About Ann Mettler

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Articles by Ann Mettler

Greek default and the risk of contagion: Has the time finally come for Fiscal Sustainability?

Posted by Ann Mettler on 28/04/10

What can I say? There isn’t a person I know who didn’t see the impending Greek default coming. It’s a country that has had no strategy for generating growth, unfunded pension liabilities en masse, a bloated, inefficient state sector, poor educational institutions, and an abysmal demographic outlook. For years, these developments could be softened by borrowing ever more and running up an unsustainable deficit, currently standing at 120% of GDP.

The only real surprise with what’s happening now is the speed with which events are unfolding and how visibly unprepared Europe is, despite the fact that experts have been warning that this would happen for years. It infuriates me that up until now fiscal sustainability has been the exclusive preoccupation of a handful of economists. I have argued for years that just as we taught citizens the need for environmental sustainability, the same can be done for fiscal sustainability. People deserve to know what happens when governments go on spending binges, driving up public debt and shouldering young people and future generations with the expense of today’s excesses. Just like no individual can permanently live beyond his or her means, no state can do so either. And you believe Argentina can’t happen in Europe? You better think again.

What is a mystery to me is why this looming and well-known threat was never communicated to a broader public; why this was never made an issue on par with environmental sustainability; why it had to remain the exclusive domain of academic economists, when the repercussions were so clearly to be felt by society-at-large.

Back in 2006, the Lisbon Council tried to kick off a fiscal sustainability initiative, attempting to broaden the widely accepted concept of sustainability to public finances. There was mild interest and encouragement from the European Commission’s DG Economic and Financial Affairs. We even got to host then-Economic Commissioner Almunia for a keynote speech but it was impossible to sustain any kind of momentum in the ensuing months in the absence of political leadership. None of the subsequent EU Presidencies or the European Commission highlighted the issue of unsustainable public finances in a concerted and ambitious manner. I guess after making the Stability and Growth Pact more “flexible” in 2005, ruining public finances was officially condoned and member states thought they could just go on with their reckless behaviour.

Reading some of my editorials from 2006, I feel angry and ashamed about the path of fiscal ruin that we in Europe subsequently embarked on, and which I back then warned of:

“The [Stability and Growth Pact] has utterly failed to explain to the average citizen the need for future-oriented budget priorities, fiscal discipline and long-term sustainability of public finances. The ultimate price for today’s lack of leadership will be borne by future generations, who – unless something is done now – will inherit a system so loaded with debt and so burdened by interest payments that political room to manoeuvre will be remembered as a luxury of the distant past.” (From ‘Europe must take an honest long-term fiscal view’, Financial Times, 6 November 2006)

“If Europe wants to be a responsible and respected global citizen again, as we were when we embraced and advanced the concept of environmental sustainability, we must urgently take action and kick off a second sustainability movement, one that will prepare our public finances and social security systems for the cataclysmic demographic changes on the horizon. How can we expect the world to listen to our calls for environmental sustainability while we squander the precious fiscal resources of our children and future generations? The time has come to abide by the values and principles we claim to possess.” (From ‘ Now What About Fiscal Sustainability?”, BusinessWeek, 22 November 2006)

Rather than feeling vindication because I knew this crisis would happen one day, I frankly feel anger and frustration at our policy makers and the economists who advise them. It is their closed-shop mentality – either trying to keep bad news from the public in the case of the former or simply believing that it’s not their job to communicate more broadly in the case of the latter – that is coming to haunt us now. Imagine if we had kept the threats of climate change to a closed, secluded group of decision makers and experts. What kind of public action and acceptance could we have expected? The people of Europe will now pay a heavy price for years of denial and acquiescence. And perhaps, just perhaps, we will see broader public movement towards fiscal sustainability after all. It is a pity that we were unable to do this in the mature, pro-active way that advanced democracies should be capable of, and that we are now faced instead with top-down, harsh austerity programmes that will impact our lives for years and decades to come.

