Issue 3 December 2005 Suggested Donation 5€
Social Europe
the journal of the european left
Breaking Europe’s Deadlock Contributions by Elisabeth Guigou John Prescott Günter Verheugen and others
http://www.social-europe.com
Editorial Board Detlev Albers Giuliano Amato Josep Borrel (tbc) Karl Duffek Elisabeth Guigou Zita Gurmai Stephen Haseler Neil Kinnock (tbc) Alan Larsson (tbc) Poul Nyrup Rasmussen Angelica Schwall-Dueren Giuseppe Vacca Jan Marinus Wiersma
(Chief Editor) (Former Italian Prime Minister) (President European Parliament) (Director Renner Institute) (French MP, Former French Europe and Justice Minister) (President PES Women) (Chief Editor) (British Lord, Former EU Commissioner) (Former Swedish Finance Minister) (President of the PES) (Vice Chair SPD Bundestag Group) (President Gramsci Foundation) (Vice President Socialist Group European Parliament)
Henning Meyer
(Managing Editor)
Editorial Team Ian Gardiner
(Design & Layout)
Friends Jean-Marc Ayrault, Stefan Berger, Antony Beumer, Matt Browne, Proinsias De Rossa, Harlem Désir, Guglielmo Epifani, Patrick Diamond, Antonio Guterres, David Held, Andrea Manzzella, Jacques Reland, Donald Sassoon, Adrian Severin, Martin Schulz, Dominique Strauss-Kahn, Livia Turco, Heidemarie Wieczorek-Zeul, Christoph Zöpel
Please make sure that there will be more issues of ‘Social Europe. the journal of the european left’ by paying the suggested 5€ donation for this issue. Visit our website www.social-europe.com for payment options. Thank you very much! ‘Social Europe. the journal of the european left’ is published by the European Research Forum at London Metropolitan University. Published by
In co-operation with
Detlev Albers Chief Editor
Editorial
Stephen Haseler Chief Editor
Dear Readers, We are happy to present the third issue of ‘Social Europe. the journal of the european left’. In this issue, we have introduced a new section 'Opinion' in which controversial viewpoints will be published. We believe it is necessary, in order to achieve our fundamental aim of informing the basic discussions in European Social Democracy, that we reach out to all opinions within the social democratic family. We cannot and should not avoid the controversies within the European left. On the contrary. We are determined to provide a space for the different positions and their most prominent proponents. In these days in particular, in which the European project itself is pervaded by cleavages, such an approach is indispensable. At the same time however, we would like to make clear the positions of the editors, such as our ‘yes’ to the Constitutional Treaty for instance.
the collective opinion of Europe’.
‘Social
In the first three issues published this year, we have brought together a wide variety of authors from a range of different European countries. We are aware, however, that some countries have not had the voice they deserve in the debates led in our journal. This was simply due to the limited scope of action in the growing up of a young journal, but we promise to work especially on this point in the next year. Article proposals from countries that have been underrepresented so far are more than welcome.
Last but not least, the whole ‘Social Europe’ Team would like to thank you for your interest and support over the year now coming to a close. We hope you will stay with us in the next year too and help us stimulating the debates in An enlightened discussion needs to European social democracy. We wish include all actors if it wants to gain you, your friends, and family a Merry general acceptance. Building on the Christmas and a Happy New Year 2006. French controversy about the European constitution, relating to which we published the opposing viewpoints of François Hollande and Henri Emmanuelli in the first issue, we go on discussing the European role of New Labour in this issue. We would like to make clear however, that the views expressed are the ones of the respective authors only and do not represent Stephen Haseler and Detlev Albers
Social Europe the journal of the european left December 2005
Contents
Elisabeth Guigou
‘The Consequences of May 29th’ (Link to French version)
73
Garrelt Duin & Martin Schwanholz
‘Danger for Europe’ (Link to German version)
75
John Prescott
‘A New Social Europe’
79
Neal Lawson
‘What can the European left learn from New Labour?’
82
Günter Verheugen
‘A New Industrial Policy for Europe’
87
Hubertus Heil
‘The Freedom We Mean’ (Link to German version)
89
Silvio Pons
‘Putin’s Russia Love and hatred towards the EU’ (Link to Italian version)
91
Socialist Group
Special Supplement
Social Europe the journal of the european left December 2005
The Consequences of May 29th and to further the understanding between our countries, Europe has eventually been reduced, in the eyes of many, to a mere machine that produces complicated directives that give rise to incomprehensible debates between unknown institutions. The fear of an infinite he crisis of Europe today is enlargement has also played a significant part. fundamentally different from any other crisis that The Draft Constitutional Treaty has paid the price of has slowed down the Union's this image and of these fears. An arid, complex reading progress so far. Until now, every single one of these for everybody who was not completely up to date on crises, including the most severe ones such as the European debates, it has not convinced the French of 'empty chair' crisis in the 1960s or that of the British the real progress it made possible. It has, on the other rebate in the 1980s, had resulted from the shock of hand, comforted them in the belief that Europe is national interests. But with the French 'No' of May something distant and incomprehensible. Another dif29th and the Dutch one of June 1st, it is now the ficulty of this text is that it was presented as a constituEuropean project itself which is in crisis. Two founding tion, which it was not: it was not produced by a members of the European Community have expressed Constituent Assembly, and the member states had to their mistrust of Europe as it is being built. The major- ratify it separately. It also comprised a third part on ity of these two countries' citizens do not understand community policies, which had no reason to be in a very well where Europe is going. This is a crisis of constitution, and this helped to make it illegible. meaning. Europeans do not really know what they want to do together any more. As long as the driving force Even if the other member states ratify it, it will be behind the European project was to ensure peace, and impossible to have the French vote on it a second time. then democracy, the objectives and the direction were There is so far no 'plan B', which would allow us to clear. Now that both can be taken for granted, we need draft another text, on the horizon. It will therefore, I a new project if we are to give Europe a new meaning. think, be necessary to start new negotiations, probably after 2007, when France will have a new President of What have the French, and the Dutch after them, the Republic - in the hope that the latter will be interexpressed when they refused to ratify the Draft ested in the European Union. Constitutional Treaty? Some of them expressed their general rejection of Europe, be it for nationalist rea- It is up to us, in the meantime, to show that Europe can sons or because they reject the free-trade liberalism the give itself a new project. To do this, we must first of all European Union embodies to their eyes. People who give ourselves a significant European budget which will reject the European construction in principle have allow us to enact concrete projects. always existed; their opposition is long-standing, and has already been manifest in France in the vote for the The structure of this budget must be changed to allow Maastricht treaty. What is new in this vote is that many for future-oriented spendings. We must go on reducing staunch supporters of the European process have the sums allocated to the CAP, whose weight has voted against the Draft Constitutional Treaty. Some already gone down from 70% to 42% of the Union's have done so because they were against enlargement, budget. We must accept the principle of limiting export either the previous enlargement that led to the 25- grants, since they have a perverse effect on the country Europe, or the possible future accession of economies of developing countries. Conversely, the Turkey. Others have feared the free-trade liberal or sums invested in rural development and territorial plantechnocratic drift of the Union. The Bolkestein direc- ning and development will become more and more usetive, which was discussed during the French debate, has ful. And we must put a strong emphasis on research, as heightened the fears of social regression linked to it is most important for our economic future. Whatever Europe, even more so since few people understood the happens, Europe will not be able to exit this crisis as process that led to its elaboration. In other words, what long as it has not reached an agreement on the budget. has been rejected is a certain obscure, incomprehensi- This is our first and foremost emergency: if we cannot ble, non-democratic way to build Europe. Without a reach an agreement under the British presidency, it will project behind it, without a real desire to live together by Elisabeth Guigou French MP & former Justice & Europe Minister
T
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be a new blow for the Union. We must also increase this budget. Our Union will only be able to realise its potential if it gives itself an ambitious budget: the current limit at 1% of the GDP is insufficient if we want to both finance the common policies, particularly the cohesion policies, and successfully manage enlargement. If an agreement is reached on the budget, the EU will be successful again and we can use this impetus to launch a few concrete projects that can be immediately understood by Europeans, for instance the project of a digital library, which binds together culture and new technologies. But we can also think about renewable energies: they start to be competitive as the price of petrol goes up. Aside from research on the hydrogen motor, we should develop a way to stock up these energies and, once again, such a project can only take place at the Union's level, not at that of states or private companies. More generally, reinforced cooperations can also allow us to go further provided we see them not in terms of including or excluding such and such member state, but as defined by their content: this logic is what made the success of the Schengen and Euro projects. Priority goes to reinforced cooperation on economic and monetary union issues, so that the Eurogroup can have more weight in its dealings with the ECB. Finally, the Commission should encourage and finance
throughout the Union a number of debates on what Europeans want to do together as well as on the boundaries of the Union. Associations and European foundations have a central role to play in this matter. Indeed, we will not be able to have a real political union as long as the boundaries of the EU are not defined. The strong, federal, integrated political union I call for has only meaning inside fixed geographical boundaries. For me, the Balkans, and Turkey (if the conditions are met) are meant to be a part of it. On the other hand, for Ukraine, Moldavia and Belarus (once this country becomes a democracy), the question needs to be debated, since it raises the question of the relations between the EU and Russia. Reaching an agreement on these issues will take time, probably years, but it is a question we can no longer avoid. Defining the boundaries of the Union also implies to redefine our relationships with our Eastern and Southern neighbours that are not destined to access the EU (Russia, Southern Mediterranean countries). The question of boundaries must be addressed not in terms of a 'Fortress Europe', but through the offer of a renovated partnership, which would be at the same time more generous economically and more demanding in terms of democracy and the fight against corruption. With Southern Mediterranean countries, this partnership should function on an equal representation basis and aim at the eventual creation of a Mediterranean world community.
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Danger for Europe Garrelt Duin is a Member of the German Bundestag and Chairman of the Social Democratic Party of Germany in Lower Saxony Martin Schwanholz is a Member of the German Bundestag and a member of its Committee on the Affairs of the European Union With the assistance of Victoria Krummel
In the next few years the German Social Democracy must resolutely seek the further development of the social dimension of European integration.
‘T
ired of globalisation’ was the headline on the cover of The Economist dated 5 November 2005. This was a reflection of the fact that, in the more highly developed economies at least, the economic euphoria of recent years is visibly waning. The dream - of using new information and communications technologies, the free movement of goods and finance and the removal of tariff and non-tariff barriers to trade to enhance people's prosperity - is leaving an increasingly stale aftertaste. The processes universally known as globalisation are producing fear, not confidence, in people. In addition, more and more people in positions of political responsibility are becoming aware that the regulatory capacities of modern welfare states are subject to increasing restrictions. This need not have, but can clearly be seen to have, a negative impact on interaction among the forces in society in the individual member states of the European Union.
