The Nordics: A point of reference for the European Union

Posted by feps on 16/11/14
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Last week, I was asked to discuss the potential lessons for the European Union from the Nordic Models at the Nordic Labour Movement congress SAMAK. For me, three points seem essential:

First: Freedom and prosperity needs to be created through opportunities and challenges!

Democracy, respect for human rights and rule of law remain guiding principles of the European Union. The mission has remained to promote them beyond the borders. This is why the subsequent enlargements have been so important, marking historical turning points from which onwards people in different states hope to lead lives enjoying freedom, dignity and prosperity. But what once has been a common desire now is rather taken for granted. Democracy seems to appear rather as a static arrangement that is there because it is agreed upon in treaties. It is not seen as an ideal that requires all to assume responsibility for its constant development. Therefore the populists have a space to promote a discourse of fear, they build upon disenchantment and despair. They grow stronger day-by-day, trashing democratic politics and actors involved. And they will, unless challenged properly, increase in numbers.

This is the most important lesson the European Union has to learn from the Nordics: More freedom is needed and it is not given. Everyone has to accept their duties but can demand their rights are respected. Respect and freedom are the basis for a fertile ground for progress and unity.

Second: Only equality of labour standards ensures long-term progress and social welfare!

The historical objective of the European integration process was to establish mechanisms of inter-state cooperation that would protect people from conflicts, poverty and hunger. While the traditions that underpin different post-war welfare systems may differ, the overall principles of equality and social justice have been common and hence allowed to speak in terms of an ideal of a European Social Model.

The vision of a Social Europe is to ensure that the common effort for the Union translates into an improvement of living and working conditions. It has always taken a lot of persistence to negotiate compromises, especially when the strategies for social transformation take a long time to show results. So when they finally reach that stage, the benefits of them are often already taken for granted.

This is also one of the reasons, why some of the welfare arrangements have evolved to be old-fashioned, not really sticking to our changing society. However, while the crisis hit, conservatives have made no differentiation and social provisions in general have become the first target of austerity.

The social objectives must translate into both labour and social policies. However austerity policies in many Eurozone countries have significantly impaired the possibility to put forward a new framework on progressive labour and social policies. The recent years have seen detachment of the debate on these even within the progressive movement.

Furthermore, European added value must not be mistaken for competing on the national level at any cost. An essential is the European labour standards. There is no trade off between efficiency and equality.

Progressives must reopen the debate and embark on the struggle for quality employment for all. This is especially essential now, when they are working for proposals for a re-industrialisation strategy. Here we encounter one of the main lessons from the Nordics for the European Union to consider. The European Union has to continue to fight for equal labour standards and better income in all European member states. The Nordics have been strong in ensuring common standards based on respect but also based on strong and effective democratic institutions.

 

Third: Globalisation gives us the duty to re-define economic thinking!

Globalisation and its new challenges demand a redefinition of fiscal, monetary and global economic policy. Here both the Nordics and the European Union need to learn.

Fiscal and monetary policy should be seen as having the fundamental function of ensuring high-levels of aggregate demand. In addition and to fight against inequalities there is an essential need for a common European labour policy and a shift away from the current system of wage repression amongst the member states and amongst the different economic zones elsewhere.

A common international labour policy and a progressive harmonisation of labour rights and social protection could lead to a reasonably egalitarian income distribution and to an end to the current dysfunctional framework.

Modern global capitalism cannot remain an uncontrolled “wild” engine. Achieving significant increases in employment, growth and reducing inequality in Europe will not be easy, but it is certainly achievable. It will imply the implementation of a range of progressive economic policies at both the country levels and the EU level. These imply that the European Union will have to become more coordinated and more progress could only be achieved through international cooperation.

In this regard, a strong and active Union with an agenda of regulated international trade based on decent work for all is to be advanced. New protectionism and fear are not the answers. But this demands a creation of a strong moral and political legitimacy for economic and labour market policy as well as for new trade arrangements such as TTIP. It should become a model for such a new approach in international treaties and an answer to modern globalisation and capitalism.

When the Nordics are looking for a more human approach in the globalised world this should be done together with other Europeans and not separately. The Nordics are part of Europe and our continent will only remain strong when united. The challenges of our century are immense. Climate change, rising inequalities, technological advances, rising of new global powers, only to name the most challenging one.

European integration remains the only solid and serious alternative to tackle this. The nineteenth century created the labour movements as an answer to industrialisation. The twentieth century created the European Union as an answer to war and self-destruction in Europe. We should now create an answer to a human globalisation. All the lessons learnt need to be incorporated in order to ensure a better and a more prosperous Europe.

