27. Cohesion Policy and Europe 2020 Stra

Cohesion Policy and the Europe 2020 Strategy: Constructing the EU for the next decade

Attil a Ágh Budapest Corvinus University

“The 2011-2012 period will most likely be marked by an increased polarisation between core and periphery Member States. (...) cohesion among Member States, and within Member States, should be fostered in conjunction with the current competitiveness criterion – the risk of seeing a two-speed Europe develop, with growing economic performance gaps among the

27. ” (Think Global – Act European, Vol. III, 2011:XV).

Introduction: Creative crisis with controversial outcomes so far

The EU is at a crossroads in 2011, and this year can become an important turning point in the EU history. The EU may turn to a wider comprehensive profile with a Cohesive Europe along the lines of the Lisbon Treaty (LT) and the Europe 2020 Strategy (EU2020) or it may turn to a more narrow competitiveness profile with a “Eurofortress” that can produce a widening gap between the Centre and Periphery in the EU27. This crossroads as a historical turning point in 2011 necessitates a new mission statement abo ut the future the EU is heading for. It has to formulate also the EU’s role in the global world in order to redesign the EU’s future in this “risky”, quickly globalizing world. 1

Since its foundations there have been many definitions of the EU as a constant redefinition of “Europe”, both in its external and internal dimensions. Nowadays, however

a future-oriented definition of the EU is needed because with the new developments - the LT, the EU2020 and recently the Europact (“Euro Plus Pact”) - the EU is heading for a

new future. The impact of the global crisis on the EU has usually been described only in negative terms, although these global developments have also pushed the EU towards a creative crisis. The global crisis has been a stress test for the EU27 and it has forced the EU to invent and introduce new crisis management mechanisms. In 2010 a new five year cycle of the EU institutions started in the European Parliament (EP) and the European Commission (EC), but the European Council (EUCO) changed beyond recognition, too. The global pressures have generated urgent internal needs for the strict economic policy coordination, thus the EU has entered a new era with the strong leadership role of the EUCO and its permanent president.

The EU has gone through several development stages that have involved a permanent redefinition of the EU. Indeed, the global crisis has recently demanded “externally” a redefinition of the proactive European role in the emerging polycentric The EU has gone through several development stages that have involved a permanent redefinition of the EU. Indeed, the global crisis has recently demanded “externally” a redefinition of the proactive European role in the emerging polycentric

“multiple level sovereignty” and at some levels “the pooled sovereignty” as an “crisis- proof” economic governance (Jabko, 2011:45,51). Actually, the incoming European Stability Mechanism (ESM) and the ensuing European Monetary Fund (EMF) outline already the institutionalization of crisis management and the future European common fiscal policy.

In the early 2010s the EU is facing both a long lasting crisis and a strong push for creative institutional and policy innovation. The González Report points out that “The EU can be an agent of change in the world, a trend-setter, and not just a passive witness.

(…) The crisis has acted as a wake-up call for Europe to respond to the changing global order.” (González, 2010:3). Thus, the first years of the new cycle will be a tough stress test for the EU in intellectual learning and social innovation. Under the pressure of global crisis the only way out for the EU is to take a big step towards the wider and deeper integration. Ulrich Beck formulated already this idea at the early stage of the global crisis in a very marked way: “If the EU did not exist, we would have to invent it today. (…) Europe does not need less Europe – it needs more Europe. The global crisis shows that monetary union cannot be achieved without political union. (…) This crisis cries out to be tr ansformed into a long overdue new founding of the EU. (…) an EU rejuvenated by the crisis.” (Beck, 2009). 2

Thus, the research agenda in 2011 at this juncture of creative crisis focuses on the following issues, offering both top-down approach or views from above (1 st issues)

and bottom-up approach or views from below (2 rd and 3 ):

nd

(1) The alternative of the Cohesive Europe or the Core-Periphery divided Europe, and the perspectives of the EU2020 Strategy in its close linkages with the cohesion policy and the strong economic governance as an “iron triangle”.

(2) The renewal of the regional/cohesion policy with the perspectives of the new member states (NMS) in the European Futures, especially regarding their catching-up strategies in the renewed cohesion policy.

(3 ) The new role of the EU in the global governance as the “globalization cum regionalization” project in the context of the Baltic and the Danube Strategy, in close connections with the West Balkan enlargement and the Eastern Partnership 3 ’s widening.

