Cohesive Europe in the post-crisis world

II. Cohesive Europe in the post-crisis world

1. Metagovernance: The strategic-political leadership of the EUCO

The “future of the EU” figured high on the agenda in the early 2000s at the Nice and Laeken Summits in 2000 and 2001. Afterwards this approach faded away when the

EU mentality became less optimistic by the mid-2000s. Nowadays, in the new period of globalization the EU again sails on the uncharted waters as before in 1989-1991, when the bipolar world collapsed and new perspectives opened up. Usually, the global

developments as external structural constraints have been forcing the EU to change its institutional structure in order to be able to develop its long term planning, policy coordination and strategic vision. With the emerging new world order the EU entered a world of uncertainty, therefore it has to be mentioned again that “Future developments remain uncertain.” (Council, 2009b:5). Thus, not only the crisis management capacity, but even more the anticipatory capacity and risk management are of great importance. Consequently, the EU has to strengthen its anticipatory and adaptive capacity in the next decade, creating institutions for the “general flexicurity” in all basic policies like the European Systemic Risk Board in financial supervision (Council, 2009b:7). Given the fact that “the EU needs to go strategic”, as an early warning says, the global risk management with anticipatory capacity has become the biggest political power potential: „Political power derives from effectively dealing with the risks and challenges that have snuck into our homes and lives: energy security, climate change, financial crisis, demographic change, migration, overstretched health care systems, and social security.” (Bauer, 2008:2). The philosophy behind this message is that the EU needs, indeed, a complex goal setting with a clear vision, thus its implementation has to be managed by a metagovernance type of institution. A Governance Initiative was launched in early 2009, quite clearly outlining the complexity of the governance: “The Council acknowledges the multidimensional nature of governance, which includes political, social, economic, security, legal, institutional, cultural and environmental aspects, at all levels. All these aspects are interlinked and should be addressed in a holistic and balanced way.” (Council of Ministers, 2009b:1). The Lisbon Treaty is the long awaited institutional match to the EU2020. It has produced a new mission statement for the rejuvenation of the EU by the

EU2020 as the new strategic program. 16

In order to return to the big and brave vision, the EU had to make a very marked distinction between the short term crisis management measures and the long term radical institutional reforms. Therefore an efficient institutional framework was needed at the EU level that could bridge the gap between/among the diverging institutions with conflicting interests. Even within the transnational EU institutions there has been a tendency of the “agency drift” among the Council formations, the Commission DGs, and/or of advisory bodies like the CoR and EESC, representing various vested interests. It has hardly been counter-balanced so far by the central steering, although the centre

has “struck back” from time to time with reorganizations, but the centre itself has also remained rather fragmented. This new governance turn for implementing the Europe

2020 is supposed to be a special form of “governance mix” with the strategic-political leadership of the European Council, first of all in the Big Institutional Triangle of the

Council, Commission and Parliament. But the governance mix has to be designed as a “matrix” of horizontal and vertical structures in the spirit of the MLG structures, with Council, Commission and Parliament. But the governance mix has to be designed as a “matrix” of horizontal and vertical structures in the spirit of the MLG structures, with

several sub-national territorial levels with the joint economic, social and territorial cohesion.

Hence, there is a need for the strong metagovernance at the top that enables the EU to make quick integrated decisions. The extended union level program has to be completed jointly for the Europe 2020 with the coherent forms and comprehensive frameworks at the EU level of public actions, although the structural reforms have to be accomplished by the member states. The establishment of the European Council in legal terms has brought in the biggest change because the central initiative role of designing and deciding strategies has been transferred from the President of the European Commission to the newly elected President of the European Council. The role of the European Council has become vital in the new institutions’ pyramid for agenda setting and strategy formation as the political side of the Europe 2020. The Monti Report

emphasizes that “The President’s leading role is particularly crucial to bring a holistic vision. (…) Now that the European Council, also through the role of its permanent President, can afford a greater continuity in steering economic governance of the EU, it would be helpful to have a top-level comprehensive guidan ce of the Council’s contribution to this key pillar of European integration. (…) Europe2020 is a promising overarching policy initiative, which will be crucial for the future of Europe.” (Monti, 2010:106-107).

In fact, instead of the bottom-up process, in which first the Council formations discuss the relevant issues that come up later to the European Council for the final - sometimes only formal – approval, in the new system the strong strategic decisions originate from the European Council and they go down in a top-down process through which the Council formations elaborate later its concrete implementation. This presupposes also the shift of ownership from the former, lower positioned national “Lisbon representatives” with their two sessions a year to the high positioned members of the European Council with their frequent meetings, almost every month. However, with the political-strategic role of the European Council, the new role of the General Affairs Council (GAC) as the policy side of the Europe 2020 with its bottom up polity process is still missing (see Kaczynski and Byrne, 2011). It would also be vital in creating the policy coherence with synergy, thus without the GAC role in the monitoring and implementation of the overall strategy the failure again can be predicted. In the New Governance Structu re (“stronger government”) the GAC should have a central place for policy coordination in the entire pyramid built on MLG structure, reaching subnational levels that has also been underlined by the Monti Report (2010:84-85). For the reform of the entire EG, the top-down structure - starting from

European Council (metagovernance) taking “full ownership” of the Europe 2020 by passing the main European Council (metagovernance) taking “full ownership” of the Europe 2020 by passing the main

