Introductory speech by Sabine Wils MEP - DIE LINKE in the European Parliament

Introductory speech by Sabine Wils MEP - DIE LINKE in the European Parliament

on the occasion of the meeting of the trade unionists network within and close to the European Left in Helsinki 8 May 2010:

Dear friends, colleagues, comrades,

The debate on the new 'Europe 2020' Strategy has been overshadowed by the events surrounding the threat of Greece going bankrupt and its effect on the Eurozone. I will come back to this in a minute.

'Europe 2020' will be the EU's strategy for jobs and growth for the next decade to 2020. Its predecessor - the Lisbon Strategy from 2000 to 2010 - is widely perceived to have failed. But there has been neither a thorough debate in the European Council nor in the wider public why it has failed and which consequences should be drawn from that for the new strategy.

This item has been simply switched over in a hurry. We are told by the Commission that although the Lisbon Strategy's targets have not been reached, Europe would be in a far worse situation if it had not been applied. The explanations for not achieving the targets are the same as at the time of the mid-term review of the Lisbon Strategy in 2005: too many targets, it was not focused enough, and member states did not sufficiently put it into practice at home.

I question such explanations. Wasn't it by means of the liberalisation and de-regulation of financial markets promoted by the Lisbon Strategy and former Commissioner Bolkestein's 'Financial Services Action Plan' that contagion via 'toxic financial assets' could spread so quickly and widely in the European Union from August 2007 - 2009? This is at the root of the financial crisis in Europe. And wasn't it via the promotion of the 'spirit of entrepreneurship' and market liberalisation as enshrined in the Lisbon Strategy that we got the build up of speculative bubbles first in the dotcom 'new economy' and later on in construction, housing and real estate? When that 'bubblenomics' went bust, the real economy was blown to pieces.

The Commission now concedes that "with the benefit of hindsight", the Lisbon Strategy should have been organised better to focus on critical elements, such as robust supervision of financial markets, speculative bubbles and credit-driven consumerism. But at the time these bubbles were proof to the Commission that 'Lisbon works' and credit-driven consumerism was interpreted that there is robust growth in the economy. So I have no intention to let the Commission and the Council get away with this. The points that the Commission now concedes were already addressed at quite an early stage by critics of the Lisbon Strategy, most notably from the Left and the trade unions. My conclusion is: the policies pursued under the Lisbon Strategy share a large responsibility for the unravelling of the financial and economic crisis.

What then about the new 'Europe 2020' Strategy?  It shares the Lisbon Strategy's old obsession with competitiveness and growth - now baptised 'smart, sustainable and inclusive growth'. The Commission proposed five headline targets - instead of the 14 of the Lisbon Strategy. With this it wants to demonstrate a new 'realism' - fewer targets and a more pragmatic approach.

The proposed quantified targets are mainly derived from old Lisbon Strategy targets:

1.    an employment rate of 75 % for the population aged 20 to 64 (Lisbon);
2.    an innovation target that investment in research and development shall rise to 3 % of GDP (Lisbon);
3.    a commitment to the already agreed EU 20/20/20 climate and energy targets, which means that greenhouse gas emissions shall be reduced by 20 %, energy efficiency raised by 20 % and the share of renewables in energy production raised to 20 %;
4.    an education target to bring the secondary-school drop-out rate below 10 % (Lisbon) and to achieve 40 % of graduates from higher education (new);
5.    a social inclusion target to reduce the number of persons at risk of poverty by 20 million (25 %),

and all this to be achieved by 2020.

At the Spring Council meeting on 26 March, only 3 of those targets (employment rate, innovation, climate and energy) were endorsed. The decision on quantitative targets on education and on poverty has been postponed to the June Council. Why?

The German Bundesrat (chamber of the Länder) opposed the education targets. It claimed that this would violate the subsidiarity principle and the exclusive rights of the German Länder on education policy. This is ridiculous. Social and employment policy are also mainly in the competency of member states - but the employment target was accepted by Germany. The education target would not interfere with the German Länder's right to organise education. As with employment, it would simply provide a quantitative measure for progress on early school leavers and higher education.

The governments of Germany, Poland, Hungary, the Czech Republic and Slovakia opposed the poverty target. They claim that it violates the subsidiarity principle, as social policy is in the sole competency of the member states.  'Europe 2020' should be about economic policy, competitiveness and growth. The Spring Council called on the Commission to propose indicators on measuring poverty. This could mean that the long established EU indicator on the at-risk-of-poverty rate - 60 % of median equalised income of households - might be watered down.