The creative crisis management of the EU has taken place in two major steps so far. The first steps were taken from the beginning of the global crisis to the institutionalization of the crisis management in June 2010 in the good faith that it was a “V”-type of crisis, i.e. the crisis followed by recovery. The second steps have been taken

as overcoming the recurring crisis from June 2010 to June 2011 that has been continued with the long stormy summer in 2011. It has been so far the regained optimism that the

“W”-type of crisis – i.e. the recurring crisis - can be overcome in the second stage of crisis management and it will not turn to an “L”-type of crisis with a long stagnation and small recovery. This W-type of crisis gives the time horizon of this paper, which covers

both the reform of the institutional architecture in the LT (“metagovernance”) and the reform of the EU policy universe in the new megaproject (EU2020). The Big Dilemma of the EU stays with us for the next period as well: on one side the successive crisis situations demand quick responses from the EU, and the EU have often been criticised of being slow in decisions, missing political leadership and paralysed by long internal

discussions. On the other side, however, there have also been voices blaming the EU for the democratic deficit, for not discussing-consulting all the issues with all those concerned from governments to organized interests. No doubt that the EU has developed

a lot of establishing its metagovernance, at the same time the decisions have been delayed by the resistance of national governments or by the other actors that have tried to engage in the political compromise with their own stakeholders.

The analysis starts with the creative crisis and with the above stages of the crisis management, and it continues with the reform processes in the institutional and policy fields. The conceptual framework of this paper is built on iron triangle, the emerging organic link between the EU2020 Strategy, cohesion policy and stronger economic governance. The paper focuses on the increasing tension between the Core and the Periphery in the EU efforts to achieve a long term consolidation after the “exit strategy”.

I. From Lisbon Strategy to Europe 2020 Strategy

1. The first step: crisis of crisis management and its institutionalization

The transition process from the Lisbon Strategy (LS) to the Europe 2020 Strategy (EU2020) was itself part of the EU global crisis management. The history of the Lisbon Strategy, in fact, came to an end already during 2009, even if the EU leaders and analysts were not aware of it. In the basic EU documents the direct crisis management measures (exit strategies) were at the forefront at the June 2009 Summit, since “Future development remains uncertain.” (Council, 2009b:5). The institutional crisis was also

looming large around the ratification of the LT. Although some institutional innovations were launched in June 2009 like the Eastern Partnership (EaP) and the functional macro- regions (Baltic Sea Region Strategy and Danube Region Strategy, BRS and DRS), there was no time and energy to evaluate the results of the LS. Only the October 2009 Summit produced a small remark that “The European Council looks forward to discussing a new European strategy for jobs and growth as part of upcoming review of the Lisbon Strategy.” (Council, 2009c:8). However, when the institutional crisis came to an end with the entry of the LT on 1 December 2009, the December 2009 Summit already outlined

the “new EU 2020 strategy” (Council, 2009d:7-8), indicating that the March 2010 meeting of the European Council would deal with the new Strategy in detail. In the late 2009 there was a turning point in the strategic vision of the EU, indeed, the LS passed away almost unnoticeably and without a meaningful official final evaluation, with a simple

summary (Commission, 2010a). By the late 2009 EU was under double pressure with a cumulative effect of the internal and external crises. On one side it had to deal with overcoming the global crisis as a short term goal (exit strategy), but on the other it was forced to elaborate a new long term strategy, since the post-crisis world would be totally different. At the same time, the main institutions of the EU were terribly busy with the start of the regular five year cycle in the EP and the European Commission. This institutional renewal was disturbed and delayed with the long and controversial process of ratification of the Lisbon Treaty (LT). This long delay can be exemplified with the entry of the LT on 1 December 2009 and that of the new Commission on 10 February 2010. Hence, heavy debates began only in the early 2010 on the new Strategy under the new name of the Europe

2020 in a completely changed global situation. 4 Moreover, the global crisis appeared as a long-term disturbing factor because in

the early 2011 the Greek crisis blurred the long term thinking by forcing the short term crisis management tasks upon these changing EU institutions, so in the spring 2010 the trouble shooting came to the fore. Thus, the coincidence and mutual reinforcement of the EU “domestic” institutional crisis and the “external” global crisis characterized this first period that can be described as the crisis of crisis management. Actually, this cumulated burden prevented the necessary radical changes in the EU until 9 May 2010 when the

