Participants in a public event of the federalist Spinelli Group overwhelmingly supported the introduction of minimal social standards at the EU level and the establishment of a common European industrial and energy policy. But the discussions failed to answer how such goals could be achieved.
The Spinelli Group conference, held yesterday (25 March) in Brussels, had a tongue-in-cheek title – “Federalism explained to children… and to EU heads of state and government”.
Several questions were put to vote through electronic means. In particular, the questions “Do we need minimal social standards at EU level?” and “Do we need a European industrial and energy policy?” got overwhelming support in favour both from the audience and on the group’s website.
However, the panel debates did not really provide clear answers how these goals could be achieved. Paul De Grauwe, a Belgian academic at the London School of Economics, said the eurozone crisis had nothing to do with social convergence. He argued that in a situation where the eurozone countries cannot respond to the crisis by devaluating national currencies, what they need to do is “internal devaluation” by reducing salaries.
Because of the crisis, there is a tendency to strip the social component of its substance, De Grauwe said, adding that the problem raised was how to deal with the negative consequences in terms of recession and social destabilisation.
“The crisis we experience in the eurozone has nothing to do with the lack of social convergence … Some may say: in order to avoid future crisis in the eurozone, social convergence is needed. I say this is not needed at all,” De Grauwe said.
Daniel Cohn-Bendit, co-chair of the Green/EFA group in the European Parliament, concurred.
Guy Verhofstadt, leader of the European Parliament’s liberal ALDE group, said that the inability to devaluate national currencies in the eurozone requires countries to engage in another type of reform that should be done at European level, in the economic, fiscal and social fields. However, such a policy does not exist, he admitted.
Unlike the USA or Japan where the central banks foster the market’s confidence, the common EU currency has “nothing behind it”, Verhofstadt said. This is why the only response brought so far was introducing discipline, he said.
The lower the EU budget is, the more convergence is needed, with minimum values to prevent social dumping and maximum values to guarantee the competiveness of the economy, he said. As a social benchmark, he mentioned setting an EU-wide minimum level of pensions at, for example, 45% of the last salary. Some countries have lower percentages that that, and a few have a higher one, such as the Netherlands which has a 62% minimum level, he said.
Another social benchmark Verhofstadt mentioned was to guarantee for every citizen inside the EU a “health package” that consists of a number of minimum services.
MEP Roberto Gualtieri from the centre-left S&D group said that with the eurozone crisis, the Union had built “a weird model that doesn’t exist anywhere in the world”. He made reference to the fact that 8% of GDP of eurozone countries was a guarantee for the European Stability Mechanism, which he described as national money obeying to technocratic rule.
Gualtirei argued that what is needed instead is coordination of economic policies by introducing binding obligations at EU level.
Common industrial policy
The same speakers engaged in a discussion of whether a common industrial and energy policy was possible. Ultimately, they concentrated only on industrial policy and made no reference to energy.
Cohn-Bendit, who led the discussion, said that in his view, a common EU industry policy was needed. He took as an example metallurgy and the auto industry. As long as there is no European policy on metallurgy, defining what type of metallurgy is needed, we will witness of collapse of this sector, he said. Regarding the auto industry, he said that a European plan on the “mobility” of this sector was needed, because it would be impossible to keep all the production sites. Therefore, he said a European industry policy could solve such issues.
These views were sharply contradicted by De Grauwe, who said that metallurgy in Europe was condemned anyway. He went even further, saying that in his country, he saw no need for a Belgian plan for the future of metallurgy.
“I don’t think that any government, at national or European level, has the capacity to identify the sectors with a future perspective. I think we should rely to the market system for that,” he said.
Verhofstadt said that in his nine-years as Belgian prime minister, he had been successful in dealing with the risks of closure of car plants. He mentioned the anecdote of the transformation of a VW car into an Audi operation thanks to his personal relations with the Audi-Porsche company owner, with whom he found common language – a passion for vintage cars.
Gualtieri argued that the EU was using its competition and trade policies “in the wrong direction”. He was supported by Verhofstadt who argued against a Commission decision to oppose a merger between Volvo and Scania.
“This is a negative way in Europe to influence industrial policies,” he said.
Cohn-Bendit mentioned Airbus as a clear example that European industry policy is possible. He also said that it should be possible that the EU takes the decision to promote tramway transport throughout the Union and put in place a European tramway consortium.
A new treaty in the making
In an earlier session dedicated to European democracy, ALDE MEP Andrew Duff said he was working on a new draft treaty, which will be ready by the summer.
He said the new draft treaty includes a proposal for an EU executive that functions more like a government, adding that the current system – with a commissioner from each country – is unmanageable.
Duff insisted that the time is right to exploit Europe’s fiscal and economic troubles to change the treaty and tackle the problems that have surfaced during in recent years.
Echoing Duff, Belgian Green MEP Isabelle Durant, a vice president of the Parliament, said the concept of subsidiarity must be reviewed: “It is not acceptable that the member states see Europe as a milk cow. Europe is much more than money.”