EU 2010 - a reappraisal

 

For the European Union, the turn of the decade was characterised by a double reality check.

 

To start with, the long-awaited entry into force of the new Treaty prompted a sigh of relief among policy-makers across the continent: the new institutional arrangements and new teams are now almost in place and waiting to be tested. An entire era of European integration based on recurrent rounds of negotiations among governments, difficult ratification processes and repeated treaty adjustments may indeed have come to a conclusion.

 

The end result is not perfect, of course, and it looks more a response to past challenges (those of the late Nineties and early 2000s, or ‘Noughties’) than to the new ones looming large on Europe’s horizon. This means that, while the overall architecture designed by the Lisbon Treaty is there to stay for long, minor adaptations may have to be agreed in the coming years whenever new members join the Union. The forthcoming Accession Treaty with Croatia is the first such opportunity, and it is already ‘booked’ to meet demands from Ireland and the Czech Republic.

 

The EU institutions and their leaders, in other words, will have to make do with what Lisbon offers and to make the most of it, while perhaps exploiting its grey areas and ‘bridging’ norms - the so-called ‘passerelles’, the various provisions on ‘enhanced cooperation’ as well as all that is not explicitly forbidden by the treaty - to advance integration and equip the Union with new tools and innovative policies. Occasionally, they may also test other forms of cooperation and integration outside the treaty framework.

 

For the time being, however, the main priority is to implement Lisbon effectively and creatively in order to have the new structures fully operational by the end of 2010. A first transition phase is likely to be followed by a period of consolidation and adjustment that, in turn, may come to a conclusion between 2012 and 2013, when the new Financial Perspectives for the next EU budgetary cycle will have to be agreed by the 27. Meanwhile, the focus on internal transformation and adaptation should not distract the EU from its external challenges, which are growing at an exponential rate.

 

 

In fact, the end of 2009 was also marked by the setback suffered at the Copenhagen Conference - a sobering experience (and hopefully a healthy shock) for the EU, well beyond the specifics of climate change policy.

 

In terms of outcome, its conclusion was modest and precarious, especially if measured against the Union’s ambitions, expectations and benchmarks. European approaches and proposals were hardly taken into consideration: in the end, they were not even mentioned in the final Communiqué.

 

In terms of process, European participants were visibly marginalised and had to subscribe to an ‘accord’ that had been agreed separately between the United States and the so-called BASIC countries (Brazil, South Africa, India, and especially China). For its part, the Danish Presidency was sharply criticised by some participants and seen as contributing to the confusion that marred the entire Conference.

 

The Copenhagen fiasco was bad not only for the EU, of course, as it represented a spectacular case of “ineffective multilateralism”. There was too little technical preparation upstream (as opposed to the 1997 Kyoto Conference) and too much political posturing before and during the Conference itself (unanimity at 193 proving once again an insurmountable hurdle).

 

There are lessons to be learned for the UN, which risks becoming unable to deliver on policy. But there are also important lessons to be drawn for the EU. Arguably, too much time and political energy were spent - at as many as three summits under the Swedish Presidency - trying to agree on a detailed common negotiating position that was eventually ignored by most of the Conference participants (although it remains on the Union’s internal agenda) and to claim leadership “by example”, and too little discussing with other key players on the possible terms of a more realistic deal and ensuing implementation.

 

This is a pattern of behaviour that is all too familiar to those who have analysed the EU’s conduct in multilateral fora and bodies. With the exception of trade, where the EU-27 speak with one voice and concentrate on their common interests, ‘Europe’ risks being at the same time overrepresented and underperforming on the global stage. More often than not, too many Europeans sit at the table. This is not only a charge made by others: accounting for one third of the seats on the UN Security Council, one third of the members of the G-20, and one third of the voting shares in the IMF (twice as much as the US, ten times as China) is hardly in line with the realities of the XXI century.

 

Conversely, too little EU can be detected at the same table(s), as Europe as a whole struggles to make an impact. Europeans are too inward-looking and focussed on separate national agendas, or almost exclusively concerned about the US. In today’s world, however, only “l’Union fait la force” - although this may be difficult to acknowledge especially for the bigger Member States - and even the ‘West’ is not enough if it does not consider and engage the ‘Rest’. This had already become apparent in the Doha Round negotiations - and was confirmed at Copenhagen.

