Ladies and gentlemen,
Let me start by thanking my esteemed colleague in the Eurogroup and your Minister of Finance Hans Jörg Schelling for his kind invitation to visit beautiful Tyrol.
Since February the spotlight has been on Greece. I was not very happy about that. We spent many meetings before reaching an agreement on a new program. Greece is in many respects lagging behind the positive outlook for the Eurozone. Almost all countries are leaving the crisis behind. Eurozone-averages on growth, employment and deficits have all improved and continue to do so. Only a year ago the eurozone was considered a liability to the global economy, now it is one of the stronger regions internationally.
Greece will require ownership and strong implementation of the program and of course political stability, which is key. Other former program countries have recovered strongly; Ireland even leads the growth-chart.
That's where we are now: Greece deserves attention, the rest of the eurozone is getting back on track.
Yet we cannot sit back and relax. The potential growth in the eurozone is not high enough, our capacity to adjust and compete is not good enough. In order to strengthen our monetary union economically and politically we need to restart the convergence-machine.
That is why, in the report president Juncker, Draghi, Tusk, Schulz and myself wrote before the summer, we put much emphasis on realizing reforms to strengthen and create competitiveness of all of our countries and convergence within the Eurozone.
We need convergence in a number of areas like labour markets, product markets and investment. But convergence can't be achieved automatically. It doesn't come easily.
When the euro was launched, many politicians assumed that trailing member states would spontaneously catch up with higher-income economies.
And in fact, in the first years of the new millennium per capita GDP actually rose among the euro's early adopters with relatively weaker economies.
As a consequence, the economy of the eurozone as a whole flourished, which in turn helped boost public support for monetary union. Unfortunately a lot of the growth was based on cheap credit. Credit used for consumption and investments in the wrong sectors of economy, in stead off improving the structural strength of the economy. We incurred debt to finance prosperity. So the rise turned out to be temporary.
When the global financial crisis struck, the catch-up process was rapidly reversed. Member states even started drifting further apart. Now it's time to restart the convergence process in order to strengthen the eurozone.
It's no coincidence that per capita GDP development is expected to be above the eurozone average in countries without economic imbalances. Countries like the Baltic States and Slovakia. And countries that have implemented ambitious reform agendas, like Spain, Portugal, and Slovenia, have also followed an upward trajectory. However, more still needs to be done.
It's a legitimate question whether the lack of convergence is a problem for the eurozone as a whole. Does the discrepancy in income levels put the monetary union in jeopardy? Can the eurozone survive despite diverging member states? Maybe it can. But it would be difficult to stop public support from unraveling either directly or indirectly because of increasing economic differences. Public support is the basis for our work on achieving sustainable growth and preserving the European social model. In the Eurogroup we are very aware that the EMU's existence is justified only as long as people are convinced it enables them to build a prosperous life. Without that support, the union has little in the way of foundations.
There are of course other, more economic arguments for fostering convergence. Let me mention three I see as especially compelling.
Firstly, within the euro area business-cycle symmetry seems to be higher for countries with comparable income levels. This increases the effectiveness of monetary policy. Secondly, the policies that stimulate convergence in our union also strengthen the resilience of its member states to economic and financial shocks. And thirdly, our internal market makes it possible for the eurozone as a whole to benefit from a higher real income in individual member states.
Although the argument for convergence is convincing, I'm aware there is also an aspect that's less appealing to member states. Eurozone countries cherish their individuality. We are used to doing things our own way. But we must realize that we can't be part of a union and at the same time approach economic policy as a purely domestic matter. Sustainable convergence will require more policy coordination. But there will still be plenty of room for the member states to make their own choices.
Now let's take a look at Austria. Its strong economic performance in terms of GDP per capita over the last two decades certainly sets an example. Unemployment is relatively low and labour force participation is high.
This country has been able to make full use of its less restrictive and less complex rules and regulations for its product markets. You've also increased your R&D expenditure to three per cent. That's well above the eurozone average.
The question is how other parts of the eurozone can adopt the policy elements that have led to these successes. And you in turn might consider how Austria can learn from its fellow member states in order to boost its GDP further.
The tax burden on labour is a good example of an area in which we have a lot to gain. As you know, the tax wedge in euro area member states is among the highest in the world. This reduces the incentive to find a job and to hire new staff. Shifting the tax burden away from labour will boost growth, external competitiveness and employment. We've discussed this issue in the Eurogroup and made countries aware of it. We've compared ourselves in this area and affirmed our commitment to reducing the tax wedge and making reforms.
We're seeing the first results already. Let me give you some examples. Estonia has taken several measures across the board to reduce the tax wedge on labour. France and Italy have lowered the tax burden on labour for low-earning households.
