Turning Europe around

Paweł Świeboda is President of demosEUROPA – Centre for European Strategy Foundation, Poland, and a Member of the Global Agenda Council on Europe. 

The competitiveness gap is at the core of Europe’s problems and it is widening. At the outset of the Rome meeting on Rebuilding Europe’s Competitiveness, the World Economic Forum Chief Economist, Jennifer Blanke, could not have been clearer about what lies ahead for Europe: a major effort to improve the continent’s performance across the whole spectrum of policy, including all the twelve areas which WEF measures in its global competitiveness ranking.

Italian Prime Minister Mario Monti argues that three issues are key in any effort to relaunch Europe – the single market, the euro and structural reforms. He made the point that the EU should stop adding layer after layer to its governance structure – from Maastricht rules to the Stability Pact, Six Pack, Two Pack, Fiscal Pact, etc. This only deepens the impression of a fundamental lack of trust, he says.

Monti claims that, while escaping criticism is not the answer, Europe should be better aware of the values of its own model. Most successful European countries are those with a functioning social market economy. But, a social market economy fails when it becomes ossified and protectionist. Hence, the current Italian government invests so much effort in opening up markets and professions and breaking through the silos which have been created over the years.

Some argue that the one area which needs more help than others is the financial markets, particularly in increasing transparency. Many believe that labour market reforms should be a priority, although there is disagreement as to whether flexibility at all cost should be pursued.

“It is amazing what you can do in Spain now in terms of labour market flexibility,” WPP’s Martin Sorrell quoted one opinion common in the business circles. “All the burden is now put on labour, even though it was the financial markets which proved inefficient,” Bernadette Ségol, ETUC’s Secretary General, was quick to respond.

Finally, a surprising degree of attention at the Rebuilding Europe’s Competitiveness meeting was devoted to the quality of governance and its impact on competitiveness. In the panel I chaired, Daniel Gros from CEPS, Michael Jacobides from the LBS and Ann Mettler from the Lisbon Council all argued for a profound transformation in the way government conducts its business in Europe.

Gros made the case for a governance union as a possible next project for the EU, with better standards and professional expertise being aggressively promoted across the member states. “No one should be excluded, send inspectors to Germany,” Gros said.

My thoughts throughout the day concentrated on the psychology of the crisis. When Klaus Schwab, Founder and Executive Chairman of the World Economic Forum, asked whether participants believed things would improve in Europe in the next few months, about half showed optimism. Others were not convinced.

Yet, it is the European equivalent of “yes, we can”, which is necessary for the spirit of renewal to start making inroads. My own country, Poland, has achieved a remarkable transformation in the last 20 years. Many Poles feel they are living through a golden decade in spite of the European crisis. Naïvety is bad, but sometimes a little hope is needed.

Image: A structure of the Euro currency sign is seen through the window on a rainy evening in Frankfurt REUTERS/Alex Domanski