 

 

France and the European Union: there is no “exception française”

Posted by feps on 18/09/14
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The French Prime Minister Manuel Valls gave a speech this week on the general policies to implement in the country to overcome the crisis and to implement an economic policy in order to foster growth and reduce the high unemployment rate in France. The content of the speech was submitted to a confident vote in the French parliament. The prime minister got the necessary majority.

There was a very striking paragraph in his speech, which needs to be addressed. The prime minister said, “it is France and France alone that decides what the country has to do”. And he stipulated that there should be a serious talk with Germany, which has to assume its responsibilities for Europe.

For sure, it is the responsibility of each government to implement its political choices. But, France is an entire part of the European Union. This means France is as committed to the treaties as all other members of the Union. Being a member of the monetary union means also that there are mutual responsibilities and dependencies to respect. Europe is still in a deep economic and social crisis and especially within the Eurozone the utmost has to be done to sort out of the crisis and to generate growth and employment.

France, like Germany, has to not only exploit the opportunities of the Monetary Union but also to implement policies that respect the various regulations. The members of the euro area have to work together in a mutual way of respective understanding. If the current government in France is accusing in a more or less brutal way its other partners this is not helpful. The French government is as responsible as the German or Italian government for what is going on. The Union is shaped in the way that requires common responsibility. It makes no sense to accuse one government. It is necessary to work together, implement policies on the national level as well as on the European level on the basis of the method often described as the European communitarian approach.

Referring to the national approach helps right wing populists and challenges what has been so far achieved in Europe. What we need is not a roll-back on national policies but to look forward on common European policies. It is not one country that is responsible for the problems of another member state of the European Union. It is the common European responsibility of each and every member state. One can only subscribe to agree on the “visible hand of the state” but this visible hand is in Europe so far “the visible hand of the Union”.

New mechanisms of coordination have been implemented since the crisis emerged.  Their good functioning cannot be taken for granted. The European Semester has become the established framework for the coordination of economic, social and growth policies. It is within this framework that France should look to tackle its problems of unemployment, sluggish growth and growing inequalities. Overcoming the crisis is not a national task any more; it is first and foremost a European responsibility. All this does not mean that the current European Growth and Stability pact is the only possible way to tackle the problems. European fiscal policy should be seen more as having the fundamental function of ensuring high-levels of aggregate demand. This strongly implies that until investment recovers from its long-term decline and households are able to spend without incurring high levels of debt; budget deficits will have to continue. This also goes with a need for coordinated pan-European public investment policies to spearhead growth and employment across Europe. A coordinated action for such a policy is much more effective than individual member states intervening independently in their own economies.

It is in that way that the French Prime Minister should talk to his European partners and especially to Germany. It is not helpful to accuse Germany and as a consequence heat up national resentments.

On the other side it is also not helpful that the German press is characterising French politicians and politics as schizophrenic. The French President, like the German chancellor, is elected. Both countries are part of Europe and hence in the same boat. The eternal debate about the German-French motor is a double-sided issue. If one is sick the other cannot survive in the medium and long run. Neither France nor Germany afford to go it alone any more.

The Juncker Commission: New orientation should have been different!

Posted by feps on 11/09/14
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The day after the official presentation of the new European commission by the President-designate Jean-Claude Juncker, the press remains ambiguous in its analyses. Some have praised the audacity to try a new structure with the designation of the 7 Vice-presidents, while the mergers and splits within some of the portfolios are still quite incomprehensible. Others are falling into the traditional trap of looking which post is attributed to which country, thus indulging the old ways of the previous mandate – within which the Commission was perceived as no more than the Council’s Secretariat. Finally others vehemently question the competence of some of the designated Commissioners. Of course, it is not easy to fulfil the wishes of all – but one can wonder, whose desires this Commission reflects. Even from a distance, it seems to fall short in terms of responding to the citizens’ wish for change – as expressed during the European elections

Four remarks:

1. President Juncker tried to appear as ready to tackle the key challenges of the EU for the next five years. Nominating popular Foreign Minister of the Netherlands, Frans Timmermans as First Vice-President responsible for better regulation (put simply: “in charge of preventing the EU from becoming even more bureaucratic and incomprehensible”) , he makes a serious attempt to respond to the citizens’ disengagement and find new paths for the EU integration. This is at the first glance not bad, but has to be implemented – which can prove more than tricky, with the fragmented EP and no urge for any Treaty change within the Council.