Garrelt Duin
Martin Schwanholz
as quite the opposite: the internal market is viewed as the vanguard, by some even as the Trojan horse, of intensifying competition." (Die Zeit, No. 43/2005) Neglect of social aspects puts the whole European Union project at risk
An analysis of the social dimension of the European integration process shows that the social question has not played an equal role in practical politics - no matter what may be claimed to the contrary. Whereas the strategy proclaimed at the outset was "peace through integration", this has since the 1970s/1980s been joined by the "economic success through integration" slogan. The challenges posed by the disappearance of the Blocs at the beginning of the 1990s again reinforced this approach. It is clear today that at least in one aspect the competition theorists have prevailed over the advocates of harmonisation insofar as the primacy of neoliberal thinking has indeed triumphed: economic catching-up must take priority over social catching-up. Exacerbated by the negative repercussions of globalisation and eastern enlargement, this inexcusable neglect One of the SPD's election pledges in the 2005 of the social dimension is now demanding its price. Bundestag election campaign was, as it says in the manifesto, to "manage in a humane way" the effects of This is demonstrated by the increasing failures of curglobalisation. In other words: politicians must seek to rent European policy: the outcome of the referenda on analyse the mechanisms of globalisation and find ways the constitution in the founding members France and to separate the positive effects from the negative ones. the Netherlands, the failure to reach agreement on the In this context, every measure must be examined in financial perspective at the June 2005 summit, the bitterms of its ability to improve people's opportunities in ter dispute over the Services Directive, or the decidedlife. ly low-key start of what had originally been heralded as a promising new orientation of the Lisbon agenda for The future of the European Union, too, is closely growth and employment. linked with the question of the extent to which it is able to understand the challenges and opportunities inher- On closer inspection, it becomes clear that the crisis the ent in globalisation and to turn them into practical pol- European Union is widely held to be in is the result not itics. Gerhard SchrĂśder is right when he warns: "All too least of the neglect of the social dimension at often people regard the regulations of the internal mar- European level. It is rooted in the citizens' fears of job ket not as a shield against expanding globalisation, but losses, a fall in prosperity and social exclusion, and their 75 Social Europe the journal of the european left December 2005
feeling that these fears are not being taken seriously by the acting political elites. The current debates we are having about the European Union are not so much concerned with fundamental issues of political integration, but rather with the sense and impact of European economic integration against the backdrop of globalisation. Thus the decisive concerns of those who opposed the constitution were not so much to do with the treaty's envisaged changes to the institutional make-up of the European Union or the need for a Common Foreign and Security Policy and for joint solutions, for instance on immigration policy and combating terrorism. Rather, the rejection of the constitution was overwhelmingly a reflection of the loss of confidence in the mantra-like appeals for liberalisation and promises of prosperity constantly repeated by the political leaders. Whereas the citizens' latent disaffection with Europe had previously manifested itself most obviously in the ongoing decline in turn-out for elections to the European Parliament, there is now the danger of open resistance to policies made in Brussels and ultimately of the erosion of the entire European project. In the fierce debates on the Services Directive, the Commission failed to recognise and to develop solutions to the potential undesirable social and ecological repercussions of the liberalisation it favoured on the basis of the country-of-origin principle. Here, the answer lies neither in the forced opening of the services market nor in the closure of the domestic market to the allegedly cheap Polish plumber supposedly working to lower standards, to use a favourite stereotype of the critics of this directive. In member states with high unemployment rates, such as Germany and France, attitudes to the new Central and Eastern European members are shaped by the expectation of further increasing pressure on the domestic labour markets. The perceived threat to welfare and livelihoods is a further factor. In addition, there is the unending stream of reports of companies relocating to Central and Eastern Europe despite above-average revenues (e.g. Otis), the breaking-up of well-placed companies by financial investors (e.g. Grohe), waves of redundancies despite high profits (e.g. Deutsche Post) and company closures to remove competitors (e.g. NorskHydro). Against this background, statements about how the increase in market-motivated direct investment by German companies and financial institutions in other member states of the European Union helps to secure jobs here at home too are not really much comfort. For many decades the European integration project derived its legitimacy from securing and increasing the prosperity which it gave the citizens of its member states. Against the backdrop of globalisation and the resulting increased pressure of competition on the European economies, this source of legitimacy is vanishing. In a European Union in which over 19 million
people are without jobs and whose states are demanding welfare and financial cutbacks from their citizens, the people rightly expect answers and solutions. In the worst case the European Union is perceived as the vanguard of a globalisation whose sole objective is to enforce pure market economics according to the neoliberal creed. On the other hand, there is simultaneously the idea that Europe should be a bulwark providing protection against the effects of globalisation. Both views are misleading. For in the best case the European Union will develop into an area in which the advantages of globalisation benefit everyone and the negative aspects are countered with safeguard mechanisms. Challenges to a social democratic European policy The challenge to social democratic policy in Europe must therefore be: "shape globalisation in a social way". The task of policy-makers is to regulate the creation and distribution of potential profits so as to reach all sections of the population if at all possible. The negative repercussions of globalisation, such as job insecurity, the increased risk of poverty and the risk of social exclusion, are after all the result not of the process per se, but of the lack of an international regulatory framework and the weakening of national regulatory mechanisms. Accordingly, the framework conditions must at last be shaped at national, European and global level. To this end, social democracy must establish itself in the member states and at European level as a force which does not sacrifice social solidarity to a blind race for competitiveness. It must tackle the question of how to protect those people who are among the losers under globalisation, and of what demands must be made of these people and how they can be assisted in their individual efforts to adapt. At the same time, it cannot and must not join the ranks of left- and rightwing deniers of reality who propagate protectionism, closed borders and renationalisation as suitable instruments to protect against the negative effects of globalisation. This does not mean that the social security systems in the member states have to be harmonised. The EC Treaty rightly denies the European Union the necessary competences, and given the varying framework conditions and traditions, it would be hard to do so anyway. Nevertheless, social democrats must continue to fight for minimum welfare standards in Europe. The Agency Workers' Directive and the Working Time Directive must reflect this. Nor has the last word been spoken on the Services Directive, even if the advocates of the country-of-origin principle have just gained a victory over the social democrat rapporteur in the lead Internal Market Committee of the European Parliament. With regard to the Lisbon strategy, it remains to be seen whether Commission President Barroso will keep his word as regards his vehement denial that the new Lisbon agenda prioritises competitiveness at the expense of the social dimension. Like Poul Nyrup Rasmussen in the most recent edition of "Social
76 Social Europe the journal of the european left December 2005
Europe", we urge that the European social models, aimed at social compensation, be recognised as an advantage of Europe as a business location. The Lisbon strategy certainly does not advocate the end of the welfare state. On the contrary, it calls for it to be modernised as an efficient, proactive state. It must ensure that its citizens have equal access to the best possible education and can participate in lifelong learning. It must actively promote research and development with huge amounts of investment. It must create the environment not only for more jobs, but for better jobs. Concepts such as "Flexicurity", which has been successfully implemented in Denmark, and which combine high demands on workers' flexibility and initiative with a high level of social security, may serve as models. Rather than unhelpful promises of full employment, frequently found in the Commission's publications, social democratic policies must reveal ways to integrate long-term unemployed with no hope of finding jobs liable to social security contributions into society, for instance through community employment. Social democratic policy on Europe must be vigorously committed to bringing about an end to the ruinous tax-cutting competition which has been intensified by the accession of countries such as Slovakia and Estonia with their low flat-tax rates. The harmonisation of the assessment basis for company taxation and the introduction of minimum tax rates belong on the European agenda. If countries with low tax rates also benefit from European structural and regional policy funding, that is an injustice for which there can be no convincing justification and which ultimately will seriously endanger the fragile intra-European solidarity. This approach must also be reflected in the new rules on state aids and on the structural funds. For instance, there should be no possibility of granting assistance to companies which relocate in and outside the European Union or which threaten to do so. Relocations must not be subsidised. The aim must be to work with the trade unions to prevent workers from being played off against each other within the European Union. This is a major challenge for the trade unions and for their associations at European level. To date, the Europeanisation of the trade unions has not been a great success. The trade unions in the more highly developed economies in particular must at last realise that a purely national viewpoint will in the end weaken them. Specifically, this means that there must be a marked increase in funding on the part of the trade unions. A proactive campaign to establish the social responsibility of policy-makers and the business sector must continue, across the EU. The social dialogue with the European employers' associations, which has been ongoing since 1985 but has had only rudimentary success so far, could be one of the instruments for this. The enforcement of high standards regarding employee participation in Europe-wide companies points in the right direction.
cial markets. The total volume of worldwide transactions is 1.9 trillion US dollars per day of trading. Approximately 3 to 5 percent of this refers to trade in goods and services. The rest is purely speculative. International agreements must at last be concluded on taxing purely speculative financial transfers in the country of origin. The modern banking sector's information and communications systems have long provided the means for this. Further, the European Union can play a pioneering role and create transparency regarding hedge funds and private equity funds. It would be conceivable, for example, to prescribe equity quotas for these funds in order to make it more difficult for them to leverage company takeovers. The European Union, given its responsibility for the free movement of capital, would certainly have the possibility of legislating in this field, for instance with a directive on the control of private equity funds. At the European level the negotiations on the mediumterm EU budget offer a chance to exert pressure. For example, sometime in the foreseeable future at least, all European subsidies need to be reviewed, including the 2002 compromise on the Common Agricultural Policy. The effect of the cohesion and structural funds must be critically examined. Not because there is a lack of willingness to show solidarity with the structurally weakest regions, but because doubts about the efficiency of redistribution at European level are permissible. The globalisation fund again suggested by Barroso suffers, not only from fundamental problems with implementation, but also from the fact that its volume - 500 million euro per year - is much too small to have any really relevant economic impact, as well as placing an additional burden on net contributors. The European Union's strength does not lie in the creation of ever more new funds or in the redistribution of ever larger amounts of money. Instead, the Community should take more action in the regulatory sphere, while keeping in mind the social dimension of the single market. In light of its existing legislative competences and the open method of coordination in the field of employment and social policy, it has the necessary instruments at its disposal. What the Commission and the national governments lack, in contrast to the European Parliament, is the political will. Social democratic policy on Europe will have to do much more here in the future. Europe as an opportunity
Only a transnational power with the stature of the European Union can influence the contours and course of globalisation. There is no other association of states in the world in which economic integration has been followed by such a high degree of political integration. The unique supranational framework for action and the unparalleled close cooperation among member states in all policy spheres offer ideal conditions for shaping the globalisation process in a social way and gearing it towards social inclusion, as demanded at global level in Another field requiring action is the international finan- the February 2004 report of the ILO World 77 Social Europe the journal of the european left December 2005
Commission on the Social Dimension of Globalisation. Otherwise there is, in the long term, the risk of social unrest even on this most prosperous continent. Recent events in the French suburbs have given us a foretaste. Europe must persuade its citizens that it is better equipped to meet the challenges of globalisation than its individual member states. European integration can only be successfully continued if its social dimension is at last imbued with life and dynamism. Herein lie both the responsibility of social democratic European policy and its big chance. And herein lies also the chance for the European Union.