All in all, the governance line of the Lisbon Strategy/Europe 2020 has to be considered from a long term view about the institutionalization of the EU that culminates in the Lisbon Treaty. The long overdue reform of the strong central decision making mechanism in the Europe 2020 has to be completed in the spirit of the MLG by the functional macro-regions (Baltic Sea Region Strategy and Danube Region Strategy), which have been the laboratory for social innovations in regulatory regionalism or regional governance. Moreover, as it has often been mentioned, the lack of national - and even more subnational - ownership may be the biggest threat in the implementation of the Europe 2020. The further integration of the union and national levels, as the radical reform of the governance line, is one of the main preconditions for the success of the Europe 2020: “The Open Method of Coordination has failed as an instrument because it does not provide an effective control mechanism for the common goals. In its current form it allows member states to integrate European objectives into national interests thereby making policy according to the changing facts on the ground. Without a robust and binding mode of coordination, Europe-wide macroeconomic management will be pursued in vain. A progressive growth policy must be combined with a new mode of cooperation – in fact, it depends upon it.” (Kellermann et al, 2009:4). Reading this too severe statement, one should not forget about that it reflects also the very heavy demands of the current global crisis management. Briefly said, the OMC has been useful but not committing, therefore the EU toolkit has remained too limited. Nowadays a clear commitment of the member states is needed for the refocusing on the Europe 2020 by shifting the border lines between the union and national competences giving more competences to the Union.

The Europe 2020 Strategy and the budgeting policies have also to be adjusted or integrated as well. It was a problem from the very beginning that the declared objectives of the LS had no proper financial resources. This was only partly corrected by the integration of the LS with cohesion policy in 2005. The case is, again, that while the Europe 2020 starts actually in 2011, the new financial perspectives will enter much later, in 2014. In such a way a non-correspondence or misfit between them can be continued.

A strategic decision has to be made as soon as possible to divide the Europe 2020 into manageable periods like 2011-2013, 2014-2017 and 2018-2020. The LS was also implemented in three periods of rather different characters, so is with the Europe 2020. The first period will still be crisis management with exit strategy, whereas the second one can be the real start for the new union policies in a renewed institutional and budgeting

framework that can only be fully implemented in the third period. 18

As discussed above, for the widening of the EU policy universe a new system of the basic institutions is needed based on integrative balancing with the central role of the EUCO. But the economic growth in a GDP-centred policy universe is still the magic word for many politicians and experts, although the main issue in the second period of the EU2020 from 2014 is how to reconcile economic growth and human investment with social progress. In this respect, there have also been many votes for the Europe 2020 understood in the spirit of So cial Europe: “The EU 2020 strategy must make it clear to Europeans that it is now all about showing the world how qualitative economic and employment growth, social justice and sustainability can be brought together in a creative way. The times of growth for the sake of growth are gone for ever. The Europeans want a progressive social agenda which seeks to enshrine a social market economy in Europe. This is exactly what ‘EU 2020’ should be striving to attain.” (Fritz- Vannahme et al, 2010:7). The González Report has also concluded that the European model depends on the “continued balance between its social and market dimensions”, hence “a renewed emphasis on increasing economic efficiency needs to go hand in hand with new social policies” (González, 2010:15). 19

Thus, the real magic word for the policy planning and policy coherence is the strong governance, based on the close coordination of the key policies, since in the last analysis everything depends on the quality of governance. Due to the global crisis, the regulatory soft power as the Open Method of Coordination has to be transformed to hard power for policy coherence (see Fink-Hafner, 2010). The structural reforms in all fields concern not only the given sectoral politics, since they have been interconnected, thus policy coordination or coherence is needed for all policy strategies. In fact, all failed policy reductions have proved so far that all preferred policy fields have depended on many others. Any policy innovation would produce the desired outcome only in the case of making the necessary changes on the related policy fields as well. The tension between the policy widening and the policy reduction went through the entire history of the LS. There were some efforts to reduce the LS to some key policy fields in the

“economy” and “society”, first of all after 2005. Despite of the reduction efforts, too many concrete indicators were given from the very beginning in the LS. But the reduction exercises always backfired, since they revealed that there was a high interdependence between/among the various neighbouring policy fields and finally the “excluded” policy fields returned with a vengeance. The history of the LS, due to the emergence of new

policies, was in fact a long process of policy widening with “policy turns” and with a continuous integrative balancing exercise between/among various policy fields. At the same time, in order to cope with the increasing complexity, the EU tried to integrate all policies into one integrated framework of “super-planning” through some kind of integrative balancing. It is easy to note that the most frequent word in the EU documents policies, was in fact a long process of policy widening with “policy turns” and with a continuous integrative balancing exercise between/among various policy fields. At the same time, in order to cope with the increasing complexity, the EU tried to integrate all policies into one integrated framework of “super-planning” through some kind of integrative balancing. It is easy to note that the most frequent word in the EU documents

approach or for integrative balancing. 20

In this spirit of social progress the “main messages” of the Employment Summit (Prague, 7 May 2009) emphasized that the Union’s response to the crisis “should be

based on a coordinated approach integrating economic, employment and social policies (…) should mobilise all available national and Community instruments and fully integrate

growth, employment, solidarity, social protection and inclusion strategies” (Commission, 2009e:1). The summary of main message was that “The future Lisbon strategy should be focused on well-defined goals, relevant to European citizens, it should be reinforced to deliver sustainable growth, social cohesion and more and better jobs, ensuring long term

sound public finances and modern social protection system.” (Commission, 2009e:1). Actually , since the relaunched LS in 2005 the main line of “policy integration” was the integration of various policies with their synergetic effects. The proper integrated policy mix was supposed to balance (1) between competitiveness and convergence approaches, (2) between “traditional” and “new” community policies, and (3) finally between “internal” and “external” policies, with a shift of focus from the national to the community designed policies but paying attention also to the member states’ specificities. 21

