Reports

Who can best deliver prosperity and social justice in Europe?

21 January 2005


The European Policy Centre hosted the first-ever European Party Political Debate, at which Wilfried Martens, President of the European People’s Party (EPP), and Poul Nyrup Rasmussen, President of the Party of European Socialists (PES), responded to the question: “Who can best deliver prosperity and social justice in Europe?” The debate was moderated by John Palmer, EPC Political Director. A question and answer session followed. This is not an official record of the proceedings and specific remarks are not necessarily attributable.

Summary

There was only a limited meeting of minds in this intriguing clash – but little overt dissent either about the aims and requirements for a globally competitive Europe with sustained growth and economic dynamism. For Mr Martens the shining example of the way forward had been set by the former Spanish centre-right government of José-Maria Aznar. Mr Rasmussen dismissed the notion, pointing to the success of the centre-left Nordic nations in delivering prosperity as well as high standards of welfare and protection of the environment. Mr Martens wanted a freer, more flexible labour market fostering competitiveness as a pre-requisite: the rest would follow. Mr Rasmussen said the answer was to move forward on all economic and social fronts together: simultaneous action on all fronts was needed. The Lisbon Agenda (preferably with a new more user-friendly name, suggested Mr Martens) would remain the core of the continuing project to establish Europe as an economic and social powerhouse.

Event Report

John Palmer said the debate was a unique experiment – a long overdue form of political encounter with leading political figures. Other similar EPC events were planned for the near future, and other political parties had already been approached to take part. The format was important because of the need to strengthen EU democracy, and with the increasing influence and power of the European Parliament, many now eagerly awaited the emergence of fully-fledged European political parties, offering the electorate a real choice.

The EPC was now championing a sharper political debate about the available political alternatives and this first event in a series raised the question of which political model would best achieve the goals of increased growth and employment now being pursued under the Lisbon Agenda.

Wilfried Martens offered a 16-point plan for pursuing the Lisbon Agenda, which he said was undoubtedly the main instrument to ensure growth and prosperity for all EU citizens. The EU was a 50-year success story, establishing peace, freedom of movement and open markets. But it was clear there could be no social justice without dynamic and adaptable economies, and the most successful governments delivering the Lisbon aims were those most capable of taking action and introducing reforms. Mr. Martens cited Spain’s Partido Popular under former Prime Minister José-Maria Aznar as the clearest example of such success.

For the centre-right in Europe - the European People’s Party - the social market economy had to link the market mechanisms of supply and demand with the obligation to respect the dignity of every human being. “We are proud of having built this social model - Europe has no meaning unless it is both an economic and a social Europe,” he said. The challenge now was to combine powerful new market forces with humanity - economic dynamism with social responsibility, and highly-organised social security systems. All this was possible while promoting entrepreneurship, the social market economy and federalism.

EPP Proposals for achieving the Lisbon goals

Mr. Martens outlined his party’s political priorities in view of achieving the Lisbon goals:

  • improving worker motivation to increase competitiveness;
  • “rebalancing” the Lisbon strategy;
  • increasing labour market flexibility and social partnership;
  • promoting high levels of social security;
  • renaming the Lisbon Agenda as the “Lisbon Strategy Agenda for Growth, Prosperity and Employment”;
  • adhering strictly to a reshaped Stability and Growth Pact (rules governing the single currency) including increased powers for the Commission;
  • releasing the job potential of SMEs by cutting red tape and bureaucracy;
  • reforming personal and corporate tax system;
  • removing disincentives to work, particular for women, with day care facilities for children and a family-friendly work environment;
  • better-managed immigration policy;
  • reforming social protection systems;
  • increasing research and development spending; improving the financing of universities;
  • launching awareness campaigns to promote entrepreneurship; tackling the stigma of failure;
  • taking account of knowledge-based economy;
  • increasing vocational training systems;
  • using new energy efficiency technologies, adding value to competitiveness.

The European Socialists’ Perspective

Referencing Mr. Martens’ proposals, Mr. Rasmussen said the Socialists could offer a 25-point plan, but he chose to speak more generally about the need for a “public political space.” He went on: “We must show to ordinary people that there are political choices at the EU level, and that Europe is more than just political figureheads making decisions.”

Europe was “better than the rumour” he went on. It was capable of being a region of excellence - but it had to be on Europe’s own terms and not under American conditions: to misquote Shakespeare, “to be European or not to be European, that is the question” said Mr. Rasmussen.

Europe had a history of combining economic survival and competitiveness. Integration was the secret of this success story and there was no room now to “de-nationalise” or “re-nationalise” Europe. The need was for more Europe, not less, and the danger was of doing too little, too late - and too right-wing. He pointed out that Europe was the only global player trying to integrate economic and social issues, rather than expect simple economic change to produce social benefits. An integrated approach remained the way forward - a combined initiative tackling economic efficiency, social capacity and environmental issues as part of the same agenda.