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A New Social Europe When a Latvian seaman works in Britain, can employers pay him Latvian wages with Latvian conditions? A dentist from Poland now earns £50,000 in England compared to £8,000 back home. We have got a lot of The UK Presidency regards the future of a Social difficult work in progress on the social agenda - the Europe as a vital debate - which is why we made it a key Working Time Directive, the Services Directive. part (for the first time) of the Informal Heads of Recently the former Prime Minister of Poland - Marek Government meeting - before which we consulted the Belka - said to me that the former Communist counsocial partners at a Tripartite Social Summit in London. tries are in many ways more free enterprise than the former West - and they find arguments about social I was recently in Brussels, speaking at the Summit com- mobility more of an ideological debate than a matter of memorating the 20th anniversary of the social dialogue, practicalities. which was begun at Val Duchesse by Jacques Delors. In the 20 years since then, the iron curtain has been torn As well as the challenge and opportunity of enlargedown - and the East and West have come together in ment Europeans also face rapid and unprecedented an enlarged European Union of 25 nations, embracing change in the global economy. There has been tremen450 million citizens, with widely different economic, dous growth in China, who are now members of the social, cultural and political traditions. Twenty years World Trade Organisation, and are applying to the EU ago, there were just 10 member states of the EU, and it for market economy status. And there has been remarkwas easier to pursue a Europe based on conformity and able economic progress in India, which is producing convergence. A single currency, a single 250,000 science and IT graduates alone market, a single set of social standards - all every year. China and India are competthis was easier to plan and deliver, though ing in high value goods, demanding of course there were still huge difficulties. advanced skills and technology. By John Prescott Deputy Prime Minister of the United Kingdom
But today the issues facing Europe are far more complex and will not respond to a one-size-fits-all approach. Our policies must cope with uneven levels of growth, prosperity, social structures and social justice within member states and across the European Union. The richest EU region by GDP per head - Inner London - is nearly 10 times richer than the poorest region which is in Poland. Average incomes in the Länder of Eastern Germany are still 40% below incomes in Western Germany - 16 years after reunification. And in England, there is a gap in GDP of £29 billion between our Northern and Southern regions, the result of decades of industrial change. John Monks has pointed out that "Enlargement is further increasing the diversity within and among systems." We need to take that into account where we agree we need Europe-wide solutions to competitiveness and social justice challenges. John has pointed out that a huge single European market "will be characterised by the free movement of capital, of goods, of services, and after the transitional arrangements lapse, of workers too". And he asks some challenging questions - "How will workers who use their right to free movement be treated outside their home country? Which labour laws affect workers moving countries, and under which agreements, do people operate? And how do companies behave when operating outside their home environment?"
In the face of this remarkable change, we cannot be passive bystanders, waiting for the world to give us a break - because it will not. And, with 450 million people, and nearly a fifth of the world economy, we should have the confidence to compete. We have got the scale, the expertise, the ability and the culture to succeed. The European Union can play a major role in shaping the world and adjusting to its challenges. We can respond more effectively to world economic change through the strength of our common endeavour. In doing so, we must reject the false idea that we have to choose between a free market Europe and a Social Europe which is somehow intrinsically economically unsustainable. For socialists, the European vision must include the creation of full employment. That means we have to maximise economic prosperity and social justice. They are 2 sides of the same coin and together they lead us to full employment. That is the position of the British Labour Government. Europe's economic and social progress in the last 150 years has been built on increasing value, inventing technology, and investing in skills so that we can afford to offer our people a better quality of life. We cannot succeed in the future by driving wages, standards and security down to the lowest global levels. A sweatshop Europe is not the answer to a post-industrial world. But neither can we sit down and let economic change wash over us, powerless to respond to global change
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because we cannot face up to the reforms which are necessary. For example, we should agree a European Union budget that gives a greater priority to investment which strengthens Europe's ability to meet global economic change. It cannot be right that 3 billion people live on less than $2 a day - while each European cow gets $2.50 a day in subsidy. I would rather spend less money on cows and invest more in people. And while the priority should be how to deal with the science, skills and infrastructure challenges of global change, instead 55 per cent of the total European budget in 2013 will be spent either on agriculture or on subsidies for the richest countries of the European Union. As Tony Blair said to the European Parliament in June, Europe needs a modern financial framework to help our cities and regions compete in a rapidly changing global economy - this is especially true for the 10 new member states of the European Union. The Lisbon agenda showed us what we need to do. We need to invest in full employment, in knowledge, research and development; in innovation; and in education and training. But we all know that our collective response to the Lisbon agenda for jobs and growth is currently not expected to deliver what we have promised. Instead of moving towards the extra 20 million jobs to be created by 2010 under the Lisbon agenda, Europe still has 20 million people unemployed. According to Wim Kok's report, for the Lisbon agenda to work, we need to deliver on the commitments we have agreed to - for example in the mid-term review of Lisbon last year. That means action at the European level - complete the Single Market, reform product and capital markets. And actions by member states - taking the difficult decisions on labour market and social policy reform, taking account of the national context. The recent report by Andre Sapir for the ECOFIN Ministerial Meeting said many of the current problems of Europe stem from labour market and social policies which suited the social conditions of the 1950's and 1960's - but which governments have been unwilling, or unable, to reform. Professor Sapir said that reforming these labour and social market policies at the national level will help turn globalisation from a threat to more of an opportunity - enabling our economies to be flexible enough to compete effectively, without losing the social standards which we all value. But, in getting to grips with the Lisbon agenda, we have to avoid the trap of thinking that common values, and common standards, of social justice and economic progress mean the same policies and the same solutions right across Europe. The Sapir report said that the idea of a single European social model was "misleading," reminding us that labour market and social reform policies are determined at the national level. Professor Sapir notes 4 European social models - the Nordic, Anglo-Saxon, Mediterranean and the Continental - and concludes that in his view the Nordic and Anglo-Saxon models are sustainable.
We in Britain certainly resent the accusation from some quarters - even by some on the Left in Europe - that our social model is an unregulated, free market Thatcherite Model. That is absolute rubbish. It is not just inaccurate, it is insulting. We remember the 1960's and 70's, when Labour Governments were unable to secure long term stability and full employment because of failed government intervention, nationalisation of industries, protectionism, insufficient investment in public services, which ended up in a million unemployed, defeat at the ballot box and 18 years of Thatcherite government. And it was the Thatcher Model that rejected the very concept of society, created mass unemployment of over 3 million people in a boom bust economy, and massively reduced investment in our public services, with millions thrown into poverty. That Thatcherite Model failed Britain and was totally rejected by the electorate. Labour was elected to rebuild the British social model. We have created record levels of employment through the largest jobs programme in Europe virtually abolished long term youth unemployment increased investment in our public services by more than any other European country in the past 5 years introduced Britain's first minimum wage regenerated our cities lifted almost a million children out of poverty, and 2 million pensioners out of acute hardship and we have embarked on the most radical extension of childcare, maternity and paternity rights in our country's history. Our approach has been endorsed by the British electorate in 3 massive general election victories. Yes, it has sometimes been controversial over in Brussels, for example in the case of the Working Time Directive - though I note that those economies that have intervened to control working hours have actually created fewer jobs than those with greater flexibilities. Our model has done a lot since 1997 in Britain to create jobs, prosperity and social justice in the UK. It has worked for us, but our approach may not always work elsewhere. Each country has to make choices on these issues. We start from different places and there are various ways of achieving the objective of economic prosperity and social justice. But with 20 million unemployed, nearly half of them more for than a year; productivity rates falling behind; underinvestment in skills, research and development; one thing is clear: the people of Europe do not want an endless debate on which social model works best. They want a job. They want the skills to compete. They want equality, flexibility and choice in the workplace. And they want a society which offers them security and respect. So today our challenge is ensuring that our common
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values of economic prosperity and social progress deliver full employment, social convergence, sustainable growth, decent public services, a better quality of life, in the face of remorseless, relentless global competition. This is our common ambition - but we should be flexible and realistic about how we get there. We have different social models but common values of economic prosperity and social justice - protecting our citizens, tackling deprivation and disadvantage, and involving people in the decisions which affect their lives. We know that, without sufficient growth in our economies, we cannot achieve our social justice objectives. And without convincing our people that we are committed to social justice, we will not get them to face the changes needed to deliver economic growth. Yes, we want a Social Europe, but we want a Social Europe that works. So let us bring our social models into the 21st century and help our people live successfully in a global economy. The debate about the future of the European social model is not about abandoning the principles we hold dear. We can increase employment, improve productivity, invest in skills and deliver social justice for all our people. We know how to do it - let us implement the Lisbon agenda to increase jobs and growth. And let us get our economic framework right so that we promote stability, flexibility and enterprise. As socialists, we are determined to deliver full employment, and making that commitment a reality must be at the heart of everything we do.
81 Social Europe the journal of the european left December 2005
What can the European left learn from New Labour? Neal Lawson Chairman of Compass
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ew Labour has become the most formidable election winning machine on the left in Europe with the exception of the Swedes. It has done so against a Conservative Party widely held to be 'the greatest election winning machine in history'. Three straight victories, the first two off the Richter scale of landslides - the last a healthy 67 seat majority. Along the way it has nurtured one of the strongest economies in Europe, ploughed record investment into schools and hospitals, introduced a minimum wage and a new constitutional settlement that has seen powers devolved to Scotland, Wales and London. What is there not to learn? Before an attempt is made to answer the question it is probably helpful to explain where I am coming from. I was an early and fulsome advocate of all things New Labour. I came to this view after a familiar journey for many in the Labour Party from a largely amorphous and romantic left position that became defined as the 'soft' left to differentiate it from 'hard' left Neanderthals. In the 1980s this soft left were Kinnockites, in the 1990s many, but not all, became Blairites. The driving force became a desperate desire to win. After a fourth election defeat in 1992 those still on this journey would do pretty much anything to win. Another defeat would have left Labour broken for good. As it turned out, the 1992 election was a good one to lose. The Tories collapsed under the twin pressures of sleaze and economic incompetence after Black Wednesday when Britain crashed out of the ERM. So Tony Blair inherited two things; first a party that would do anything he asked of it such was the overwhelming desire to get back into office and second a Conservative Party that itself had become a broken electoral force. Tony Blair is a uniquely gifted political leader whose abilities have seen him overcome many seemingly impossible odds. But the fact is that any half decent Labour leader would have won the 1997 general election.