In fact, the social progress based concepts have turned to the mainstream thinking, in which the proper policy mix of the economic and social policy is in social

productivity (see Fitoussi, 2009 and Martens, 2010). This means that “The focus of research on social progress thus shifted from GDP to defining, measuring and attempting to explain a broader set of factors deemed to effect the well-being of individuals in societies, which together have been termed ‘quality of life’. Research on social progress has also begun taking the well-being of future generations into account by examining sustainability issues.” (Theodoropoulou, 2009:14). Actually, social progress has proven to be the “hub” in the EU policy universe around which all policy fields have been orga nized. Consequently, “The forthcoming Europe 2020 Strategy needs therefore to

develop a broad ‘partnership for progress’; indeed, a new model of governance in partnership. (…) The Europe 2020 Strategy will also have an increasingly important external dimension. Regional and local authorities are already active promoters of vast

networks of cooperation across and beyond Europe” (Stahl and Spinaci, 2010:59,62). 22 Even after the LT the new policies in the Europe 2020 will be mostly in national

competences. Thus, budgeting allocations for new policies would involve also the co- financing of national policies because so far there have been no real “common” energy or

innovation policies. Thus, discussing the EU policy universe as to creating the proper policy mix, the difficulties may come not only from the nature of the individual policies (first of all from the conflict of economic and social policy in the short run), but also from the diverging national interests and positions in these policy fields from energy to innovation policies. Thus, discussing the EU policy universe as to creating the proper policy mix, the difficulties may come not only from the nature of the individual policies (first of all from the conflict of economic and social policy in the short run), but also from the diverging national interests and positions in these policy fields from energy to

pl anning with policy coherence needs common vision (“Think European”) as guidance for actions 23 (“Think Global – Act European”).

2. Differentiated membership or the gap between Core and Periphery

The EU has always been a “unity in diversity” that has meant differentiated memberships or flexible integration from the very beginning. This membership

differentiation has become more and more marked not only with the widening, but also with the deepening process, namely with the broadening institutional architecture and the increasing policy universe. As Janis Emmanouilidis has recently noted, “More than ever before the EU needs to operate at different speeds – and there are numerous reasons why this is so. The enlarged Union is characterised by a growing diversity of interests, an increase of economic, financial, social and geopolitical heterogeneity and diverging objectives and expectations concerning the future path of integration prevent consensus about Europe’s finalité.” (Emmanouilidis, 2010:97). Thus, “Differentiated integration serves to accommodate the diversity and plurality of the member states.” (Closa, 2010:4). Indeed, at the new level of the EG stipulated by the LT the EU needs more diversity to allow some elbow room for the accommodation of the MS, but the durable and extreme plurality of the governance methods is at the same time an obstacle to implementation of the LT already in medium term and the further improvement of the EG in long term.

The Amsterdam Treaty as a preparation for the Eastern enlargement was one of the turning points in coping with diversity. The Amsterdam Treaty has split the EU into two parts, since some former members has been allowed to opt out from the incoming policies (euro and Schengen), whereas no opt-outs have been allowed for the new member states, only some derogations for their introduction. The Schengen acquis and the eurozone memberships are mandatory for the NMS, but only after some time when the “internal” conditionalities are met. This implies that the Eastern enlargement was not

a “full” accession, only a partial one that has to be completed with some policy memberships afterwards, already within the EU. Therefore, at the time of the Eastern enlargement the debates were very intensive on the differentiated membership issues, and these debates have returned with a vengeance nowadays when the split between the Core and Periphery is again high on the agenda. In general, the EU history has shown that the conditionalities have always been increased as the EU has “redefined” itself (Kahn- Nisser, 2010). In fact, the Europact can be the creation of a “new supranational a “full” accession, only a partial one that has to be completed with some policy memberships afterwards, already within the EU. Therefore, at the time of the Eastern enlargement the debates were very intensive on the differentiated membership issues, and these debates have returned with a vengeance nowadays when the split between the Core and Periphery is again high on the agenda. In general, the EU history has shown that the conditionalities have always been increased as the EU has “redefined” itself (Kahn- Nisser, 2010). In fact, the Europact can be the creation of a “new supranational

includes the immediate transfer of competences and the pooling the sovereignty beyond the level inside the ‘old EU’”. (Emmanouilidis, 2010:98). Therefore, now it is a new

turning point ahead to avoid the fatal split between Core and Periphery, and to elaborate

a model of flexible integration. The Two-Speed Europe that may be institutionalized by the Europact is at a closer look a Three-Speed Europe with a wider peripherialization process, since both the most developed and the least developed coun tries have been left out from the “Eurofortress”. Hence, the Three-Speed Europe can be the simplest description of this project. Namely, Scandinavia is the “overdeveloped” group, including the Norway and Iceland as quasi MS.

This first group does not want to join the eurozone (including the UK for various reasons), but these countries are the real, long term “high speed group”. The “Eastern” new member states are the second, “underdeveloped” group, including still the eurozone MS like Slovakia and Estonia, and to some extent also Slovenia. The description of the third group, the eurozone member states is the most difficult. History matters, since some less developed countries like Greece and Portugal have joined the third group of the old eurozone states, but nowadays they are financially the most vulnerable members of the EU27. Thus, when the EU17 dares to take a big step ahead in the European integration, it finds the biggest difficulty in its own group due to public debt crisis in these high risk MS, and the Core-Periphery split re-appears within the eurozone with a vengeance.