Gordian knot was cut by the German Bundestag decision in the Greek bailout case. With the ensuing Greek Drama and its PIGS (Portugal, Italy, Greece and Spain, originally Ireland was also included) follow-up around the economic governance a new chapter began in the crisis management with sharp debates and firm decisions. This first period came to an end by the June 2010 Summit of the European Council with the

institutionalization of crisis management. 5 There was a long story of wake-up calls for the crisis driven change in the EU

since the beginning of the global financial crisis. In this previous period, before the mid- 2009 there were already strong incentives for breaking the status quo and for overcoming the deep social resistance to the changes/reforms of the European Governance (EG). A strong demand appeared also for the economic governance completed with the complexity management in the widening EU policy universe “inside” and with the global anticipatory risk management “outside”. But the strategic vision was pushed to the background from time to time even later, also in the early spring 2010 by

the “immobilism” in the EU due to the panic reactions of economic nationalisms. The direct, narrow minded reactions to the financial, economic and social crisis disturbed and delayed the long term crisis management, although the strategic vision returned back new and again. In this situation the elaboration of the Europe 2020 strategy became vital and pivotal. It determined the future self-definition of the EU basically both in its

institutional architecture and in the increasing policy universe. This vital importance was emphasized by Barroso at the presentation of the Commission’s Europe 2020 document on 3 Marc h 2010: “Europe 2020 is about what we need to do today and tomorrow to get Europe back on track.” (Barroso, 2010:1).

In fact, although the first outlines of the Europe 2020 strategy appeared in the Presidency Conclusions of the December 2009 Summit (Council, 2009d), the real debates about its content began still only after the entry of new Commission. This December 2009 document while presenting the Europe 2020 also wisely noticed that the “time has now come to evaluate the impact of the Lisbon strategy”. It did not engage in this evaluation, but it underlined the need for the “long-term reforms in an ambitious and revamped new strategy”. This Council document pointed out that a new reflection was needed for “a more efficient and transparent governance structure (…) to improve

coordination of economic policies and on the best way of using country recommendations to strengthen the link between national and EU measures, and enhance national ownership through more active involvement of social partners as well as of regional and local authorities.”. At the same time the European Council endorsed the initiative of the

Commission to launch a consultation process on the Europe 2020 in order to prepare the funding document for the spring 2010 meeting. In addition, the European Council noted the importance of the Sustainable Development Strategy for the Europe 2020 by Commission to launch a consultation process on the Europe 2020 in order to prepare the funding document for the spring 2010 meeting. In addition, the European Council noted the importance of the Sustainable Development Strategy for the Europe 2020 by

The first occasion to discuss the Europe 2020 Strategy was on 11 February 2010 at the Informal Summit, since the main aim of this meeting was to confirm the basic tenets of this Strategy. The Summit was overburdened, however, by the Greek fiscal crisis, which on its part further delayed the whole process, but at the same time forced to accept some radical changes in economic governance. The February Informal Summit already indicated that the newly elected president, Herman Van Rompuy was ready to play an assertive and innovative role in the European Council, including the Europe 2020 Strategy. In a long speech in Bruges at the College of Europe he gave a comprehensive description of the post-crisis world and noted the necessity to make a political decision for stronger governance. At the same time he hinted at the fact that the EU’s main goal was the convergence of the member states’ economies but the opposite process could still be observed (Rompuy, 2010a:4-5). From the very beginning he pushed for the new strategy, and when the first draft of the Europe 2020 strategy was published on 3 March

2010 (Commission, 2010c), he underlined that “Work on the new strategy is only beginning” (Rompuy, 2010b:2) that can be confronted with the too optimistic presentation of this document by Barroso as a quasi completed draft. Anyway, the Commission ’s basic document (2010c), although not yet the final one of the Europe 2020 Strategy, has to be compared with the 2000 Council decision launching the LS. The contrast is rather shocking, since the 2000 Council document had been prepared in a boom period and expressed naïve optimism, while this March 2010 Commission document was written in a deep crisis period and expressed a hardly concealed pessimism.

The pessimistic mood because of the global impact of financial crisis went also through the whole March 2010 document, declaring that “the crisis is a wake-up call” and “Europe needs to get back on the track” (Commission, 2010c:2). However, as a half-

hearted reaction to crisis with the threat of Greek collapse that could be followed by the other PIGS states, it presented only some controversial steps with an overloaded agenda. It was stuck again between the brave general vision and the overextended detailed targets that were presented in a three floor planning architecture of the EU2020: 3 priorities, 5 headline targets and 7 flagship initiatives. This structure was built on the levels of the general principles, the middle level targets and the concrete projects. But, as many analysts have pointed out, they d id not represent a “coherent response” to the challenge. The duality of economic and social principles was repeated from the March 2000 Council document on the LS, instead of merging them by focusing on the terms of social progress and/or social productivity. The economic and social factors were simply separated to three principles, which were supposedly “mutually reinforcing priorities”:

“(1) Smart growth: developing an economy based on knowledge and innovation. (2) Sustainable growth: promoting a more resource efficient, greener and more competitive

economy. (3) Inclusive growth: fostering a high-employment economy delivering social and territorial cohesion.” (Commission, 2010c:5). In fact, already in the LS the essential

tension was that the first two principles above were reduced in fact to economic competitiveness, which contradicted to a great extent to the third principle above that represented solidarity. It is not by chance that most criticisms were formulated in the

mood that this first draft was not enough green and social. 7 Furthermore, the March 2010 Commission document mentioned that “EU goals

are translated into national targets and trajectories”, or “Country-specific recommendations will be addressed to Member States” (Commission, 2010c:5). It emphasized the membership specificities, and outlined the five “interrelated” headline

targets at the EU level in concrete indices, but without introducing the double track approach for more and less developed member states. The double track approach does not mean in itself a double speed Europe but presupposes that facilitating devices are introduced to the strategy, basically in the form of cohesion policy for the catching up of the less developed member states. This shows that the weaknesses of the LS final evaluation, i.e. the missing analysis of the “pre-Lisbon” situation in the new member states, created problems in the elaboration of the new Strategy, too. It was not pointed out in Commission document (2010a) that one of the main reasons for the relative failure of the LS was the missing realization that the new member states in many respects were still in the “pre-Lisbon” phase and the facilitating devices for their catching up were also missing, since they were not an essential part of the LS governance structure. No doubt

that the LS neglected the special situation of the new member states and their “pre- Lisbon” tasks and burdens. Again, there is no sign in the March 2010 document either that the EU would realize this divergence in the starting conditions. Nor there is any reference to the efforts to prepare some special measures for the double track approach

in the Europe 2020. 8

Similarly, it was vividly contested whether the seven flagship initiatives converged and/or coincided with the five headline targets. Therefore, it was not by chance that the “poverty reduction” became the most controversial issue in both cases, since it was not organically linked to the other items and its salience varied a lot from country to country. Another contradiction of the basic document was that it referred to the parallel reporting of the Europe 2020 and the Stability and Growth Pact, but confirmed the “integrity” of the SGP, i.e. it refused the urgent demands for its reform and synthesis with the Europe 2020 (Commission, 2010c:5-6). In fact, the case of the LS should have been a warning, since at that time also two sets of indicators emerged, separately for the LS and for the SGP. It resulted in deep troubles not just in statistics but also in the implementation of Similarly, it was vividly contested whether the seven flagship initiatives converged and/or coincided with the five headline targets. Therefore, it was not by chance that the “poverty reduction” became the most controversial issue in both cases, since it was not organically linked to the other items and its salience varied a lot from country to country. Another contradiction of the basic document was that it referred to the parallel reporting of the Europe 2020 and the Stability and Growth Pact, but confirmed the “integrity” of the SGP, i.e. it refused the urgent demands for its reform and synthesis with the Europe 2020 (Commission, 2010c:5-6). In fact, the case of the LS should have been a warning, since at that time also two sets of indicators emerged, separately for the LS and for the SGP. It resulted in deep troubles not just in statistics but also in the implementation of

makes necessary the merging of the two strategies with a common list of key indicators as the Europe 2020 scorecard (Saltelli et al., 2010:2,6).

It is also evident that also the “key shortcoming” of the LS was kept in the March 2010 Commission docum ent as “the omission of a very large element of European

economies, namely the public sector”. The public sector provides not only a large variety of public services with its controversial and always challenged productivity level but it also sets the legal framework for social development, thus it has an enormous importance for the entire Europe 2020 Strategy (Martens, 2010:18-19). This Commission document dealt in some ways with cohesion policy, yet, it did not cover all policy areas (e.g. education) and t here were also some “missing links” between/among the policies concerned (e.g. public sector – public services). Again, the separation of the Europe 2020 from the Stability and Growth Pact meant that the Strategy “does not address economic reform comprehen sively”, although “integrating both policy fields would have also

provided an opportunity to bind Europe 2020 into the wider economic governance mechanisms.” Finally, therefore “the proposed governance mechanism is still predominantly ‘soft’ (…) Agreeing a vision for Europe 2020 might be difficult enough –

but without stronger governance mechanism to implement it, it will just remain a vision.” 9