That was then. Now I believe there are fundamental lessons to be learnt about the systematic failings of New Labour and that unless these are learnt quickly the party's period in office will be defined by Iraq, it will fail to reach anything like the potential and hope that was invested in it to shift Britain to the left in the way Thatcher shifted it to the right, even more worrying it will leave behind a more unequal and less democratic country and the Labour Party itself will be left in the same state as the Tories in 1997 - out of office with a rump membership incapable of renewing itself. The hopes and dreams of a generation of clever and ambitious left politicians will have been squandered in the face of an electorate that will rightly claim that they had provided the mandate and the money for more. So why is this a possible future melt-down scenario for New Labour and therefore what lessons can be learnt by sister parties? To understand we have to go back to get to grips with what makes New Labour tick before assessing the problems of Labour's period in office to date. Understanding New Labour There are two abiding influences on the direction and behaviour of New Labour - the specific conditions of its creation and its genesis as the latest incarnation of Labourism. The first relates to the influence of Thatcherism, the second to Labour's original birth at the hands of the unions and the centralising and statist forces which were then forming the Zeitgeist. The combination of the two has skewed New Labour's ability to establish and renew itself in the tradition of European social democracy. New Labour was born in an era of supreme political pessimism that outweighed the profound optimism of its first successful election night on 1st May 1997. On that glorious early summer morning - when the scale of victory became apparent - anything it seemed was possible. Sadly though the die had already been cast. The points of continuity with Thatcherism where to prove to be more telling than the points of rupture. Not only had Labour been in the wilderness throughout the 1980s but in that period had witnessed the failure of the French socialists to go it alone and then seen the remnants of the 'hard' left crumble with the Wall in 1989. Also during that time Democrat hopefuls in the
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USA had been not just vanquished but humiliated at centralised view of change-making and governance. the hands of a rampant Republican party. The Labour Party is tribal, often arrogant, statist and centralising. Perhaps the best term for this 'Labourism' By the mid 1990s Labour was not just prepared to sell is parliamentary Leninism. Its early separation from its soul to get elected it had forgotten what its soul was the Liberals and the eclipsing of once strong cooperafor. In Britain the forces of globalisation combined tive and mutual traditions meant that by the late twenwith the march of Thatcherism which had torn down tieth century is was out of step with a more decenthe remnants of post-war collectivism through privati- tralised and less deferential world. sation and the crushing of corporatism - or as we would now say social partnership. In this barren land Sadly, despite early promise, New Labour failed to rid the left was not just desperate to win but had lost the itself of this Labourist culture and even deepened it confidence and wherewithal to believe a left project because of an anxiety that so few in the party really worthy of the name was still feasible. Some doubted understood what the 'project' was all about and therewhether it is was even desirable. fore could not be trusted. So powers were centralised even more tightly around the Prime Ministers office New Labour became not simply the continuation of who became in effect not just PM but Secretary of Sate Thatcherism - but in effect Thatcherism with a human for Education and Foreign Secretary. Gordon Brown face. The limited break with neo-liberalism, described ran not just the Treasury but pensions and transport. brilliantly by Stuart Hall (in the Soundings article Turf battles have been fought out over trade and indusLabour's Double Shuffle, Issue 24, Autumn 2003, try and health. Targets, control and initiatives from the Lawrence and Wishart) and by Alan Finalyson (Making centre have dominated over empowered local governSense of New Labour, 2003, Lawrence and Wishart) ment despite the more consistent funding councils was based on Thatcherism's inability to mobilise the have enjoyed. country in the face of the global market challenge. She was a moderniser but her ideology stopped her from Finally though, New Labour is still a 'Labour Party'. It modernising far enough. The project for New Labour is paid for by the unions and gains legitimacy from its was to use the infrastructure of the state to better equip members (although a diminishing number of them). individuals to survive and thrive in a global economy. New Labour has had to respond to the demands of So the mantra of 'education, education, education' was trade unionists and activists. Hence policies like the central because this was the means by which we would minimum wage, tax credits and employment protection have the ability to compete. Meanwhile the welfare sys- legislation - although nothing is allowed to stand in the tem would be re-oriented to make it compatible with way of ultimate control from the centre of re-orientathe demands of global markets - becoming both a sys- tion to the demands of the global economy. tem to bring people back into work while being opened up to commercial forces that would make it more 'effi- So New Labour is a strange combination of enlightcient' and provide a new market for business to earn ened neo-liberalism, old Labourism and still live social profits. Crucially the state would no longer be the safe- democratic impulses towards equality. It makes for a ty net, the support structure for the needy and unfortu- rich mixture which naturally leaves most commentanate - but the agency to prepare people physically and tors, party activists and European partners reeling with emotionally for the rigours of market competition. confusion and explains the emphasis on media 'spin' to paper over the very deep cracks and inconsistencies at The speech that Tony Blair made to the Labour confer- the heart of the project. ence in Brighton in September this year was the most coherent restatement of this active use of the state to A glass half full or half empty? enable Britain and its people to cope with the demands of the global economy. Thatcherism would never have Defenders of New Labour, and there are still some, used the state in this interventionist way - hidebound by will of course point to the many successes of the ideology the market would never have been given the administration - most of which I have already mensupport it needed to succeed. This was the New tioned. It is not to say that life under a Labour governLabour or Neo-Labour project. ment is worse than it would have been if the Tories had won. It is to say that the failure to break with either If New Labour was one response to the forces of cap- Labourism or Thatcherism confines New Labour to a italist development what it failed to respond to was its past, present and future that it is difficult for other own 'Labourist' history and character. The British social democrats to learn effective lessons from. If the Labour Party is unique amongst the European left in definition of a successful social democratic governthat is was a creation of the trade union movement. Its ment is the creation of a more equal and more demofocus was therefore always the improvement of wage cratic society then New Labour fails on both counts. earners conditions within the economic system rather The government's own figures show that Britain is a than its transformation to an alternative society. This more unequal country than it was in 1997. Turnout at alongside with the strong tradition of paternalistic general elections has plummeted to around 60%. This Fabiansim and Britain's heavy and concentrated indus- is not of course the only measure of the democratic trialisation combined to create a very top down and health of a country and turnout is falling across the 83 Social Europe the journal of the european left December 2005
world - just nowhere as fast as in Britain under New Labour. The belief in formal politics as a means to make a better world is shrinking rapidly just when the demands for democratic action are growing. In essence the reasons for failure go back to the creation of New Labour and the unwillingness to differentiate itself sufficiently with Thatcherism or do politics differently from the old top-down centralism of the past. John Prescott, Labour's Deputy Leader, once described the intent of the New Labour mission with great succinctness and clarity as 'traditional values in a modern setting'. Because of the powerful grip of Labourism and Thatcherism New Labour is neither sufficiently true to its traditional values of equality, liberty and solidarity nor is it facing up to the reality of its modern setting which demands politics is about winning power to give it away and trusting the people.
EU has yielded little by way of a blueprint for the future. The limitations and contradications of New Labour is rooted in inversion of social democracy. Social democracy was always the social, economic and political means by which people could make themselves the master of the market. Clearly this required all sorts of compromises, negotiations, failures, set backs and victories. But the intent was always clear - labour was to mange capitalism for social ends. New Labour inverts this principle. The forces of global capitalism, they would have it, are impossible for us to confront, regulate, steer or face down. Instead, against this unstoppable and benign force the best we can do is equip our people by making them more competitive than the labour forces of other countries. So people become not the masters of the market but their slaves by meeting the demands of global markets. Too often this approach leads to a race to the bottom as workers at Gate Gourmet found this summer when they were all sacked in an attempt to bring in low wage workers from Eastern Europe. The New Labour claim that social justice can only be secured by economic efficiency is very often wrong.
The illegitimacy of the war in Iraq and the failure to bring order to a country hamstrung by extremists will dog New Labour until a resolution to the emerging civil war is found. Most people in Britain now believe that any resolution must be predicated on the withdrawal of troops. But if Iraq serves as a lesson of international interventionist failure there are other two other big lessons to be learnt by the European left from New It is this failure of imagination and social democratic Labour's period in office. intent that has seen Labour's membership plummeting to fewer than 200,000, which means that over half of The first is that political leadership is about just that - the membership have left since 1997 and leaves the leadership. Even in the most difficult circumstances party perilously close to the point of collapse. the left, which by definition must always be dissatisfied and eager to usher in a better world, must create the If not New Labour then what? conditions in which it can overcome the forces of reaction and not just appease them. Two issues stand out While the future of the left rests on the values of the with regard to New Labour. The first is redistribution. past it will not be built on the methods of the past. Gordon Brown has channelled funds in record New Labour was one response to the challenge of left amounts to the poor. But is has been achieved by modernisation. Unfortunately in too many respect it stealth and the complexity of the tax credit system. was the wrong response. If Labour's recent history Only once for the 2001 election campaign did Labour was defined by a prioritisation of principle over power openly campaign for increased taxes - and only then in in the 1980s, the reverse is proving to be the case now. an opaque fashion. New Labour has never attempted to The challenge is to find a sustainable point of balance challenge and change the public consensus established between power and principle by rejecting the sterile under Thatcher that people rather than the state could extremes of both. New Labour's electorate strategy best spend their money. It places a glass ceiling on our was to reconnect with the centre-ground of Britain but aspirations to attempt further redistribution - despite unlike Thatcherism was never prepared to drag it to a the fact that we have not redistributed at a rate to stop new centre based this time on left beliefs. As discussed the widening gap between rich and poor. above, for New Labour this was neither feasible nor for some desirable. There are two gambles that can be The second example of timidity is Europe. Blair is an made by the left - that progress can be made by stealth, instinctive cultural European and always saw the virtues through centralisation and taking wearing the cloths of of a single currency. At the beginning of his first term your opponent or the progressive gamble that given he could have taken Britain into the single currency but time, space and support people will make more decialways ran scared of the euro-sceptic national press. sions that are just, fair and cooperative rather than selfThis shift away from a central belief has continued ish and individualistic. New Labour bet heavily on the throughout its years in office leaving Labour talking former. about opt-outs and red-lines - and not how Europe can be used as a vehicle for social democratic advance. A modern left has to be established for the principles New Labour has effectively shut the door for good on of equality, liberty and solidarity. But the means must the single currency and was relieved that the constitu- adapt and where necessary subvert the cultural and ecotion bit the dust earlier this year. Its Presidency of the nomic forces of globalisation and welcome that 84 Social Europe the journal of the european left December 2005
process because it provides the ultimate level playing field in which cowboy capitalism cannot flee to find fresh workers to exploit as labour markets increasingly become regulated. In a world increasingly defined by decentralisation and the end of deference a new left must place itself squarely on the terrain of autonomy through self-management. This demands the creation of new forms of collectivism and equality not as and end in itself but a means to achieve meaningful freedom. It is a social democracy that places at least as much emphasis on the democracy side of the equation as the social side but recognises the symbiosis between the two. I genuinely and perhaps naively believed New Labour was going to be a social democratic force that was pro Europe, in favour of a new politics, dedicated to the development of community over markets, alive to the potential of social partnership, as tough on the causes of crime as the crime itself and continually prepared to intervene to stop the excesses of capitalism as its was with the early utilities tax. These are all the things it said it was going to be. I was wrong to believe it. But the point is not to feel betrayed as this just passes the blame onto leaders. The lesson for the democratic left in Britain and across Europe is not oppositionalism but instead to assemble the ideas and polices and build the organisations and alliances to ensure leaders are more likely to take us in the direction of a modern social democracy. Neal Lawson is chair of the democratic left pressure group Compass (www.compassonline.org.uk) which has recently published a pamphlet on the virtues of the Swedish model of social democracy and is currently undertaking a year long process of writing a manifesto for the democratic left. He is also editor of the Labour journal Renewal (www.renewal.org.uk) - the latest issue of which focuses on the future of a left orientated Europe. He can be contacted at neal@compassonline.org.uk and would like to hear from European politicians and activists who may share the focus of Compass on building a radical social democracy.
