This article is part of our special report Tatra Summit: Europe’s competitiveness in a global economy.
Europe’s competitiveness in a world characterised by disruptions has been in the spotlight of the GLOBSEC Tatra Summit. The Green New Deal, sustainable finance and leveraging the EU budget were identified as the keys to help Europe resist the global pressure.
Slovak Ambassador to the USA, Ivan Korčok, summed up the new reality on Friday (11 October), saying the romantic transatlantic relationship is now over.
“The optimists say we need to disrupt it and replace with something new, but engaging in a trade war and retaliation is not a process of renewal”, he said. “Looking at the decisions that are made every day, this process resembles much more a destruction,” Korčok said.
According to the diplomat, in Washington, no one listens to the old mantra that we need to stay together any more. “We need to mobilise those who still believe in that,” he said and called on the business community, which can see the risks, to be engaged in a constructive way.
For policymakers, this means acknowledging that “a lot can be decided on our (European) side” and that US will take Europe seriously only if Europe is stronger.
Many speakers asked where the EU stands in the ongoing US-China battle for global dominance.
“It is indeed a chance for Europe to be more assertive,” says Jörg Wuttke, president of the EU Chamber of Commerce in China. “Trade war is one thing, but it is the tech war, that should worry us more,” Wuttke said.
Slowdown or recession?
The forum kicked off on Friday with a panel reflecting on whether the EU faces a new recession. Czech businessman and billionaire Daniel Křetinský voiced his concern about what he called “ideological approach” of EU institutions. He cited as an example the push to set up a “superfund for digitisation”.
“This is a lost battle”, the CEO of EPH said, adding that it will not produce anything like a “European Google“. Instead, he said, there are industries where Europe is already strong, like the manufacturing, chemical or automotive sectors, which basically need additional attention.
Also, the climate narrative may be dangerous in the sense of what signal the talk about the carbon-neutral economy is sending to the industry.
“How can an executive decide how to invest?“ asked Křetinský, who purchased a 49% stake in French newspaper Le Monde last year.
Johan Van Overtveldt (ECR), an MEP and chair of the European Parliament’s Committee for Budgets agreed, saying that when there is “shouting and screaming” about the climate, businesses are holding back investments.
The Belgian MEP also questioned the monetary policies of the European Central Bank. While claiming that Mario Draghi “deserves a statue“ for what he did during the 2011-2012 economic crisis, the ECB policies ever since have been a problem and the bank is strongly divided on what needs to be done under current circumstances of an economic slowdown.
“I do not envy Mrs Lagarde,“ Van Overtveld said.
According to Poland’s Finance Minister Jerzy Kwieciński, Poland’s younger generation does not know what recession means, hinting that Poland’s growth is three times higher than in the Eurozone.
Hungary, on the other hand, “knows what recession is and we hated it”, said Gabor Gion, state secretary on the Hungarian ministry of finance.
“A crisis usually doesn’t come when everybody expects it, but the recession will come if everybody is talking about it,” Gion said. Reminding the forum that Hungary’s economy is linked to that of Germany, he said: “When Germany sneezes, we get cold”.
Who pays for going green?
Debating the embrace of sustainable finances, Slovakia’s Central Bank Governor said climate change has also become a financial risk and central banks must be part of the debate.
The region of Central and Eastern Europe, which is lagging behind for the time being, must build capacities to embrace sustainable financing and Slovakia wants to be part of the “coalition of the willing” in climate matters.
At the private sector level, General Counsel and Chief Franchise Officer for Mastercard in New York, Timothy Murphy, said the company was working to incentivise their clients to opt for ecologically friendly consumer choices.
They have developed an index rating of the clients’ payments from the sustainability point of view.
From his perspective, Europe is already a global leader in a number of sustainability issues. While in Europe, the debate is happening, in the USA, the debate is “toxic” and little is happening. “EU’s leadership is absolutely required”, Murphy emphasised.
The Tatra Summit also focused on the future of the automotive industry.
Finance Minister Ladislav Kamenický sees a “completely different” landscape for the automotive industry: “We are really afraid”, he said, referring to Slovakia’s strong dependence on the car industry. In the era of electric cars, the assembly will be much easier, and the companies will not move their R&D to countries like Slovakia.
Various speakers called for a strong industrial strategy in the EU, embracing also the needs of SMEs.
EU budget: a hot potato
Policymakers also looked at how the EU’s next Multiannual Financial Framework (MFF) can help address the bloc’s challenges when it comes to convergence, climate, innovation and competitiveness.
The division between the so-called old and new priorities of the EU budget is false, according to the State Secretary of the Slovak Ministry of Foreign Affairs, František Ružička.
European Investment Bank’s Vice President Vazil Hudák said there will be no competitiveness without cohesion. “It is clear that public resources will not be enough, we need to bring private money into this,” he said.
[Edited by Sarantis Michalopoulos/Zoran Radosavljevic]