In fact, the direct reason for the Europact is to compensate for the low competitiveness of these weak euro-member states. The Two-Speed Europe as a

“project” can be dangerous, but the term is rather meaningless because the main tension is just within the eurozone group. This group has been supposed to move ahead at the high speed but it has recently been fatally divided between the good and bad performers that will continue for some more years to come (see Commission, ECFIN, 2011 -

European Economic Forecast, Spring 2011). There has been an increasing gap between the “Northern lights” and the “Southern cross” as The Economist comments: “A two-

speed Europe has historically been a political spectre, but is has now become an economic reality. It is happening within the euro area, the heartland of European integration. On the fringes of the single-currency zone Greece, Ireland and Portugal have become ensnared in a sovereign-debt crisis. But in its northern core, driven by the German powerhouse, economies are reviving and public finances are solid. Now many fear that the economic divide could turn into a political chasm.” (The Economist, 2011:31-32).

However, in the last analysis, the EU27 proves to be a Multi-Speed Europe, in which the “common denominator” has always been redefined. If it is reduced to a minimum, then the Cohesive Europe will fail. The EU27 has very differentiated

membership system, or a very varied legal-political and socio-economic landscape with different “policy memberships” that has been analyzed several times under various titles like e.g. the “concentric circles”. The EU needs nowadays a positive strategy for the

differentiated or flexible integration (Tsoukalis et al., 2010:21-22), since as Janis Emmanouilidis has pointed out “a higher degree of flexible integration is a necessity if the EU27+ wants to remain effective (…) closer cooperation between a limited number of EU

countries can help to overcome stalemate, improve the functioning of the Union and reduce tensions between those who want to deepen collaboration and those who are not (yet) ready or willing to do so.” (Emmanouilidis, 2010:97). Therefore, flexible integration and the increasingly “closer cooperation” should go together, i.e. when making a substantial decision about the convergence – as it is the case with the Europact -, it is at the same time the right moment to elaborate the proper flexible integration in order to

be able to implement it. Nowadays the flexible integration as some kind of integrative balancing cannot be seen (yet?) in the Europact, since the EU is weaker and the pressure of the euro crisis is bigger than it was in 1993 when the Cohesion Countries were integrated into the eurozone by the facilitating fund. The EU27 has recently been weakened by the same Cohesion Countries, since they have fatally been wounded by the global crisis, and it has recreated and/or deepened the North-South divide in the EU. Hence, the EU is unable to prepare the same kind of facilitating fund for the NMS as it did earlier in the nineties in the case of the Cohesion Countries, so at present the integrative balancing mechanism does not seem to work. However, after these first urgent measures, the financially Cohesive Europe may be the solution with a well regulated structure of the European institutional architecture, in which the flexible transitions between the policy membership levels are to be institutionally arranged and financially

facilitated. 24 At this crossroads it has to be clear that Cohesive Europe has two meanings. First of all, the Cohesive Europe presupposes a general policy line for the EU27 with a broadly defined and permanently recreated strong “basic membership”. Beyond this general

cohesion policy for all MS in the framework of the renewed cohesion policy, however, in the post-crisis situation Cohesive Europe demands also a special cohesion/regional policy for the less developed MS. In such a way there has been a double track of maintaining and recreating the convergence, namely for all MS on one side, but leaving way for the

MS idiosyncrasies, including their catching up exercises on the other. 25 All in all, Cohesive Europe presupposes a flexible integration, including the

transition to the other membership levels of the policy integration. It needs a well transition to the other membership levels of the policy integration. It needs a well

years as its own “deepening” and “widening”, and much more is to come. 26 Namely, the EU has tried to elaborate some new “union” – earlier “community” -

policies as energy, climate change and knowledge triangle (higher education – research – innovation), and it has extended its common policy universe to the new policy fields also in the justice and home affairs. The EU has usually more initiatives in policies than for institutions, that is, despite all the delays and hesitations, the EU is more dynamic in introducing new policies than in regulating the interfaces of these policies by creating the proper institutions for them. In the present open situation it is risky that the Europact may produce strict regulations for a well defined policy field, but leaves the wider linkages and the precise social indicators of economic governance unregulated and unbalanced. There is no clear delineation between the policy integration levels that would

also provide the “elevators” between the different levels of the European institutional architecture. This situation can create a “Eurofortress” with strong some bastions but with long weak walls. It will reproduce the pre-accession situation for most NMS at a higher level, since they are already within the EU legally but still just “partially”. They have to “enter” the EU again in terms of policy memberships, under more difficult conditionalities than originally. All NMS face similar difficulties, even if they are already eurozone MS. Nevertheless, it is not only an East-West Divide, even more so a North- South Divide (see Magone, 2011). The choice between the regulated-orchestrated convergence and the “free competition” with increasing divergence concerns both the European institutional architecture and the EU2020 policy universe in all MS.

