Robert Madelin: ‘We have to assume the hardest possible Brexit’

The EU treaty mentions a two-year deadline for a member state to conclude negotiations to leave the European Union. But it also foresees possible extensions, opening the way for a follow-on process, says Robert Madelin, who just left the EU executive.

Robert Madelin is a former EU official and Director General of the European Commission’s DG Connect and DG Sante.

Until the end of September, Madelin was Senior Advisor for Innovation at the European Political Strategy Centre, the Commission’s internal think tank which reports directly to President Jean-Claude Juncker.

Since giving this interview, Robert has signed up to offer his services as strategy consultant with Fipra International.

He spoke to EURACTIV’s founder Christophe Leclercq, and publisher Frédéric Simon.

You left the European Commission. Was that your decision or were you asked to leave? Do you think there will still be Brits in management positions in 2019?

My decision to take an early departure from the Commission, since I am still only 59, was taken entirely on my own, as the lawyers would say ‘in tempore non suspecto’, in the summer of 2015.

It was always clear to me and to my main interlocutors within the Commission that the innovation gig was my last engagement. So, I delivered the report on time at the end of June and we published it in July. Since then, I have been packing my boxes.

On your Brexit-related question, I think President Juncker’s message to all the Commission’s staff on the day after the referendum in the UK was the most positive and encouraging possible, and Vice-President Georgieva subsequently confirmed to everybody that the goal is to maintain the status quo within the Commission as within the European Union of 28 until it changes.

Since then, you have had, I think, Matthew Baldwin‘s appointment to a management position in a directorate general. Therefore, I believe that the future path will only be decided later. But for now, it is business as usual. Keep calm and carry on.

So you think Brits will not be discriminated against when it comes to management positions within the Commission?

I’ve heard only assertions to the contrary and I have not seen any problems so far.

You have preannounced your new activities – a mix of academic, pro-bono work and strategic advice. Are you considering advising public institutions, notably on Brexit?

I see this as a portfolio career. I said to myself and to the Commission, I see this as a ten year period during which to build a portfolio, and probably you will only get to cruising speed after 18 months or two years.

However, I am not absolutely clear what this experiment will deliver.

Secondly, I think the value added of policy civil servants is an ability to relate strategic contexts to specific problems. This is my training, and if I can be useful in any part of Europe, that is what I want to do, but I am not setting myself up as having a Brexit practice. I am rather in the business of seeing how I can help both pro-bono, in terms of policy thinking and in the corporate world.

If you were asked for your views on Brexit on a professional basis, would you rather help the “European side” or the “British side”?

I don’t think there are sides. It seems to me that the decision of the people of the United Kingdom to leave the membership of the European Union is a fact. The question then becomes how do you maximise collective public value of the participants in this process going forward?

By participants, I mean the member state that is leaving, the EU 27 and, in my opinion, other global partners of those two entities. I think that we are looking at a process with global economic and continental social ramifications and I don’t think you will ever win a negotiation by looking at sides. I think what we have to do is maximise the pie.

When a senior official leaves the Commission, he or she is often quickly approached by corporate lobbyists. Have you been approached and do you have a cooling-off period like Commissioners do?

Well, let me answer it the other way around. Commission officials have plenty of cooling off, we remain bound for life by the staff regulations and the main condition is not to do any lobbying or advocacy vis-à-vis the colleagues of your former institution for a year.

In addition to that, for two years we have to get specific clearance for any occupational activity whether pro-bono or not. That is why, before deciding to leave, I also cleared in a way my ‘life plan’ with the Commission internally.

Whether that’s my work as a visiting research fellow on cyber studies at Oxford, my work at the World Economic forum, my pro-bono work or the work at my soon-to-be-established strategic consulting company, all of that has to be cleared very carefully. I have to say, in the immediate aftermath of my departure, most of the approaches are on the pro-bono side.

When we interviewed you a year ago, you told us the report on innovation you were drafting for the European Commission wouldn’t be made public. But the report was published on the Commission website in the end. So what happened?

When we talked in summer 2015, the working hypothesis was that this was an ad-hoc report which would not be published. It was clear after scoping it in the first three months that it would be published as an EPSC strategy paper.

The short version is published on the website, and you also have the link to the full version which is on the publication’s office website and can be downloaded for free!

What changed was simply the publication policy of the EPSC. The same change took place for the Karl Falkenberg report on sustainability, which was also published before ours.

What is the main takeaway of your report? What did you find that was not already common knowledge?

I think the main finding is that Europe is much better at innovation than we think, but only in patches. Five of the top ten WEF indexed innovative countries in the world are European. If you include Switzerland, it means that we do very well. But we are not good at copying and scaling good practice across Europe.

The second point which follows from the first is if we did a few things now at scale across Europe, we would get bigger innovation pay-offs in the life of this Commission.

Lastly, it is not about research budget. It’s about a complex emergent innovation ecosystem, it’s about skills, it’s about local support, it is also about research, of course. But sometimes we focus too much on the things where we are already doing quite well. We already have a nice Horizon 2020 programme, we have a good budget. There are other elements like skills, like the entrepreneurial stance of most universities, (and) the innovation commitments of most regions, where we could make a much bigger gain.