As it had been expected, the Europe 2020 strategy was in the focus of the European Council meeting in March 2010. The Council document confirmed the former measure that once a year the European Council would make an overall assessment of the Europe 2020 strategy (probably every March as before in LS). Similarly, it invited the member states to elaborate their national programs by the autumn of 2010 as a regular arrangement for the future. At the March 2010 Summit many leaders from the new member states warned about the danger of marginalizing cohesion policy and about the missing policy instruments of reintegrating the low skilled workers into the world of labour. This warning indicated the deeper cleavage line between the more developed member states pushing for the “competitiveness” and the less developed member states underlining the “cohesion” targets in both ways: between the more and less developed member states and also between the more and less skilled parts of their societies. Otherwise, to complete the Road Map the Council document indicated also, beyond the detailed Europe 2020 strategy, an R&D program for October 2010 and the energy policy As it had been expected, the Europe 2020 strategy was in the focus of the European Council meeting in March 2010. The Council document confirmed the former measure that once a year the European Council would make an overall assessment of the Europe 2020 strategy (probably every March as before in LS). Similarly, it invited the member states to elaborate their national programs by the autumn of 2010 as a regular arrangement for the future. At the March 2010 Summit many leaders from the new member states warned about the danger of marginalizing cohesion policy and about the missing policy instruments of reintegrating the low skilled workers into the world of labour. This warning indicated the deeper cleavage line between the more developed member states pushing for the “competitiveness” and the less developed member states underlining the “cohesion” targets in both ways: between the more and less developed member states and also between the more and less skilled parts of their societies. Otherwise, to complete the Road Map the Council document indicated also, beyond the detailed Europe 2020 strategy, an R&D program for October 2010 and the energy policy

ed a strict “timeline” for the 2010-2012 period (Commission, 2010c:34). There was, however, a big step taken ahead in the Commission basic document towards the “stronger governance” what I call the EU metagovernance. It was high time, indeed, to realize th at “Stronger economic governance will be required to deliver results.” This document described clearly the role of the EU institutions in the Europe 2020

governance by putting the European Council to the central stage: “The European Council will have full ownership and be the focal point of the new strategy. The Commission will monitor progress (…) The European Parliament will be a driving force to mobilise citizens” (Commission, 2010c:6). Accordingly, the proposed architecture of the Europe 2020 has been based on the central role of the European Council. Thus, the European Council has to extend its competences and to take full responsibility for the success of the new Strategy instead of the blurred competences and responsibilities of the OMC in the LS.

This top-down approach means that the European Council adopts the strategic decisions first, later the various sectoral Council formations have to elaborate the detailed programs, including the necessary implementation measures. This stronger governance received a more detailed treatment in the Commission document, with the European Council in the driving seat but also inviting the contributions of stakeholders at national and levels in the MLG spirit (Commission, 2010c:27-30). It is indeed, a new turning point in the EG reform, or to some extent, in the “political union” as integrated governance, if and when it will be implemented. The decision to overcoming the Greek crisis might have

given the final push towards the “stronger” economic governance that could lead to further radical changes in the European Governance (EG) by establishing the Europe 2020 governance framework. Discussing the Greek case at the March 2010 Summit, the

statement of Jerzy Buzek echoed the main message that “The issue of the ‘governance’ of this new strategy is crucial.” 10

After the publication of the March 2010 Commission document there was a tough debate on the new Strategy at both the governmental and the expert levels, or so to say at the political and policy levels. In this debate also two important documents took part,

since they appeared in May 2010. The Monti Report warned about “the risk of economic nationalism” and it pointed out the necessity of a reformed cohesion policy for the further developing of the single market (2010:7,85- 86). The González Report went into the same direction and it emphasized the need for the distinction between the short term views and long term considerations, arguing for the predominance of the strategic view

for the “EU 2030” (2010:3-4). This predominance of the strategic view appeared in the EU2020 new document, since the Commission offered already on 27 April 2010 a for the “EU 2030” (2010:3-4). This predominance of the strategic view appeared in the EU2020 new document, since the Commission offered already on 27 April 2010 a

been enough “integrated”, since the links between/among the various policies had to be strengthened for getting synergies: “The Europe 2020 Strategy has to be underpinned by an integrated set of policies, which Member States should implement fully and at the same pace, in order to achieve the positive spill-over effects of coordinated structural

reforms.” (Commission, 2010d:5,7). On 12 May 2010 the draft for Reinforcing economic policy coordination was published, in which, beyond the Excessive Deficit Procedure, the

Commission “proposes the establishment of a European Semester for economic policy coordination, so that Member States would benefit from early coordination at the

European level as they prepare their national stability and convergence programmes including their national budgets and national reform programmes. Finally, it sets out principles that should underpin a robust framework for crisis management for euro-area Member States.” (Commission, 2010f:3). All in all, the Greek crisis revealed the deeper tensions in the EU and the ensuing turmoil was helpful to clarify the various standpoints of the member states in the different policy fields and through their conflicting social interests.