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It’s a proud day to be German: Reflections on the Spring European Council

Posted by Ann Mettler on 26/03/10

It has escaped me, frankly, why Angela Merkel has been portrayed as a bad European as of late. Perhaps because she didn’t immediately cave in to calls for a Greek bail-out? Or is it because she didn’t want to follow Europe’s lagging economies by replicating their model of exporting less (because of lack of demand for their products), consuming more, and raising wages irrespective of productivity increases?

I have often wondered what this day would be like, the spring European Council 2010, when leaders would kick-start the EU’s next 10-year strategy. My feeling today is a strange mixture of cautious optimism and mild disappointment. The optimism is driven by what happened last night at the European Council. Despite all their differences, the Eurozone leaders decided on a set of conditions that are uncomfortable enough to prod countries into finally doing the structural reforms that they’ve only been talking about in past years. Who will want to invite the IMF into their countries, risking the loss of economic sovereignty and making themselves subject to diligent surveillance and public humiliation? Finally, the Stability and Growth Pact has some teeth again. And for all those that criticize the Germans for being so tough and fiscally responsible, think back only five years ago when at this very spring European Council the Germans led an effort – under then-Chancellor Gerhard Schröder – to make the Stability and Growth Pact more “flexible”. Only five years ago Germany was widely considered the sick man of Europe, faced with over five million unemployed, anaemic growth and loss of competitiveness. Anyone who criticises Germany now should look back to 2005 when it was downright embarrassing to be German. And needless to say that the additional “flexibility” in the Stability and Growth Pact led to so many of the fiscal problems that we see today.  For all those countries that didn’t use the growth they experienced in the last decade – including Greece and Spain – one can really have only one message: you can’t reform during the good times. Guess what? You’ll have to reform during the bad times. My prediction is: the deal the EU leaders brokered last night on the conditions of a bailout for Greece will do more to drive forward structural reform that than the official European process designed for modernising our economy, the Europe 2020 strategy.

Which brings me to my second point, namely my disappointment. It increasingly seems that our leaders are driven by events, rather than driving events themselves. What I mean is that this is already the second summit that they were supposed to talk about Europe 2020 but were this agenda topic has been sidelines by short-term crisis management to tackle the Greek crisis. With EU leaders coming together twice in less than six weeks, not to lay the foundation for the next decade, a solid blueprint for future economic growth and job creation, but rather to tackle the problems of a country staring at the fiscal abyss, tells us everything we need to know. We have reached a point where our problems are so overwhelming and our political room to maneuver to small, that virtually no one has time any more to reflect on what kind of economy we want to build and leave behind for our children and future generations. Issues that are of fundamental importance, such as education, innovation and fighting climate change, get drowned out in the almost hysterical quest for short-term remedies to cover up underlying problems. We no longer go after the disease but rather try to take a short-term medicine to kill the pain or cover up the symptoms.

Europe 2020 was supposed to address many of the these issues but apart from being drowned out amidst the crisis management for Greece, it is also subject to widespread (and frankly surprising) criticism from European leaders. Most of the targets are now disputed by one member state of the other. The 3%R&D target is questioned by finance ministers, who are looking for possible cuts in their national budgets. The 40% target on tertiary graduates is disputed by Germany, where the federal government has given up jurisdiction for education to its regions. The shifting of financial resources within the structural and cohesion funds is countered by Poland and Italy which do not want to see the emphasis on big infrastructure projects replaced by more investment in skills, innovation and entrepreneurship. And any effort to link the EU budget to its purported political priorities of generating “smart, sustainable and inclusive growth” will fall foul of France, which insists that the lion’s share will continue to go to agricultural subsidies.

For all the talk about “economic government” or “governance”, Euroskeptics in the UK or elsewhere need not worry for our leaders are as far from reaching consensus as they could possibly be. The only thing that unites Europe right now is a widespread feeling of urgency in the face of the global economic crisis, of wanting to fight increasing international marginalisation (as experienced at the Copenhagen climate talks and the cancellation of the EU-US summit by President Obama) and of knowing that what is at stake is nothing less than the European way of life (in the words of European Council President Herman van Rompuy). But what divides us are fundamentally different ideas over economic management and priorities and future challenges and the adequate responses. The next three months will be crucial because the June European Council will have to produce a powerful, visionary and compelling blueprint for the future. With the Greek crisis ostensibly dealt with, our leaders have no more excuses to favour the short-term over the long-term; to engage in immediate crisis management rather than laying the foundations for future prosperity; for constantly reneging from their responsibilities for future generations rather than satisfying the demands of today’s vested interests. The moment of truth has come. And it will decide not only the fate of the Euro but the fate of Europe.

