Let us for a moment change perspective
and look at today's Europe not
through the eyes of a politician, or a
journalist, but through those of a business
executive. Imagine that you work
for a well-established international company
that has grown steadily and successfully
over the years. This year your
company has simultaneously acquired
ten foreign companies of greatly differing
size, expertise and product range.
One month later, head hunters have
been searching for a new CEO, and, after
all well known names have been rejected,
the directors have settled on a young,
unknown candidate with good potential
on paper but little track record.
Soon afterward the board of directors
is completely renewed, bringing in
some with extensive knowledge of your
business and others with little or no perience. New corporate governance
rules have been proposed and your private
and institutional shareholders are
loudly demanding that the company
meet its commitment to becoming the
most competitive in the world, and soon.
Few companies could survive so many
upheavals at once. And yet that is a
rough business equivalent to the challenges
now facing JosŽ Manuel Dur‹o
Barroso, the new President of the European
Commission, and his team.
In May 2004, the European Union
was enlarged to include ten new member
states, increasing its population by 20
percent but its economic output by only
five percent. A month later a new European
Parliament was elected in which
more than half the members are newcomers,
many with little or no direct experience
in Brussels. Within weeks a
draft European constitutional treaty was
adopted that will, if ratified, set new
rules for running the European Union.
At the same time, after much uncertainty,
came the nomination of Mr. Barroso
and his team of 24 Commissioners,
21 of them brand new to Brussels.
For the first time in EU history, all
these events were synchronized. The date
of enlargement was set to enable the new
member states to participate in the European
Parliament elections. Similarly, it
was decided that the new Commission
would take office in November, allowing
time for the new Parliament to vet the
nominee Commissioners and their portfolios.
This has inevitably led to a greater
politicization of the Commission.
At the same time, the EU institutions
- the Commission, the Parliament
and the Council of Ministers - have all
grown bigger, making the Union more
difficult to operate. How do you avoid
bureaucratic and political deadlock
while trying to find a balance between big and small, rich and poor countries?
How do you ensure an effective single
market while market rigidities persist
and economic growth is sluggish, especially
in the euro zone? How do you
achieve the goal set in Lisbon in 2000 of
making Europe the world's most technologically
competitive economy by the
end of this decade? And with so many
diverse political and cultural backgrounds,
how does Europe speak authoritatively
with one voice on the world
stage? The constitutional treaty is designed
to tackle many of these issues but,
given growing skepticism about the European
project amongst the citizens of
Europe, its ratification is not a foregone
conclusion.
Mr. Barroso has made a relatively
good start, despite being obliged by the
European Parliament to reshuffle his
team slightly and drop the controversial
Italian nominee, Rocco Buttiglione.
Generally, however, he has been evenhanded
in allocating portfolios, giving
priority to skill and experience rather
than to nationality, and he has recognized
the importance of promoting a
liberal, free-market philosophy. One of
the most important posts, competition
policy, has gone to an experienced Dutch
businesswoman and former Transport
Minister, Neelie Kroes, whose toughness
has earned her the nickname of"Nickel
Neelie. Taxation has been entrusted to
another woman, a Latvian from the
Green Party. It will be intriguing to see
how she responds to charges by some
older member countries, particularly
France and Germany, that new member
countries are unfairly using low corporate
tax rates to attract investment.
The European Parliament elections
did not much change the political profile
of the Parliament, but returned a fair
number of Euroskeptic MEPs, not just from older member states like the UK
but also from some of the new members
such as Poland. These MEPs will severely
criticize any policies that do not bring
real benefits to the citizen and to the
business community. Mr. Barroso also
understands that many companies resent
the way Brussels delivers more and more
legislation, raising costs for business, but
does not create the free market conditions
to make business competitive.
The Commission is promising that
in future the emphasis will be on not
more but better legislation that will produce
more jobs, more competitiveness
and higher standards of living. It is,
however, the governments of the member
states that are responsible for implementing
and enforcing new laws passed
in Brussels - which is why it is crucially
important for business to take its messages
not only to Brussels but also to national
capitals. That is where the power
lies to remove obstacles to competitiveness
such as labor market rigidities, high
employment and socials costs, differing
fiscal regimes and diverse healthcare and
pension provisions.
If all this sounds rather pessimistic,
there is some good news - particularly
for Americans. One striking feature
shared by many Commissioners and
politicians from the new member states
is that they have spent time overseas, and
that part of their education has often
been in the United States. This can only
encourage an international approach to
policy making, and it will certainly accelerate
the already rapid adoption of English
as the lingua franca in Brussels. To
the chagrin of our Gallic colleagues,
more of the new Commissioners speak
Russian than French. And while the challenges may seem
great, it is worth pausing to look back at
what has been achieved in the last 20
years.When I first arrived in Brussels in
1984, the concept of a European Single
Market had not yet been imagined. Yet
by the end of 1992 it was a reality, albeit
an incomplete one. In the early 1990s
most people still scoffed at the idea of a
single European currency. Yet by 1999
the euro was a working reality, and in
2002 we had euro bills and coins in our
pockets.Within 15 years of the fall of the
Berlin Wall in 1989, eight former communist
countries are full-fledged EU
members.
All this has greatly benefited business,
both European and American, as
standards are harmonized and barriers
to the free flow of goods, services, capital
and people are dismantled. Enlargement
is opening up even more markets, some
with breathtaking growth rates of seven
or even nine percent, and, despite the
difficulties, there are many opportunities
to be grasped.
In Europe we often criticize ourselves
for lacking the American Á¡can-doÁ±
mentality. But I sometimes think that we
undersell ourselves and all that we have
achieved in a relatively short space of
time. It has required vision, tenacity,
hard work and the ability to take difficult
decisions. Mr. Barroso and his team
will need all those qualities if Europe is
to achieve its goal of becoming the
worldÁÃs most competitive economy, another
grand ambition that, like the euro
in the early 1990s, is still being derided
by the cynics.
Catherine Stewart is Managing Director of
Cabinet Stewart, an EU public affairs consultancy
in Brussels.
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