The Presidency Conclusions of the June 2010 meeting have noted proudly that “we adopt ‘Europe 2020’, our new strategy for jobs and smart, sustainable and inclusive growth. It constitutes a coherent framework for the Union to mobilize all of its

instruments and policies and for the Member States to take enhanced coordinated actions.” (Council, 2010b:1). It has said repeatedly that “The European Council today has finalised the European Union’s new strategy for jobs and smart, sustainable and inclusive growth. This strategy will help Europe recover from the crisis and come out stronger, both internally and at the international level, by boosting competitiveness, productivity, growth potential, social cohesion and economic convergence. The new strategy responds to the challenge of reorienting policies away from crisis management towards the introduction of medium- to longer- term reforms” (Council, 2010b:2). No doubt that after some years these solemn words will be quoted as a historical turning point by introducing the new EU strategy. The text of this EU document in general, however, contradicts to that statement indicating that the EU moves definitely from the crisis management to the long term perspectives, since the crisis management has just been institutionalized by this document. Thus, the long term perspectives have been both outlined and postponed at the same time.

The European Council has confirmed the headline targets and flagship projects that were suggested in March 2010 but without reacting to the sharp debates around them, thereby shifting the main problems to the next meetings. It may be of relevance, however, that the document has emphasized that the Europe 2020 Strategy will be the The European Council has confirmed the headline targets and flagship projects that were suggested in March 2010 but without reacting to the sharp debates around them, thereby shifting the main problems to the next meetings. It may be of relevance, however, that the document has emphasized that the Europe 2020 Strategy will be the

agricultural policy and cohesion policy, will need to support the strategy. (…) The European Council stresses the importance of promoting economic, social and territorial cohesion as well as developing infrastructure in order to contribute to the success of the new strategy.” (Council, 2010b:3). On the other side, contradicting to this optimism, the worries about the protracted crisis that have returned from all directions new and again, and they have gone through the whole text, so crisis management has appeared as the

real priority: “The crisis has revealed clear weaknesses in our economic governance, in particular as regards budgetary and broader macroeconomic surveillance. Reinforcing economic policy coordination therefore constitutes a crucial and urgent priority.” (Council, 2010b:4). The demands for the effective economic policy have been formulated in various terms and approaches from fiscal sustainability to the stronger economic governance, nonetheless these various terms and approaches themselves have not yet shown the necessary “coordination” as the ad hoc reactions of the crisis management have demonstrated.

The Europe 2020 Strategy has been launched but the content of economic governance has remained the main controversial issue. At the March 2010 Summit the Greek crisis cast its shadow on the negotiations about the EU strategy, in the same way at the June 2010 Summit the threat of the Spanish crisis – with its domino effects to the other PIGS states – did it, so the international media dealt more with the Spanish case than with the Summit itself. Most probably this was one of the shortest and quickest Summits, since it was reduced to a one-day meeting and the detailed decisions were postponed again. The EU was not yet able to overcome the crisis, but it learned to live with the crisis, so the EU institutionalized the crisis management. It has institutionalized the crisis itself in such a way that the pressure of the crisis has become a permanent part of institutional workings to forcing out the decisions and their implementations so far. Obviously, however, new policies can be pursued by the same governance structure only for a while, and policy changes sooner or later provoke new governance structures as well, as it has been the case with the EU crisis management institutions as the financial stabilization agencies.