2. In appointing 5 Vice-Presidents as Coordinators responsible for finding answers to the most profound EU challenges, President Juncker appears inclined to aim at further politicisation of the EU Commission and exploring ways towards a new grand, cross-party coalition for change. This is a departure from the strategy adopted by the President Barroso, who searched for no political calling other than remaining at disposal of the European Council. If Juncker can restore the EU Commission to its treaty-based powers, this would be another good symbol and perhaps a step forward in unlocking the dysfunctional and imbalanced set-up currently in place . President Juncker seems to show to the Council that following the last EU elections and the subsequent mandate voted by the European Parliament, he holds democratic legitimacy and is therefore accountable for his actions. This is also not bad at the first glance, but this has to be proven!

3. Nevertheless, the composition of the College seems to embody the conservative project for Europe. Nearly all of the 5 thematic vice-presidents originate from conservative family. This will influence what initiatives and in what way they will be carried forward. Progressives have another approach to topics like the Energy Union or the Jobs and Growth policies and what is even more frightening is the Social Europe dossier. There is a real difference in seeing how far Europe is going on Jobs, Growth and Social Affairs. When the appointed Commissioner of Economic and Financial Affairs, Taxation and Customs proposes something progressive he will first have two hurdles to overcome before the idea is discussed in the College. This is not to mention the fragmentation of the EP again, because of which it will be most challenging to ensure supportive majority in anything beyond the first reading. We all know how Europe functions. This is a clear invitation to pursue the lowest common denominator and a sign of paralysis that the EU may experience this term.

4. But, any essential manual of modern management or university book on how to organise an administration warns against the creation of confusing structures or too many hierarchies. Who, for example, holds the ultimate responsibility for the digital agenda? Is it the Commissioner or to the Vice-President? To whom do civil servants of the administration report? Who decides the priorities in each political area? Is it the President, the Vice-President responsible for a thematic area or the appointed Commissioner? All this will probably create confusion. The risk is that the College is then concerned more with internal coordination than with clear political guidance! The structure of new Commission is not lean, and the Commissioner-candidates are already using the administration for their own benefits, telling the press in their respective countries a lot of fairy-tales. This is no wonder, especially since the nomination of the High Representative and the President of the Council was predominantly reported as a deal in between the countries, regions, euro-zone and non-eurozone, pro- and anti-Russia approach etc. – but was not at all commented as a decision reflecting European (party) political scene as it now stands. Therefore, the Council will again be the real decisive body within Europe. Hence, President Juncker’s Commission represents stagnation in the developments of recent years. It looks back to the interests of the different individual nations and not forward towards a more European future-oriented Union. In this light, the newly nominated President of the Council, Donald Tusk may indeed achieve the impossible – becoming in his post ‘the’ face of Europe.

This is not what the last elections with the top candidates were about. This does not represent the ambitious plans that were laid before the European electorate!

Is Mario Draghi kicking out financial capitalism and austerity policies?

Posted by feps on 06/06/14
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Yesterday’s decision of the European Central Bank to cut its key interest rate below zero and the other measures announced are more than a European way of the U.S. Quantitative Easing (QE). The ECB cut its main refinancing rate to 0,15% and its deposit rate from zero to minus 0,1%. The European Central bank is the first major central bank to endeavour into negative territory. In fact it is a historical breaking decision. It is particularly historical because it challenges the European Union institutional setting. It was not a genuine European procedure; rather it was an impartial decision of the board of directors of the European Central Bank!

A negative interest rate is the announcement to the financial markets that something is changing fundamentally. Banks are urged from now on by a simple declaration to channel money for real investment and not for speculation in the financial markets. European banks can no longer just ‘bunker’ money into the ECB. Even more the so called TLTRO program (Targeted longer-term refinancing operation) punishes banks when they don’t channel the credits to the private investment sector. This is the real revolution in European central banking: it is no longer the ‘invisible hand’, instead it has become a rule of the central bank to pave the road for investment and growth, rather than beforehand it was up to governments to initiate an investment programme.

There have been various comments and reactions especially from bankers but also from governments. Not surprisingly the harshest critics came from the former chief economist of the ECB, Jürgen Stark, and the head of the German IFO Institute Werner Sinn. They argue that the ECB decisions are a desperate attempt to pump more liquidity towards the south with even cheaper money. However they argue that the final bill will ultimately be paid by the small savers who will get barely any interest any more for their savings and the pensioners who will get less for their life insurance. They argue that this will affect in particular the richer countries in the North of the Eurozone.

Evidently, those criticising are largely orthodox monetary policy bankers stipulating that first and foremost price stability is the overall priority and investment comes second. According to them, firm consolidation of their structural economic problems is priority together with the substantial reducing of their debt. Moreover, they argue that there is already too much liquidity in the markets and lending will not and cannot be reinforced.