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Wikinomics in Europe: Towards an i-society

Posted by Ann Mettler on 12/03/10
Commissioner Geoghegan-Quinn

Commissioner Geoghegan-Quinn

Last week, the Lisbon  Council hosted one of my favourite events ever, The 2010 Innovation Summit. It was what an event on innovation should be: open to new ideas, collaborative and, well, simply different. Intellectually, the discussions were underpinned by a new e-brief we launched at the occasion, entitled Wikinomics and the Era of Openness: European Innovation at a Crossroads. It was written by our newest team member, Anthony D. Williams, who now serves as senior fellow and is best known as co-author of the international bestseller Wikinomics: How Mass Collaboration Changes Everything. It’s a brilliant analysis of how the nature of innovation itself is changing – by becoming more open, more collaborative and more interdisciplinary. Highly recommended, and check out the footnotes which are all interactive and will guide you to many cool projects around Europe that we discovered doing this research.

The overall highlight of the event was undoubtedly the thundering speech delivered by Máire Geoghegan-Quinn, the EUs first innovation commissioner. She was simply fabulous and surprised everyone with the clarity of her vision, articulating in precise terms what her roadmap is, while also signaling her willingness to listen to others and take their ideas onboard. I had the pleasure of chairing the session with her and was looking down on an audience that was quite simply in awe with the speaker and listening to her every word. I think for many it may have dawned for the first time that in order to be a credible advocate for innovation, one needs to be innovative, curious and open to the world and embrace new realities and challenges. Well, that’s exactly what we saw that day – and not only from the Commissioner by the way. Another highlight was the forceful intervention of Prof. Martin Schuurmans, the chairman of the European Institute of Innovation and Technology (EIT). Anyone who thought that this was your run-of-the-mill EU consensus seeker and bureaucrat was in for a surprise. There was almost a moment of catharsis when he put his finger exactly on the weak spot in European innovation policy, namely the incessant effort to build some kind of common response and allowing the underlying process to become the ultimate goal, rather than focus on delivery and impact, which is of course ultimately the only measure of success when it comes to innovation. Prof. Schuurman’s approach was like a breath of fresh air and bodes very, very well for the EIT if I may say so.  Prof. Schuurman’s remarks were preceded by Andrew Wyckoff, who is the innovation genius at the OECD in charge of its exciting, new Innovation Strategy. He is simply brilliant and a fountain of knowledge and wisdom. Andy confirmed what anyone who has remote knowledge of innovation already knows, namely that a lot of innovations are not the result of R&D (what a thunderclap in a town where innovation is too often equated with research spending) but rather new forms of collaborations and changes in processes and business models.

This event has left me more positive about the prospect of innovation in the EU than I thought possible. I have said this so many times before and even if it sounds banal, the key to innovation is the innovator, is the person who makes things happen, who takes a risk, who goes against conventional wisdom and who is prepared to embrace the new and not afraid of change. Máire Geoghegan-Quinn is that person and I know that our participants left the summit in hopeful anticipation that change has finally arrived in Brussels. As Commissioner Geoghegan-Quinn so eloquently put it in her speech: “We are all innovators now.”

Watch Commissioner Geoghegan-Quinn’s lecture in full on YouTube
Watch remarks of Prof. Martin Schuurmans, EIT
Watch interview with Anthony D. Williams on Wikinomics in Europe
Watch highlights of The 2010 Innovation Summit

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EU 2020 Proposal: The Watershed we had Hoped for?