The general evaluation of the June 2010 Summit has still been rather positive in the EPC analysis , as a “welcome moment of calm in the midst of the storm”: “’Unspectacular’ is probably the word that best sums up the 17 June European Council,

with no immediate crisis to deal with, few headline grabbing initiatives and no major surprises. (…) this was a welcome change after months of emergence meetings dominated by mounting euro-zone crisis, and EU leaders tried to use the occasion to send out a signal of confidence to their citizens, the financial markets and the wider with no immediate crisis to deal with, few headline grabbing initiatives and no major surprises. (…) this was a welcome change after months of emergence meetings dominated by mounting euro-zone crisis, and EU leaders tried to use the occasion to send out a signal of confidence to their citizens, the financial markets and the wider

2010:1). Against this background of the evolving crisis, the relative calm and consolidation at the June 2010 Summit may be considered as a success, indeed, but also at the same time the start of a new kind of workings for the EU in institutionalizing the

crisis management. 11 The overall view of the political and economic landscape of the EU in the first half

of 2010 was formulated in the EPC by elaborating of the European Economic Sustainability Index (EESI). “In light of the unprecedented turmoil in the euro-zone and

the uncertainty over what the future holds, it is important to not only understand the current pressures on public finances but also the medium- to long-term factors which will effect the economic stability and sustainability of EU countries in future. The long-term competitiveness of European economies, their governance and their ability to carry out structural reforms to cope with long-term challenges will all influence whether countries have a sustainable economy in the long run. This will also determine the success or failure of the euro.” (Zuleeg, 2010:6).

Actually, if there is no sufficient policy coordination and coherence “the ever increasing integration” brings more vulnerability into the EU workings, since the progress in some policy fields demands corresponding actions in the other fields. If this policy coordination is missing, with the progress of integration the crisis will be deeper and deeper because the complexity management becomes the most important precondition of the EU performance and sustainability. This “integrative balancing” has been fatally damaged by the growing distance between/among EU member states in economic policies and governance capacities that has come to the surface brutally due to the global crisis. As Fabian Zuleeg points out by presenting the EESI: “The implications of the index are clear: structural reform is necessary in many countries if we wish to avoid future crises. (…) The EU can also go further: its growth strategy and available EU funding must aim to help these countries to invest into future and to carry out the necessary structural

reforms. (…) In the absence of joint action, if certain countries are allowed to deteriorate further, Europe will face low growth and further crisis in future.” (Zuleeg, 2010:15). Despite the frozen controversies in the June 2010 Presidency Conclusions the EU has begun a change of paradigms from the narrow economic approach based on the economic growth in the GDP terms to the much wider view of socio-economic developments, which gives some hope for the success of the Europe 2020 strategy.

Altogether, the first half of 2010 was a period of the future-oriented EU definitions - see the series of the long- term strategies as the González, Martens, Metris and Monti Reports - in both ways, globally by strengthening the EU as global actor and internally by elaborating the European economic governance. In this direction, the European Policy

Centre in A Schuman Declaration for the 21 th Century, issued on the 60 anniversary of the Schuman Declaration on 9 May, offered some thoughts on what Schuman might say

st

today on the new European Challenge: “In global terms the EU and all its members are in relative decline – politically and economically. The world is becoming ever less euro- centric: global affairs are increasingly shaped in other parts of the world. Without

change, the old continent is doomed to gradual marginalization and irrelevance.” (EPC, 2010a:1-2).

2. The second steps: continued crisis leads to stronger economic governance

Actually, the year 2010 was an “annus horribilis”, a turbulent year of horror with a grave euro-crisis. As a result of the global financial crisis, the euro faced a deepening public debt crisis in 2010 because of the structural problems in some eurozone countries. The following steps taken for strengthening the economic governance have also provoked deep tensions among the member states due to the large competitiveness gap between them. The MS still had “little appetite for policy reform”, therefore “Policy integration

continued at a slow pace. Only modest progress was made in strengthening eurozone governance.” (Tsoukalis et al., 2010:12). Actually, the spring 2010 euro crisis of the EU

had been more or less overcome by June 2010, but it turned out afterwards that the Lisbon Treaty framework was not enough for a long-term consolidation. Thus, after the first steps in exit strategy, as a direct reaction to the global financial, economic or even social crises, a long-term answer was also needed.

The years of 2011-2012 are the decisive period for the EU developments. While in 2010 the focus was on the direct crisis management, in 2011 there has been a clear shift of preferences to the strategic goals of the EU2020 as to the measures of the long time crisis management. Indicating the tasks after the exit strategy as a turn to the long term vision, the February 2011 Conclusions have noted: “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.” (European Council, 2011a:1). There is no return to the pre-crisis world, so nowadays the main effort of the EU is to contribute to this task of “laying foundations” for the post-crisis world both within the EU and in its new global dimension. Obviously, the post- crisis situation will be very different. It will demand a more “Cohesive Europe” as it has been summarized in the LT and the EU2020. The comprehensive – economic, The years of 2011-2012 are the decisive period for the EU developments. While in 2010 the focus was on the direct crisis management, in 2011 there has been a clear shift of preferences to the strategic goals of the EU2020 as to the measures of the long time crisis management. Indicating the tasks after the exit strategy as a turn to the long term vision, the February 2011 Conclusions have noted: “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.” (European Council, 2011a:1). There is no return to the pre-crisis world, so nowadays the main effort of the EU is to contribute to this task of “laying foundations” for the post-crisis world both within the EU and in its new global dimension. Obviously, the post- crisis situation will be very different. It will demand a more “Cohesive Europe” as it has been summarized in the LT and the EU2020. The comprehensive – economic,