Nonetheless this decision is a real turning point of European monetary policy which has been for far too long influenced predominantly by the German Bundesbank and its orthodox and traditional approach of targeting only price stability and a low inflation rate rather than growth and investment.

Generally it is governments that have to provide stimulus with increased spending on public services and hence investments on stimulating growth. But the crisis countries are obliged to do exactly the opposite. They are cutting spending and increasing taxes to conform to austerity policies. As long as austerity policies prevail there is little hope for a vigorous economic recovery in the euro zone as the New York Times is commenting.

The ECB is now giving a strong wake-up call to these kinds of policies. Interest rates will now stay low for longer and more liquidity will be in the market to facilitate lending for investment especially in the south of Europe. This is the essence of the radical announcement.

Amazingly this links straight to the current negotiations on the top jobs in the EU. It is not by chance that some rumours stipulate that the German Chancellor, highly influenced by orthodox economists would like to get rid of this unorthodox Italian Central Banker. Rumours tell that she is trying to send him to the IMF in Washington. Is that the real merry-go-round behind in order to have not only a new mainstream president of the EU Commission but first and foremost another ECB head who is more in line with orthodox austerity policies?

Consequently the question lies if progressives allow conservatives once again to hinder a fresh start for Europe. It is absolutely inappropriate to try to smoothly sort out a non-conformist central banker who likes to stimulate growth and investment for substantially reducing unemployment especially for young people in southern Europe.

As long as European political leaders are continuing to argue that austerity is the only way out of the crisis they do not accept the dramatic consequences of these socially devastating policies! Mario Draghi seems to put an end to this with a courageous and risky decision and doesn’t address orthodox neo-liberals concerns. This makes him a truly avant-gardist. Hence, the decision is a historical break and a genuine starting point of kicking out devastating financial capitalism and austerity policies.

Towards the “MartinJuncker-Commission”?

Two days after the European elections the European parliamentarians took the initiative. The leaders of the groups in the European Parliament met and agreed to propose Jean-Claude Juncker as candidate for the presidency of the European Commission.

The European Council, convoked by its president Hermann van Rompuy for yesterday night, was stunned by this quick action from the Parliament. The long discussion in the Council and the statement after by the German Chancellor Angela Merkel reflects the way in which the heads of governments still behave.

The Lisbon Treaty stipulates that the Council proposes to the Parliament a candidate for the Presidency of the Commission on the basis of the results of the European elections. Of course, it would have been more “literally” in line with the Lisbon-treaty if the first reaction after the last Sunday elections had come from the Council. But it took a serious effort from the European Parliament to take the initiative and to put a serious proposal on the table.

This proposal reflects the reality of the results. Jean Claude Juncker was the leading candidate of the EPP (European People’s Party). The EPP came out as the strongest group. The second largest group is the Socialists & Democrats (S&D) and they endorsed and accepted the proposal of Juncker. So he has a huge majority in the Parliament. This is the way respecting the European voters’ will. It is also obvious that the backing of Juncker by the Parliament is in line with the “grand coalition” between EPP and S&D and hence there will and have to be a prominent place for Martin Schulz in the new EU Commission. The results gave a majority to the “MartinJuncker-Commission”!

It is irrational that the conservative leaders amongst the heads of state are now blocking their own leading candidate for the elections. When the progressive leaders in the EU Council supported the EU-parliament proposal, this was an act of respect to the will of the European voters. It was the French president François Hollande who set the tone in expressing the willingness of the progressives to support the conservative candidate Juncker!

Angela Merkel, and in particular the British Prime Minister David Cameron, have harmed European democracy in not taking the results of the European elections seriously. This is precisely the fear expressed in my last blog. European democracy will and can only improve when the respect towards the citizens is there.

But running a campaign, nominating a leading candidate, stipulating that this person is then to be proposed according to the results and according to the majority in the European Parliament and then in a “usual” backdoor-deal scenario, screwing up the whole process is exactly what Europe does not need. Let us hope that the Parliament will stay united and strong from now on.

However, the Tuesday meetings showed that Europe is on the way to becoming more transparent and open. It is now clear that the conservative heads of state would not like to diminish their “power”. The questions surrounding the LisbonTreaty do not pertain to juridical interpretation: it is now a pure question of power, of who has a say in the European institution. The Parliament has shown yesterday that it respects results and the wishes of European citizens.

10 observations on the European elections campaign

Posted by feps on 23/05/14
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1. The European election campaign undoubtedly helped the European Union to do an enormous step towards greater politicisation. Nevertheless the European Union is still far away to be a transnational democracy. There was still no unifying topic that mobilised voters across member states.

