In the eyes of most Europeans, the EU is cold and remote. “Nobody could ever fall in love with the Single Market,” warned Jacques Delors in the late 1980s, when the pioneering Commission president was at the height of his popularity and making the single market a reality.
There’s little love of any sort for the EU nowadays. The Union plumbs new depths of distrust and antagonism. To survive and flourish, the EU must become more directly relevant to the people of Europe – and there is a way to do it.
An EU-wide unemployment benefit system has been mooted since 2012, if not before. Earlier models have been refined into one that looks feasible.
But while the details are important, the key point is a bigger one: the need to rebrand the European Union as a caring organisation rather than an arrogant and unfeeling bureaucracy.
“To survive and flourish, the EU must become more directly relevant to the people of Europe”
Youth unemployment is widely seen as symptomatic of the EU’s failure to deliver the economic benefits it promised. It’s an unfair criticism: job creation policies to overcome mismatches and speed young people into work are defined at a national level – and often locally. But as we all know, in politics, perception is everything.
And that’s why a European benefits scheme is a good idea. It would be a high-profile sign that the EU is recovering the spirit of solidarity between member states that is currently in full retreat. Another reason – more complicated, but fundamentally more important still – is that it would move social policy back near the top of the EU’s agenda.
Saving the euro is vital, and a European benefits scheme would be a first step towards the fiscal integration the eurozone needs. It would also focus attention on Europe’s huge but overlooked demographic problem. By the middle of this century there will be only two working-age Europeans per pensioner (down from a four-to-one ratio today). Social protection will fast become the hottest political challenge of all time.
The latest European unemployment benefits model comes from a German research outfit – the state of Baden-Württemberg’s Centre for European Economic Research (ZEW). Its approach would be to harmonise national systems and pool relevant national budgets to create common levels of benefits.
“A European benefits scheme would be a sign that the EU is recovering the spirit of solidarity”
Quite apart from the scheme‘s public relations value, its authors claim significant economic advantages. They reckon it would help smooth out the disparities between regions suffering from the uneven impacts of unemployment, and in the longer term would cushion the asymmetric shocks that have been a feature of the eurozone crisis.
Not everyone shares this view. Critics of the idea raise the ‘moral hazard’ question and ask whether it wouldn’t encourage weaker eurozone countries to keep on delaying reforms. They also argue that the wider benefits system could serve as a magnet to ‘benefits scroungers’ – and so encourage even more joblessness.
But the bottom line is, of course, the potential cost to the eurozone’s richer northern countries. Led by Germany, they are already opposed to proposals for eurozone bonds to help tackle sovereign debt problems.
So on the face of it, the unemployment benefits scheme stands no chance at all. But that is to ignore populist Euroscepticism – a far greater threat to the European project.
If the benefits scheme could be presented as a more human face of the EU, as well as a means of breaking the deadlock over the eurozone’s future, then maybe it has a future. That would offer Berlin an opportunity to refute the notion that, in the words of Oscar Wilde, it “knows the price of everything, but the value of nothing”.
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Nearly a year on from the Paris Agreement, the European Union is developing its own 2030 “climate and energy package” to meet its commitments – notably to reduce greenhouse gas emissions by at least 40% compared to 1990 levels. Climate policy is an area of real “shared competence” for the EU, and the UK has played an active role in shaping it for the last decade. So what are the implications of Brexit for the EU, and for international climate negotiations more broadly?
Britain’s credentials in this area are strong. With the Climate Change Act of 2008, the UK took a pioneering role by adopting the first legally-binding climate change target in the world – with an 80% emissions reduction target by 2050 (again based on 1990 levels). The UK was the catalyst for cooperation between the more progressive EU member states on this issue, building the so-called “green growth coalition”. In 2014, the UK was the only major member state that pushed for a tougher EU climate target for 2030. It’s open to speculation as to whether the “at least 40%” goal could have been agreed without British advocacy.
Brexit is set to weaken the green growth coalition, make climate talks more difficult, and shift the power balance in favour of countries opposing an ambitious climate policy.