A lot of that has to do with governance, because there are many layers of decision-making. For example, education is typically an area where the European level doesn’t have much of a say. So how can Europe gain scale when there are so many layers of decision-making?

There are examples of that. The Vanguard initiative of regions has co-designed a network whereby different regional prototyping experiments could be shared and scaled in the other regions. This is a process where they are now getting to the stage of asking the question of: ‘Can we do commitments to pre-commercially procure each other’s innovative products?’

I think that the question that the mid-term review for structural funds can address is ‘How do you take smart specialisation as a planning step?’ which we had in the first half of the period, and turn it also into an execution-scaling step in the second term.

The report mentions a ‘No-regrets skills policy’ which contains references to artificial intelligence and robotics. You have been involved in prospective thinking over this year. How much do we know at this stage about the impact of artificial intelligence, especially in the workplace?

That is a very good question. On that I would go with Professor Schwab’s take in his book from the early part of this year, The Fourth Industrial Revolution, where he says that this is a time of great fluidity in our world and that if human societies decide what they want, they can have it.

And compared to that, I think we have a very poor analytical stance. We are debating whether adding artificial intelligence and robotics to the current world could result in a disaster, so we are worried. But you don’t add new technology to the current world without changing it.

For example, people say the gig economy would become the grey economy and hollow out the state because there wouldn’t be any more tax revenues. With the Internet of Things and Blockchain, it is feasible at very low transaction costs to contract for a 30-minute gig economy job, to get paid for it and to settle social security and income tax at the same time, as an inherent part of the system.

So, we just need to get ahead of the curve and use these new technologies, not only to challenge current ways of doing work, but to frame future ones.

So you mean it doesn’t necessarily mean fewer jobs but different jobs?

Firstly, it doesn’t necessarily mean disaster, in general. Secondly, on jobs, I think that the lump of labour fallacy is just as much in the 21st century as it was in the 19th.

Human beings like acquiring things, including services. In the end, the question isn’t ‘is there demand?’, the question is ‘Are we training our younger generations and structuring our society in such a way demand can shift with as little friction as possible from what we do today to what we will be doing in the future?’

Still on the job element of artificial intelligence and robotics, do we know specific areas of the job market which will become obsolete? Which areas of the job market do you really see shifting massively?

The first question, I am afraid is the wrong way to look at it. The old statistics before the motor car had buggy whips as a line item in the structure of the economy, and then it disappeared. The same things will go on now, but it doesn’t mean that jobs will be lost.

Article 50 will be triggered before March, and it will open a two-year process. Do you think two years is enough for the British government to get what it wants, meaning some kind of access to the single market?

I am ten days out of the European Commission, I don’t intend to set myself up as a pundit on probably the most important negotiating process that either the European Institutions or my country of birth have had to face in the last 200 years. I don’t know and I don’t think anybody yet does know.

I think that what we are looking at is a process whereby in the UK, in Europe and across the world the issues are continuing to emerge. We are digging down into virgin soil. We are all discovering new aspects of this very complex process, and that will go on.

The precise timetables for the execution of article 50 are clear in the article, two years is mentioned but so are extensions, and the content will turn out to meet the timetable. By that I mean, either it will be a very complicated negotiation, and then all parties will need to agree that it goes longer, or the elements that are decided in a short period will be simpler, and there will have to be a follow-on process.

Again at the moment, this question is exactly the same as the robotics question, we are saying, ‘if nothing else changes we hit a wall’. But human beings have been avoiding walls rather than hitting them for quite a long time.

How about going around the wall? Some people think that reversing Brexit is not impossible. Is this wishful thinking or is there a small chance?

I don’t know, and I think the only sane position today is to assume Brexit, and even to assume the hardest possible Brexit. And to say, ‘if the UK was completely outside, what more than that is needed in your view?’ And if you ask that question of everybody on both sides of the channel, then you will find out what the desiderata are above the zero option, and then we can see what the best-fit institutional model is.

I think at the moment, by talking about the shape of the box instead of the product that needs to go in the box, we are misdirecting most public energy. But I don’t know the answer to your question.

Some think that if the package at the end of the process is not terribly attractive, then there could be a popular movement towards changing it, either by a general election or by a second referendum. What does that mean for the EU negotiators?

I think these questions are just purely speculative. It is not intellectually uninteresting to discuss them, but it misdirects public attention from the area where a lot more thinking is needed.

This is, again: ‘If we assume that the UK is not in at all, what more than that would be good in your view, in your sector, in your area of civil society?’ If we have the answer to that question from 500 million citizens, the companies and the civil society organisations they work in, we will begin to understand what the common interest is, and everything can flow from that.

Hollande, Angela Merkel and Jean-Claude Juncker have all said the four freedoms cannot be unpicked individually, and there is no compromise possible on the Single Market. So what room for negotiation does Britain really have in your view?

I think that those who talk about red lines before understanding their own goals are only engaged in posturing. So your question probably cannot be answered even in the secret chambers of Her Majesty’s Cabinet yet because we are working on the goal.