2. The decision of the PES (Party of European Socialists) after the last elections in 2009 to change from backroom deals of designating candidates for the high profile position was a historical turning point in EU democracy. The binding decision of the PES Congress in Rome to run with a top-candidate changed and personalised the vote.

3. Therefore, the highly respected candidate of the PES, Martin Schulz, was the most outspoken and in the positive sense “aggressive” top-candidate. His campaign – highly personalised, genuinely pan-European and highly relevant to national concerns in his home country – was a forward-looking agenda-setter for a more democratic Europe. He also improved his own credibility in Germany as a European leader and helped so the SPD to be seen as more European than before the campaign.

4. The campaign of Jean Claude Juncker was on the other hand less “aggressive”, underlining the fact that he had been pressured into running for the position. This shows that the overall conservative family do not “buy in” to the post-Lisbon processes and consequently made their campaign less “European”. The candidate also diverged from other conservative national leaders on certain European issue.

5. Personalisation broadened the democratic process and introduced quite substantially “more Europe” into the campaign, especially in Germany, France and Italy but also in Eastern European countries like Romania and Bulgaria. It would have been helpful to have more support from the media in the transmission of the “presidential debates”. For example, in France, they were not broadcast. The way in which this was set-up has to improve considerably for the next time.

6. However, an overall European enthusiasm was not seen in the campaigns around Europe. In a lot of the member-states the national party continued to campaign on purely national issues, with national campaign posters – like the CDU in Germany with Chancellor Angela Merkel rather than the top-candidate Jean Claude Juncker – and often on non-EU level topics.

7. Nevertheless, the debates about “more Europe” or about “a more democratic Europe” had a polarising effect. The Eurosceptics tried (hopefully without success) to benefit from their populist rhetoric that it is “Brussels” who is responsible for all the problems we currently face; it is “Brussels” that is bureaucratic, technocratic and hence illegitimate.

8. It was not easy for the pro-European parties to be on the one side critical towards the current political, institutional and democratic set-up and on the other side constructive and open-minded for further steps of integration. The argumentation of the neo-populists to brand non-voters as, by definition, anti-European has to be seen as very dangerous and unsubstantiated.

9. The Campaign showed very clearly that Britain is in a peculiar situation concerning its relationship with Europe. In the UK as in many countries across the EU, the European elections campaign focused on national issues. Additionally, in the UK we saw the odd situation whereby neither of the two top-candidates appeared during the electoral campaign. Due to its awkward relationship with the EU, British voters have not had an opportunity to scrutinise or vote for either of the two as the campaign of the top candidates was not brought to its doorstep, which is a shame because English language dominated in the campaign.

10. It is up to the heads of state to now propose to the European Parliament a candidate for the presidency of the Commission. If they will not take into account the results of the European elections, Europe will face a new crisis of legitimacy. There is hope that all the parties who have proposed top-candidates will stand by their commitment to block the proposal of the Council, in the event that this proposal ignores the democratic mandate given to the Parliament.

Common Foreign and Security Policy – Sovereignty must be shared!

Posted by feps on 19/02/14
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Invited yesterday to speak at a conference of the S&D Group in the European Parliament I raised the crucial question of the European Common Foreign and Defence Policy of the sharing of sovereignty.

Looking on the current state of the CFSP one has to admit that there is some “movement”. It seems also that many of the experts are excited.
- Excited that the December 2013 Council discussed this long awaited issue.
- Excited that at least in June 2015 the Council will discuss it again and
- Excited that as a consequence in some of the member states – especially in Germany – there is also movement.

Nevertheless the question remains whether this “movement” will culminate in a substantial, forward-looking, revised European approach. In saying this, I mean a substantial common approach to strengthen further the already on-going CFSP. Catherine Ashton was right to argue in her last speech to the European Parliament that Europe has to do MORE together and to do it MORE effectively. The current annual budget of €200 billion is no small amount of money.

But if the CFSP is to become the driving force of a coherent European approach of security policy a lot remains to be done. There is still the behaviour of the Europe’s “big players” – France and Britain. We are all aware that their foreign and security policy is far removed from a truly European approach. Of course there are historical reasons for this but it also has plenty to do with the overall construction of the European Union. At present, this is not a federal Union but one based on sovereign states and intergovernmentalism. In foreign and security policy, sharing sovereignty is still one of the most sensitive issues, especially when it comes to decisions on sending troops.

There is still the issue of the role of Germany in the set-up. The Security Conference in Munich last month was “promising”. The German foreign minister made some substantial proposals on a new German approach and the Defence minister – in her own way – went immediately to Western Africa to promise more active involvement of the Bundeswehr in Mali and other conflicts on the African continent.