There were in effect four “democratic places” - local, regional, national, and European Union. To be competitive, it was necessary for politicians to operate in them all equally: “If this EU is to be the best, we need to operate and work politically with all different aspects, on all four levels.” There were, simply, two directions for EU prosperity and growth - “Mr. Martens,’ or mine.”

Mr. Rasmussen pointed out that nine out of the ten top countries in the world with respect to quality of life were European and four out of the eight of the most competitive were Scandinavian. While some said social and economic goals were diametrically opposed, for the PES the two were in no way contradictory. However, he acknowledged that the Lisbon Strategy was not functioning well enough at national level at the moment. What as needed was improved research, education, and money, all of which required economic growth which involved focusing not just on the supply side but on the demand side. The problem with Mr. Martens’ proposals was that nearly all were supply-side solutions.

The big mistake was to believe that growth would emerge by itself - it had to be fostered. Europe's single market was already the world's biggest economy, and the EU's export capability at the moment was higher than internal demand. The problem was internal demand in the single market, and as a result politicians had to learn to use the economic interdependence between 25 counties as a Lisbon Agenda lever.

The PES formula for success came down to a “golden triangle” of higher economic growth, a better Stability and Growth Pact, and the implementation of the Lisbon Strategy. Those three factors, tackled simultaneously, would lead to the goal of more and better jobs.

Debate

Asked by John Palmer if he felt that competitiveness ought to be the priority, Mr. Martens returned to the Spanish example. Under Mr. Aznar Spain had implemented economic reforms, suppressed monopolies, privatised the public sector and reduced public costs and taxes. As a result unemployment had fallen from 23% to 11%, thanks to a policy based primarily on competitiveness and innovation.

The EPP model, therefore, was that of a social market economy, embedded in the European Union’s identity. The ‘social element’ was “inherent in our concept of society.” The EPP, despite the associate member status for British Conservative MEPs in the party, was not in favour of the “Anglo-Saxon” view of society. The real challenge in Lisbon Agenda reforms was to maintain this type of society with a social market economy.

Mr. Palmer questioned Mr. Rasmussen on the Danish government’s insistence - along with that of a number of other Member States - that the EU budget should be capped: how could that be unified with producing the necessary economic and social reforms?

The former Danish Prime Minister said the PES view was that the budget should certainly be increased, but EU money also had to be used better, not least through the reform of the Common Agricultural Policy (CAP). While the CAP absorbed around half of all funds, it was hard to press Member States to increase overall spending.

Discussion

Answering questions from the floor Mr. Rasmussen rejected the suggestion that the economic and social policy differences between the EPP and PES were minimal, pointing out that the EPP, for instance, wanted to abandon the Working Time Directive it without setting an upper limit, while Socialists advocated “working smarter, not working harder.” At the moment the US had higher productivity per head and per job - but the EU had a higher work rate “per hour.”

He agreed with one questioner that there had to be a culture of “risk-taking” in business and enterprise, but people were reluctant if the social costs were too high. The day when a job was guaranteed for life were over, but these days it was too costly for firms to dismiss people. The problem with that was that if it was too costly to lay them off, it was also too costly to hire them. Today’s guarantee should focus not on job security but on ensuring that the transition to another job was as smooth and painless as possible. He said policy-makers needed to relearn the concept of simultaneous action on various fronts. He also encouraged the use of EU structures to gather knowledge about best practice, by creating, for example, a knowledge bank of the best functioning environmental technologies. “Do we need more risk-taking? Yes. But question is how we can get people to take more risks.”

Mr. Martens insisted that countries such as Germany, France and Italy had not had the courage to change in the way that Spain demonstrated under Prime Minister Aznar. The EPP was in favour of agreements between social partners, with a single market, a single currency and a social Europe - things Denmark had once opposed.

Mr. Rasmussen insisted the EPP was turning its back on liberalisation, but liberalisation was the path to re-engaging with the public: “We need practical action and concrete political choices to convince people that what is going on is of relevance to them. We must make it simple and focused, instead of creating fear about things people can’t understand.” There had to be a new alliance between consumers, politicians and business, because Europe had a chance to become a strong manufacturing centre if it remained at the top of the “added-value chain.”

Mr. Rasmussen called for a new kind of global system, not the current one in which there was one super-power and then the rest. The EU had to assist regional blocs such as ASEAN, MERCOSUR and the new African Union on their way toward becoming equal partners in establishing proper global governance.

For Mr. Martens a long-standing problem for the EU still remained its minimal political influence in the world, despite its role at the forefront of financial aid in international relations. Washington still called the shots. The Lisbon Agenda, he implied, would not resolve that situation, regardless of how its goals were achieved.

Future Debates and European Union democracy

Thanking the two Presidents, John Palmer, said that the debate had been a great success - as attested by the large participating audience it had attracted. There would be further such debates on other key European political issues in the future. The European Policy Centre had made the strengthening of the Union’s political democracy a key theme in its current work programme. Under the rubric of “Political Europe,” the EPC would not only be encouraging greater debate between the political parties - to allow European voters greater choice in future elections - but also working on other aspects of how to strengthen the voice of civil society in our democracy.