Conclusion: the post-crisis vision for the global competitiveness of the EU

he European Futures after the “annus horribilis”. It has formulated the main issue as “the more competitive Core Europe, the less Cohesive Europe? ” Or from the side of the differentiated memberships: “the Widening Core and

This paper has tried to discuss t

Periphery Gap ”. Nowadays there has been a deep malaise in the EU about its future, and its global competitiveness with the US and the BRICs. This pessimism has been generated by the global financial crisis turning into social crisis, and finally to an identity crisis. It has also been based on the exaggerated predictions about the BRICs increasing role and the overwhelming US global capacity. Actually, however, the transatlantic

ideological divide demonstrates that “the American growth model is stuck in deep crisis.” (Hill, 2011b:11). The EU has been markedly different from the other continental mega- regions, including the United States, first of all due to its commitment to the basic values of Social Europe. Referring to Social Europe, this American analyst has recently formulated in the title of his book - The European Way: A model for development in the twenty-first century (2010) – that Europe can be a model for the global developments. Even the subtitle of his book suggests that “the European Way is the best hope in an insecure age”. Steven Hill argues that reacting to the global crisis, “Europe has painstakingly pieced together the direction and details for a new e conomic order.” In fact, the risk of the global stalemate has been in the US policies, turning again in summer 2011 into a deep US crisis. T hus “Now if only Europe can get its laggard transatlantic cousin to pick up its pace, 2011 could be a banner year not only for economic recovery but for establishing the path for healthier and more stable global economic order.” (Hill, 2011a:4). 27

The debates on the Lisbon Strategy demonstrated - and these lessons have come back in the preparations of the EU2020 Strategy - that (economic) competitiveness and (social) cohesion are not necessarily going together to produce social market economy. Just to the contrary, the protracted global crisis has created a new divide between them and it has demanded a new model for their synergy. Accordingly, the March 2011 Conclusions have declared that the improving competitiveness does not lead automatically to a higher degree of convergence reinforcing social market economy (European Council, 2011b:4-5). So far the package of the competitiveness measures in the Europact has shown no sign of integrative balancing to enhance economic, social and territorial cohesion as stipulated in the LT regulations. The asymmetrical decision preferring competitiveness to convergence might have been necessitated by the very high outside pressure and the urgency of the decision. But even if it is considered just as the first reaction, some worries should be expressed already about its negative consequences. It remains to be seen whether the EU will take further actions to invigorate the EU2020 with the vision of Cohesive Europe, whether the new integrative balancing mechanisms will be introduced in order to upgrade the new member states as partners instead of simply imposing the rigid rules of economic competitiveness upon them.

The EU had in 2011 a long stormy summer but after the late July event one can draw a positive, optimistic conclusion on the sustainability of the EU crisis management.

The Eurogroup Emergency Summit on 21 July 2011 concluded that “We confirm our commitment to the euro and to do whatever is needed to ensure the financial stability of the euro area (...) We call for the rapid finalization of the legislative package on the strengthening of the Stabilit y and Growth Pact”. Finally, this document has invited the EU institutions “to make concrete proposals by October how to improve working methods and enhance crisis management in the euro area.” (Eurogroup, 2011). Obviously, this has been so far the strongest statement not only for the defence of the euro area, but first and foremost for the institutionalization of the EU crisis management and for the continued reform of the European Governance. Indeed, this statement has “the highest political significance” in the annals of the crisis because “it demonstrated that with its back against the wall, Europe could muster the political will to save the Euro. (...) For the first time the Eurozone got ahead of the market. (...) It recognized that the EU as a whole owed some obligation of solidarity as well as self interest to find ways of

stimulating growth in the debtor nations to offset the unavoidable severity of domestic fiscal austerity.” (Liddle, 2011:2-3). 28

Thus, in this post-crisis period a more pragmatic EU with efficient policy making – the so called Europe of results - is necessary but it is not enough. The EU needs long term visions or key concepts at this critical juncture moving from the pre-crisis to the post-crisis world. It stands at a crossroads when the results of the crisis management as an exit strategy can already be seen but the clear contours of the post-crisis world are still not yet visible. The EU reforms have to concern both the polity and policy lines, or the institutional architecture and the widening of the EU policy universe. In both ways there have been great achievements, with the LT the institutional architecture is half- completed, since the new top-down structure is ready for political leadership, as initiatives and urgent decision-making in the global world, but its bottom-up structures are weak or missing. The same goes for the EU policy universe, since there has been a big rearrangement between the union and national competences, still the painful process of the “unionization” of the new policies is far from being completed as policy widening. The current EG reform has also to be accomplished by the institutionalization of the stronger economic governance.

To overcome the crisis, new paradigm is needed. The EU has to return to durable economic growth but on a higher level of sustainability or in a qualitatively different way going beyond the GDP-centred concepts towards the social progress based paradigm. There have been many efforts to predict and prepare the EU’s future using the instruments of the frontier research. The biggest innovative effort has come from the designers of the EU2020 Strategy. This vision has meant a radical turning point in the

EU’s history and it has closely connected with the change of paradigms. The social sciences have provided a strategic planning to support the basic decisions where to go,

what kind of Europe has to be planned when the EU arrives at the crossroads. Social progress has been elaborated as the new paradigm for the future EU in the next decades by the leading policy institutes, and the renewed cohesion policy has been identified as its main instrument (see Fitoussi, 2009 and Martens, 2010). Following the first two steps of the policy and governance reforms, and after the stormy summer of 2011, the third steps are also urgently needed to accomplish the entire process of the exit strategy and to enter the new period of sustainable socio-economic recovery by 2013. The third steps can be the elaboration of the European Social Governance after the European Economic

Governance (EEG): “the EEG architecture must continue to develop so that it can combine successful short-term consolidation and the enhanced long-term Europe 2020 goals of inclusive growth, social cohesion and social inclusion. Or, to put it another way, what is needed is a m odel for the future Economic and Social Governance of the EU.”