And there is still the question of NATO, its policy and finally its existence. This was an organisation founded in the context of the Cold War to protect Western interests in a bipolar order. With the accession to the European Union of states once on the East of the Iron Curtain it is unclear what particular function NATO serves in the overall European geopolitical landscape. It is also clear that the bipolar world is not existing any more since more than 20 years!

Within the European Parliament, there is even a tendency for some MEPs to behave as if they are in the NATO General Assembly. Is it not time for EU member states’ security interests to be decided within our own internal constructs and procedures, and not one that is a relic of a much more conflict-prone world. I recognise that, as long as NATO is the coordinator of activities in Afghanistan, it is perhaps unrealistic to advocate its demobilisation. However, once it becomes more feasible, should we not make our foreign policy concerns genuinely European and not bound to the Atlanticist reflexes of the past.

Nevertheless, there has been some progress, not only during Brussels talks but also in concrete issues. The role of Europe and of the High Representative in the negotiations over Iran’s nuclear capabilities proved to be a particular high point. However, when you look at Central Africa or Ukraine it is evident that there are limits to the optimism we can hold. Indeed the Neighbourhood represents a significant opportunity for a proactive common approach if only we could harness. The establishment of the European Endowment for Democracy has provided a good example of how EU “soft power” can be used to help the growth of democracy among our neighbours but there is still much more we can do.

Furthermore, it is difficult to understand why it took such a long time to bring the famous “Solana-paper” to the table. This paper was future-oriented, promising and forward-looking.

Solana raises the question of potentially uniting European CFSP. Here lies the key question. Are member states willing to adopt a reflex that is “automatically” European? Again I come back to the Munich security conference. More or less everybody on the European level welcomed the German “move”. German Chancellor talked this week with the French President on an important involvement of Germany in Central Africa. My question on this is a simple one: Why was there not the simple reflex of Germany to discuss this “move” first with its European partners here in Brussels? Why is there still the thinking that Foreign and Security policy is first and foremost a question of national sovereignty and not one of shared sovereignty? A lot has been argued that the next step of European integration should be a common CFSP.
It is evident, in the context of European elections that our politicians will not go to marketplaces, on television and to knock on doors to talk to citizens about Foreign and Security Policy. As such, it is not a priority right now. Nonetheless, we should not forget that in this issue we possess something that could represent a significant advance in European integration.

TTIP could work if the pieces were in place … but are they?

Posted by feps on 04/11/13
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During the weekend I received some emails and comments on the proposal to establish the transatlantic trade and investment partnership (TTIP/TAFTA).

Talks between the EU and US started this summer. In the public debate taking place in Europe over the TTIP negotiation, it seems that we Europeans have to accept US standards and law and to adapt our system to the US system. An agreement in its proper definition is a negotiation achievable between two partners on an equal basis.

Just by coincidence I read an article today in the Financial Times that warns that Brussels’ stance could hit the trade deal and that Germany is pushing for tough data protection controls to be included in a proposed EU-US trade pact. This is fair enough in the aftermath of the NSA scandal. An agreement between the US and Europe cannot be only an agreement to implement US rules and follow the US business model. Europe guarantees the personal data of its citizens. TTIP has to consider this as a precondition before starting negotiating on any other technical trade item!

There are obviously a lot of differences in approaches and thoughts on TTIP. Even Americans are critical towards the current state of negotiations. For example, in a conference in Washington at the beginning of October, which was organised by FEPS in cooperation with Nobel Laureate Joseph Stiglitz and the Center for American Progress on macroeconomic cooperation and the international monetary system it turned out that not all of the Americans are supporting the argument that a single transatlantic market is a powerful vehicle for boosting economic growth.

This argument was also brought into the debate by the very critical study published in October 2013 by the Seattle to Brussels Network (S2B). It stipulates that a more realistic boost of the growth rate would be only 0.1% instead of the promised 1% of EU commissioner Karel de Gucht. If the reality is 0.1%, unfounded promises of increased trade and job creation can even reverse social and environmental regulatory protections. We all know that this could also be very risky for social cohesion and finally for democracy.

If that is the danger we as Europeans should simply not accept any TTIP agreement. We should then continue with our traditional trade relations. But ambitious proposals are often not so bad as foreseen. The best example is the EU as such!

With over one third of global trade such an agreement could create the world’s largest free trading bloc with all the implications, which will go far beyond the Atlantic. Trade and a different “form” of capital mobility create economic growth and jobs. This is not only economic theory in the pure Ricardian sense, but also an economic reality of globalisation. TTIP could be an example to establish decent work and it must prove that it is possible – even in times of ruthless globalisation and rising inequalities due to the race to the bottom – that decent work and social standards become a basis of a trade system based on the respect for citizens’ rights and their overall working and living conditions.