Already the LT contains an extension of cohesion policy from economic and social cohesion to territorial cohesion. Moreover, parallel with the developments of the global crisis, the EU2020 as a long term vision or mega project was elaborated in a very strong linkage with the renewed cohesion policy designed in the Fifth Cohesion Report in November 2010. Indeed, the basic mission of the EU2020 is delivering the Cohesive Europe by 2020, since “Europe can succeed if it acts collectively, as a Union.” (European Commission, 2010a:5). This new vision has put forward “three mutually reinforcing priorities” as smart, sustainable and inclusive growth, indicating the “social progress” as

a key term for the EU’s future. Thus, maintaining the efforts for economic cohesion, the latest EU documents have been focusing particularly on social and territorial cohesion.

The “iron triangle” or the organic links between the EU2020 megaproject, the renewed cohesion policy and the stronger economic governance has been the main message of

these EU documents, since the implementation of the EU2020 presupposes both the renewed cohesion policy and the stronger economic governance. This connection is the main message of the March 2011 Conclusions by pointing out that the stronger economic governance both by the European Semester (EU27) and the Europact (EU17) is needed for the suc cessful implementation of the EU2020: “The European Council today adopted a comprehensive package of measures to respond to the crisis, preserve financial stability and lay the ground for smart, sustainable, social inclusive and job- creating growth.” (European Council, 2011b:2). 13

The new European architecture built on the LT and EU2020 has been under high pressure from the very beginning, and it will be so in the coming years. Therefore, to break the vicious circle, the EU has turned in 2011 to some major reforms. The reform of economic governance became the central topic on the 4 February 2011 European Council meeting, and at the Eurozone Summits on 11 and 15 March 2011. Finally, the 24-25 March 2011 Summit endorsed the Europact. The first arrangement of the stronger economic governance was completed after the negotiations with the EP by the European Council on 24 June 2011, although many “technicalities” of regulation are still to be arranged in the coming years. Thus, after the “annus horribilis”, the year of horror for

the EU in 2010, there has recently been a positive turn towards the post-crisis consolidation, although with a big question mark on the future of Cohesive Europe.

Alongside the short-term actions – aid packages to Greece and Ireland (and later Portugal) – the EU has designed the structural reforms of economic governance with two innovations. The first measure has been the European Semester as an “ex ante” coordination of fiscal policies in the EU27 with the “Community” method. At the same Alongside the short-term actions – aid packages to Greece and Ireland (and later Portugal) – the EU has designed the structural reforms of economic governance with two innovations. The first measure has been the European Semester as an “ex ante” coordination of fiscal policies in the EU27 with the “Community” method. At the same

(Open Method of Coordination) in the former Lisbon Strategy (Börzel, 2010). The second one has been proposed as the competitiveness pact (later Europact) for the eurozone members (EU17), which has been based on the intergovernmental method relying on peer pressure for enforcement (see Delors, 2011). Altogether, because the shock

absorbing capacity of the EU was very low at the outbreak of the crisis, there was a need for a new initiative. The German-French proposal for the competitiveness could not be condemned as an “intergovernmental” approach (e.g. Ponzano, 2011), since it has been based, indeed, on a combination of the Community and intergovernmental methods. The

new approach has been called by Angela Merkel in her Bruges speech as a “coordinated European position” or the “Union method” (Merkel, 2010:7). In this current debate of the Notre Europe Institute the eminent analysts have pointed out that “the difference between the two methods was no longer a matter of their nature but a matter of degree” (Schoutheete, 2011:3). Thus, the main problem with the Europact is not in its intergovernmentalism, but in its neglect for the possible consequences for the growing gap between Centre and Periphery.

Although in 2011 the Europact or “competitiveness pact” is a necessary and important action as the “turning point in the management of the crisis”, it is at the same time however a controversial achievement, since “several key question remain unanswered” (Emmanouilidis, 2011:1). The Europact has been needed for the