(Fischer and Hoffman, 2011:8). 29

Therefore one has to return to the basic issue: What kind of EU? The simple and short answer is: we need Cohesive Europe with converging key policies in all MS. The Cohesive Europe as a complex economic, political, social and cultural unit with flexible integration is outlined in the EU2020 Strategy. Cohesion policy is its main instrument in the spirit of integrative balancing, by empowering the unequal external partners through an effective integration. The Europe 2020 has to be implemented through the widest possible popular mobilization as the EU documents emphasize: “While these guidelines are addressed to Member States, the Europe 2020 strategy should be implemented in partnership with national, regional and local authorities, closely associating parliaments, as well as social partners and representatives of civil society” (Commission, 2010b:7). The future of the EU has been formulated as the main intellectual adventure to

reinventing the EU for the 21 st century. Europe is in a creative crisis, and Europe is in a moment of its own redefinition: “The EU needs to redefine its role in a rapidly changing

world. (…) European integration is clearly at a crossroads.” (Tsoukalis et al., 2010:23). With the proper integrative balancing, after the age of the “nationalization” of citizens in the nation states there would be an age of the Europeanization of citizens with their

politicization, socialization and “culturalization” in the EU as a real transnational polity. The common future as the new perspectives for a Cohesive Europe will create the common European demos in some generations. The original idea of Jean Monnet was that after the economic integration the member stat es have to turn to the “cultural integration”. Indeed, the overcoming of the global crisis will create the common future with shared new values and achievements, based on the common history as a common destiny for all European peoples.

Annex – The short history of the new European architecture

In 2010- 2011 there has been an extended “crisis management” in the EU ending up with a policy triangle: EU2020 – economic governance – cohesion policy. The need for the stronger economic governance has been represented and managed by the EUCO and its new President. The leading analysts have concluded that “There is no doubt that the European Council has been a positive instrument of change. (…) But it is also clear that the European Council has gained power and political space at the expense of the original Community institutions. Quite obviously the Commission is no longer today the main initiator of the integration process, as it was in the early years of Community. The Council of Ministers is no longer the ultimate decision taker on most important issues. Those roles have been in practice taken over by the European Council.”

(EPC – Egmont Institute – CEPS, 2010:7). (1) As a first step, the EUCO has emphasized that “Structural policies are essential

for a strong and sustainable recovery and for preserving the sustainability of our social models. (…) The European Council stresses the importance of promoting economic, social

and territorial cohesion” (European Council, 2010a:1,4). (2) The EUCO has adopted the EU2020 for smart, sustainable and inclusive growth and repeated the statements from the 2010a Conclusions that all policies, including the cohesion policy have to support this Strategy. To lay the foundations for much stronger economic governance, the EUCO has invited the Task Force to report by

October 2010 (European Council, 2010b:3,4). (3) The EUCO has wanted to “enhance the coherence and complementarity between its internal and external policies”, the focus has been on “the strategic partnerships with the key play ers in the world” and on “the implementation of the European Neighbourhood Policy” as the globalization cum regionalization strategy

(European Council, 2010c:2,5,8). (4) The Task Force has suggested “greater fiscal discipline (…) the enforcement

measures w ill be extended to all Member States” with “a reverse majority rule” (European Council – Task Force – October 2010, 2010:1).

(5) The EUCO has endorsed the report of the Task Force on economic governance and it has also referred to the Conclusions of the Social Summit on 21 October 2010 (European Council, 2010d:1,5).

(6) The EUCO has outlined the itinerary of the LT amendments and it has indicated that the EU2020 has to promote “the delivery of structural reforms” also at national levels (European Council, 2010e:1,2).

(7) Reacting to the recurring crisis, the EUCO has repeated the main issue that “Beyond the immediate action required to tackle the most pressing challenges posed by

the economic and financial crisis, it is important to continue laying solid foundations for a sustainable and job- creating growth. This is the purpose of the Europe 2020 Strategy” (European Council, 2011a:1).

(8) The EUCO has reacted to the Arab uprisings and it has emphasized that “All countries of the region need to undertake or ac celerate political and economic reforms.” (European Council, 2011b:1).

(9) The Eurozone Summit has completed the formal adoption of the Europact and has suggested the amendments to the LT. The process is to be concluded with the approval of the EP (European Council, 2011c:1).

(9) The Conclusions the March 2011 Summit have noted about the March Euro- Summit that “The Euro Plus Pact as agreed by the euro area Heads of State or government (…) will further strengthen the economic pillar of EMU and achieve a new quality of economic policy coordination, with the objective of improving competitiveness and thereby leading to a higher degree of convergence reinforcing our social market

economy.” Thus, the main message is that supposedly the “new quality of economic policy coordination, with the objective of improving competitiveness and thereby leading

to a higher degree of convergence reinforcing our social market economy.” (European Council, 2011d:4-5).

The plethora of names is somewhat disturbing, namely “The term ‘Plus’ was, according to President Van Rompuy, added to the name to indicate both that eurozone countries have committed themselves to a higher degree of economic coordination and that the Pact is also open to Member States which have not (yet) adopted the euro.” (Emmanouilidis, 2011:8). Therefore in this paper I have used the simple term of Europact.

(10) The June 2011 Summit has mentioned the “near completion” of the “six package” of stronger economic governance, and it has endorsed the Danube Strategy

and the Council Conclusions on the ENP passed on 25 May 2011 (European Council, 2011e: 1,13,14).

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1 The paper has been prepared in the framework of the Hungarian National Research Foundation, OTKA ID: 77659). In Hungary we had a project for three years on

the strategic preparation for the Hungarian EU presidency in cooperation with the Spanish and Belgian experts, with many conferences and six books (see recently Ágh and Vértes, 2010; and Ágh, Kaiser and Koller, 2010). This paper is a summary of my recent ana lyses and findings based on a large overview of literature (see Ágh 2010 and 2011), and it is first part of a larger, comprehensive study followed by the second and third parts on regional/cohesion policy and on the macro-regions as the Danube Valley.