In the international system, we have rules and conventions signed by governments to protect citizens, consumers and workers. Regrettably they are not binding and hence not implemented at all. But if these basic rules are accepted and if in addition to that the EU and the US agree to go further, TTIP can foster social dialogue, create more decent employment, and increase respect to worker’s rights and social protection.

This is then not only a contribution to social peace but could stabilise the economy, fight inequality, stimulate aggregated demand and boost growth. If this will be the approach TTIP is a real opportunity to establish a model of trade based on respect and solidarity for the benefit of growth and jobs. Additionally the question that remains open is whether TTIP will reduce the role of the state in supporting innovation and economic development.

Will the misfortune of a German Europe remain?

Posted by feps on 24/09/13
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Some points on the German elections

1. Success for Angela Merkel’s personalisation of German elections!

Without doubt – this election result on Sunday represents a success for the playing out of the persona of Angela Merkel but this is not a victory for the party. The strategy of her campaigners paid off. The SPD did not have an appropriate strategy to counter this personalisation in the campaign.

2. Towards a new structure of the German party system!

A change has occurred in the German party system; firstly a personalisation of politics has become apparent. Secondly “Die Linke” strengthened its left wing vote in eastern Germany and also managed to keep a large bulk of its support in the west, where they had been expected to lose more. This party is definitely not a factor to neglect any more.
Thirdly the Eurosceptics achieved an impressive result and will now definitely be turning towards the upcoming European elections.
Fourthly the Liberals are the losers of the new set-up because they are no longer able to convince voters that they should vote for them. For them it will be difficult to come back in four years time.

On Sunday we probably saw the appearance of a new structure in the German party system even if the “normal” divide of 50% conservative supporters and 50% centre-left supporters remains after this election

3. The SPD is no longer winning!

The SPD has not been a winning party on the federal level since 1998. Sigmar Gabriel stated on Sunday night that the party has obviously not managed to return to the status of a “Volkspartei”. This is the crucial issue. The party is still not re-united after the Schröder loss in 2005; there is still a large fraction in the SPD who believe he betrayed the left with his ‘Hartz’ labour market reforms.

If there will be a grand coalition between the CDU and the SPD, the risk is that the junior partner, SPD will suffer and lose support amongst potential voters. This would most likely give further potential for Die Linke to become stronger and runs the further risk of the SPD losing its label as the “Volkspartei”.

If the SPD chooses not to go into coalition and Merkel isn’t able to form a government with the Greens, new elections would be called. If this becomes the case she will then most probably win with an absolute majority.

4. Credibility is the key to win!

The key question during the campaign was the question of “credibility” and this not only for Peer Steinbrück, but also for all parties and candidates. Has Steinbrück represented the party of the left? Was he the credible candidate when it came to social reforms, minimum wage or rising inequalities in German society? On further analysis, the personality of Steinbrück, his well-paid speeches to the banks and the finance industry, and his remarks on the pay of a Chancellor in Germany compared to industry bosses make it seem otherwise.
Similarly, the Green Party and their focus on taxes rather than on environment was not credible for the voters.

Another key problem of the campaign was the left orientation of the SPD campaign. Elections are always won in the centre!

The overall majority of the Germans do not see the question of the rising inequalities as their concern! Low unemployment, booming industry and better salaries for Germans did not create the desired mood of a need for change, as was hammered by the SPD campaigners.

For Angela Merkel the old story paid off. Elections are won in the centre. This is still valid and she got the support of the large majority of the middle class people!

Middle class people voted Merkel and CDU in in the interest of having their jobs secured and to avoid the higher taxes proposed by the Greens and the SPD. Neither of these parties managed to convince the middle class voters that the raise is only for the top incomes and therefore for only 5% of the population.

5. European issues had no stake in the campaign!

Credibility also played a strong role for the voters concerning the Euro and the handling of the crisis. Voters have not accepted Steinbrück’s critique of Merkel’s handling of the Euro crisis. The SPD always voted in line with the Merkel government in the Bundestag. You can’t then criticise her for not doing the right things to save the Euro single currency. The SPD was not credible concerning the Euro and Europe. Europe didn’t feature as a key issue in the campaign.

The European narrative based on a vision of solidarity and integration in contrast to the selfish and particularistic concept of the conservatives was not presented to the voters. A single statement that Europe is needed is not enough. The European Union was not the reference point of the SPD. The question is why? Andreas Gross, the Swiss political analyst published a very interesting article on that in the FAZ. I agree with him when he argues that there should have been a move of the SPD towards a federal Europe in the sense that voters should have a clear choice what they can expect from the party with regards to the EU. The SPD did not discuss the differences in the reform agenda of the Euro. Only the concern for German interests and priorities were in the debate. There was no debate on a European Germany instead of a German Europe or on the rise of new nationalism and populism in Germany and elsewhere. For the SPD, the AfD was a problem of the CDU and not an overall question of convincing the citizen on further European integration.

