Monday, March 12, 2012

The potential for an alternative to the Merkozy way (Part 2: Competitiveness)

This is a follow up to my post "The potential for an alternative to the Merkozy way (Part1)" of March 10, 2012.

The so called "Fiscal Pact" or "Fiscal Compact", that Merkozy conceived and 25 of 27 states signed in early March is too rigid in scope, in philosophy and in targets to be of benefit to the participating states (we shall see how many will actually get the OK from their national parliaments or their citizens, eg Ireland).

It introduces fiscal only interventions to the sovereignty of the members that not only justify a national referendum in Ireland but a 2/3 majority in the two houses of the German parliament (the Bundestag and the Bundesrat) too, etc.

Theoretically, the Europe 2020 strategy that was decided in 2010. But that IMO is not nearly enough.

According to the Europe 2020 webpages of the European Commission, "the 5 targets for the EU in 2020 are:
1. Employment
75% of the 20-64 year-olds to be employed
2. R&D/ innovation
3% of the EU's GDP (public and private combined) to be invested in R&D/innovation
3. Climate change / energy
greenhouse gas emissions 20% (or even 30%, if the conditions are right) lower than 1990
20% of energy from renewables
20% increase in energy efficiency
4. Education
Reducing school drop-out rates below 10%
at least 40% of 30-34–year-olds completing third level education
5. Poverty / social exclusion
at least 20 million fewer people in or at risk of poverty and social exclusion"

It seems to me that this "strategy" is more of a plan that a strategy. Plus IMO it relies too much on R&D as a source of EU competitiveness. Plus it does not allow for specialised strategies and competitiveness models for each state or regions thereof.

What is needed is the establishment of a Competitiveness Agency for the Europlus ie the participating members.

This agency must be the sum of 25 think tanks of the member states and daily monitor and analyse the competitiveness strategy of each member states and regions within the states and seek to coordinate those into an overall "conglomerate" strategy.  It should operate mainly in an inter-governmental way but with cooperation and support from the Services of the European Commission, committees of the European Parliament and councils of the EU. With a very lean infrastructure and secretariat. Also consult with the national parliaments of the participating states.

It should include technocrats who will be personal appointees of the member governments as well as the key national social partners.

The Competitiveness Agency should have the right to express opinions on any action or policy of EU institutions and bodies that affect the competitiveness of not only the Europlus as a whole but the EU and most importantly the participating states!

Eg it should be able to criticise the ECB if its interest rates lead to Euro exchange rates that hurt the competitiveness of the Eurozone/Europlus or some of its members or regions!

Issue opinions on the impact on the competitiveness of eg Greece or Portugal from TENs, evaluate the so called structural funds with respect to their impact on the competitiveness of the recipient economies or regions, even have the right to suggest EU policy vis-a-vis its WTO membership, FTAs, or even argue for EU  exit from the WTO if that is seen as the only way of improving the competitiveness of enough members of the Eurozone/Europlus! Propose EU laws the removal of which would improve competitiveness!

A Eurozone/Europlus "MITI" (as in Japan)? Not quite, simply a body that cares for the competitiveness of the Eurozone/Europlus AND its constituent member states and regions thereof.

The key concept is that the competitiveness of the Eurozone/Europlus is not a one-fits-all policy, but a spectrum of policies that as a whole have to accommodate the competitiveness needs of each state and even region.

To be continued.

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