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86 Social Europe the journal of the european left December 2005
A New Industrial Policy for Europe by GĂźnter Verheugen EU Commissioner for Enterprise & Industry The challenges for industrial policy
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he challenges for industrial policy are clear: first, globalisation is here and will stay. The EU cannot turn back the clock. Global production networks are reducing costs and increasing flexibility. In particular, the Asian emerging market economies are today taking their place and fully participate in global markets. The increasing internationalisation offers enormous opportunities, but naturally also intensified competition for the EU as a location for investment, production, and R&D spending. Of course, the path to globalisation is not easy. Adjustment to structural change means managing social burdens and coping with job losses in the regions
The EU does not believe in the fairy tale of a so-called ‘Europe of services’ affected through the creation of new and lasting production and employment opportunities, which is easier said than done. However, on the whole, globalisation brings strong benefits for Europe. As the EU is the biggest trading bloc in the world, a large proportion of working places depends on the EU`s trade performance and open markets. Secondly, the nature of manufacturing production continues to change profoundly. Fast technological changes are taking place across the globe. In many industries, traditional manufacturing methods of mass production are being replaced by more adaptable production runs, using intelligent and multi-task production equipment. Global production networks are putting a premium on reducing costs and increasing flexibility. In spite of these challenges, there are good reasons to be confident about EU manufacturing industry's place in the world and its future. Commission analyses show that EU industry has not by and far performed as badly as often publicly presumed. Instead, a majority of individual EU manufacturing sectors have performed well in comparison with their counterparts in other industrialised economies. Important EU manufacturing sectors such as pharmaceuticals, the mechanical engineering, chemicals, and motor vehicles sectors have revealed a substantial comparative advantage and record
trade surpluses against the rest of the world. Nevertheless, there is no reason to become complacent. The industrial structure of the EU economy as a whole makes it less than ideally positioned to face the ongoing globalisation process. There is clearly a productivity growth differential between the EU and other industrialised economies, particularly the US. To some extent this is due to an industrial composition effect: the ICT-producing sector is one of the growth engines of the US economy, while in the EU its share of the whole economy is still bigger as its growth. Another worrying factor is that EU trade is still concentrated on sectors with medium-high technologies and low to intermediate labour skills. That makes the EU particularly vulnerable to the competition with China, Asia and other emerging countries. Moreover there is also increasing international competition for R&D spending. Today the EU is not competitive enough as a location for research. Both the US and Japan are attracting more international R&D expenditure than the EU. In addition further countries such as China and India are becoming important locations for new R&D investments. The US has also been more successful than the EU in attracting researchers and highly skilled staff. These trends are a matter of considerable concern in so far as they lead to a loss of R&D investment and researchers from the EU, which puts sustainable growth and jobs in the EU at risk. The New Industrial Policy How should the EU react to these challenges and concerns? The EU does not believe in the fairy tale of a socalled 'Europe of services' since the growing business service sector is based on industry and would look bad without. Both working places in industry and in services would be endangered if the EU does not care for a strong and competitive European industry. Therefore the European answer is clear: a competitive Europe, providing sustainable growth and more and better jobs needs a sound industry that is competitive. While accepting competition as the rule of the game of a market economy that has been established globally, the EU has to strive towards excellence as the only road to win the game. To that end the Commission has suggested to pursuit a comprehensive, coherent and modern industrial policy, which is an important pillar in the new Partnership for Growth and Jobs. Based on a detailed analysis of 27 manufacturing sectors the Commission has suggested implementing a tailor made industrial policy that takes into account the particularities of the sectors as well as problems of horizontal nature. Therefore the Commission will launch a number of sector initiatives, for sectors such as pharmaceuticals, defence, space or informationtechnologies and chemicals to discuss the challenges
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and framework conditions for sustainable growth and employment for the coming 10 to 15 years together with the main stakeholders, industry, trade unions, the member countries and the European Parliament, in order to anticipate threats and to elaborate 'a master plan' to improve the general framework conditions for the relevant sector. Since some challenges however are common to many sectors such issues will be addressed on a cross-sectoral base. Intellectual property rights (IPR) are a key issue for many sectors, some of them related to the regulatory framework (EU Patent), others in awareness building for SMEs or in the fight against counterfeiting and piracy. Therefore an initiative for the better protection of IPR will be launched. The interaction of energy and environmental policies (energy prices, energyefficiency, and climate change) is also a priority for many industrial sectors, which the Commission wants to address actively through creating a high-level group for the 'competitiveness, energy and environment'. It has also turned out that the EU must become more active towards important trade partners such as the US and China and work on further improving market access for European industry. As the textile crisis showed, it would be irresponsible not to look rationally into the real competitiveness situation of an industry and to retain a wrong sense of security. Globalisation does not call for 'business as usual' but for structural change and constant innovation as the promising way to success. In this context the Commission has also analysed a phenomenon of concern to many people: the issue of relocation. As a result there seems to be a gap between perception and reality. Generally the EU is not substantially losing to cheap wage countries such as India or China and the US and the European markets are attractive places for investment in industry. After all manufacturing has been involved in the process of globalisation for many decades, with the overwhelming majority of manufacturing foreign direct investment going to industrialised countries. The United States alone receives nearly one third of EU manufacturing outflows. The EU-15 outflows towards the new member states have stabilised at about 13% of total EU-15 FDI outflows. Investment flows towards China have certainly increased a great deal since the 1999-2000s, but represented in 2003 only 3.8% of all outflows. The share of India is even lower. Another perception, that the increasing internationalisation costs our industry a substantial numbers of jobs, does not match the findings of numerous studies either. One of them showed that relocation and outsourcing represent 7.2% of planned job reductions in total and 8% of cases of restructuring. In short, relocation does not seem to be the job killer number one. It is the permanent process of restructuring that affects employment, since job losses and job creation do not happen at the same time, at the same place and in the same area where the employment situation has been negatively affected. Undeniably, structural change can pose local and secto-
ral problems and particularly impact upon lower skilled workers that should be helped to cope with the consequences of industrial restructuring. These costs are very often concentrated in some sectors and some regions. This is for example the case of the fashion and design industries. The production in these sectors remaining in the EU has refocused itself on highervalue and higher quality products, having undergone a largely successful process of structural adjustment. The group of sectors concerned with structural changes also includes some parts of the food, machinery, and electrical equipment industries, some non-ferrous metals industries, and business services. The EU has its role to play and to assist in coping with negative effects of structural change. Instead of simply accompanying structural change the anticipation of challenges and threats ahead becomes increasingly important to avoid dramatic situations. To that end the EU proposes amongst other issues a more stringent use of EU structure to foster innovation and competitiveness. In this context, the Commission has also proposed a so-called globalisation fund at the Hampton Court informal European Summit, which was taken up in the UK proposal for the next financial framework 2007-2013. Last but not least better regulation matters. To make the EU the most competitive place for jobs and investment, a modern legislation is needed at all levels, which is as transparent and easy to apply as possible and which avoids unnecessary bureaucracy. Better legislation will be an important contribution for improving the framework conditions for many sectors of the European industry and the Commission has already tabled an ambitious working programme on the simplification of existing legislation for the coming 3 years. The is no reason for pessimism with regard to the future of industry in Europe and the European industry is probably in a better shape than many people's impression. There is much to do however, to tackle the challenges of globalisation and rapid technological change in view of maintaining a modern, future-oriented and innovative industrial base in the EU which will remain an important job provider. The Commission's new industrial policy is a concrete outline of work to achieve this.
88 Social Europe the journal of the european left December 2005
The Freedom We Mean by Hubertus Heil German MP & SPD General Secretary
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By contrast, Udo Di Fabio, a conservative judge at the Constitutional Court, stresses in his much-acclaimed book Die Kultur der Freiheit (The Culture of Freedom) that freedom is inconceivable without social ties and obligations. The position he adopts is thus antithetical to socially irresponsible ultra-liberalism. So far, so good. At the same time, however, he considers that free individuals should do something and give something before they start asking society for something. That sounds good, too, but while Di Fabio's point may be significant it ignores the social and very practical prerequisites for freedom.
reedom is a grand concept and there is much talk of it in Germany at present. For social democrats, freedom - flanked by justice and solidarity - is the supreme basic value. The fact that freedom is currently on the lips of politicians of all hues should put us on our toes. Even the Federal The realisation that individual freedom is crucially Chancellor made it the key issue important but that it depends on certain social and in her government policy statement. political conditions is one of the fundamental tenets of social democracy. In his farewell speech as SPD chairFor many people of my generation - particularly those man Willy Brandt remarked: "If I had to state what, who were born and brought up in the old Federal apart from peace, is more important to me than anyRepublic - ‘freedom’ was taken for granted. Over time thing else I would say without any ifs or buts: freedom. it degenerated into a hackneyed concept and was left to Freedom for many, not for the few. Freedom of consthe advertising industry to exploit at will. 'Freedom' cience and speech. Freedom from need and fear, too". For him freedom was by no means controlled happiness but the release of the creative skills invested in One of the main concerns driving man.