But even much more important is that SPD has not developed a narrative of Europe which countered new populism and new nationalism also in the perspective of the upcoming European election in May 2014.

Finally and this is unfortunate: Germany will continue to foster a more German Europe and will not become a more European Germany. This is the battle for the SPD and now even more on the agenda than before.

Solidarity in fighting climate change has vanished

Posted by feps on 29/08/13
Tags: , , , ,  

Coming back from summer – the time of year when I spend most time with nature and appreciate the best things in life – I was quite astonished at the rate at which we are destroying Mother Nature. And for what benefit?

There seem to be so many ‘environmental’ issues at the moment, which are intrinsically linked to economic policy or more precisely to austerity policies.

The issues range from fracking and exploring for shale gas (as in Britain), arctic drilling (as in the US), or the lack of momentum in curbing carbon emissions and enhancing our use of clean and safe energy supplies (as in many European countries). Although the US has recently paused its plans for arctic drilling, but only because Shell has not managed to succeed in drilling exploratory wells.

One issue struck me particularly: the decision to give up the Yasuni ITT initiative in Ecuador; probably because this concept was so revolutionary and abstract from other policies in operation since its introduction in 2007, and undoubtedly because the foundation of this concept relied on international global solidarity. Maybe also because if this did become a reality it would radically change the way we consider our economic and social policies. The end to this project was blamed on power and lack of co-responsibility.

The Yasuni initiative was presented by the President of Ecuador, first to the United Nations in 2007 in a bid to help protect the Amazon rainforest, with its incomparable biodiversity, from oil drilling. The protected park is also known to hold 20% of the country’s oil reserves. The initiative brought with it so much ambition and hope and yet it was a simple concept.

FEPS held a lunch debate where a representative form the Ecuadorian embassy here in Brussels presented this project. It was back in 2010 when there was still a lot of ambition and plans for the financing of climate change initiatives. The debate was at that time on “the lack of global governance and the consequences for the world’s natural resources?”

Just six years later the same President has decided to allow 1% of the park to be used for oil drilling. He blames the power of the rich and the big polluting nations, and believes that the situation would be different if the richer nations held the world’s ‘lungs’. Apparently the resources will help raise around 18 billion US$ per year which he wants to help build hospitals, schools and bring his people out of poverty.

A charming idea has not worked out. Solidarity seems to be an empty notion when it comes to the international level. It was expected that the international community will provide 3.6 billions US$ to Ecuador in order to preserve the environment. So far only 13 millions US$ have been transferred to Ecuador!

Not surprisingly China’s Sinopec is showing a lot of interest in the Yasuni reserve of oil and together with Brazil’s Petrobras is one of the 2 potential candidates who will team up with Petroecuador to explore the oil in the Yasuni reserve. It is obvious that emerging economies need more and more energy to maintain their growth path.

There are things that Europe should learn from this:

It is true, in Europe and globally today, that power is still the driving force. Regardless of whether a policy is right or wrong, whether it takes into account all sectors of society, especially the most vulnerable ones, as long as it benefits those who hold the power, it usually goes ahead. This was the case with the bailouts to Greece, Portugal and Spain. The citizens are paying back and not the banks, who caused the problem. We can see the effects of this now.

Likewise, co-responsibility relates to the way we develop, our relationship with nature

What is our strategy for fighting climate change? It seems we are no longer concerned with the real threats. In the past decade the emissions of carbon dioxide have increased, as has been feared by the IPCC itself in pessimistic projections. The first battle against global warming is already lost. In 30 years, the “red line”, the global warming to two degrees Celsius, will be exceeded and first hit the poorest regions. The American economist William Cline of the Peterson Institute comes to the conclusion, that a loss by at least 20 per cent of the crop yield is a genuine threat in 29 developing countries. According to estimates of the United Nations, at least two billion people more will live in slums in ten years, mostly in megacities, which also cause tremendous environmental damage.

What is our progressive strategy and answer to this? Where is our “co-responsibility”? The environmental challenges and new social issues urgently require emancipation from mainstream economic thinking, which is only subordinated to the expectations of the markets.

Although progressives are focusing much more on pro-growth policies, more emphasis needs to be given to issues of sustainability and equity. Progressives need to consider climate change and global warming as central as any other political issue and develop more alternative green and sustainable growth strategies!

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