LISBON STRATEGY : WHATS WRONG

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LISBON STRATEGY WHATS WRONG ?
Tania ZGAJEWSKIZagreb, 3.05.2006
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INTRODUCTION

• Personal presentation
• The importance of the topic
•  Not only an economic program, but a society
  project 
• The approach
•  Reality is important, but so is presentation 
  

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• How Europe speaks about people
• will strongly impact
• how people will speak about Europe
• So the way we talk about the Lisbon strategy
  explains much the way
• we lose referenda

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PLAN

• THE PROBLEM EUROPES ECONOMIC SITUATION
• THE ANSWER THE LISBON STRATEGY
• THE RESULTS MITIGATED
• THE ALTERNATIVE PATHS

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• THE PROBLEM EUROPES ECONOMY
• Whats really bad ?
• Whats not so bad ?
• THE ANSWER THE LISBON STRATEGY
• The 2000 version
• The 2005 version
• THE RESULTS MITIGATED ESPECIALLY AT NATIONAL
  LEVEL
• The EC level
• The national level
• THE ALTERNATIVES
• More decentralization
• More integration

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1. EUROPES ECONOMIC SITUATION

• What is the Lisbon strategy backdrop?
• We live through two revolutions ICT and
  globalization. This is the dawn of a new age (in
  some ICT corporations, productivity can be
  multiplied by 4 in 10 years).
• We thus need to prepare for the Information
  economy and the Knowledge society.
• This requires a lot of reforms.

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1. EUROPES ECONOMIC SITUATION

• There are two ways to present the reality.
• 1.1. Some problems are very real
• (the  black scenario )
• 1.2. Things are not that dramatic
• (the  pink scenario )

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1.1. Some problems are very real ( black )

• We get into a grey society
• and this is a heavy trend.
• There are new competitors in town (China, India)
• and they weight a lot.
• Unemployment remains too high in many places
• especially for low qualified people.
• Our adaptability to the Information
• Society is limited.
•  Jurassic Europe ,  Eurosclerosis 
• we become an economic history museum.

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1.2. Things are not that dramatic ( pink )

• Let yourself be surprised
• Productivity growth per capita and hour is not
  that bad.
• The debt situation remains manageable.
• (public debt, private debt, external debt )
• We have survived a strong petrol shock.
• The environmental situation has improved in some
  corners.
•  The European model 
•  We are living Halcyon days 

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Conclusion about the Lisbon strategy

• The diagnosis part of the strategy is strong
•  we need to adapt to a new economy, a knowledge
  society 
• Structural challenges need structural answers.
• The message part of the strategy is weaker
• The situation has negative and positive aspects,
  but the official speech is essentially negative.
  
• People are often worried (see the polls before
  referenda).
• The  European speech  should offer a
  perspective, and not compound the problem.

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2. THE LISBON STRATEGY

• 2.1. THE ORIGINAL VERSION (2000)
• 2.2. THE REVISED VERSION (2005)
• . and the revised version is in fact worse than
  the original !

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2.1. The original version (2000)

• Various objectives
• economic
• social
• environmental
• Various instruments at different levels
• EC measures (regulations and directives)
• National measures for the most important part
• through Open coordination method (OCM)

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In fact one contradiction

• Many ambitions (which is well)
• Very little means (which is not so well)
• Most things are at the national level
• No legal constraints
• No budgetary outlays
•  Europe  is thus responsible for things it
  basically cannot control (and about which Member
  States are not eager to act).

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2.2. The revised version (2005)

• Less objectives  priority to the economy,
• no more social and environmental objectives 
• Less coordination  no name and shame of
• the Member States by the Commission
• Less appropriation by the EU  Member
• States must feel more responsible 
• .. but then, what is now the added value of an
  European approach ?

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In fact a second contradiction

• We want to convince people to accept difficult
  reforms.
• But we have diminished the perspectives we
  offered them.

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Conclusion about the Lisbon strategy

• There is a means problem.
• If the problem is so fundamental, means should
  logically be increased.
• There is a perspective problem.
• A lot of people do not feel committed
• to a program which has no social and
  environmental perspective.

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Which creates a communication problem

• Lets not forget that people want a positive
  perspective.
• The revision has reinforced the
•  doom and gloom  aspect of
• the strategy and reduces the
• involvement of the average
• citizens in the reforms.

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3. THE RESULTS

• Growth limited
• RD limited
• Structural reforms limited
• Popularity limited
• Less ambition little means
• limited results. Whats surprising ?

