Friday, April 20, 2012
Economic Ideas Forum, Dublin Castle 2012. Day 1.
It has various high ranked Irish and European officials and politicians from many European countries participating in its panels, notably from Ireland, Spain, Holland, Finland, Germany, Italy and Britain. Its main focus is to discuss, debate and analyze the issues that created the current eurozone crisis, reach to conclusions and offer solutions for the future. Also, to address the challenges that Europe is facing now and during the next few decades, and the best potential ways to deal with them.
The Forum begun with the welcome speech by Mrs Creighton, during which she pointed out that Europe has many times dealt with other financial crisis in the past, but always emerged stronger. She mentioned that Europe is like a family and like every family it has its problems and disputes, but "we must work together, collectively, putting our best forward."
Then the President of EPP (European People's Party) and CES, Mr. Wilfried Martens addressed the audience and he encouraged the European leaders to take stock of the impact of their decisions and think of ways to deal with them. Mr. Martens also stressed that the European Community must show its solidarity, that is time to take responsibility and focus in fiscal discipline, job creation and that the origins of the crisis are the high levels of debt. He also mentioned that Europe's monetary union needs to be implemented with economic union and that the completion of the single market is essential to promote recovery. Mr Martens closed his speech by quoting Germany's Chancellor Mrs Angela Merkel's statement that "my vision is a European political union," and that he hoped that the Irish citizens will make a European choice in the up-coming EU Fiscal Treaty Referendum.
Mr Martens was followed by Mr Antonio Tajani, Vice-President of the European Commission. He stressed that Europe must put real economy in the center of its agenda and that "we need to be strong on political choices, we need a new industrial revolution." He added that Europe must invest in research, innovation and education and with a pan-European infrastructure we should be able to deal with similar crisis in the future. He compared Europe with China and America and how it lacks in investment when compared with its competitors, but also noted that those investments must be focused in enhancing technological leadership and devote more resources in research; a research that must be industry oriented. Mr Tajani also said that "trade should be free but also fair," and he closed his address by noting that Europe must have an economic governance with a stronger E.C.B. (European Central Bank).
Followed Mr Tajani's speech we had the first panel of discussion which was moderated by Mr Roland Freudenstein, (CES Deputy Director) and comprised by Mr Brian Hayes (Ireland's Minister of State in the Department of Finance), Mr Joachim Pfeiffer (CDU/CSU Speaker on Economic Policy of Germany), Mr Peter Nyberg (Commission of Investigation into the banking system of Ireland), Mr Colm McCarthy from the School of Economics in UCD (University College Dublin) and Mr Dan O'Brien economics editor in The Irish Times.
This panel focused in discussing the position of Europe in the world economy and how to win opportunities through stronger economic governance. Mr Pfeiffer addressed the issue from a German perspective and he added that consumption in his country was one of the pillars of growth. Mr Nyberg said that European authorities were not powerless in dealing with certain problems but some supervisors in the ECB did not see that anything bad was going to happen. Only a handful of people had an idea of what was coming "but they could do nothing about it."
Mr Nyberg suggested that to avoid future crisis, we need to educate a new generation of bankers, that will allow and prepare the banks in similar situations in the future to take the losses. Mr McCarthy agreed with the fact that Europe has just a currency but not a monetary union and that the eurozone design is "flawed." He suggested that the Maastricht Treaty must be revisited, that we need market discipline and better supervision as complimentary measures to a currency union.
Mr O'Brien stressed that "we do not know the magic formula for growth and what mix of policies with generate growth," bringing examples from the north and south Italy, as well the east and west Germany regions and the economic differences between them. The panel concluded that the Fiscal Treaty is not enough to deal with the crisis, that we need to revisit the ECB and its roles, we need a stronger EU Commission and above all that European politicians should not dismiss people and ignore them. The issue of a European Finance Minister was also discussed and if such move is a threat to European economic diversity.
A lunch break followed, before entering the room for the second panel of discussions that was opened by a key note speech by John Bruton, former Taoiseach of Ireland and Ambassador of the EU to the USA. Mr Bruton started his speech by reminding the audience about "the many discouraging moments" that Europe faced in the beginning of the Single Market. But as it took a period of time to create a relative functioning Single Market, "we should look back at our experiences from that and apply them in our problems with the single currency." He suggested that Europe needs also a single market for Banking and that we rely too much on the banks for credit, while there is no European bond market; the banks are far too big. "We need a Europe wide investor protection, but be careful not to drive business out of our continent," he said.
