becomes much more difficult to implement reforms, and maybe there is a correlation between the different pace of reform and the degree to which stakeholders have been engaged in the process. 

So we will want to get this right. It is therefore important that the consultation is not Brussels-centric, that it is not just a consultation among the insiders. But we will try to reach out to as many stakeholders as possible.

Can you give examples of good consultation at national level?  

There are plenty of good examples. The way a government interacts with social partners and stakeholders on Lisbon is probably not very different to the way a government interacts in other policy areas. But there are good examples where in the beginning the link between government and stakeholders was not so strong, and where the government recognised this and has taken action to correct this. France is a very good example of that.

Can you give a bit more detail on the tools you will use to engage with stakeholders? And also the tools you hope the member states will use?

Obviously we can be much more specific once we have the new president appointed, because it will be his decision what will be undertaken. But typically we would do a short document, a simple accessible document explaining how the strategy works, like a Green Paper. We may not call it a Green Paper, but I think the purpose will be the same – to provide the basis on which a constructive debate can take place. That would be around mid-September before the consultation is launched. We will use other means. We will probably use 'Your Voice in Europe', asking questions that people can answer on the Internet.

Do you think that your voice in Europe has had an impact on the national debates?

Well, 'Your Voice in Europe' is for us an important instrument to enable people to participate in the European debate. It is non-bureaucratic. Anybody can go on the Commission's website your voice in Europe and can see what issues we are currently consulting on. In five or ten minutes you can give your views directly to the decision-makers.

Do you feel national policymakers have been participating and influenced outside the English-speaking zone by 'Your Voice in Europe'? 

I think it is hard to say. The answer would probably be 'yes' on some policy aspects and 'no' on others. We can't expect miracles from an instrument like your voice in Europe. 

Again, I think the starting position is political will. If a member state wants to involve its stakeholder, then Your Voice in Europe and other instruments are very useful. But if member states regard the Lisbon Strategy as the best-kept secret, and are not organising, and are not trying to interest the parliament in the debate on the Lisbon Strategy, then obviously Your Voice in Europe  cannot compensate for that.

During the economic downturn there has been a lot of demand from member states to focus more on short-term issues, and the Lisbon Strategy is typically more long-term. The EU itself tends to function more slowly than the member states because of its heavy decision-making procedure. How do you see this shaping the Lisbon agenda after 2010?

One of the strong elements of the European recovery plan is that we combined the elements of the short-term with the medium and the long-term. It is clear we say, 'yes, we need to take urgent action. We need to give an impulse to the economy, a fiscal impulse to the economy'. But this must be done in a smart way. It is not just about spending money; it is about spending money to ensure that the EU comes out stronger after the crisis and accompany that with an acceleration of structural reforms. So it is that kind of approach we are supporting, which the European Council endorsed. 

Furthermore, we have now done a preliminary assessment of the national recovery plans, for the June European Council meeting. And we have come to the conclusion that they have been respected by the member states. That it is not short term for the sake of the short term. But it is short term in order to come out stronger after the crisis. I think that is very important.

Let me also make a comment about the short-term, medium-term, and long-term. It is not so much that some measures can wait for another couple of years. The difference is that measures take longer to produce effects. You cannot say, 'well let's wait for education reform for two, or three, or four years; let's do this other thing first'. We say, 'no, do it at the same time'. But it may take two or three years, or maybe even longer, before you find the effects. So when you make a distinction between short-term and long-term, you make the decision of when are you going to see the effects. Not a distinction in terms of the sequence; 'let's do this, and put this other thing on the back-burner'. That's exactly the mistake the EU should not make. R&D is a good example. 

It is probably not going to help an awful lot in the short-term, but our strong message to member states is to keep up R&D spending, if possible even increase it, because this will help us in the medium to long-term. We need to move away from this idea that we can afford to postpone reforms until after the crisis. These reforms have to be taken now, but we have to accept that it may take a bit longer before we see the results.

Some, like France, are even pushing for the rules of the Stability and Growth Pact to be altered. Due to the current crisis, they need to spend more to boost the economy. Can this be tackled as part of the Lisbon Strategy revision? 

My first comment is that we are using the flexibility offered by the revised Stability and Growth Pact to make sure that we give a boost to the economy, and support demand. The Pact is being used exactly as intended when the revision was agreed.

