EU summit eyes ‘economic government’ for Europe

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European Union leaders are meeting in Brussels on Thursday (11 February) in the midst of the euro currency's biggest crisis yet, with EU President Herman Van Rompuy set to push for greater "economic governance" of Europe.

Immediate attention at the summit will turn to Greece's soaring public debt, which has raised fears of a possible default, hit the euro currency and prompted speculation over a bailout plan (EURACTIV 04/02/10).

But EU leaders will also try to focus on the long-term, with an exchange of views to take place on the European Commission's proposed 'EU 2020' strategy, a ten-year economic plan due to replace the EU’s flagship Lisbon Agenda for growth and jobs.

Commission President José Manuel Barroso will present the priorities of the new economic strategy ahead of the publication of the EU executive's formal proposals, expected by early March.

In his invitation letter to heads of state and government, Herman Van Rompuy, permanent president of the European Council, said EU 2020 "requires ownership and commitment at the highest level".

"The new strategy needs to become our joint responsibility," Van Rompuy stressed.

Discussion will centre on giving more political weight to the Lisbon Agenda, which has largely failed to turn the EU into "the world's most dynamic knowledge-based economy by 2010".

Van Rompuy's plans for greater 'economic governance'

Frans Van Daele, head of office for Van Rompuy, said the meeting will seek to chart a course for the EU's future "economic governance".

"What we are trying to do there is to bring about a meeting of minds between heads of state and government on the fact that structural reform is absolutely essential to lift our growth rate to a higher level which we need in order to create jobs," Van Daele told a press briefing in Brussels on Wednesday (10 February).

Such reforms are not new and were already contained in the Lisbon Strategy, he admitted.

What could change, he said, is the definition of a more limited set of European objectives (on research spending, employment, etc.), which would then be fine-tuned to fit the different situations in member states.

"A one-size-fits-all approach is not going to work," Van Daele said. "We have to translate general focused objectives into national targets so that every country has a number of precise objectives to be pursued in its own manner," he added, noting that research spending, for example, varies widely from one member state to another.

"It is obvious that countries that are less advanced [on research spending] will need more time to get there and hence the trajectory in time for some will be different from others," he explained, saying that "intermediary stages will be different".

The European Commission will be asked to propose objectives that are "precise, quantifiable and very limited in number" in time for the March EU summit, Van Daele said, stressing that "choices have to be made" if the 'EU 2020' strategy is to keep a sense of focus.

France and Germany to present joint plans

Last week, French President Nicolas Sarkozy and German Chancellor Angela Merkel outlined a common vision for 2020, and said they would present their joint plans to EU leaders (EURACTIV 05/02/10).

"We will be there to present joint proposals on an issue that is of paramount importance in our eyes, the economic governance of the 27," Sarkozy said. "This is a point on which we really agree with each other."

France has long insisted on turning the euro zone's meeting of finance ministers into an economic government for Europe, a view which Germany had until now opposed due to concerns over the independence of the European Central Bank.

But Greece's debt problems and Europe's sluggish recovery from the economic crisis may give Berlin reason to change this. "The term 'economic government' was considered controversial" in Germany until now, notes Handelsblatt, one of Germany's leading economic newspapers. "Now even Merkel mentions it."

Giving 'EU 2020' more teeth?

Still, there seem to be wide divergences on giving the new 'EU 2020' agenda more 'teeth'.

Spanish Prime Minister José Luis Rodríguez Zapatero, who holds the Union's rotating presidency, argued in favour of setting binding economic goals for member states, a suggestion rejected by Berlin, which said it would create unnecessary bureaucracy (EURACTIV 12/01/10).

"There is convergence on the idea that we should coordinateand set objectives, maybe fewer of them," said an ambassador from one of the EU's big member states, citing the Lisbon Agenda's objective of spending 3% of member states' GDP on research.

The Lisbon Agenda, he said, failed partly as a result of slow monitoring of progress. EU leaders only followed up only once a year, at the March EU summit.

Now, monitoring will take place "maybe several times per year," the diplomat said. "The progress will be in the governance," "more direct ownership" of the strategy by member states and "tighter coordination" between national and EU levels, he explained.

"It is important that the coordination and the impetus comes from the highest level – this is what's going to change."

However, the diplomat rejected as "counter-productive" suggestions that member states could be sanctioned for failing to meet the strategy's objectives. "If you want to antagonise public opinion about the EU, then go ahead," he said.

Change, he said, will come in the way of "thematic reviews" of specific elements of the strategy, such as innovation and research spending. "And possibly, we will do it in public," he added, referring to criticism that the Lisbon Strategy had shied away from 'naming and shaming' failing member states.

But he cautioned that it will take more than the 11 February summit to launch an economic government for Europe.

Building 'incentives' into the game

Frans Van Daele, head of office for European Council President Van Rompuy, said the EU's new 2020 strategy "should bring incentives into the game".

"In the end we could make use of the instruments in the new EU treaty, which are the instruments of surveillance, to tell people that they are not doing what they committed to doing."

Le Monde newspaper reported that such incentives could include privileged access to credits delivered by the European Investment Bank (EIB), or to EU research and regional funds.

Van Daele said he hoped the March summit of EU leaders would formally sign up to the three lines of action proposed by Van Rompuy – EU objectives, national plans and incentive measures – so that a full plan could be put into legal "grammar" at the June summit.

Individual national programmes, he added, should be presented "by the end of the year". 

In an open letter to EU leaders ahead of the summit, Guy Verhofstadt, leader of the liberal ALDE group in the European Parliament, called for greater unity in the face of current challenges.

"If the current economic crisis has taught us anything, it is of the need for a common approach to economic policy, to public finances, to banking supervision and bonuses, to environmental legislation etc," Verhofstadt said in the letter.

"Businesses need a stable legal and macro economic framework in which to thrive and invest. A single market and a single currency inevitably require some common approaches to broader macro-economic policy planning."

The member states' lack of determination in implementing the Lisbon Agenda has frustrated business leaders, who have called for greater commitment to delivering on the objectives.

"Many political leaders make European commitments but by the time they cross their own national border they forget about it," said Wim Philippa, secretary-general of the European Round Table of Industrialists (ERT), a powerful lobby group. "If Europe wants to be competitive in 2020 or in 2025 then that should not happen," he told EURACTIV in an interview.

In 2000, the EU launched its ambitious 'Lisbon Strategy' to become "the world's most dynamic knowledge-based economy by 2010".

After five years of limited results, EU leaders re-launched the strategy in March 2005, placing greater emphasis on growth and jobs and transferring more ownership to member states via national action plans (see EURACTIV LinksDossier).

A new plan, dubbed 'EU 2020', was launched for consultation by the European Commission in November last year, placing the emphasis on green growth and jobs through innovation (EURACTIV 19/11/09).

The consultation resulted in 1,500 submissions. These highlighted widespread concern about the jobs crisis, whch made the need for a comprehensive roadmap to recovery even more pressing.

  • 11 Feb. 2010: EU leaders to discuss the bloc's draft '2020' strategy.
  • Early March 2010: European Commission to present formal proposal for 'EU 2020' strategy.
  • 25-26 March 2010: EU summit to adopt main policy orientations, based on a limited set of objectives tabled by the European Commission.
  • 17-18 June 2010: EU summit to approve final strategy.
  • End 2010: Member states to adopt national programmes to meet overall EU objective.

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