 

 

This is where the internal agenda for the forthcoming decade dovetails with the external one.

 

Take the economy: in the ‘Teenies’, the EU will not be taken seriously by the other global players unless it is capable of modernising itself and delivering growth rates capable of matching at least some of the emerging powers. Herman Van Rompuy’s recent remark whereby a Union stuck at 1% risks being confronted with intractable fiscal and social problems domestically, industrial decline and strategic irrelevance worldwide, is absolutely correct.

 

This is why Europe should add much more substance to the new strategy for growth and jobs to be discussed in the coming months as a follow-up to the (failed) 2000 Lisbon Agenda. Indeed, ‘EU 2020’ - as it is likely to be rebranded - may have to strike a much more effective balance between this policy area (where the Commission has virtually no powers) and that of the Single Market (where its competences are instead considerable).

 

Mario Monti is preparing a report on the latter, now increasingly under siege from national governments keen on ‘protecting’ employment and firms at home. Yet the agenda for the next decade should not be purely defensive: after all, the Single Market is incomplete by nature, is a work in progress and a permanent challenge. The Union should rather combine the preservation of a level-playing field across the EU with a more proactive agenda including incentives for those sectors that struggle to thrive without public investments and solid framework guarantees. This applies, for example, to cross-border networks (transport, communication, energy conversion and transmission) as well as ‘green’ industries - which all represent potential areas for new growth but cannot rely on market forces alone. ‘EU 2020’, in other words, should offer not only priorities and targets but also identifiable carrots - as sticks are mostly unwelcome and possibly counter-productive.

 

Or take the euro itself: the euro zone has so far withstood the financial crisis surprisingly well, thanks also to the pragmatic behaviour of the European Central Bank. But the rules that govern monetary union are twenty years old and hardly adequate to tackle the challenges of the post-crisis environment. They are unlikely to be changed formally, not only because they are treaty-based (and anchored in the ECB statute) but also because, when dealing with international markets, certain things are rather done than said - or (re)written in stone.

 

Still, the interpretation and application of some principles that underpin Monetary Union (including its entry criteria) could well be adapted in order to strengthen financial and fiscal stability on the entire continent without hampering growth. In parallel, external representation of the euro zone should be streamlined, starting with the IMF and the World Bank.

 

By the same token, enlargement may not be wildly popular inside the EU these days - but is definitely so among its current neighbours. With the exception of Turkey, all actual or potential applicants would be easily manageable by the current Union. Yet its reluctance to commit to their rapid integration (albeit based on full respect of the conditions) weakens the EU’s ‘transformative’ power abroad and slows down their full ‘Europeanisation’.

 

Even beyond the Balkans, the Union must reflect on how to use its economic and political magnetism more effectively if and when the integration prospect is too distant or just inconceivable.

 

 

Enlargement has been, and can continue to be, a big success story. But it has also come at a price, with cumulative effects on already complex common decision-making procedures, different national economic and political systems, overlapping and sometimes conflicting domestic electoral cycles and deadlines. While policy arenas are increasingly transnational, transatlantic or global, and require long-term approaches, political arenas are still predominantly national or even local, and impose short-term approaches.

 

When we call for political leadership and lament its lack, we often forget this crude reality, which is not unique to our continent (as President Obama knows very well). It is particularly constraining on a Union made of 27+ constituencies kept together by a tangled web of common rules but without the commanding authority and legitimacy of an elected leader of the executive.

 

If the Union wants to address effectively the combined risks of internal gridlock, external irrelevance and collective decline, it may have to allow (and encourage)  old and new Brussels-based bodies better to articulate common interests and formulate innovative approaches well beyond the lowest common denominator at 27. Europe needs, so to speak, game-changers within the existing rules.

 

To this end, the Lisbon Treaty represents a necessary but not a sufficient condition: neither does it provide new instruments for economic governance, nor does it automatically generate political will or strategic vision. In the forthcoming decade, however, all these will be desperately in demand - out of necessity even more than choice.