Posted by Ann Mettler on 28/02/10

Addendum: This blog was written based on a copy of Europe 2020 that was leaked to the press on or around 24 February. Since the launch on 3 March, we have subsequently learned that two of the original nine flagship programmes are no longer included in the final version. They are the “Energy Action Plan” and “A New Jobs Agenda.” Also, there is now some confusion over the governance of Europe 2020. What appeared like a clear-cut division of labour between the European Commission and the European Council/member states in the original draft has now been called into question because there is confusion over who will set the country-specific targets and conduct the surveillance. To be clear: for me it is a non-starter to allow member states to set their own targets because they have an incentive to set them too low (in order to reach them easily and proclaim success). Also, the member states are not likely to diligently monitor progress. As we have seen with the watering down of the Stability and Growth Pact in 2005, member states are soft on one another. To the extent that there is a body that credibly and forcibly puts much-needed pressure on member states, it is the European Commission. That is why it is imperative that the Commission be entrusted to set the country-specific targets for the five headline objectives and that it be the guardian of compliance and in charge of surveillance. Anything else spells failure.

On Wednesday, 3 March, the European Commission will launch a communication on Europe 2020. This much anticipated document has already raised much interest, with onlookers and analysts eager to see if there are real improvements and promising innovations in comparison to the Lisbon Agenda. Here is my take on the document, which offers first an analysis of the innovations and then a critique of issues that are either missing or not sufficiently highlighted.

Overall, this policy blueprint for Europe 2020 is a vast improvement over the Lisbon Agenda. These plans have clearly taken account of the shortcomings of the previous decade. Specifically, the following innovations should be noted:

-    the articulation of Europe-wide goals and country-specific targets, taking account of the vast differences in economic development between EU member states
-    an increase in targets from two to five, taking into account key objectives that have hitherto been missed, such an increasing educational performance, fighting climate change and reducing poverty.
-    a dramatically greater degree of coherence with nine flagship EU programmes supporting the five headline targets, thereby kick-starting and facilitating an actual process to achieve the targets that are set out. These flagship programmes include Innovation Union; Youth on the Move; European Digital Agenda; Low-Carbon, Resource-Efficient Europe; Energy Action Plan; An Industrial Policy for the Globalisation Era; A New Jobs Agenda; New Skills for New Jobs, and a European Platform Against Poverty.
-    a clear division of labour between the European and member state level. That used to be often blurred in the Lisbon Agenda, with the European Commission taking the heat for non-performance of the member states.
-    a clear division of labour between the European Commission and the European Council, with the former in charge of the content and enforcement of the strategy, and the latter in charge of governance
-    the Europe 2020 strategy builds on the competencies already bestowed on the European Commission, such as internal market, the Stability and Growth Pact and trade policy, which is sensible, makes the strategy more comprehensive and can lead to fruitful synergies
-    there is finally a recognition that the state of public finances – both in terms of overall debt, annual budget deficits and quality of spending – must be an integral part of a modernisation strategy
-    likewise, there is finally a recognition that the policy priorities must be linked to the EU budget. The Commission rightfully says that a credible Europe 2020 strategy necessitates significant changes in the EU budget.
-    for the first time, the importance of the public sector is noted, recognising that rising demands at a time of empty public coffers can serve as an impetus for innovation and renewal
-    a sanction for non-performance in form of a policy warning (no further information available on what specifically this warning entails)
-    an invitation for the European Commission to “monitor progress… and providing an overview of progress towards the targets.” This could signal a return to naming and shaming.
-    a dramatic expansion in the stakeholders invited to be part of the process, now also including regions, parliaments, civil society and individual citizens.
-    an articulation of a communication strategy

While the overall direction is very promising and deserves broad support, there continue to be a number of shortcomings:

-    it is disappointing that the EU continues to use the R&D target of 3% as a proxy for innovation performance. That is too simplistic and downright misleading. As the case of Japan clearly demonstrates (which is mentioned in this paper as a role model, with R&D spending of 3.4% of GDP), high R&D spending in itself does nothing to boost economic performance. Despite its high R&D expenditure, Japan experienced a “lost decade” of low growth, declining global market share and precarious state of pubic finances. In addition, a high degree of innovation is not driven by research but by changes in processes, business models and workplace organisation. And it is precisely in these areas where Europe has weaknesses. This calls for a different target or at least necessitates that the R&D target be complemented by other targets, such as productivity growth.  At the same time, we should finally recognise that innovation is at least as much a management and organisational challenge as it is a research challenge.

