LISBON STRATEGY : WHAT’S WRONG ?

LISBON STRATEGY : WHAT’S WRONG ? Tania ZGAJEWSKIZagreb, 3.05.2006 TZ

INTRODUCTION • Personal presentation • The importance of the topic « Not only an economic program, but a society project » • The approach « Reality is important, but so is presentation » TZ

How Europe speaks about people will strongly impact how people will speak about Europe So the way we talk about the Lisbon strategy explains much the way we lose referenda TZ

PLAN • THE PROBLEM : EUROPE’S ECONOMIC SITUATION • THE ANSWER : THE LISBON STRATEGY • THE RESULTS : MITIGATED • THE ALTERNATIVE PATHS TZ

THE PROBLEM : EUROPE’S ECONOMY • What’s really bad ? • What’s not so bad ? • THE ANSWER : THE LISBON STRATEGY • The 2000 version • The 2005 version • THE RESULTS : MITIGATED ESPECIALLY AT NATIONAL LEVEL • The EC level • The national level • THE ALTERNATIVES • More decentralization • More integration TZ

1. EUROPE’S ECONOMIC SITUATION What is the Lisbon strategy backdrop? We live through two revolutions : ICT and globalization. This is the dawn of a new age (in some ICT corporations, productivity can be multiplied by 4 in 10 years). We thus need to prepare for the Information economy and the Knowledge society. This requires a lot of reforms. TZ

1. EUROPE’S ECONOMIC SITUATION There are two ways to present the reality. 1.1. Some problems are very real (the « black scenario ») 1.2. Things are not that dramatic (the « pink scenario ») TZ

1.1. Some problems are very real (« black ») • We get into a grey society … and this is a heavy trend. • There are new competitors in town (China, India) … and they weight a lot. • Unemployment remains too high in many places … especially for low qualified people. • Our adaptability to the Information Society is limited. « Jurassic Europe », « Eurosclerosis » : we become an economic history museum. TZ

1.2. Things are not that dramatic (« pink ») Let yourself be surprised : • Productivity growth per capita and hour is not that bad. • The debt situation remains manageable. (public debt, private debt, external debt ) • We have survived a strong petrol shock. • The environmental situation has improved in some corners. « The European model » « We are living Halcyon days » TZ

Conclusion about the Lisbon strategy • The diagnosis part of the strategy is strong « we need to adapt to a new economy, a knowledge society » Structural challenges need structural answers. • The messagepart of the strategy is weaker The situation has negative and positive aspects, but the official speech is essentially negative. • People are often worried (see the polls before referenda). The « European speech » should offer a perspective, and not compound the problem. TZ

2. THE LISBON STRATEGY 2.1. THE ORIGINAL VERSION (2000) 2.2. THE REVISED VERSION (2005) …. and the revised version is in fact worse than the original ! TZ

2.1. The original version (2000) Various objectives : • economic • social • environmental Various instruments at different levels : • EC measures (regulations and directives) • National measures for the most important part through Open coordination method (OCM) TZ

In fact : one contradiction • Many ambitions (which is well) • Very little means (which is not so well) • Most things are at the national level • No legal constraints • No budgetary outlays « Europe » is thus responsible for things it basically cannot control (and about which Member States are not eager to act). TZ

2.2. The revised version (2005) Less objectives : « priority to the economy, no more social and environmental objectives » Less coordination : « no name and shame of the Member States by the Commission » Less appropriation by the EU : « Member States must feel more responsible » ..… but then, what is now the added value of an European approach ? TZ

In fact : a second contradiction • We want to convince people to accept difficult reforms. • But we have diminished the perspectives we offered them. TZ

Conclusion about the Lisbon strategy • There is a means problem. If the problem is so fundamental, means should logically be increased. • There is a perspective problem. A lot of people do not feel committed to a program which has no social and environmental perspective. TZ

Which creates a communication problem … Let’s not forget that people want a positive perspective. The revision has reinforced the « doom and gloom » aspect of the strategy and reduces the involvement of the average citizens in the reforms. TZ

3. THE RESULTS Growth : limited RD : limited Structural reforms : limited Popularity : limited Less ambition + little means =limited results. What’ssurprising ? TZ