What we will need to consider in the next phase is the link between the Stability and Growth Pact and the Lisbon Strategy, because the two instruments are of course being employed, but are not necessarily being employed in a way that produces synergies. When you look at the next couple of years you will see that you need to start the process of fiscal consolidation, to reverse the fiscal stimulus. This will of course have an impact on the Lisbon Strategy. Particularly issues that require public expenditure will be faced with budgetary constraints. So we need to take that into account.

We need to make sure the growth potential of the European Union is further enhanced, because that will make it easier to go back to normal. It will also make it easier to start reducing our debts. The two strategies need to be mutually supporting. They are mutually supporting, but I think there is still room for trying to bring them more closely together.  

In order to implement them better, and communicate them better, a number of people have said that the EU needs a new narrative. Most people agree that the brand name 'Lisbon Agenda' has not worked very well. What are your thoughts on this?

From a problem analysis point of view, it is fair to say that we have a branding problem. If we were a private company, and we had a problem with our marketing, we would call in a marketing company, and say, 'how can we re-brand this product?' We are convinced it is a good product. If it is a bad product, even good marketing will not help sell it. 

Too many people still associate the Lisbon Strategy with 2000 – 'the most competitive economy in the world' - too many people have already concluded that the Lisbon Strategy is a failure, and thus does not warrant any more attention. And then there is a very large group of people who are frankly not tuned into this debate at all. 

There is clearly an issue here. Are we going to have a 'Lisbon Strategy B' after 2010? Or is this an opportunity to really come up with something new? I think in any event, independent of the name, which is an issue that will obviously need to be thought about, the new narrative is important. 

We are in the middle of a very deep crisis but there are opportunities. There are major chances now for Europe to transform their economy to accelerate to become a smarter economy, a greener economy, an economy built on knowledge and social inclusion. 

From that perspective of a new narrative, where does Europe want to be in 2015? What kind of Europe will we have after the crisis? What is the exit strategy? When we come out at the end of that tunnel where will we find ourselves? That will need to be taken very much into account in the next narrative.

Who do you expect to provide some ideas for the new narrative? And when?

Hopefully all of us! The idea of consultation is to get new ideas, to get input. Hopefully people will come up with things that we in the Commission, or in the member states, haven't thought of.

So that is certainly the purpose. We are not going into a consultation to just get validation for our views. Obviously, the president has views, we have views. It is very important that we strengthen our assets. The EU hasn't got a lot of energy, hasn't got a lot of natural resources, but we have got our human resources, our physical, our network. So we need to make the most of our people. We need that to be placed at the centre of our strategy; if you see the importance of ICT, in terms of energy efficiency, in terms of health, in terms of productivity. We need to work towards the most modern networks, the most impressive education.

Critics have argued that the Lisbon Strategy was too static as it was based on the competitiveness/social/environment policy triptych. To some extent, these priorities were defined to satisfy different constituencies, but it has also added many constraints to the agenda. One hypothesis to solve this problem would be to have more overarching topics such as education or innovation, which are more dynamic – what do you think of that?

I think the criticism that the Lisbon Strategy is a static strategy has been proven wrong by the facts. Lisbon is a dynamic strategy. The whole issue of climate change and energy has been incorporated into the Lisbon Strategy. It is not as if we have kept the Lisbon Strategy exactly like it was in 2005. 

If we have made progress at the political level, it is widely recognised that in order to be successful you need to have competitiveness, you need to have social inclusion, you need to have a very strong social basis, and you need to care about the environment. 

The sustainable and the smart is something people now agree on. Whereas previously there was this whole debate; is it competitiveness first? Do we put popular ideas on the back-burner? And this discussion has disappeared in a way. The ideological discussion is much less important than it was before, which I regard as progress. 

Therefore the point is not so much about the direction. There needs to be a discussion about the direction. But it is not so much about the 'what', but about the 'how', it is about the implementation. The problem in Europe is not that we do not know where we need to go, but it is that we don't always manage to implement the measures that will get us there. 

Innovation is already a critical part of the Lisbon Strategy. It is central to increases in productivity, which is necessary to increase the standard of living with a shrinking labour population. It is essential to addressing these grand challenges that are facing us.

I think what we need to do with innovation is make it more operational. Innovation is a relatively fuzzy concept, but we need to translate it into policy terms, into something that is concrete, because I think that is another important issue for the Lisbon Strategy. If you want to keep it a political strategy, and not just a bureaucratic strategy, then it must be concrete. It cannot stay at thirty thousand feet, as the Americans would say. It needs to be translated into operational decisions that the spring Council, and the ministers, can take. 