-    The proposal is also too timid with regards to state transformation. Accounting for some 40-50% of GDP in most EU member states, the coming decade will see dramatic and pronounced changes in how the state functions, driven in large part by greater demands (for example due to ageing society), citizens who expect more tailor-made and better delivery of public services, i.e. via new technologies, as well as the budget constrains which virtually every country is faced with. While the call for greater innovation in public administrations, as articulated by the paper, is spot on and long overdue, these plans need greater detail and full inclusion in one of the nine flagship programmes. If one considers the situation in Greece or Ireland, state transformation is the number one challenge, and is linked to the well-being and future prosperity of the entire society. This warrants more than a faint mention in this document as it is in many ways the key challenge of Europe’s future. If the only EU response to the state crises emerging around Europe is “cut, cut, cut”, this could lead to a backlash and rising EU skepticism. Europe needs to develop a more constructive role in the process of state transformation; a role that goes beyond mere crisis management.

-    The call for better quality of public finances needs to be accompanied by complete transparency in public finances. The European Commission needs to make public how member states raise and spend public money. As is, it is virtually impossible for citizens to understand how and in which areas public money is spent, i.e. does anyone know how much their governments spend on servicing their national debts, investment in education and training or social services? In the absence of complete transparency on public finances, it will be impossible to measure and assess the quality of spending outside expert circles, depriving the European Commission of the public pressure that could be exerted if this information was made accessible to a broader audience. In addition, better public information could prevent future meltdowns a la Greece because a better informed public could call at an earlier stage for changes in public expenditure.

-    While the European Commission deserves praise for finally linking its flagship programme, i.e. the Europe 2020 strategy, with a communication strategy, it will need more than a communication tool box and a web-based exchange to bring European citizens along. In particular, what is missing is an understanding that these processes of change need to be underpinned not only by top-down communication but by a public education strategy. Only citizens who truly comprehend why changes are necessary can accept and support reforms. The communication challenge with regards to Europe’s modernisation is on par with other transformative challenges, such as climate change, in which thousands, if not millions of organisations, people and multiplyers have been activated for decades to explain to the broad public why change is necessary. A communication tool box and web-based exchange could have never replaced the activism and engagement from the bottom-up which has made all the difference in the area of climate change.

-    While there are tools to punish non-performing member states, i.e. via the policy warning, there is no mention of conditionality, i.e. by providing more EU funds to countries that make progress in achieving the five headline targets. This was mentioned in earlier plans for Europe 2020, including by the Spanish EU Presidency, and should be seen as a key way to incentivise countries to improve their performance. It is a mistake to make use of “sticks” without accompanying “carrots”. Countries that do well and make an effort need to be recognised and publicly celebrated and rewarded.

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Huge Cost of Low Performance in Education

Posted by Ann Mettler on 29/01/10

Check out this video interview with Andreas Schleicher, head of the OECD’s Programme for International Student Assessment. The Lisbon Council hosted Andreas for the launch of his new study on the huge cost of low performance in education. The study holds important lessons for Europe, especially as we reflect on the substance of the EU 2020 agenda. View the video here: http://www.youtube.com/watch?v=LsthK7oWpi0

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Sticks are not EU2020’s keys to success

Posted by Ann Mettler on 14/01/10

Here is an editorial of mine published in this week’s European Voice, a first reaction to plans of imposing sanctions on economic non-performance. In a nutshell, my argument is that countries that don’t grow and that have high unemployment don’t need punishment from Brussels, as they are already punishing themselves (see Spain with 19% unemployment or Greece teetering on the brink of fiscal ruin). Building a domestic consensus - and a broad understanding - of the need for change is the best way forward for reforms, a process which Brussels can certainly underpin and support but can never unilaterally impose.

Read the editorial here

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EU 2020: Innovating Indicators

Posted by Ann Mettler on 13/12/09

With the reflection on EU 2020 in full swing, this e-brief weighs into the debate with an analysis about the political economy of indicators, as well as concrete recommendations on targets for the EU’s new economic blueprint. “Innovating Indicators: Choosing the Right Targets for EU 2020” is a unique reflection on how to measure and evaluate societal progress and make the policy process more inclusive and meaningful to a broader number of people.