social democrats has always been to give people opportunities
It is not least the political left that has achieved a good deal in releasing those creative skills. That everybody can find their place in society through their own efforts and that everybody has the theoretical opportunity to live their life according to their own designs is a very thus became a brand attribute for credit cards and recent development in the history of mankind. It precheap flights. sumes equal freedoms for women and men and the chance to overcome social barriers. One of the main In the meantime our society has begun a new quest for concerns driving social democrats has always been to meaning and fundamental values; the time has come to give people opportunities and not to pigeonhole them retrieve the concept of freedom from the world of for the rest of their lives on account of their social orimarketing and put it back into the political debate. The gins. formation of a grand coalition will not hinder this new quest. On the contrary, it is likely to expedite it. In How free is our society then? A young person living on essence, any debate on the concept of 'freedom' revol- income support in the second generation and growing ves around the classical distinction made by the philo- up in a residential ghetto somewhere in the suburbs sopher, Isaiah Berlin, between negative freedom (the without acquiring any school-leaving qualifications or freedom from something) and positive freedom (the finding a trainee position can do as he pleases within freedom to do something). the bounds of the law. But is such a person free? In theory, nobody will stop him learning new things and In line with the teachings of Friedrich August von standing on his own two feet. But in real life - which is Hayek, economic liberals are quite content with negati- what politics should be about - this young person has ve freedom. Guido Westerwelle talks a great deal about virtually no chance if he is not systematically pushed freedom - as chairman of the Free Democratic Party and encouraged. Or to take a different example: A busithat is part of his job description. In his reply to the nessman is not free to fire his employees as he thinks Chancellor he equated tax increases with a lack of free- fit. Laws and contracts prevent him from doing so and dom. For him freedom means radical denationalization thus limit his negative freedom. Would society be freer and the release of homo economicus from all social if he could hire and fire at will? commitments. Freedom is thus reduced to freedom of economic pursuit. It is no accident that freedom is given pride of place in the code of basic social democratic values. It includes 89 Social Europe the journal of the european left December 2005
negative freedom, in other words the freedom from fear, need, paternalism, bureaucracy and discrimination. But it also includes positive freedom, in other words the freedom to seize the opportunities life offers and act on one's own responsibility. Social democrats do not place blind faith in the state. For us, as for others, restrictive and unnecessary red tape and excessive calls for statistics and reports do not rank amongst our political objectives. We know that, for the sake of the country's future, we need both a dynamic economy, a civic society based on the principle of solidarity and a state that is capable of taking the requisite action. The latter serves not merely to provide the economy and society with public goods that the market alone cannot supply. In a democracy a functioning state is essential to ensure that the strength of the law prevails and not the law of the strong. We social democrats want people to be emancipated and capable of mature judgement. Free people are informed; they face up to reality, represent their interests and act in a responsible manner on their own behalf and that of others. This emancipatory potential that is inherent in freedom does not develop of its own accord. Enabling it to blossom is an active and conscious social achievement. Those who talk of freedom today should not forget to mention responsibility. Human rights and human duties apply here in a comprehensive sense. Those who derive advantage from their income or wealth have a duty to make an appropriate contribution to the well-being of all. This is what distinguishes our concept of freedom from that of the economic liberals, who see positive freedom as posing a threat to negative freedom and thus cannot redeem the promise of freedom for a large number of people. A policy of freedom presumes the capacity to exercise freedom. It must place its faith in equal opportunities for the future, guarantee social rights and reinforce social standards and values. This stems from the realisation that one's own freedom is always that of others, too.
90 Social Europe the journal of the european left December 2005
Putin’s Russia. Love and hatred towards the EU by Silvio Pons Director of the Gramsci Foundation
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lthough an essential strategic resource, the enlargement of the European Union is now reaching its limit, presenting with increasing clarity and inevitability both an inclusive and an exclusive aspect: it aims no longer solely at shifting the EU's space, but at establishing a boundary. At present, we can see that to the East, this boundary has gone on to include the space of the former Soviet Union in addition to the Baltic States, and all the way to Ukraine, excluding Russia. As far as the EU's architecture is concerned, this is fully understandable. But Russia then becomes an essential test for EU's future foreign policy - much more than the 'politics of proximity' would appear to predict.
Putin has insisted that democracy must be adapted to the various national situations At present, Russia is not an international political priority for any of the leading global players, nor does it truly play this role, although claiming it. It is a country largely dependent on Western financial, commercial, and technological resources for its economic rebirth, and partnership with the EU plays a leading role from this standpoint. Its ruling class and still more, its public opinion - continues to claim a European identity, without renouncing a statist and geopolitical dimension distinct from the EU. Moscow no longer presents a threat to Europe, and Western intervention in the former Yugoslavia cast light on Russia's weak reaction to a crisis that directly implicated long-standing traditions of its role in international affairs. In Central Eastern Europe, the limits of Moscow's influence - harshly underlined by the recent events in Ukraine - are clear enough as not to warrant further comment. In brief, Russia is much less important to Europe than Europe is to Russia. After all, the reality that we are getting used to - a reality taken for granted from our standpoint, but unheard of for those with memories of the last century - is one of an inward-looking Russia presenting no challenge at all. All this has allowed us to understate the importance of its distance-taking from Europe, which appears to be the result of the concrete modes of EU's expansi-
on process. The European agenda was effectively influenced by Poland and the Baltic States through the design of establishing the EU's eastern boundary in the most exclusive terms. This is a design that takes Russia's civil and political incongruity for granted, and thus does not concern itself so much with feeding it, by fostering the growing divergence between the legitimate Europeanist aspirations of the former Soviet countries on the one hand, and the post-imperial frustrations of the Russian Federation on the other. But here a paradox is created. The promise of democracy and well-being accompanying European expansion does not only not involve Russia - and is being made while Russia is taking a different road - but may even be seen as a factor contributing to what is perceived as Russian involution. There is room for doubt as to whether or not this is in the EU's true interest. There is a great difference between bordering on a Russia sufficiently prosperous and cooperative, more reliable as a constitutional state, and unleashed from its imperial heritage, or on a Russia oscillating between instrumentalised partnerships, a sense of exclusion, and post-imperial nationalism. The summit between Bush and Putin held in Bratislava this past February provided a glimpse of America's changing attitude towards the democratic quality of its Russian partner, appearing to herald a foreign policy motif for the American President's second administration and an additional challenge for the EU. It remains to be seen whether the EU will be able to meet this challenge. For the time being, it may easily be seen that neither Putin's meetings with Chirac and SchrĂśder in March nor the summit between the EU and Russia in May 2005 produced a high-profile strategy. Thus, the main change commanding our attention is rather Putin's attitude. In Bratislava, and even more recently, he has presented commitment to democracy as an irreversible choice linked to his country's vital interests. He has not raised the traditional argument of non-interference in internal affairs. Instead, Putin has insisted that democracy must be adapted to the various national situations, alluding to Russia's inclination to privilege order and state prestige over any manifestation of disintegration and disorder. He thus invoked the legitimacy of his own centralising action, which is at the same time a clear rejection of any universalist democratic thrust. It is likely that this response by Putin bears out those who maintain that public pressure, like that adopted by Bush, can achieve the opposite effect. But the point is that Putin's words mark a limit to Russia's strategic partnership with the West, as apparently inaugurated after 9/11. Now, not only the foreign policy adopted by Putin in the postSoviet area and the Middle East, but also his claim of legiti-
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macy for an authoritarian democracy, show the prevalently instrumental nature of Russian policy towards the West. Consequently, Russia poses a thrust towards multipolarism as based upon political and cultural diversity and upon power politics - potentially incompatible with the multilateralist perspective that is the very heart of EU's international role. The relative activism of Russian policy towards China and India (and more recently even towards Turkey) must be seen in this light, which is to say as the search for converging thrusts rather than strategic alliances. The development of international politics after 9/11 has made an essential contribution to this development in Putin's policy. On the one hand, the militarising trend of the 'war on terrorism' in Iraq has boosted Putin's desire to internationalise the war in Chechnya, legitimising Russia's military methods. From this standpoint, the alliance with Chirac and SchrĂśder had no stable political significance other than reinforcing a multipolar vision implicitly more radical than the neo-Gaullist position. On the other hand, the wave of democracy in the countries of the former Soviet Union took place precisely while Russia was limiting the range of its political reforms, also as a consequence of the Chechen scourge and its resulting terrorism. These two elements show a significant convergence that fits into a longer-term process. Currently, two essential aspects of Russia's transition are nearing achievement. The first is the birth of a strong power, which has put an end to the weakness of the institution of the presidency since the time of its establishment and has directed all its energies towards keeping the Federation from falling apart. The second is the sterilisation of what little political pluralism and parliamentary democracy existed after the collapse of the USSR. In truth, the consolidation of the presidency is not merely the affirmation of personal power, but reflects a restoration of the state's authority after a period of perilous disintegration. But the point is that Putin appears to offer a solution different from that of his predecessors: abandoning the attempt to yoke the introduction of the market to a radical reform of the political system, and, instead, restoring the state's authority. In this sense, the rise of Putin put an end to a phase in Russian history that had been opened by Gorbachev, while the recurring comparisons in the Russian press between the figure of the President and that of Andropov are less superficial than one may think - and they do not refer merely to the common link of the KGB. Market authoritarianism and the affirmed continuity of the state (which does not even refrain from re-evaluating Stalin in a nationalist/patriotic vein) are presented as ingredients of Russia's international integration achieved without westernisation. This is the ambiguous basis on which Putin has reconstituted an international role for the country, putting an end to the Yeltsin era's oscillation between cooperation and competition with the West. Today, the idea of integration between Russia and Europe promoted by Putin goes no further than a highly selective and conditional involvement. Russia's ambivalence in its relationship with Europe is a cli-
chĂŠ of historical and political discourse. The liberal philosopher Isaiah Berlin, deeply steeped in Russian culture, spoke of Russia's 'peculiar amalgam of love and hatred' towards Europe, but firmly believed in its essentially westward-leaning character. On the other hand, Russian historian Mikhail Gefter believed that Russia's place 'in the orbit' of European expansion could not eliminate a deeper truth: Russia was historically 'the threshold and the limit' of this expansion. These views appear to translate quite clearly into the contradictory reality of our time; and yet, they remain unresolved. Putin's 'controlled democracy' may be considered a Russian internal issue to be criticised, but one essentially without implications for Europe, or even seen in a positive light as a source of the country's stability. In turn, Russia's multipolar thrust may be deemed too weak to truly influence the international system, or alternatively, a useful buffer of antiAmericanism. But taken together, these two factors outline a perspective that brings us face to face with all the problems inherent to the main challenge of our times: the difficult relationship between security and the expansion of democracy.
The idea of integration between Russia and Europe promoted by Putin goes no further than a highly selective and conditional involvement
92 Social Europe the journal of the european left December 2005
Special Supplement
Hong Kong: Time to Deliver on Trade and Development Harlem DĂŠsir, Vice-President of the Socialist Group in the European Parliament Erika Mann, PES Group Co-ordinator in the Committee on International Trade
Harlem DĂŠsir
The WTO's Hong Kong Summit was one of the key events in a year in which world leaders committed themselves to a major breakthrough in the global effort to combat poverty. A reformed world trade system should play its part in that effort.
Erika Mann
The PES Group position in the run-up to Hong Kong
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or the Socialist Group, the EU's guiding objectives adopted in November 2005 ahead of Hong Kong had to be: resolute support for a multilateral trade system which puts trade at the service of sustainable development, full employment and the effective management of globalisation for the benefit of all; a successful conclusion to the Doha Development Agenda (DDA), in the interests of global economic recovery and jobs and the future of multilateralism; a genuine "pro-development" outcome, which will contribute to poverty reduction; aligning the EU's negotiating stance more closely to our citizens' priorities - including the highest social and environmental standards, and managing and reforming globalisation; ensuring coherence in the policies of the WTO and other international organisations, in the service of the UN's Millennium Development Goals.
Developed countries must deliver on the promise that this round is fundamentally and centrally about development. It would be a mistake to believe that this means industrialised countries must forego their own interests. For three reasons, neither trade nor development is a zero-sum game: -
a true development round would be a huge step towards a more stable, democratic, prosperous and secure world; poverty and underdevelopment are breeding grounds for the most potent threats to Europe's security and stability; the biggest beneficiaries of more open EU markets are EU citizens; greater prosperity in Africa, Latin America and Asia also means stronger markets for our future exports.
