Di ritorno dal Regional World Economic Forum di Bruxelles, Jere Sullivan, Presidente di Edelman Global Public Affairs, ci ha mandato le sue annotazioni che volentieri condividiamo. L'economia mondiale naviga in acque agitate e qualunque punto di osservazione in più può essere utile per capire il presente e pianificare il futuro.
The longer term view – Euro 2020 Strategy. Barroso and Van Rompuy highlighted a number of key factors that need to be addressed as part of Euro 2020 Strategy including:
· The Eurozone needs to achieve both economic stability and financial market stability as the two are inextricably linked.
· All growth starts with good public service and the EU leaders need to make tough decisions that benefit the long term prosperity of the region not just short term decisions to satisfy the electorates.
· A number of member states continue to live beyond their means and Greece should be a wakeup call. Changes need to be made to increase productivity and balance economies and this would include austerity programs and debt reduction.
· Investments need to be made to improve the economies in the Eurozone including investment in knowledge based economies, interconnection of energy systems and in a lower carbon economy.
· The solution is not to lower standard of living but rather to increase competitiveness which will require investments at both the European and member state level.
· In these tough times more than ever there is a need for political courage to make unpopular decisions.
· Unless the Eurozone doubles its economic growth it cannot support the current EU social model and it will not have a voice in the global economy,
A stronger message from the business community. A panel of businessmen – from the U.S., UK, Russia and India -- followed the politician’s panel and they did not mince words. They were much more pointed in noting that unless the EU makes some tough decisions it will continue to lose influence to the U.S and China, followed by India, Russia and Brazil. Lack of productivity, less than business friendly labor laws and declining innovation were just a number of the issues sited by the panel that make investing in the EU less attractive.
· Manpower Chairman and CEO, Jeffrey Joerries felt Europe needs to teach less rote thinking and more innovative thinking. This is not only an academic exercise but a general state of mind that needs to be reinforced.
· Llloyds CEO Lord Leveve was particularly critical saying the EU is “fiddling while Rome burns” and that Europe hast to wake up and get its act together to compete in the 21st Century.
· WPP CEO Martin Sorrell felt business was being hampered in Europe by over-regulation, lack of employee mobility (to move beyond their market) and a lack of political will to achieve changed. As a result investment that should be going into the EU is going to the US, China and India.
· Chander Gumani, CEO of Mahindra Satyam said the EU has too much talk and not enough action and his company invests in individual European countries and not the EUI as a whole mainly because there are no uniform tax laws and business regulations.
· Ruben Vardanian, CEO of Troika Dialog a large investment fund in Russia said that in the last decade the EU has become less attractive and that the new generation in the EU is more interested in a stable life than progress.
Greening of Europe. In addition to discussion about the current economic malaise in the EU another popular topic was renewable energy. A number of key points were addressed by business, government and NGO representatives:
· The EU had set a goal of reducing its carbon emissions by 20% by the year 2020 and are currently are 1% behind their goal on the critical timeline.
· A common area of agreement is the need for a unified smart grid as opposed to the current state of antiquated and varied grid technology at the national level.
· As always is the case there was much debate over the role of traditional energy sources versus renewable or a mix of both.
· Industry feels currently renewables can be used for more passive energy needs – lighting, offices, etc. – but is not available in great enough abundance and at a competitive price to support heavier manufacturing – steel production, auto manufacturing, etc.
· Challenges and solutions included:
o Banks not offering financing as quickly and freely in a down economy to the renewable sector;
o Lack of investor certainty in the renewable energy space to support greater investment by industry;
o A need for consumer incentive in the form of tax breaks to purchase and use the technology to drive scale, which will in turn bring pricing down for renewable energy;
· Industry felt greater efficiencies in the technology need to happen before it is fully embraced. They also believed government can play an important role through tax breaks and incentives.
· NGOs support the idea of government should play a role in funding R&D for renewable, but companies should be forced to share the resulting technology. You see the dilemma.