Everybody has red lines, but they should not be the determinant of the process at this stage, we are still in the analytical stage.

Is there anything positive you think Britain can get from leaving the European Union? And is there anything positive that the European Union itself can get from Britain leaving?

To me, everything is to play for. As the Irish Joke has it, “We should not start from here.” I don’t think it should surprise anybody that had I had a vote I would have cast it for Britain to remain. So clearly, did I dream of being in this place? No I didn’t. Did I predict it? No. But, as I was saying earlier, we have to look forward and work out what is the mutual benefit of the one and the 27 and their global trading partners.

I personally think that it is extremely positive that the first speech of the secretary of state for international trade was at the WTO, that the UK is firmly within the rules-based multilateral global trading system.

That’s a first foundational statement of policy, and it means that we are committed to mutual benefit and the global development of free trade, both in the EU and in London. That’s already a basis to try and grow the pie.

Let’s move away from Brexit and get into fiction mode. If you were Commission president, what would be your first decisions?

If I were president of the Commission, I would be respecting the principles of integrity and discretion. I think the message in the State of the Union speech, which is forward-looking and positive, and which I would act on, is to reverse the expectation of the younger generation that they will be less well-off, not just economically but in all respects, than their parents and grandparents. That is a great place to start.

Based on the report that you prepared, there are many implications for the Commission. Is there anything there that you would prioritise?

The report is of course still being studied at all levels in the Berlaymont building and elsewhere. I have come out of my Commission career as an innovation evangelist, in fact I have discovered religion around innovation, I would say. My proposition in the report is you should begin by doing everything…

Everything recommended in your report?

Yes, and maybe other things. This is a big, broad system, it’s not a pipeline where you pour in money and research produces innovation, you need to begin nudging all points in the system in order to shock it in the right direction.

If you don’t shock enough points in parallel, maybe the system, which has its own tendencies, will not evolve. So there is not much substitute to going for the whole menu, and what that probably requires is that some of the institutional changes take place, those that are recommended in the report, which are not only for the Commission.

Let’s imagine now that you are on the board of a large corporation, and you have to recommend making an investment either in the UK or on the continent. Everything being equal, what would you recommend?

I think we have to be conscious in Europe that there is a third option which global boards are looking at today, not to put the next investment in Europe at all.

I think it is very important for us all to understand around this Brexit discussion that the rest of the world is actually rather impatient to be engaged by us Europeans on both sides of the English Channel in a debate about the global interest.

So I think that you are looking at discussions, whether you are talking about the Americas or Asia, where people are saying ‘is either side of the Channel the best option?’. Now, if I was sitting on a board as a non-executive director I would say: ‘take the short but also the long view, what is your business cycle?’ If you are making the sort of investment where you are looking at a two – to four – year period, you can assume the status quo.

But few investments have such a short term.

Correct. For a longer term like a ten-year period, I think probably what we would see is people waiting, if they can afford to. If they can’t, then it depends on how many fixed assets they already have on both sides of the channel and whether they were going elsewhere.

In other words, I don’t think you can simplify this, I don’t think there is an answer of principle. The main difference between where I used to sit and the boards of some of the major listed companies is that yes, you have principles, but you also have to look at the rational economics.

You may have heard about the #Media4EU editorial series that we have started at EURACTIV. Let’s imagine that you are one heading a large media company somewhere in Europe, what would you do on a 10- or 20- year horizon? Would you remain focused on your domestic market or consider cross-border activities?

I think you have to wonder ‘can I survive as a media company in the global internet society?’ That depends on whether you count on selling pieces of paper or PDFs or interactive experiences, but unless you have an internet-robust vision of the future, you don’t have a future.

Then you can have geo-blocking or not, you can have paywalls or an IP-exploitation policy or not, in the light of the latest copyright proposals.

You also have to decide, and the best European companies are doing this, how much attention you pay to technologies that could completely transform your business costs between your current countries and language regimes and other countries and languages. For example, when it comes to automated translation, we ain’t seen nothing yet.

There are few Pan-European media groups so far except in some specialised areas. Do you think there is a chance that some will emerge in the future?

I think it will be more like syndicated local newspapers in the UK in the old days, where part of the stuff was collective, but the local stayed local. Now, what I have seen in the UK is that in the local part the cost base shrinks until you don’t have real reporting on real local news at all. So, if there is potential for bigger consortia and syndicates, it has to be in a different model that enables the local to stay local, otherwise the global will trump the continental.

The last question is an open one. Is there anything on your heart which you would like to express to the Brussels Bubble and more widely, anything that you feel strongly about?

Because I have left the building but I have not left town, I am not yet writing my will and testament.

My sense is that we build most public value in Europe where we get more people around the table. And I believe that both within organisations and between institutions we are not yet instinctively inclusive enough.

Are you thinking of stakeholder involvement, which has been one of your methods at the Commission?

I am thinking about multi-stakeholder conversations instead of sequential transactional consultations, about involving everybody in the company and not only senior people, about social inclusion out there both as an issue for, for example, commune elected politicians and for countries. I think that the message ‘only connect’ can be relevant to you whatever your work or life.