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The results are not completely negative

• Lets not go ourselves into the  doom and
  gloom  
• We are in a phase of structural adjustment
• (ICT, globalization, rise of energy costs)
• There is still growth (but not strong enough)
• Some structural reforms have begun (but not gone
  far enough)

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Theres a strong difference in the delivery

• 3.1. At the EC level
• 3.2. At the Member States level

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3.1. At the EC level

• Transports
• Railways airways (market opening has been
  deepened)
• Electronic communications
• Telecoms Internet (essential for the expansion
  of ICT, and thus productivity)
• Energy
• Gas electricity (market opening has been
  deepened even with present resistances)
• Not so bad. Some things changed.

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3.2. At the Member States level

• Structural reforms
• Employment Pensions Training
• RD
• EC weak (EC budget has been reduced) and Member
  States not better (slight improvement)
• OCM Open coordination method
• So open there is not much coordination in fact
• (references to other Member States in national
  debates are quite inexistant)
• Not so good. Not much changed.

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This being said, there are strong variations
between Member States

• Big Member States are generally bad performers,
  small Member States are generally better.
• This is true for structural reforms, and also
  for public deficits.
• (Croatia can be happy about the future)

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Conclusion about the Lisbon strategy

• The results remain weak, which is quite normal
  with limited means.
• Basically, the EC has delivered, and the Member
  States have not.
• Question What should be done to improve the
  delivery ?

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4. THE ALTERNATIVE PATHS

• The Lisbon strategy has relied from the
  beginning on a fundamental paradox (big
  ambitions, small means).
• There are in fact two alternative paths which
  are more logical (reduce ambitions, or increase
  means).

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The Lisbon compromise is weak. Why ?

Weak as result Fundamentally, the EC was not
created to be a bureaucratic talking shop. There
is very little added value in fact. Weak as
message And there is a lot of lost value in
communication. The EC must either do something,
or keep silent. Simulating action is the worst
communication strategy.
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4. THE ALTERNATIVE PATHS

• 4.1. More decentralisation
• 4.2. More integration

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4.1. More decentralization

• Single market for the EC
• Energy
• Services
• Transport
• The rest for the Member States
• Social problems
• Environment
• Structural reforms

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4.2. More integration (an illustration)

• EC Legislative level
• - Single market new environmental (energy
  taxes, infrastructure charges)
• EC Macroeconomic level
• - Increase the coordination of national economic
  policies
• - Create stabilization fund (at least for
  Eurozone)
• EC Budget level
• - Put our money where our mouth is (ICT,
  networks, environment, corporations
  restructuration). Thus increase the EC budget,
  but with new priorities (Sapir report, 2004)
• Member States must have environmental and social
  targets (softer thus than regulations)
• - Fear of change must be fought.

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So the subsidiarity principle is respected

• Environmental regulations
• - Restructuration of energy taxation and better
  infrastructure costs have already been debated at
  length by EC institutions.
• EC Macroeconomic level
• - The 1980s have shown that uncoordinated
  macroeconomic initiatives have little efficiency
  (and this is more valid with a single currency).
  
• EC Budget level
• - The efficiency of EC outlays is obviously
  bigger for networks and research.
• Environmental and social targets
• - These are political commitments. No EC
  instrument.

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Where is the added value of more integration ?

• EC Legislative level
• - The EC environmental regulations HAVE allowed
  better management of sustainable development.
• EC Macroeconomic level
• - Interdependance must be managed. Non management
  is costly in growth.
• EC Budget level
• - Networks and research outlays are more
  efficient at EC level. Better coordination in
  both cases.
• Environmental and social targets
• - The targets are essential to motivate people,
  and they do not infringe on the subsidiarity
  principle.

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Lets remember !

• IF YOU WANT PEOPLE TO FEEL INVOLVED, SPEAK
  ABOUT THEIR INTERESTS
• ( they must have targets for their interests)

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General conclusion whats wrong with the
Lisbon strategy ?

• In a nutshell
• The diagnosis is correct.
• The message is unbalanced, because it is
  excessively negative.
• The action program is unbalanced because means
  are unsufficient, and targets on non economic
  aspects have been dropped.

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A dangerous communication strategy indeed !

• There is thus a need to reintegrate social and
  environmental objectives in the strategy, AND to
  show the link with the other parts.
• We have precisely done the reverse.

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How Europe speaks about people impacts strongly
on how people speak about Europe

• If you want people to invest in Europe,
• Europe must first show that it invests in people
• Thank you