In its own interests, as well as those of the developing world, Europe should have few higher foreign policy priorities than the fight against poverty and underdevelopment. Agriculture The success of the agricultural negotiations is an important prerequisite for the overall success of the Doha Round, in view of the priorities of the developing countries, and the steps that must be taken, not only by the EU but by all developed countries. The issues at stake include a substantial reduction in trade-distorting domestic support and a phasing out of all export subsidies. All forms of export supSocialist Group Special Supplement in Social Europe the journal of the european left December 2005
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Special Supplement port should be phased out within 5 years in all developed countries, including hidden support in the US, Canada, Australia and New Zealand through export credits, food aid, export trading enterprises. A significant improvement in market access for poor countries attempting to export into the developed world has to be achieved. All developed countries should, by 2010, also follow the EU's lead in granting free market access to the products of LDCs (Least Developed Countries). The new mechanisms of the reformed CAP and the EU's multi-functional and sustainable agricultural model must be maintained. The EU must have the right to provide non-trade distorting policies and measures related for example to environmental, rural development or animal welfare goals through policies which qualify for the "green box" and which are totally decoupled from production. There should also be as much opening as possible of developed country markets to developing country exporters, including the elimination of tariff peaks and tariff escalation, but with a realistic timetable, to allow for an orderly transition. Measures regarding export subsidies, domestic aids and market access should be applied in parallel by all developed-country WTO members. Agricultural negotiations must aim for a substantial improvement in market access. There should be reductions in all forms of export subsidies with a view to progressive withdrawal, substantial reductions in all domestic support with trade distorting effects, special and differential treatment for developing countries, according to their development needs, including in food security and rural development matters, and taking account of other non-trade considerations. There must be a far-reaching solution to the problems of cotton and sugar, to ensure that developed country subsidies and tariffs do not destroy livelihoods in developing countries. On cotton, all export related support for cotton production in developed countries and all distorting domestic support must be eliminated as rapidly as possible, certainly no later than 2010. Since the EU has already taken steps to reform its cotton market the negotiations must require the USA, as by far the greatest source of trade distortions in cotton, to eliminate market distortions by cutting production related support by 50% by 2008, with substantial reductions thereafter. Alongside these changes, there must be support programmes for structural reform for farmers and workers in the EU cotton sector and development support measures for the developing countries. Rational and concrete solutions should be found in the sugar sector to avoid market distortion through a global agreement to eliminate export subsidies as rapidly as possible and a gradual reduction in tariffs and domestic support. The EU must be prepared to provide adequate adjustment assistance not only to EU producers and refiners, but to workers and regions dependent on sugar production. ACP and Least Developed Countries producers should benefit from more generous tariff quotas and adequate EU financial support. The Luxembourg agreement of 26 June 2003 on CAP reform must be taken forward applying consistent principles in the sectors which have not yet been included in the 2003 - 2004 decisions and the other developed countries must make equally ambitious agricultural concessions, in order to prepare the ground for the implementation of the agreement, supporting both the rural way of life and rural jobs. The erosion of trade preferences, notably those granted by the Cotonou Agreement and the GSP, must be dealt with. The agricultural products and tariff measures that the European Union must negotiate with its trade partners must be subject to social and environmental criteria which respect binding international conventions on social standards, management of natural resources and food safety. The European Union must be able to protect its most fragile agricultural sectors, in particular the fruit and vegetable sector.
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Special Supplement Non-agricultural market access (NAMA) The EU's positions in the NAMA negotiations must reflect its commitment to a development round. It must take account of the needs, both of the poorest and of more advanced developing countries to promote industrialisation and economic diversification and to safeguard employment. Tariff measures can have an important role to play in these processes. The formula adopted for tariff reduction must, therefore, respect the principle agreed in Doha of "less than full reciprocity". The agreement must allow developing countries and LDCs some room for manoeuvre in their development strategies and must not undermine employment and economic diversification. There must also be a significant reduction in trade barriers while calling upon the rapidly growing developing countries to assume their share of responsibility in ensuring the success of the round. Finally, non-tariff barriers that often hinder access of poorer countries' products to developed countries' markets should be eliminated to the extent possible and technical assistance should be offered, to improve trade facilities. Services Public services cannot be treated just as a product traded on the free market. These services are not a matter solely of consumer choice, but also of basic human need. They should not be dismantled or undermined. The EU must honour its commitment to make neither offers nor requests in the areas of public health and education. Services related to the fulfilment of people's basic needs, such as access to water, sanitation and energy, or which play a key role in cultural identity, such as audio-visual services, should not be threatened through GATS negotiations. Negotiations on services must be demystified through enabling full access to requests and offers for the European Parliament, national parliaments and civil society as a whole - the full text of offers and requests should be made public at the time of their transmission. A genuine development round? The most important test of whether the Doha Round is genuinely a development round will be the outcome of negotiations on the three big dossiers of agriculture, NAMA and services. WTO rules on special and differential treatment should be strengthened. Developing countries argue that these have been largely ineffective. The position of industrialised countries is that no permanent exemptions from WTO rules are possible and longer implementation periods are offered instead. WTO rules on intellectual property (TRIPS) also continue to pose many problems for developing countries. A permanent solution on public health must be found and measures taken to ensure full implementation of the breakthrough Doha agreement on TRIPS & public health. Developing countries also have a special interest in trade facilitation and technical assistance. Flexibilities for developing countries, with a special focus on the LDCs, small and vulnerable economies, islands and land-locked countries, should be strengthened in all areas of the final Doha package. Although trade has positive effects, imbalanced trade relationships can also lead to economic dependency and a loss of a society's ability to govern its own affairs. WTO developing country members must be allowed to decide on their own trade liberalisation and must not be required to undertake more than they can handle according to their level of development. Regarding agriculture negotiations, the WTO should introduce a "development box" for the least developed countries (LDC), so that they can tackle food safety and rural employment. The EU must press hard to ensure that technical assistance and capacity building are adequately resourced. Measures should be agreed to promote SouthSouth trade, in particular regional trade. Trade, coupled with aid and debt relief, has an essential role to play in the achievement of the Millennium Goals. It is essential that trade measures are designed in a way that does not undermine the internal development and poverty reduction strategies of the developing countries themselves. The Socialist Group believes that the Hong Kong Summit must contribute to the Millennium Goal of Socialist Group Special Supplement in Social Europe the journal of the european left December 2005
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Special Supplement increased development aid, by establishing a multilateral "aid for trade" facility for poor developing countries. This should be in addition to, and not instead of, reform of trade rules to fully recognise the needs of developing countries and there must be no conditions attached to the money. After Hong Kong, what next? WTO members gathered in Hong Kong with low expectations as talk of success and agreement had been played down on all fronts. In the months leading up to Hong Kong, it had proved difficult to narrow the gaps between the EU, the USA, the G20 group of mainly large developing countries and the G90, which unites LDCs, the African Union and the ACP/Cotonou countries. In a move partly designed to ensure that the summit produced at least some tangible results, WTO negotiators proposed a "development package", to be agreed in Hong Kong and implemented ahead of the completion of the round as a whole. Its key elements were to be: -
all developed countries should follow the EU example by giving LDCs duty and quota free market access on all products (except military products, under "everything but arms"). a major commitment of funds to "aid for trade" a solution to the cotton problem strengthening of some aspects of special and differential treatment for developing countries and LDCs.
In the course of the Ministerial, this proposal was eroded somewhat as the USA in particular, insisted on some exceptions to the duty free - quota free element. On cotton, there was a small step forward with the principle of scrapping trade-distorting domestic subsidies agreed, although without a timetable. The aid for trade element remained, but there is a very real worry that this may be financed by diverting money away from existing development budgets. On the three big trade dossiers, the summit approved small steps towards a final agreement. Agreement was reached to scrap agricultural export subsidies and to stop the abuse of food aid, state trading enterprises and export credits - all by 2013. The developing countries regained some ground on NAMA through two victories: -
the Hong Kong declaration allows for different coefficients to be used to calculate the tariff cuts required of developed and developing countries, which will moderate the otherwise unfair impact of the negotiating formula on the latter; and by leaving open the question of how many coefficients there should be, the Hong Kong text allows developing countries to get closer to their preferred position that they should have more autonomy to decide individually what level of market-opening to aim for;
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the text also establishes a link between the level of ambition on NAMA and the degree of agri cultural market-opening, something for which poor countries had fought hard. On services, Hong Kong agreed a text which obliges all WTO members to participate, if so requested by another member, in plurilateral or sectoral negotiations, and includes language on the scope of those negotiations more favourable to developed country interests.
On all the big trade dossiers, the texts agreed can best be seen as giving some new tactical gains, for the negotiations still to come, to one group or another. Very crudely: tactical gains for agricultural exporters on the agriculture dossier; for developing countries on NAMA and for developed countries on services. But all the big issues remain to be negotiated, and ground won or lost at Hong Kong can still be reconquered by the various participants. The bigger questions that remain are: -
whether, in the time available, negotiators can achieve a final deal. and whether this will genuinely be a developing round.
Back in Brussels, the Socialist Group will be arguing for the European Parliament to step up substantially activities on the Doha Development Agenda (DDA), to ensure maximum public pressure on the European Union's negotiators to ensure a positive answer to both of these questions. Socialist Group Special Supplement in Social Europe the journal of the european left December 2005
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Special Supplement
A European future for the Western Balkans This region has the potential to be a prosperous part of a prosperous Europe Giuliano Amato on the Balkans May 2005 Jan Marinus Wiersma
1.
Hannes Swoboda
Introduction
Over the next few years the European Union has a number of key questions relating to the western Balkans that will have to be answered and that will not only be decisive for the political, economic and social development of that region, but will also be of the greatest importance for peace and stability within the Union. Ever since the break-up of the former Yugoslavia, the European Union and its member states have, together with their international partners, made great efforts, militarily and financially, to bring an end to conflicts in the region and to support the development of new structures. Since 1999, programmes for reconstruction and stability in the region have been linked to a promise of future involvement of the countries in the western Balkans in the policies and structures of the European Union. At its meeting in Thessaloniki in June 2003, the European Council reiterated its determination to fully and effectively support a European perspective for the western Balkan countries, which ultimately, once they meet the established criteria, will become an integral part of the Union. The "Thessaloniki Agenda for the western Balkans" and the Union's "Stabilisation and Association Process", create a European framework for the western Balkan countries on the way to possible accession at some stage in the future. Croatia is the first country in the Western Balkans, which has started the negotiations for accession directly after the announcement by UN chief prosecutor Carla del Ponte that Croatia is "fully cooperating" with the International Criminal Tribunal for the former Yugoslavia (ICTY). The Former Yugoslav Republic of Macedonia (FYROM) submitted its formal application for membership of the European Union in March 2004 and tabled the necessary documents for this application on 14 February 2005. On 9 November 2005 the European Commission proposed to accept FYROM as a candidate country. But the positive developments in these two countries do however not mean that the general perspective for a long lasting peace and stability in the region is already positive. The International Commission on the Balkans says in its report "The Balkans in Europe's Future": The region is as close to failure as it is to success. For the moment, the wars are over, but the smell of violence still hangs heavy in the air. The region's profile is bleak - a mixture of weak states and international protectorates, where Europe has stationed almost half of its deployable forces. Economic growth in these territories is low or non-existent; unemployment is high; corruption is pervasive; and the public is pessimistic and distrustful towards its nascent democratic institutions. The European Union's commitment to a future for the western Balkans must not be seen as a reward for the achievements made so far. However, only the European Union can act as a real engine for change in this still vulnerable region with the power to lever reforms and the press for justice and reconciliation. Socialist Group Special Supplement in Social Europe the journal of the european left December 2005
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Special Supplement Only those countries willing and able to carry out reforms will become stable countries. The European integration strategy with the potential of EU membership at the end of the process must be the ultimate incentive to reform. Reforms are undoubtedly necessary if there is to be lasting peace and stability in the western Balkans, a European region which will soon be completely encircled by EU member states. 2.