2 The early 2010s are an innovative period in the EU, including the three volumes of Think Global – Act European (see the third volume in Fabry, 2011 as to the motto of

this paper). These volumes have tried to suggest reforms of the EU policy universe for the incoming team presidencies. The main conceptual framework of this paper is the new paradigm of social progress elaborated recently by the EPC experts, see later. On the new dilemmas of the EU decision-making see Simon (2011) in this volume.

3 This paper deals with the first research item, the second and third one have been elaborated separately in two following papers as indicated in the note 1 (see Ágh,

2011d,e). In fact, the first two papers deal with the same issue of cohesion policy as the two sides of the same coin, first from a top-down approach and second from a bottom-up approach. The third paper offers a case study of this issue, namely cohesion policy in the case of an emerging macro-region with strategic design (Danube Strategy).

4 Post-crisis world can be described by the simple fact that one-third of jobs created since 1989 and 45 per cent of jobs since 2000, as the start of LS has been lost

(Stahl and Spinaci, 2010:59). To return to the pre-crisis level would need some years with even three per cent growth annually. The official term for the new Strategy was first “EU 2020”, later it has been finalized as “Europe 2020”. 5

The famous saying of President Nixon was that “dollar is our currency and your problem”. Following this the parlance in Brussels has been a saying (although open to some variations) that “euro is our currency and Greece is our problem”. 6

The Commission launched consultation process for the preparation of its first draft with a consultation paper on 24 November 2009 until 15 January 2010 (see the overview of public consultation, Commission, 2010b). This process was linked also to Barroso’s Guidelines and its results were summarized by Barroso on 26 January 2010. 7

Although both Left and Right have supported the Europe 2020, there have been obviously different approaches and both sides have tried to find their versions. Hannes

Swoboda and Jan Marius Wiersma see in this project the “social democracy reaffirmed”: “A first test for our new capacity to regain confidence and design visions for the future is our capacity to actively participate in the discussion and formulation of the agenda for Europe 2020.” (2010:6). For the similar view of support in the centre-right see Stübgen and Wadeful (2010). As to PIGS, Ireland was mentioned earlier but Italy nowadays fits better to this group. Italy has introduced, indeed, similar austerity measures like the other Southern states (Spain: 12 May, Portugal: 20 May and Italy: 25 May 2010).

8 Double track approach means taking the very different starting conditions into account and offering facilitating devices for catching up. In fact, the EU has applied the

double track approach several times, namely the member states with a GDP per capita double track approach several times, namely the member states with a GDP per capita

9 See Fabian Zuleeg Europe 2020: better – but still not good enough, EPC Commentary, 05.03.2010:1-2, www.epc.eu .

10 See the statement of Jerzy Buzek in Address by the President of the European Parliament Jerzy Buzek to the European Council, Brussels, Thursday, 25 March 2010,

p.2.).

11 On the other side the EPC evaluation has mentioned three main critical issues in the adoption of the Europe 2020 Strategy, the controversy about the headline targets,

the lack of stronger focus on public services, and the poor treatment of implementation of Strategy due to the remaining governance deficit, or the clashes between economic governance and economic government approaches (EPC, 2010b:2,5).

12 “The Third Industrial Revolution and the new era of distributed capitalism allow us to sculpt a new approach to globalization, this time emphasizing continentalization

from the bottom up. (…) Continentalization is already bringing with it a new form of governance. (…) The European Union is the first continental governing institution of the Third Indust rial Revolution era.” (Rifkin, 2011:1-2).

13 The EU2020 as a comprehensive strategy presupposes the reform of the EU policy universe as a whole, including also the Europeanization of the national public

administration systems with their MLG partnership structures (see also Borghetto and Franchino, 2010). In this respect, cooperation, complementarity and coherence are the magic words for the Commission. The EU2020 has therefore been completed by the bottom-up functional macro-regional strategies like the Danube Strategy in order to promote also the pre-accession processes of the Western Balkan states and to facilitate the Eastern Partnership for the six Eastern European states by integrative balancing.

14 In my view, the EU has to assist the catching up of the NMS on one side, and these countries have to do everything to take the opportunity for the convergence on the

other. Obviously, this is not the case of the incumbent Hungarian government (see e.g. Balogh, 2011). I describe the threat involved in the Europact turning to Eurofortress but I disagree very much with the attitude of the incumbent Hungarian government delaying the introduction of the euro beyond 2020 and not joining the Europact. The detailed criticism of the euroscepticism of the present Hungarian government, however, would need a separate paper.

15 The EU has made some efforts to revitalise neighbourhood policy and coming to terms with the neighbourhood, which is highly diverse, mostly poor and unstable, but

with a modest success. “The EU has repeatedly tried to promote regional integration in other parts of the world”. (Tsoukalis et al., 2010:6,9). On the general security issues, including the war in Libya, see Park, 2011.

16 “The Lisbon Treaty resolves in principle to raise its level of ambition in the field of foreign and security policy to that of a major world actor” (Emerson et al, 2011:2).

This Global Matrix describes the world system emerging from the post-crisis situation. See also Jacoby and Meunier, 2010.

17 There have been serious efforts by the CoR to “involve local and regional authorities in the Lisbon governance process” that has been supported by the Lisbon

Monitoring Platform (LMP) as a contribution to the implementation of the LS. This trend was relaunched at the European Summit of Regions on 5-6 May 2009 in Prague, prior to the Employment Summit ( http://www.cor.europa.eu/pages/EventTemplate ).