The results are not completely negative Let’s not go ourselves into the « doom and gloom » • We are in a phase of structural adjustment (ICT, globalization, rise of energy costs) • There is still growth (but not strong enough) • Some structural reforms have begun (but not gone far enough) TZ

There’s a strong difference in the delivery 3.1. At the EC level 3.2. At the Member States’ level TZ

3.1. At the EC level Transports : Railways + airways (market opening has been deepened) Electronic communications : Telecoms + Internet (essential for the expansion of ICT, and thus productivity) Energy : Gas + electricity (market opening has been deepened… even with present resistances) Not so bad. Some things changed. TZ

3.2. At the Member States’ level Structural reforms : • Employment + Pensions + Training R&D : • EC weak (EC budget has been reduced) and Member States not better (slight improvement) OCM : Open coordination method • So open there is not much coordination in fact (references to other Member States in national debates are quite inexistant) Not so good. Not much changed. TZ

This being said, there are strong variations between Member States … Big Member States are generally bad performers, small Member States are generally better. This is true for structural reforms, and also for public deficits. (Croatia can be happy about the future…) TZ

Conclusion about the Lisbon strategy • The results remain weak, which is quite normal with limited means. • Basically, the EC has delivered, and the Member States have not. Question : What should be done to improve the delivery ? TZ

4. THE ALTERNATIVE PATHS The Lisbon strategy has relied from the beginning on a fundamental paradox (big ambitions, small means). There are in fact two alternative paths which are more logical (reduce ambitions, or increase means). TZ

The Lisbon compromise is weak. Why ? Weak as result : Fundamentally, the EC was not created to be a bureaucratic talking shop. There is very little added value in fact. Weak as message : And there is a lot of lost value in communication. The EC must either do something, or keep silent. Simulating action is the worst communication strategy. TZ

4. THE ALTERNATIVE PATHS 4.1. More decentralisation 4.2. More integration TZ

4.1. More decentralization Single market for the EC • Energy • Services • Transport The rest for the Member States • Social problems • Environment • Structural reforms TZ

4.2. More integration (an illustration) • EC Legislative level - Single market + new environmental (energy taxes, infrastructure charges) • EC Macroeconomic level - Increase the coordination of national economic policies - Create stabilization fund (at least for Eurozone) • EC Budget level - Put our money where our mouth is (ICT, networks, environment, corporations’ restructuration). Thus increase the EC budget, but with new priorities (Sapir report, 2004) • Member States must have environmental and social targets (softer thus than regulations) - Fear of change must be fought. TZ

So the subsidiarity principle is respected • Environmental regulations - Restructuration of energy taxation and better infrastructure costs have already been debated at length by EC institutions. • EC Macroeconomic level - The 1980s have shown that uncoordinated macroeconomic initiatives have little efficiency (and this is more valid with a single currency). • EC Budget level - The efficiency of EC outlays is obviously bigger for networks and research. • Environmental and social targets - These are political commitments. No EC instrument. TZ

Where is the added value of more integration ? • EC Legislative level - The EC environmental regulations HAVE allowed better management of sustainable development. • EC Macroeconomic level - Interdependance must be managed. Non management is costly in growth. • EC Budget level - Networks and research outlays are more efficient at EC level. Better coordination in both cases. • Environmental and social targets - The targets are essential to motivate people, and they do not infringe on the subsidiarity principle. TZ

Let’s remember ! IF YOU WANT PEOPLE TO FEEL INVOLVED, SPEAK ABOUT THEIR INTERESTS (= they must have targets for their interests) TZ

General conclusion : what’s wrong with the Lisbon strategy ? In a nutshell : • The diagnosis is correct. • The message is unbalanced, because it is excessively negative. • The action program is unbalanced because means are unsufficient, and targets on non economic aspects have been dropped. TZ

A dangerous communication strategy indeed ! There is thus a need to reintegrate social and environmental objectives in the strategy, AND to show the link with the other parts. We have precisely done the reverse. TZ

How Europe speaks about people impacts strongly on how people speak about Europe If you want people to invest in Europe, Europe must first show that it invests in people Thank you TZ

LISBON STRATEGY : WHAT’S WRONG ?