The investment plan proposed by the European Commission has unleashed quite a torrent of comment, criticism, and discussion. At the wave of a magic wand, a cash injection, pretty much recycled from the European budget, drops out of the hat together with a vague sort of promise that the funding in question will grow and multiply. But is it the technical details of the plan that really matter most? Might the political factors perhaps be more important?
As stated by Jean-Claude Juncker in an interview with Le Monde (29 November 2014), the investment plan was launched also as a way of ‘changing the way we speak about Europe’. So what matters most, the Commission President seems to be implying, is the creation of a new narrative – which is something that the European trade union movement too is extremely keen to see, but in a much more ambitious form.
[vision_pullquote style=”1″ align=””] So what matters most, the Commission President seems to be implying, is the creation of a new narrative – which is something that the European trade union movement too is extremely keen to see, but in a much more ambitious form. [/vision_pullquote]
An investment fund and a new narrative were also the preconditions stipulated by the socialist parliamentary group (S&D) before entering a coalition with the EPP and the liberal group in the European Parliament. Yet in the wake of the European elections there has been no change in the left/right balance of power, whether in the Commission, the Parliament or the Council. Since the EU enlargement of 2004 the left has remained in a minority. The left, what is more, is currently in the throes of ideological reorganisation, at least in the two large countries where it is in government, namely Italy and France. In both, structural reforms, and particularly labour market reforms, are high on a national policy agenda which draws legitimacy from the European agenda.
The investment fund – with its relatively scanty endowment – has been unveiled in tandem with a renewed call for structural reform. Whether there really is an incipient change of narrative is far from clear. The situation of Belgium, currently governed by the most radically right-wing coalition for more than thirty years, represents a case in point. Here, all the reforms dreamed up by Ecofin and the ECB have been rolled out: a raising of the retirement age; ad hoc de-indexation of wages; reduction of employer social contributions; new rules governing unemployment, and so forth. The programme triggered one of the biggest demonstrations ever seen in the country, followed by three regional strikes and a nation-wide one ob 15 December 2014.
The government agreed to delay implementation of its budgetary goals for two years but severe expenditure cuts are announced in all sectors. The Commission, with its superior political acumen, considered that the reduction in public debt (that has again risen above 100% of GDP) was insufficient and that the situation represented a risk requiring close monitoring. All things considered, the Belgian case testifies to an even more radical stage of the earlier narrative.
Next, what about the southern countries where the need for investment has been most acutely felt? This is the blind spot in the current debate with insufficient attention being paid to the fact that, alongside the macroeconomic challenge, there exists the further challenge of economic specialisation. The reduction of Greek debt will not be enough; the more important need is to consider what type of investment is necessary now and will be sustainable in the future. As stressed in a recent ILO report on Greece, it is essential to select for financing soundly based projects, the impact of which will be felt in the medium term at best. It is legitimate to doubt, however, whether this report will serve as a guide for the project-assessment officers responsible for deciding which projects are to receive funding.
[vision_pullquote style=”1″ align=”right”] Rather than ‘changing the way we speak about Europe’, would it not be better to speak about how we can change Europe? [/vision_pullquote]
And so we are faced with a Faustian deal. The left has joined the political coalition that supports Juncker and which purports to share his vision of a ‘last-opportunity’ Commission; it therefore cannot be too openly critical and is obliged to look on the bright side. In the absence of an alternative overall approach to austerity, the price to be paid is that of labour market reforms – a stance that happens to coincide with the major goal of the ECB.
Rather than ‘changing the way we speak about Europe’, would it not be better to speak about how we can change Europe?
The French version of this column first appeared on AlterEco
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