Dombrovskis: Euro crisis ‘is also a competitiveness crisis’


As Europe slowly climbs out of the economic crisis, the focus for the European Parliament elections campaign is jobs and growth, Valdis Dombrovskis says, adding that competitiveness is key and that Europe needs to catch up with the US and Japan in spending on innovation and science.

Valdis Dombrovskis is the former prime minister of Latvia and one of the contenders to become the lead candidate in the European People’s Party (EPP)’s campaign for the EU elections. He spoke to EURACTIV’s editor-in-chief Daniela Vincenti.

To read a shorter version of this interview, please click here

The slogan for the elections is ‘This time it’s different’. Looking beyond the ‘top candidates’ who will lead the European parties’ campaigns, what do you think will make these elections truly different from previous ones?

Well, one element is this campaign setting as you mentioned, but another one is that we must realise the European Parliament has much more powers than before. The Lisbon Treaty has substantially increased the parliament’s involvement in EU decision making. This pushes citizens to take the EU elections seriously and understand that elected officials truly have a say on how the EU develops.

You sat in the European Council as PM and you held an MEP mandate for your party, Jaunas laiks (or New Era Party). Do you really think the institutions have adapted to this new, stronger Parliament?

I must say they did. Over the past few years, we have discussed much more the agreements we make with the parliament in order to pass a piece of legislation. The scope of co-decision has widened. For example, during previous Multi-annual Financial Framework [the EU long-term budget] negotiations, I was a sitting MEP, while last time I was on the Council side. I can say that we have negotiated with parliament much more seriously than seven years earlier.

Do you have the impression that citizens – let’s say Latvians – are in fact aware of this shift?

Well, it is a politician’s duty to explain this. If you ask many citizens questions on how the EU functions, there are still a lot of misconceptions and a lack of understanding. It is probably not the most exciting topic, but given the role the EU is playing in everyday lives of citizens and in national decision making, I believe this awareness will gradually increase.

Hopefully, we’ll be able to reverse this negative tendency of ever falling turnout, during the upcoming EU elections. I believe the EU is more present in citizens’ lives than ten years ago, and so it would be a positive signal to finally reverse this trend.

Compared to other potential EPP candidates, what are your specific strengths to lead and win a campaign?

I have dealt with the financial and economic crisis in my own member state and I believe this is an experience which I can bring to the EU level: how to deal with the aftermath of the crisis and how to ensure sustainable growth and job creation. Beyond this, I have almost five years of work experience, both in Council and in the European Parliament. I know many of the colleagues and they know me.

If you are selected to lead the EPP’s campaign, how will you lead an inclusive campaign that speaks to voters’ interests equally in Malmo, Dansk or Malaga, for example?

I believe it is possible by applying the principle that Europe should be bigger on big things and smaller on small things. What we really need to concentrate on in the coming years, is how Europe can facilitate economic growth and job creation – it is all about jobs and growth.

Deciding the EU’s agenda based on this is essential to all EU citizens, regardless of where they live. Europe has been dealing with these economic and financial issues and now needs to focus on creating jobs.

Perhaps this is more needed than being active on smaller issues – sometimes considered as burdensome regulation. Not that I am proposing an active repatriation of powers, but when coming up with new proposals we should concentrate on areas that have added value for jobs.

What can we do better in order to overcome the consequences of the financial and economic crisis, then?

I believe that during the last years, the EU has done a substantial amount of efforts to restructure economies. The budget balances are substantially better now than two or three years ago. The fiscal compact or the economic governance regulations like the six-pack or two-pack… There are a number of initiatives that have dealt with the financial and economic crisis.

Now we see that this is gradually delivering results. We have more or less finished the adjustment phase and can now focus on how to facilitate growth and jobs creation.

The key word here is competitiveness. You cannot sustain high levels of well-being or welfare without high levels of competitiveness. What we are seeing in Europe is not only a fiscal crisis; it is also a competitiveness crisis. We need to look at how to stay competitive in a changing world.

One idea is how to facilitate innovation and science. This is one of the areas where the US and Japan are outspending us. Another is how to address the structures of competitiveness: each country has its own issues, specific to the country, and while we deal with fiscal issues we must also deal with competitiveness issues.

Other initiatives to highlight are the EU’s digital single market, or trade, like the negotiations with the US [through the TTIP] or Japan [through the EU-Japan FTA]. None of these will bring miracles but one can bring maybe half a percentage point to the GDP; another can bring one percentage point more; and so on.

Your top opponent if you are nominated is likely to be Martin Schulz for the socialists. His campaign will heavily criticise austerity and push for more solidarity and a social Europe. How would you win a 'presidential debate' against him?

Look at the policy goals: they are not all that different. If I look at Mr Schulz’ public statements, he touches upon the same issues of jobs and growth.  The issue is how to get there.

In the case of austerity, it is easy to criticise it. But look at public debt levels in Europe and in the eurozone: these are really high. For the EU28 [the average of all EU member states] it is just below 90% of GDP; in the eurozone it is above 90%. This is substantially higher than described in the Maastricht criteria of 60%.

I believe that we have gone through a difficult process and our public balances are already much better. Now, once we are heading for growth again, we need to make sure it is sustainable growth. We can’t create another bubble or lag behind on our public finances. I don’t believe EU countries can go through yet another crisis.

Where do you see the EU heading in the future?

If I may, I’d like to strike a more philosophical note. We have a Latvian poet called Janis Rainis who has a famous saying. Past?v?s, kas p?rv?rt?sies. In English that would be “The one who will endure is the one who is willing to change”

For the EU, this means that in order to sustain our influence and enlarge our influence, we’ll need to change. I hope the EU is maintaining this readiness to address these issues and to change according to the changing world.

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