· New Commissioner for Climate Change Connie Hedegaard from Denmark, led a panel discussion and demonstrated the willingness and recognition that government and business need to work together to address climate change. However, she was particularly hard on aviation and shipping saying they have been dragging their feet and need to step up their efforts. She did give kudos to GE who was sitting on the panel with her as a company that was stepping up to the demand of addressing climate change and doing so in a way that is profitable.
· The airlines countered by stating that mobility is critical to the EU to expose their citizens to new ideas, expand innovation and thus grow the market.
Finding its Foreign Policy niche. A number of panels addressed the role or diminishing role of the EU in setting foreign policy. It was felt the EU as a whole lacks a unified opinion on foreign policy and is not viewed as a leader on any particular aspect of foreign policy. Instead France, Germany and particularly the UK drive their own positions and they won’t cede power to the EU. It was felt by many that the EU cannot and will not be able to provide hard power (troops and military strength) but can play a role using soft power (educating national security forces in Afghanistan, providing infrastructure support etc.).
There was debate on whether or not the EU should play a role in Afghanistan with foreign policy wonks from the universities suggesting Pakistan and the Balkans are places where the EU can play a bigger self defined role. Konstantin Zhigalov Special Representative of the Chairman-in-Office of the OSCE believes the EU has to be more involved in Afghanistan as 30 countries have special representatives assigned to Afghanistan and the EU needs to be part of that group. Also Afghanistan borders 3 of the OSEC member countries. Also the EU is destination for Afghanistan’s leading agricultural crop – opium – and like it or not it is connected.
Oxford professor Timothy Ash said while the EU may feel it is getting its act together it is almost viewed with contempt by Beijing, Mumbai and Washington D.C. These three would all like to deal with the EU as one entity but to quote Henry Kissinger they are not sure whom to call. Ash also felt Russia has less of an interest in dealing with the EU on foreign policy as a re-emerging imperial power in their own right. That said the development of Russia’s economy is central to their future and they cannot modernize it without the EU.
The end of the EuroZone? Marek Belka, Director, European Department, International Monetary Fund (IMF), suggested international investors will put on hold the idea of investing in the Euro versus the dollar. He believed the European region has not been a healthy target for investment for some time and depending on how Greece responds, combined with the fragile economies in Portugal, Spain and Italy that fact could continue for some time. He did note that often times it takes a crisis like Greece to create a mechanism for change and it should serve as a catalyst for structural reform.
To expand or not to expand. There was ample discussion about whether or not the Euro Union should expand. Some felt in this current economic environment there will be little appetite for expansion for fear of the big economies being put into a situation where they will have to bail out yet another government.
At the same time Turkey made the case that unless Europeans want to work 65 hours a week they will need countries like Turkey in the Union. They boast the 6th largest economy in the world, 66% of their population is below the age of 23 and they have the 4th largest workforce in the world. They feel the EU needs to hold up their end of the bargain and seriously consider them for accession. Valid arguments but the Big 3 economies do not support Turkey joining the EU, and unless they are swayed, the discussions could continue for decades. The elephant in the room was the issue that many Europeans do not want a large Muslim country as part of the EU. This is the downside of the WEF often times the obvious points are glossed over because of political correctness.
Italian Senator Emma Bonino made a very valid point that the EU spends an enormous amount of time validating a country’s accession to the EU and very little time monitoring them once they enter to make sure they are adhering to rule of law and transparent governance. This was once again a point that was glossed over when business leaders chastised developed Western European governments for being non business friendly which is why the developing faster grow economies in Eastern Europe and Russia make more attractive targets for investment. No reference was made to the cost of corruption in those economies which is a major stumbling block for investment in those regions.
The overall tone to the meeting was somber and while concerns about the competitiveness of the Eurozone have been voiced and editorialized over the last four and half years I have worked in Europe, and the EU keeps chugging along. However, this time it seemed a bit more urgent and it wasn’t just the chattering class on the editorial pages issuing warnings – it was European business, academic and government leaders alike suggesting now was the time for action. Only time will tell.