Mr Bruton also mentioned the case of certain groups of people that will lose out from the development of the Single Market and they know who they are, that is why they are quick to take action and stop any development; on the contrary people who will benefit from the Market, do not know or realize it until it is too late.
Then he joined the rest of the panel, the moderator Mr Peter Ehrlich (Financial Times Germany), Mr Raymond Gradus (Director of CDA Research Institute, the Netherlands), Mr Eric Loeb (Vice President, International External Affairs at AT&T), Mr Maurice Thompson (Vice Chairman CITI Europe, Middle East and Africa) and Anthony Foley (Senior Lecturer, Dublin City University Business School). This panel debated on the options of Europe to bounce back from the crisis and the role of the Single Market as a key to growth.
Mr Ehrlich started the discussion by stating that recovery can happen only if the Single Market is used in every EU state, but the problem is that member states do not really abide into what they agree. Mr Foley agreed but he added that this is a problem not only in Europe but international, bringing as example the Doha round negotiations. He also mentioned that another problem is protectionism, meaning that EU member states keep certain sectors out of the Market on purpose. Mr Gradus added to the debate the issue of taxation rules on European level, while Mr Bruton noted that if we create a single bond market, we will need a single deposit scheme across Europe.
Later Mr Foley argued that in 2012 we have yet a Europe wide solution and Mr Bruton noted that certain conflicts of interests are presented as conflicts between countries. Mr Ehrlich following that statement, questioned why things that are discussed during the EU Council meetings are not explained to the people. Mr Loeb said that Europe does not need any more policy statements by its leaders, "we have already so many on the self!" But Mr Bruton appeared more harsh with the ECB officials than Mr Nyberg earlier and suggested that people in the central bank did not read certain protocols,"they were given a task by EU policy officials, but they did not do their job!"
The panel also addressed issues like the inability of Governments to borrow in the current climate contrary to the multinational corporations. They discussed the taxation harmonization across Europe issue that is sensitive to Ireland; Mr Bruton and Foley stated that this will be bad for Ireland and that competition among states is good, while Mr Gradus that supported this suggestion clarified that he supports the harmonization of the basis of the taxes, not the tax rates. Other conclusions by the panel were that we need an integrated Europe to deal with the multinationals, European citizens must start voting as Europeans and make EU more democratic and that because of this crisis there has been far more European integration in the last two years than in the past fifteen!
After a short coffee break we returned to the debate and the third panel of discussions, moderated by Mr Christophe Leclercq (EurActiv founder and publisher) and its members; Mr Richard Bruton TD (Minister for Jobs, Enterprise and Innovation of Ireland), Mr Danny McCoy (Irish Business and Employers Confederation) Mr Ciaran O'Hagan ( Bond Strategist at Societe Generale) and Mr Kimmo Sasi ( Chairman of the Finance Committee in the Eduskunta, Finland).
The panel's discussion focus was on the dilemma of boosting competitiveness while enhancing social Europe. Mr McCoy noted the importance of the native multinational companies, but also the issue of Europe blocking accession to any potential; a situation that is visible by the scandal of high youth unemployment! Then Mr O'Hagan stressed the issue of rating agencies and how they rate countries; he suggested that new criteria for ratings must be introduced like social cohesion and demographics. Mr Sasi commented on the Finnish system of income and high value tax and how it resulted in good social services.
Then the debate moved into the labor flexibility issue and the permanence that leads to security of jobs and social security in general. Mr Bruton stressed that the diversity of the European economic models is actually Europe's strength. "With a few more billions of people entering the capitalist system from China, India and eastern Europe," he continued "innovation and labor flexibility is essential." He also pointed the need to encourage people in funding their own pensions, due to Europe's decreasing demographics. Mr McCoy supported that Europe's social model is unsustainable and "the younger generation will realize that we have to deal with it; labor flexibility is going to arrive!"
The panel also questioned the age of retirement limit while all speakers agreed that there can be no more luxurious social security, with only "effective but not excessive benefits" as Mr Sasi said. They discussed about the need to be daring in reforming social policies, as they holding back growth. The role of the unions was also taken into consideration while Mr Bruton stated that "European welfare state is doomed," but the reforms must be done gradually and in a humane way. The panel concluded that we need different types of social contract, we need to develop new models and to promote creativity and entrepreneurship within the education system.
The third panel closed the first day of the Economic Ideas Forum, with the much anticipated second day that includes a speech by the Taoiseach of Ireland Mr Enda Kenny, already being in the participants' minds.