Everybody agrees that there should be more innovation. I have never met anybody in my life who says that 'I am against innovation'. Is anybody against panda bears? Or against Santa Claus? It is not at that level that we need to find agreement in the EU. It is more at the operational level. Innovation means changes to the intellectual property rights regime. If we want to have more innovation, do we agree on that? It means faster standardisation, more inter-operable standardisation, do we agree on that? So those are the issues that we really need to highlight.

Does this also imply changes to competition rules?

Well, it could also mean that. That is what the debate needs to be about. Not about whether innovation is absolutely critical for the European Union, because we already agree on that. But what can we do practically? What can the Lisbon Strategy do in practical terms, at the EU level? Obviously one answer is to contribute to putting in place the framework conditions where innovation can flourish.

Education is absolutely an important point. Again, there will be lots of discussion and consultation, but I would be surprised if education was not given a very central place in the strategy after 2010. 

It is critical for a number of issues. If we are going to compete successfully with the rest of the world, it is because of our brains, because of the skill levels of our people. With a fast-changing economy, and the pace of globalisation, people will need to be given the skills and abilities to make these transitions successfully. It is a very important part of social policy. In globalisation it is the people who have a good education that will be successful. The early school leavers are the ones who will be most vulnerable. You see it now with the recession strikes. They are the people who tend to be shaken out of the system first. So education is critical. 

And there again, the question is 'how can we make this operational?' How can the Lisbon Strategy help us accelerate certain reforms that are taking place at the member-state level?

But here again there is no real EU competence. Is the EU's role then just one of coordination?

The Lisbon Strategy has in a way overcome this problem of whether we have competence or not. We have no competence to tell the member states that they should put in place mechanisms that would enable start-ups to start within a week. We have no competence. But we managed to achieve that. We went to the European Council with a practical proposal that it should be possible anywhere in European Union to open up a business within in one week. It was already possible in some member states. So it was feasible. If we could multiply that so it was possible to do that in all member states, we would all benefit. It happened. 

It is not an area where the Community has competence. The heads of state and government thought it was a bloody good idea. They agreed to it. We then had monitoring in place. We used the Open Method of Coordination (OMC) to exchange some good practices. Member states like Portugal, where citizens could open a company within an hour, could tell other member states where it took forty days how they could shorten that delay, and it worked.

In terms of education, we are not going to make a proposal for a directive on education. But that is not to say that we cannot agree on a number of sound proposals at the EU level. Sound ideas that member states, and heads of state and government, agree to implement in their own member states, and with the Commission monitoring to make sure that it does happen. 

Another issue that has arisen with the economic crisis is the lack of coordination of macroeconomic policies. We have heard leaders saying that we have a monetary policy, but that we still do not have a proper economic policy as such. It seems like the Spanish want to make this an issue during their presidency. How do you see the EU's economic policy developing in the coming years? Would further steps towards integration get the EU too close to the core competence of the member states?

First of all, there are lessons being learned from the crisis. These lessons are going to be very useful for the strategy after 2010, especially lessons regarding the important reforms happening in all member states in more or less a concerted effort. Of course, they are happening from very different starting position. But as I have said, the current uneven pace between member states in different policy areas is a problem. So that lesson is being learned.

There are also lessons being learned as a result of the financial crisis. Before too long, many member states will have run out of fiscal room for manoeuvre, and therefore the only way forward is structural reform. I think those two elements will certainly be beneficial to the strategy after 2010. 

In terms of economic policy coordination, this is not just economic policy coordination for its own sake. It is because it will benefit all of us. In that case the starting point is very important. In the context of the Lisbon Strategy, in terms of structural reforms, we have the country-specific recommendations. They are proposed by the Commission, but ultimately these are Council recommendations. So it is an agreement by every member state and government, about what each member state needs to do. It sets out quite specifically what reforms are of a priority. This is like an embryonic form of economic policy coordination. 

This is what we have got. The question is: are we going to make more of it? Are we going to use it even more intensively? We talked about the teeth of the Lisbon Strategy at the beginning of the interview, we have got some tools, but will they be sufficient? Will they satisfy everyone? Probably not. They will probably go too far for some, and not far enough for others. But at least we have got something to build on. This is something we can really develop over the next period.