Spain has introduced a simpler tax system, including lower personal income tax rates. This summer the Belgian government announced a tax shift from labour to revenue sources that are less harmful to growth. In the Netherlands we're about to announce lower cost for both workers and employers. And last but not least, Austria is taking action as well. This government has presented a comprehensive tax reform that will reduce the entry rate for personal income tax.
At the next Eurogroup meeting we will explore the scope for benchmarking the tax burden on labour, and we will closely follow the progress made.
But the tax wedge is just one area we need to focus on. We should also address the broader issue of labour markets, opening up product markets and improving our investment climate. And more importantly, if we want to remain a strong and competitive partner for trade and investment, we simply cannot afford to be average. We need countries to commit to catching up with - or even exceeding - the eurozone's highest level.
As mentioned, we've reiterated the importance of convergence for the EMU's smooth functioning in the Five Presidents' report.
Stepping up economic policy coordination in the eurozone requires political ownership. It should be a concerted effort, in which the member states wave the baton as much as the European Commission. I will promote these discussions in the Eurogroup to help identify the policy areas which are essential for real convergence.
We need to translate this into a common ambition by setting simple, measurable benchmarks that foster best practices and concrete timelines. And let me stress again that, for the eurozone, achieving the average is not ambitious enough.
Ladies and gentlemen,
Time for me to conclude. After a period of crisis management the Eurozone has come out of the crisis in a strong way. The situation in Greece has not damaged the recovery path of any of the other countries. We have build a new fiscal policy, the ECB has done “whatever it takes”, we have realized in record-time a banking union which has made a successful start. Now we must deal with our structural issues. To become once again a leading economic region.
And the Eurogroup will play an active role in this. To quote conductor Claudio Abbado, who once said about the Vienna Philharmonic: 'I don't conduct them; I make music together with them.' And when the musicians play together in tune, the orchestra never ceases to amaze the world.
The Eurozone must do the same.
Thank you.
On 4 September 2015, EU Ministers of Foreign and European Affairs are addressing the Middle East peace process, the EU's Eastern Partnership and the Union's relations with Russia. On 5 September, the Ministers are joined by representatives of the candidate countries for EU accession to discuss migration and the challenges that the EU and the candidate countries must face in this area. Afterwards, the Ministers are discussing EU-Iranian relations following the agreement on Iran's nuclear programme.
Place: Justus Lipsius building, Brussels
Chair(s): Mr Fernand Etgen Luxembourg's Minister for Agriculture,
Viticulture and Consumer Protection
All times are approximate and subject to change
+/- 14.30
Adoption of the agenda
+/- 14.45
Market developments
AOBs:
- Drought in Eastern Europe
- African swine fever
+/- 18.00
Press conference
EU Ministers of Agriculture and Fisheries meet in Brussels on 7 September 2015 to hold a debate on the state of play of agriculture markets in the EU with a special focus on the difficulties in the milk sector and the animal production. They are discussing in this regard the impact on the EU market of the import ban on EU agricultural products imposed by Russia.
Following the financial crisis of 2007/2008 and initial attempts to stimulate the economy through increased government spending, austerity has become a dominant narrative in many developed nations. Government spending has been significantly reduced in a number of European countries, as part of efforts to reduce both public deficits and debts. After several years of such austerity measures, what has been the impact of this policy approach on the environment.
In the short-term, the financial crisis has resulted in a reduction in the production of pollution and greenhouse gas emissions. However, the development of austerity policies which tend to favour the economy at the cost of the environment, combined with a reduction in the ambition of policies designed to protect the environment, are likely to result in significant environmental damage over the medium-to-long-term. Attempts to understand the impacts of austerity on the environment have barely scratched the surface so far. Vital questions remain unanswered: What measures are most useful for measuring the existence of austerity? How has austerity altered environmental policy? Have the environmental policy approaches of different European states differed in response to austerity? A forthcoming panel at the UACES (University Association for Contemporary European Studies) Annual Conference seeks preliminary answers to these very questions.
Taking place on the 7th of September 2015 and hosted in the stunning city of Bilbao, Spain, this panel will develop conceptual debates and examine recent empirical studies on European cases to assess the lasting legacy of austerity on the planet. The panel is chaired by Dr. Charlotte Burns of the University of York, who recently secured funding for three years to examine the impact of austerity on European environmental policy.
The panel begins with a paper by Viviane Gravey, investigating 20 years of attempts to dismantle EU environmental policies. Building on policy dismantling studies, her paper asks what could drive European actors to target the EU’s “green acquis”, and analyses the strategies EU actors deploy in order to cut policies in a highly consensual political system. It provides an historical background to the panel discussions, highlighting how calls to cut policies and remove policy proposals predate austerity. The paper argues that these repeated calls for dismantling have had broad effects – affecting existing policies, how proposals are produced and the culture of the Commission as a whole – paving the way for austerity at EU level.