Download the e-brief brief here

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EU 2020 Consultation Marks Brussels’ Return to Policy and Substance

Posted by Ann Mettler on 24/11/09

Today, the European Commission is launching a consultation on the EU 2020 strategy, the successor to the Lisbon Agenda. With Lisbon’s deadline in the year 2010 quickly approaching, there is now a unique opportunity to review and improve this vital policy programme and lay a strong foundation for the new EU 2020 strategy.

To be sure, there is some urgency given that Europe finds itself in the midst of the deepest recession since the 1930’s. If we ever needed a sound exit strategy and long-term policy blueprint, it’s now. And we have no time to waste.

On substance, there is likely to be some continuity with the first ten years, as the key issues Europe is grappling with have been the same for some time and are unlikely to change in the future: a rapidly ageing continent, profoundly impacting fiscal sustainability and social security systems; the need for a more educated, inclusive and diverse workforce, equipped with the latest skills and know-how; and a more innovative, entrepreneurial and productive economy, ready to face the challenges of climate change and global competition.

But as we learned from the current Lisbon Strategy, aspiring to laudable goals is far from enough. That is why the EU 2020 agenda needs a much improved governance and ownership structure, as well as a new modus operandi that will credibly embody the innovation and renewal that is the very foundation of this strategy.

For starters, we must prevent another glaring discrepancy between announcing goals that only member states can ultimately deliver on while providing the European Commission with woefully inadequate tools for enforcement. The currently applied Open Method of Coordination is little more than a comparative tool without the possibility to threaten sanctions, and there appears to be no appetite to return the “naming and shaming” that caused so much consternation in member states in the early years of the Lisbon Strategy. Against this backdrop, the European Commission must devise a realistic, yet smart and compelling strategy. On the one hand, it should rest firmly in the areas where it has competences and adds inherent value, such as competition policy, the single market, external trade, the enforcement of the Stability and Growth Pact, as well as the European coordination of key policy areas, such as the response to climate change and the financial crisis, facilitating research collaboration, promoting ‘Digital Europe’ and extending the smart grid, to name but a few areas that need urgent action from Brussels. Another key priority should of course be to finally shift the EU budget from subsidising the past to making a strategic investment in the future.

On the other hand – and in areas where the Commission has no or few competencies – it needs to count on smart tactics and persuasion, mostly by being ahead of the curve and bringing issues to the surface long before they become main stream. It should use the power of its bully pulpit to highlight key issues at an early stage and facilitate a race to the top by “naming and faming” good practices in member states. This will not be radically different from today’s Open Method of Coordination, but it should be more inspiring, more visible, and more accessible to a larger number of people, rather than the closed shop bureaucratic exchange it currently is. This means that a superior information and communication strategy is not a tiresome afterthought beneath the professional dignity of a senior civil but a vital cornerstone of a new strategy; a strategy that should seek to occupy the moral high ground where the battle for citizens’ hearts and minds are won. After all, if it’s true that political leaders cannot be re-elected after enacting reforms, as some pundits have alleged, then the electorate is as much the problem as it is the solution.

One area where our leaders should be particularly careful going forward is in formulating new targets. Nothing has discredited the current Lisbon Strategy more than the poor performance in achieving its key targets, a 70% employment rate and the goal to spend 3% of GDP on research and development. While both lie squarely in the hands of member states, the European Commission has taken the brunt of the criticism, including bizarrely from the member states themselves. The solution, however, cannot be to enact less ambitious goals or do away with targets altogether. To the contrary, if anything, we need more ambitious targets going forward, not only comparing our performance with each other but with the best in the world. What is imperative, however, is a new understanding of - and more respect for – targets in the first place. A target is not an end in itself but a goalpost, a desirable policy objective to strive towards where progress can be made even if the target is ultimately not reached. No one has derided the Kyoto Protocol as being a stunning failure on par with the Lisbon Agenda, despite the fact that the vast majority of signatories have not achieved their targets and key polluters opted out completely. Instead of laughing it off or drowning in cynicism and defeatism, as is so often the case with the Lisbon Strategy, there is a global movement to go into the 2010 Copenhagen and 2011 Mexico City UNFCCC to get more – more binding, more ambitious, more comprehensive targets. Why should the Lisbon Agenda / EU 2020 strategy be any different, especially now that green growth and eco-innovation is one of its hallmarks?

