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Home›Economic integration›EU could have a memorable year in store

EU could have a memorable year in store

By Susan Weiner
September 26, 2021
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This article is an on-site version of Martin Sandbu’s Free Lunch newsletter. Sign up here to receive the newsletter straight to your inbox every Thursday

I just made a brief visit to Brussels for the first time since the pandemic to catch up with old and new contacts. Fortunately, not everyone had left for Strasbourg to witness the start of the EU’s political year: the traditional State of the Union speech by the President of the European Commission.

The coverage by my FT colleagues of Ursula von der Leyen’s speech highlights the promise of a “Global Gateway”, a new infrastructure program with the ambition to compete with the Chinese Belt and Road Initiative. . It is an excellent idea. But I think this will only work if the EU spends as much money on it as China has been willing to spend on the Belt and Road, and if the EU also finds ways to share its institutional “software”. – regulatory convergence with the bloc with a with a view to closer economic integration. And he needs a much better name. Why not the Marco Polo or Magellan project?

The speech was generally hard-hitting on China – a ban on imports made with forced labor was promised – and on European values. In addition, the speech largely developed the already central themes of the von der Leyen commission: decarbonization proposals; an industrial policy aimed at self-sufficiency in strategic goods, including a European Chips Act; and a more competent health policy at EU level (with the largest spending commitment of all the proposals, von der Leyen having pledged 50 billion euros).

However, there is a strong argument to be made that this commission should be less concerned with proposing new initiatives than with bringing to fruition those it has already launched. After just two years in office, even without the pandemic-induced work, the commission offices would groan under the weight of big politics, ranging from a massive decarbonization strategy to plans to overhaul the digital economy.

Even if the committee had only implemented and executed what was already on the table and would not have proposed any new initiatives in the remaining three years of its mandate, it would have changed the EU more than most committees. .

This would require focusing not only on policies, but on the institutional modernization of the committee itself, argues a report by Georg Riekeles of the European Policy Center. (I find the idea of ​​using as a model the way the Brexit Task Force, where Riekeles worked, was particularly intriguing to keep national capitals and the European Parliament on board throughout the Brexit negotiations.) , the State of the Union did not provide what was necessary.

In the short term, however, much of this is crowded out by more immediate political dynamics. Here are the three factors that have dominated most of my conversations.

First, everyone is waiting for Germany and France. The outcome of the German election determines what is politically feasible – not just the results on election night, but what kind of governing coalition can be negotiated, which could take months. (A perfect illustration is the interview of my Berlin colleagues with Christian Lindner of the Free Democrats.)

It is also very important that France chooses to prioritize the presidency of the Council of the EU in the first half of next year, much of which will coincide with the re-election campaign of French President Emmanuel Macron. It is still unclear what Paris will find advantageous to lobby (although there was a hint in the verification of Macron’s name by von der Leyen, with whom she said she would organize a European defense summit. ). The EU machine will, in other words, be stuck between two elections for the next nine months, one causing paralysis, the other dynamism but not necessarily good nature.

Second, the debate over EU fiscal rules is intensifying again. A consultation on how to reform them had just started when it was sidelined by the pandemic, which in any case led to the rules being suspended until 2023. It should now restart. The different parties have laid the groundwork. Last week, several countries in Northern, Baltic and Eastern Europe signed a document insisting that there is no need to agree on reforms before the rules return in force. That is, they will not be forced to accept weaker rules due to a delay.

In his speech, von der Leyen promised a consultation that would aim for a consensus “well in time for 2023”. It’s hard to see this as realistic, or even that she thinks it’s realistic. It may just as well be an attempt to push back the aforementioned document and restore the sense of a deadline for reforms. Rather than being naive, I find the commission more likely to look for ways to increasingly force the issue, albeit gently.

This brings us to the third short-term political dynamic, linked to the recovery and resilience plans financed by the unprecedented common debt of the EU. In most cases, they are going remarkably well: the national capitals are seen as presenting serious and solid plans, and the commission as having done a good job in ensuring their quality. If this continues – in a matter of months, countries must reach set milestones to receive the next tranche of money – the enticing question is whether the stimulus spending mechanisms or the confidence they have generated can help improve performance. rest of the EU budgeting, and even improve the prospect of an agreement on reforming fiscal rules.

But another aspect of the stimulus package is much more difficult: the commission still has not approved the plans of Poland and Hungary, and even if it did, national ministers probably would not accept them with the majority required. Moods have grown significantly in the face of these countries’ challenges to EU laws and values, and it is now difficult to see how this conflict will end. But when it does, it will leave the commission with a stronger arsenal to tackle rule of law violations in member states. He shows his willingness to withhold money. The plans of the two countries themselves will include institutional reforms to strengthen the rule of law. So even after their approval, the money will be conditioned for improvement. And the highest European court should soon approve new rules making it easier to stop transfers of European funds in the event of a violation of the rule of law.

A resurgent pandemic, or some other unexpected crisis, could sweep all of this aside. But for now, it looks like it could be a momentous year for EU economic governance.

Other readable texts

  • The European Central Bank got a crisis-free tap.

  • Sean Hagan of the Peterson Institute analyzes President Joe Biden’s anti-corruption initiative and hails his treatment of corruption as a threat to US national security interests.

  • The US Treasury released a report on the economics of child care provision. In a speech, Treasury Secretary Janet Yellen said child care “is a classic example of a broken market” and that policy must reflect that its “contribution to economic growth is as essential as infrastructure. or energy “.

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