From here, Paul Tobin and Charlotte Burns seek to answer the question, ‘how do we measure the impact of austerity on the environment?’ Their paper assesses whether budgetary amendments, institutional alterations, and both qualitative and quantitative changes to legislation can be possible impact indicators, finding that a triangulated approach which encompasses a variety of methods would enable the best assessment of austerity’s influence. From here, the co-authors provide the latest findings from three months of elite interviews in Brussels, identifying a change of narrative that has occurred with the selection of the new, pro-austerity EU Commission led by Jean-Claude Juncker. This new narrative of ‘jobs and growth’ has given the EU a new niche with which to build credibility amongst European citizens, but appears to have developed to the detriment of the EU’s former identity as an environmental pioneer.
Having assessed changes at the EU level, John Karamichas’s paper examines the impact of austerity at the nation-state level, focussing on the case studies of Greece and the UK. Greece has been at the centre of austerity politics in Europe since the financial crisis, acting as the clearest example of ‘austerity by imposition’ by an external actor, in this case, the troika of the IMF, European Commission and European Central Bank. The UK, on the other hand, has pursued austerity economics for ideological purposes as a result of its centre-right government. The paper argues that regardless of the two states’ differences prior to the adoption of austerity measures, they have both entered a downward spiral where economic growth has become completely disengaged from environmental parameters.
Finally, the paper by Duncan Russel and David Benson focuses further on the UK situation. Their paper examines how green budgeting can be used as a means of stimulating sluggish economies. Here, competing discourses within environmental politics seek to minimise the impact of austerity politics by rival political institutions. By using veto player perspectives, the authors show how rival environmental policy discourses are used in bargaining games to minimize the impact of austerity politics by rival political institutions pursing their wider policy goals.
By demonstrating the development of austerity politics in Europe, establishing a methodology with which to understand the phenomenon and exploring two case studies, this panel promises to shine a spotlight on an otherwise neglected – but hugely important – contemporary issue in European politics.
The post Exploring the Impacts of Austerity on Environmental Policy appeared first on Ideas on Europe.
(Photo: L’Equipe)
Over the last twenty years ‘Europeanisation’ has become a key concept in European Studies, almost a research field of its own. The current meaning of the term must have been introduced around 1994 in a seminal JCMS article by Robert Ladrech (possible that there are some earlier occurrences that I am unaware of). Prior to this rather recent semantic shift, ‘Europeanisation’, both in its English and French version, was a term used mainly in the 19th century, in contexts of cultural hegemony. The Oxford English Dictionary of 1989, for instance, defines it at ‘to make European in appearance, form, habit, or mode of life’ and cites some literary quotes concerning the ‘Europeanisation’ of India, Egypt or Japan.
I was therefore quite surprised to bump into it in a newspaper article dated 5 September 1955. The text in question is the report on the first football match of a pan-European club competition, known then as ‘The European Champions Clubs Cup’ and today as ‘The Champions League’. At the end of his match analysis in L’Equipe, the French sports daily who was behind the whole idea of this competition, Gabriel Hanot expressed his fear that ‘national competitions might be sacrificed to the Europeanisation of football’.
Funny enough, the ‘Europeanisation of football’ has now become a serious object of study. And the fear that the Champions League might one day eclipse all other competitions and become a closed league of ‘super-clubs’ is still regularly voiced today. In 1955, the match between Sporting Portugal and Partizan Belgrade (final score: 3-3) was of interest to insiders only. Major media did not care at all. In comparison, the space devoted last week across all media in France, Germany, Britain or Spain, to an event as secondary as the simple draw for the first round group stage gives testimony to the degree this Europeanisation of the football horizon has reached.
One aspect of the match in question deserves to be mentioned in particular: the fact that in its very first official game the European Cup was able to cross Cold War borders and bring together a team from the Western edge of the Continent with one from behind the Iron Curtain. Salazar’s Portugal and Tito’s Yugoslavia did not even have diplomatic relations, which complicated the travelling (the Partizan players had to insert a stop-over in Paris) but by no means prevented the match from taking place. For the Cup’s organisers, it went without saying that Central and Eastern Europe needed to be present in this new competition, and besides Partizan, teams from Budapest and Warsaw also competed (Dynamo Moscow had declined the invitation, apparently for meteorological reasons).
Today we’re in a miniature Cold War again, with Russia and the EU imposing sanctions on each other. France will have to reimburse around a billion Euros to Russia for not delivering the two Mistral war ships it had already built on command of the Russian marine. But that will not keep Paris Saint-Germain from travelling to Donezk (of all places) this autumn to play their Champions League game against Chaktior, while Olympique Lyon will play Zenith Saint Petersburg.
But as in 1955, football somehow manages to ignore the political circumstances. It pursues its own Europeanisation agenda, kicked off in Lisbon exactly sixty years ago.
Albrecht Sonntag,
The EU-Asia Centre at ESSCA School of Management, Angers
The post A kick-off to a quite particular kind of Europeanisation appeared first on Ideas on Europe.