To be sure, the window of opportunity that is opening now will be short-lived. The consultation that is starting today is a good start and long overdue, and the current Swedish EU Presidency is uniquely suited to act as a catalyst and honest broker for a more innovative, sustainable and inclusive vision of Lisbon. By the time the Spanish EU Presidency concludes its tenure in June 2010, there has to be a noticeably different strategy in place – not necessarily in content but in method, in management and mood. It needs more visible buy-in and commitment from the member states, a smarter, invigorated and more communicative European Commission, and a motivated, engaged and credible set of stakeholders. After a prolonged period of institutional naval-gazing and job jockeying brought about by the Lisbon Treaty, it is now high time to get back to business, and to focus on the things that really matter to citizens and voters.

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EU Consumer Policy: Economic Citizenship and User-Focused Markets

Posted by Ann Mettler on 05/11/09

This was the name of a policy seminar that the Lisbon Council hosted today. We were blessed to have with us Commissioner Kuneva, who never fails to impress, and Mario Monti, who is such a monumental figure in his own right.

I think the power and potential of consumer policy is vastly overlooked and under-estimated, not the least by journalists who seem to have more or less slept through the pronounced changes that took place somewhere mid-term in the first Barroso Commission. It was originally spearheaded by Commissioner Reding and her workings on roaming charges, but was carried forward in a powerful, convincing and coherent manner after Commissioner Kuneva entered the Commission in 2007.

So what is the change that I am talking about? It’s the realisation that a policy and regulatory focus on consumers leads to better social and economic outcomes than Europe’s more traditional approach of protecting producers. Thankfully we had an executive from Philips on hand who explained that it is the user-centric approach, coupled with a belief in healthy competition, that is making his company so successful. I could just see jaws dropping in the audience when they heard that companies not only accept but embrace competition because it creates the internal pressure to drive forward innovation and deliver superior products and services.

If I have one prediction to make is that there will be a new “economic triangle” emerging in the next Barroso Commission. It will consist of the internal market, competition and consumer affairs. This is not business-as-usual and is a profound break with the past. It will reward companies that are innovative, entrepreneurial and relentless in their pursuit of consumer interests, and will punish those companies that excessively rely on user lock-in, rent-seeking, protectionism and subsidies – and there are many of these “zombie companies”. Think of how often you are not satisfied with a service but have nowhere else to turn to; how much you would like to switch providers but are prohibited from doing so or there are no alternatives (i.e. cable operators in Brussels); how much easier your life would be if your service providers just tried a bit harder, or were a bit more innovative. As an individual consumer, some of this may only be a minor inconvenience, but when you run an organization, the lack of proper and affordable business services is a drag on your productivity and performance. And hey, organizations and businesses are consumers too. That is often overlooked.

Either way, today’s event confirmed that we are entering a new era; that there will profound changes going forward; that the entire internal market project needs a “new deal”, as Professor Monti coined it. I couldn’t agree more.

Download Commissioner Kuneva’s e-brief on A Blueprint for Consumer Policy

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A New Dawn: 10 Recommendations for the New European Commission

Posted by Ann Mettler on 07/10/09

With the Lisbon Treaty finally in the end game after the Irish Yes vote last week, and José Manuel Barroso embarking on a second term as European Commission president, it will be more important than ever before to position the EU’s executive arm as an agent of change, a driver of innovation, and a catalyst for a more successful, sustainable and entrepreneurial future. In an effort to contend with the office of president of the European Council, it will be crucial to give more identify to the European Commission, and embed it firmly as a body that works at the leading-edge of economic and social developments and in the interest of the larger European common good. Against this backdrop – and in view of mastering the deepest recession in decades – this moment is ripe with opportunity to break with “business as usual” and master the courage to bring about promising modernisation and stimulating innovation.
Download my latest e-brief here

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