Discussions at this two-day seminar centered on the role of local, national and European-level public actors in stimulating economic recovery.
Questions were raised by the participants as to whether any further room for maneuver remains in an acute phase of an economic crisis that has already seen the deployment of ECB reserves and tight fiscal policies. The consensus among those present was that globalization and international competition call for decisions and measures to be taken at the EU level, with some of the main proposals to emerge from the debate including structural reforms (involving the banking system, for instance), protections for those sectors of European industry that are presently competitive, and the introduction of effective financing mechanisms (such as Eurobonds as they were originally conceived or loans guaranteed by the EU).
It was suggested that progress towards resolving the situation is definitely not being helped along by the current ambivalence of certain countries, which, though Member States, have no hesitation in depicting the EU to their citizens as an interloper controlling the European Commission. It is nevertheless true, as pointed out by many of the participants, that for a long time there have been rules imposed in the EU which other economic areas are not encumbered by. It was felt that the dogmatic application of competition policy in Europe has yet to strike a desirable doctrinal or regulatory balance, which is effectively impeding the emergence of major market players and limiting the protection of strategic EU assets. On the assumption that EU treaties remain unaltered, many of those in attendance called for a return to the spirit that permeated the Union from its inception up to the 1980s, recapturing the sense of a joint endeavor and solidarity geared towards a common good.
The participants were in total agreement in viewing the role of public-sector actors as that of facilitating real economic growth, especially by means of engaging the private sector. In concrete terms, it was suggested that this responsibility entails the creation of an enabling legal, regulatory and fiscal environment, but particularly one that is marked by certainty and stability. The EU does not seem to have fully appreciated the importance of this premise, often adopting rules (dealing with matters such as the International Financial Reporting Standards, intra-European competition, the ban on state aid, and solvency) that do not work in its favor. For their part, Member States in times of budgetary difficulties tend to use taxation as a rapid means of generating revenue, causing great instability and, at times, reducing – if not negating – the effectiveness of other mechanisms put in place to support or regulate the economy.
While it was conceded that Europe is in huge need of infrastructure, there was a corresponding acknowledgement that addressing this involves making difficult choices between different visions. For instance, should improving short-range mobility take precedence, or does priority lie with large-scale networks? Similarly, should the emphasis be on continuous investment in the further development of information and communication technologies, or should the prime focus be making them more affordable for consumers? In contrast with the situation in the US, private funds in Europe tend to avoid injecting equity and making long-term investments, thereby withholding valuable resources from sectors capable of furnishing much-needed growth – a situation which stems from the absence of the sort of long-term assurances necessarily sought by investors.
Corporate investment and strategic funds could meet this need – the latter by pursuing two different strategies: the funds of those countries in crisis by repairing the damage done to the market (hence enabling the restructuring of problematic sectors), whereas the sovereign wealth funds of countries not indebted could allocate their surpluses to generate revenues.
Public intervention was therefore considered key when the laws of the market function poorly or when the timeframe in question is longer-term. Yet public actors are faced with an impossible task: that of intervening in accordance with market laws in sectors where the market itself either does not intervene or does so badly. While some participants were of the view that public involvement is never desirable in those instances where the private sector can manage on its own, others felt that state intervention can provide assurances and support for the private sector. Falling midway between these two positions, infrastructure was seen as a case where public-private partnership is the most appropriate mechanism for sharing the risks of investment.
Summing up, the seminar thus mapped the limits of the respective roles of public and private actors in helping to revive the economy, with high expectations expressed for the adoption by Europe of more effective rules and a fairer culture of competition. Ultimately, the role that states, other public actors and businesses are able to play will make it possible to give greater resonance to Europe’s voice on the international stage.