18 The Bruegel Institute has launched a program that has directly related to the Europe 2020 and it has also suggested a better match between the Europe 2020 and the

next financial perspectives (see Sapir, 2009).

19 In this respect of the changing paradigm, the EPC document “A Schuman Declaration for the 21 st Century”, issued by Rosa Balfour, Janis Emmanouilidis, Hans

Martens, John Wyles and Fabian Zuleeg may play a central role.

20 The German team has recently argued in a similar way: “The Integrated Guidelines, despite their claim to be ‘integrated’, focus solely on economic

considerations. A new European Strategy from 2010 must be able to link economic activities and forms of regulation in the EU to their social and environmental effects. (…)

Any revision of the Lisbon Strategy must ensure a new balance between economic and social objectives. A successful employment policy depends on an active and broad

strategy for sustainable and high quality growth.” (Fischer et al, 2010:7,12). There are also proposals for other coordination and supervisory bodies as a European Council of Economic Experts (ECEX) that can provide the “naming and praising” function based on the experiences of the German Council of Economic Experts (Fritz-Vannahme et al, 2010:4-5).

21 “Even today all the indices show that the new members are still below the averages for the ol d members. (…) In order to give economically weaker states a chance

of winning, the assessment of their achievement would have to concentrate less on the current status, and more on developments over the past year.” (Fritz-Vannahme et al, 2010:2,4).

22 „If there is no public pressure on individual member states, and if at the same time the significance of the EU strategy is not understood by the electorate, national

governments will not feel compelled to change anything. (…) EU citizens and social partners s hould play an active role in policymaking.” (Fritz-Vannahme et al, 2010:3,7). Barroso declared in October 2009 that “Citizens have to be at the centre of the agenda.” (see in Theodoropoulou, 2009:25). If it is so, then the citizens have to be involved and motivated for the Europe 2020 Strategy unlike in the case of the LS, see in Hacker (2011) for details.

23 The Competition Council has underlined the necessity of “European cooperation within the ‘knowledge triangle’ (…) the European Institute for Innovation and Technology

(EIT) is expected to play an important role in this context.” The role of “frontier research”, “effective governance of ERA” and the Ljubljana process as the “fifth freedom” has also been mentioned (Council of Ministers, 2009a:15).

24 Thus, the facilitating fund is not a new idea, it originates from 1993, and with a similar Fund the Eastern enlargement can also lead “to rapid convergence, as it had

earlier in the case of the Cohesion Four (Greece, Ireland, Portugal and Spain)” (Tsoukalis et al., 2010:11). The related EU documents (European Commission, 2010b,c,d) have dealt with the Funds in great details: “The point of cohesion policy was always to help reduce socio-economic disparities and promote real convergence in the European Union by inv esting in social change.” Cohesion policy has recently also proven to be a very powerful instrument to “Responding to the economic crisis” (European Commission, 2010b:2). Further proposals for the new Facilitating Funds have to be elaborated to promote the catching up process in the NMS at this juncture.

25 In this paper I have analyzed the Cohesive Europe in a top-down approach or at macro-level, in the other paper of this volume I have dealt with a bottom-up approach or

with the subnational-regional level. The double track approach and the paradigm of social progress come back as well in this approach of regional/cohesion policy from a different side. I have concentrated here on the Core-Periphery tension, see the differentiated membership issue also in Ker n and Gänzle, 2011.

26 On the basic features of cohesion policy for the Cohesive Europe see European Commission (2010b,c,d). See also CoR (2009). The EU2020 strategy for the Cohesive

Europe includes a strong territorial dimension (European Commission, 2010d:7).

27 “An expanded eurozone remains so much in Germany’s direct interest that it is worth financing, if not paying for.” (Posen, 2011:29). “Germany has evolved a social

capitalism which has proven to be more stable and efficient than America’s Wall Street capitalism, not to mention more ecologically sustainable.” (Hill, 2011c:7). Moreover, “Europe needs forward-looking German leadership anchoring a European Germany in a more German Europe.” (Godement and Klau, 2011:19). In my view this effort contradicts t o the German tendency to create a Core Europe as a “Club within the Club” (Dohmen and Schlamp, 2005) to institutionalize the Core-Periphery gap. Since the spring 2010 capitalism which has proven to be more stable and efficient than America’s Wall Street capitalism, not to mention more ecologically sustainable.” (Hill, 2011c:7). Moreover, “Europe needs forward-looking German leadership anchoring a European Germany in a more German Europe.” (Godement and Klau, 2011:19). In my view this effort contradicts t o the German tendency to create a Core Europe as a “Club within the Club” (Dohmen and Schlamp, 2005) to institutionalize the Core-Periphery gap. Since the spring 2010

2 011 in an ECFR discussion Jürgen Habermas has strongly criticized the Europact (“Pact for or against Europe?”) warning about “the future resentments between European countries”, and Mark Leonard has noted that “Germany has come to a crossroads of

national re-

28 orientation” (see Guérot, 2011). Liddle also notes that “We have witnessed once again an absolutely classic

British underestimation of the underlying dynamic of European integration.” (Liddle, 2011:3).

29 According the German concept, new Leitbilder or key concepts are needed, and this recent edited volume (Brincker and Jopp, 2011) has contributed to their elaboration

to a great extent. The emerging new paradigm of social progress has been the main conceptual framework of this paper and I return to this issue in the concluding paper in this volume from the side of the renewed cohesion policy.