So far, it’s unclear how the UK will commit to burden-sharing after Brexit. Sectors included in the Emission Trading System (ETS) are regulated at EU level, but emissions reductions from the sectors are covered by its partner policy, the “Effort Sharing Decision”, which is the responsibility of member states. They define and implement specific national policies to meet the targets set for 2020. The European Commission’s “Effort Sharing Regulation” proposal, published on 20 July, foresees binding emissions reductions for member states from 2021 to 2030 – and the UK’s target in non-ETS sectors is set at a 37% reduction from 2005 levels.
Brexit also raises a question mark over ratification of the Paris Agreement. The timeline for the United Nations’ global stocktaking summit in 2018 will be negatively impacted. The UK was instrumental in gaining the support of the Visegrád countries (Czech Republic, Hungary, Poland and Slovakia) in the vote for emissions reduction commitments. Which country will step up to play that mediator role? Which member state will push for timely implementation? Will climate laggards such as Poland, which is pushing for a change in the burden-sharing arrangements before ratifying the Paris Agreement, gain greater influence?
“Brexit could open a window of opportunity for a transition to renewable energy that favours low-carbon technologies and more ambitious energy-efficiency efforts”
As a result of Brexit, the EU will lose a decisive proponent of European energy market integration – a topic that inspires great scepticism from a significant number of member states. Some national governments still consider security of supply to be better ensured by closed national markets and national energy utilities. It’s undeniable that in eastern Europe there is a strong will to maintain national state control of the energy sector.
But Britain has not been uniformly supportive of progressive green policies. The scrapping of ambitious and nationally-binding targets for renewable energy in the EU’s 2030 Energy and Climate Policy Framework bore the signature of the UK government, as did the rejection of an efficiency target. Brexit could open a window of opportunity for a transition to renewable energy that favours lowcarbon technologies and more ambitious energy-efficiency efforts. Britain has often aligned with the Visegrád countries in calling for non-discriminatory energy and climate targets with regard to the choice of low-carbon technologies.
This quest for “technology neutrality” allowed room for the further exploitation of nuclear power and coal in conjunction with carbon capture and storage (CCS) solutions. Both of these technologies are perceived as risky, even among the general public in the Visegrád countries; opinion polls suggest that renewables and energy efficiency are the preferred options for the future. There are further open questions regarding controversial technologies, including the possibility of fracking in the UK, to ensure security of domestic energy supply.
Britain’s renewables sector is likely to become more vulnerable, as the UK is the largest beneficiary of allocations from the European Investment Bank (EIB). In 2015, the UK received around 35% of the €3.6bn that the EIB granted for renewable-energy and energy efficiency projects worldwide. Overall, the EIB has lent Britain around €7.8bn – and it should be noted that only member states can be EIB shareholders. It’s possible that the UK could, in the future, play a role similar to that of Norway, which is part of the single European electricity market through membership of the European Economic Area. If so, Britain would still have to comply with the EU’s renewable energy quotas and energy efficiency targets, but without the political power to influence those standards.
“The UK was instrumental in gaining the support of the Visegrád countries in the vote for emissions reduction commitments”
There is greater uncertainty over how the UK’s new energy policy will develop if it no is longer required to meet the EU’s targets. Although Britain’s goals have historically been more ambitious than the EU’s joint target, British climate action may drop down the policy agenda, as the targets established through national legislation can simply be overturned in Britain’s parliament.
Britain’s exit could trigger a more ambitious EU transition to renewable energy, but the speculation that Germany will drive this effort forward seems unfounded. It is unlikely that the Energiewende (“energy transition”) policy of the Merkel government will be exported, especially if one considers the new amendments to the German Renewable Energy Sources Act. Energy generation from conventional fossil sources is still high in Germany, and the feed-in tariff system, once the motor of renewables’ rapid growth, is to be replaced by a more market-based auction system. This favours large companies and holds back the further engagement of small-scale actors that are the driving forces of the Energiewende.
For pessimists, the future means a weakened climate policy agenda and implementation in the UK, a struggling ETS, and active policymakers becoming passive “policytakers”. Even optimists see only the Commission and national governments “muddling through”, looking for new windows of opportunity to make progress, especially in the areas of renewable energy policy and energy efficiency.
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Move over, France and the Netherlands: there might be another big election in the first half of 2017 with the potential of delivering a populist leader to the helm of government in an influential EU state.
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