Remember that at the start of the Lisbon Strategy in 2000 there was much talk about 'eradicating poverty by 2010'? Meanwhile the number of persons at risk of poverty in the EU 27 has increased and with crisis and stagnation there is still an upward trend. But in the Council there are strong forces which want to fall back even behind the Lisbon Strategy. The Commission is already shifting gear to reverse: EU policies to combat poverty shall only 'ensure that the benefits of growth and jobs are widely shared so that people experiencing poverty can be enabled to take an active part in society'. Better access of the poor to essential services, but not a decisive effort for the eradication of poverty is the new agenda.

Perhaps a word on the new old targets. For example, the 75 % employment rate target was already valid for the Lisbon Strategy. It was not achieved, but there had been an increase in the employment rate up to 2008. But this was exclusively attributable to the rise in atypical contracts. Is it appropriate to re-confirm such a target without at least discussing the quality of jobs created? Similar questions could be raised about the other targets. Equality for women and gender-mainstreaming policies were at least a rhetorical component of the Lisbon Strategy. In 'Europe 2020', there is nothing about this.

So far, this is a pretty nasty picture for 'Europe 2020': You have only 5 modest targets, but only on three of them these are also quantified. Why should this deserve the label of a 'strategy' at all?

The Commission also proposed seven EU-level flagship initiatives on 'Europe 2020', but these were not discussed at the Spring Council and postponed to the June Council meeting. The flagship initiatives resemble the older 'Lisbon Community Programme' - that is measures and programmes launched and funded at EU level in order to promote the Strategy more effectively. They focus on issues such as innovation, youth on the move, digital economy, jobs and skills, industrial policy in an era of globalisation, resource efficiency and the fight against poverty. I will not go into detail on these.

The Spring Council agreed on additional policy areas to be linked to 'Europe 2020': addressing bottlenecks for growth by deepening the single market, developing an external dimension of the strategy in the spirit of the Global Europe Agenda for opening markets and promoting the interests of EU business worldwide.

The upshot on 'Europe 2020' in my view is: it is conceptualised along the same spirit as the failed Lisbon Strategy. Its focus remains on competitiveness and further market liberalisation, only that the same old medicine is repackaged with a lot of cloudy 'Greenspeak'.

But what about the new realism of 'Europe 2020'?

At the end of 2009, the European Council already agreed on an exit strategy from fiscal stimulus measures to fight the crisis. The Maastricht deficit criteria shall be reached again by 2012 or 2013 by most of the member states. Against 22 member states there are deficit procedures under way. Very harsh austerity measures have been taken against Greece, but also Latvia, Hungary and Romania, which were put under joint tutelage of the EU and the IMF. Many member states already apply similar cuts in public spending, public services, pensions, health care, public sector wages etc. and are raising VAT rates and social security contributions for employees. And all this against the background of a still fragile and stagnant economy. The private sector is still not in a position to generate new investment due to low levels of capacity utilisation, bleak economic prospects and persistent problems concerning companies access to credit.
So where should the investment for anti-poverty measures, innovation, resource-efficiency, education etc. come from, in order to even reach the modest 2020 targets? With harsh fiscal retrenchment policies as pursued by EU member states this will simply not be possible, regardless how ambitious or not Europe 2020 targets may be.

The sado-monetarist EU exit strategy will also not enable member states to achieve fiscal consolidation, as automatic stabilisers such as social protection and public investment will be weakened by it, wages depressed and in return internal demand and tax revenues diminished. A double-dip recession becomes more likely by these policies.

It is this austerity policy which we must fiercely fight back. I fully agree with the position of the European Trade Union Congress that first and foremost we need a strategy for the next 5 years to overcome stagnation. The basics of this are that we need further EU-wide co-ordinated fiscal stimulus:

•    A new EU recovery plan amounting to 1% of EU GDP each year designed for investing in environmentally, socially and economically sustainable development, to promote equity, full employment with ‘good work’, greening the economy, social welfare, eradicating poverty and social exclusion and to create quality employment;
•    Industrial policy initiatives: re-conversion of the car industry towards sustainable transport services, extension of railway networks and supply of spatially inclusive and comprehensive regional train services (Programme Rail Europe 2025), promotion of 'green' shipbuilding and stabilisation of the steel industry in that context. Such re-conversion must be accompanied by measures for job retention, training, re-training and skills development, and secure employment transitions for workers in the industries concerned.
•    The setting up of European economic governance introducing new means of raising funds, especially a financial transaction tax, bonus taxes, and the ability to issue Eurobonds intended to fund specific community projects.
•    Effective regulatory measures on financial institutions to prevent them from ever again inflicting such a massive disaster on millions of individuals. Immediate urgency measures are needed to prohibit short-selling and trading in credit default swaps and to establish a public European rating agency. Hedge funds and private equity funds should be prohibited to operate in the EU or at least severely restricted, offshore centres closed down, and also investments of pension funds strictly limited to European government bonds.

These are some of the key points for an alternative policy which generates investment for a transition to sustainable development. We do not want a monetarist 'austerity' union, but a social Europe.