Strict conditions
European Socialists and Social Democrats inside and outside the European Parliament have always supported this strategy of achieving reforms by offering the possibility of closer and closer ties with the European Union. It is in the interests of all European citizens to have peace and stability in the western Balkans although we are under no allusions that for some countries the timescale is long and uncertain. Whilst not erecting more barriers and obstacles, we must insist on the fulfilment of all the basic criteria before any further steps can be taken. Substantial progress must be made towards meeting the political aspects of the Copenhagen criteria before stability and association agreements can be concluded and full adherence to and implementation of these criteria must be guaranteed before accession negotiations can begin. For the countries in the western Balkans this means: -
unconditional co-operation with the International Criminal Tribunal for the former Yugoslavia (ICTY); respect for the rule of law and human rights; respect for the rights of minorities and implementation of all relevant legislation including guar antees for the return of refugees; democratic and legitimate constitutions and institutions; stepping up a proactive fight against crime, corruption, the trade in human beings, illegal arms and illegal substances.
The Nice Treaty is not an acceptable basis for decisions on the accession of any more new member states. The European Union must put its own house in order before any final decisions can be taken on the accession of any new member states. 3.
A joint strategy for the whole region
Each country in the western Balkans must of course be judged on its own achievements but an overall strategy with shared objectives for the whole of the region is needed. Respecting existing borders, the countries of the western Balkans must learn to address common challenges together. Interdependence is crucial to the future of the Balkans. These are small and for the most part unattractive markets whose economic sustainability depends on the creation of a common economic area attractive to foreign investors. A regional approach is therefore a necessary precondition for development. But a regional approach backed with European incentives must also deal with the on-going dreams of greater Albania and greater Serbia, must reduce ethnic inequalities and thereby pull the rug from under the feet of those who would see instability and conflicts perpetuated within the region. Regional development and investment programmes, joint education and employment initiatives, common transport and tourism projects should eventually lead to the establishment of "membership-similar" mechanisms: a joint Balkans customs union or joint participation in CFSP activities for example well in advance of any possible EU membership. 4.
Economic and Social Development
One of the features common to all the countries in the region is the rapid and solid growth experienced in the years following the crises and turbulence of the 1990s. Annual real GDP growth in the region has been above 4% since 2001 (5% in 2004). In 2004, for the fourth consecutive year, the economies of the Socialist Group Special Supplement in Social Europe the journal of the european left December 2005
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Special Supplement countries of South East Europe grew faster, on average, than those of the new EU member states in central Eastern Europe and the Baltic. Growth in Albania has been particularly strong. Only the Former Yugoslav Republic of Macedonia has relative growth problems. Yet this growth has not been translated into more and better jobs for the people of the region. Bosnia and Herzegovina, the Former Yugoslav Republic of Macedonia and, to a lesser extent, Serbia and Montenegro, still suffer from extremely high levels of unemployment - over 40% in Bosnia - Herzegovina and the FYROM and 30% in Serbia and Montenegro. Albania also has a relatively high rate of unemployment in comparison to the EU average although it has recently begun to decline. A particularly worrying feature of unemployment in the region is that it is persistent and long-term hitting in particular young people, unskilled workers, people with disabilities and people with health problems, women with small children, members of some disadvantaged ethnic minorities (such as the Roma) and other vulnerable groups, such as the displaced, refugees and demobilised soldiers. 5.
European Assistance to the western Balkans
Since the break-up of the former Yugoslavia, the European Union has given considerable support to overcoming the conflicts and to economic and social reconstruction in the region. Between 1991 and 2004, the European Union committed â‚Ź 6.8 billion to rebuilding the countries of the western Balkans. Current support for the western Balkans is provided through a mixture of instruments within the framework of the Stabilisation and Association Process. New instruments must be developed with the goal of future membership of the European Union in mind. 6.
Croatia
Over the past few years, Croatia has shown positive political, social and economic development. It now has established democratic institutions and its per capita GDP is well above the level of most of the new EU member states. At the end of 2004, the European Council decided to open accession negotiations with Croatia on condition that there is full cooperation with the ICTY in The Hague in bringing to trial indicted war criminals. Unfortunately this condition had not been met by the due date for the start of negotiations. Council decided to postpone talks until full co-operation had been guaranteed. Finally, on 3 October 2005, Croatia's accession negotiations were given the green light by the UN Chief Prosecutor who announced that, "for a few weeks now, Croatia has been cooperating fully with us and is doing everything it can to locate and arrest Ante Gotovina.". We would urge Croatia to continue to cooperate fully with the ICTY and to make headway in returning refugees and protecting of minority rights, the fight against crime and corruption, in improving its judicial procedures and in making the negotiation process a success. 7.
Former Yugoslav Republic of Macedonia (FYROM)
FYROM is perhaps the best example of a country where the incentive of European integration combined with an internal desire for peace has worked miracles. FYROM was able to prevent full-scale civil war through a process of negotiation supported by the EU and the United States. The government presented in February its request for accession with the answers to 4,000 questions which should enable the European Commission to present its opinion on FYROM's readiness to start accession talks with the Union. FYROM is a modest but significant success story. The Ohrid agreement on cooperation between ethnic Albanians and ethnic Macedonians has strengthened both FYROM's institutions and society as a whole. This agreement has been an instrument in overcoming Socialist Group Special Supplement in Social Europe the journal of the european left December 2005
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Special Supplement internal conflicts and coupled with a determined approach to EU membership should have a powerful symbolic effect on the other countries in the region. It should not be forgotten though that FYROM remains one of the poorest countries in Europe, in urgent need of economic growth and new jobs. Hopefully the Commission will soon be in a position to give a positive opinion on FYROM's request to start negotiations on the country's future accession to the European Union. During the negotiation process, FYROM must continue to give priority to meeting the basic conditions for membership of the Union, notably the strengthening of the Ohrid agreement and thus the country's future stability. It is also important that FYROM and Greece do everything they can to find a mutually acceptable solution to the still unresolved problem of the country's name 8.
Albania
Although Albania has recently benefited from positive economic growth, it remains one of the poorest countries in Europe and economic progress has not led to comparable social progress. Respect for democratic institutions and procedures, for the rule of law and basic human rights and the fight against corruption and organised crime lag well behind the developments in some other countries in the region. Although negotiations on a stabilisation and association agreement began in February 2003, a conclusion is still not within sight and is largely dependent on the capacity and commitment of the Albanian authorities to implement a number of key reforms. Particular attention must be paid to the fight against crime and corruption and the further development of a political culture rooted in political and social tolerance. With the Socialist Party having lost the elections and its government responsibilities, it should together with other progressive forces - take the opportunity to become the leading force for democratic change and the modernisation of the political and social landscape in Albania. 9.
Bosnia and Herzegovina
Since the Dayton Agreement brought an end to the most violent and barbaric civil war on the European continent in the past 50 years, Bosnia Herzegovina has existed as a protectorate; firstly of the international community and more recently of the European Union. Important steps have been taken in developing state institutions based on ethnic cooperation and fully-fledged constitutional institutions are beginning to emerge. Involvement of the international community, in particular of the European Union, in the governing bodies of the country is waning. Key to the successful development of Bosnia Herzegovina will be the support given to it by neighbouring countries and full respect of the basic principles of the Dayton Agreement. A period of total independence and self-government is a pre-condition for any future accession to the European Union. To that end, it would be helpful were conditions for negotiations on a stabilisation and association agreement with the European Union (reaching an agreement on police restructuring) to be achieved before the end of 2005 with a conclusion soon thereafter. In the framework of this agreement, priority must be given to scaling back the international presence in running Bosnia-Herzegovina's affairs. 10.
Serbia and Montenegro, including Kosovo
The Federal Republic of Serbia and Montenegro has made economic and social progress and has taken steps forward in its co-operation with the International Criminal Tribunal for the former Yugoslavia. Recognising these achievements, the Council has decided to start negotiations with Serbia and Montenegro and the conclusion of a stabilisation and association agreement is the first step along this road. But there are still serious issues to be tackled with regard to the fight against corruption and organised crime. The really big issue facing the country in the coming year is the question of separation and/or cooperSocialist Group Special Supplement in Social Europe the journal of the european left December 2005
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Special Supplement ation between Serbia and Montenegro on the one hand and a possible arrangement for the final status of Kosovo on the other. Closely related to this question is the potential re-emergence of violent nationalism. The Serbian authorities must guarantee the rights of all minorities in the country, including the people of Vojvodina. Should a majority in Montenegro vote in the referendum for separation, people who wish to continue the relationship with Serbia must be protected. New forms of co-operation between an independent Montenegro and Serbia would have to be created in such a way as to avoid any new tensions and conflict in the region. As far as Kosovo is concerned, it is clear that the status quo cannot be maintained and that a return to the Milosevic era must be completely excluded. The most probable and also most acceptable alternatives for Kosovo are the formation of an autonomous region within Serbia (everything but independence), or independence with internationally assured guarantees of continued cooperation with Serbia and for the protection of the Serbian, Roma and other minorities in the region. Whatever agreement is reached, priority must be given to creating the conditions for a return of all refugees, the protection of minorities and the fight against crime and corruption in this vulnerable region. 11.
Final concluding remarks
The Socialist Group in the European Parliament attaches great importance to the establishment of sustainable peace and on-going stability in the western Balkans. This would not only be good news for the region but also for the whole of the European continent. The Group will continue to lend its full support to the European integration strategy for the western Balkans in the framework of the Thessaloniki Agenda. The overall objective of this strategy must be to assist the countries of the region in fulfilling the conditions for a step-by-step integration into the policies and the structures of the European Union. Priority must, in the first instance, be given to these countries that meet the political Copenhagen criteria. The European Union must, for its part, ensure that it has the capacity to absorb any new member states. The Nice Treaty is not an acceptable basis for further decisions on the accession of any new member states.
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Endnotes
We would like to express our special gratitude to ChloÊ Aublin who helped a great deal in the development of this issue. All the views expressed in the articles of this issue are those of the authors and do not necessarily represent the views of Social Europe Forum. All rights reserved Social Europe Forum Š 2005
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