Brussels Policy Briefing

Sections of text in italics are meant to clarify the information contained in the main text or describe the significance of new developments from the perspective of the authors and may include personal accounts that may not always be independently verifiable.

1. Strategic Policy Developments

Barroso on the State of the Union
Commission President José Manuel Barroso delivered his first "State of the Union" address on 7 September. The high-profile speech to the European Parliament will become an annual event and is obviously modelled after the US President’s annual speech to Congress. Broadly speaking, Barroso sees five major challenges for the European Union: Dealing with the economic crisis; restoring growth for jobs by accelerating the Europe 2020 agenda; building an area of freedom, justice and security; launching negotiations for a modern EU budget, and pulling the EU's weight on the global stage.

He particularly urged Member States and the Members of the European Parliament (MEPs) to use the coming year to push for deeper reforms on several fronts, from economic governance to the bloc’s financial and energy sectors. “Without structural reforms, we will not create sustainable growth. We must use the next 12 months to accelerate our reform agenda,” Mr Barroso said. “Now is the time to modernise our social market economy so that it can compete globally.” He also unveiled two new initiatives: a common EU bond to finance large, cross-border infrastructure projects, and a European vacancy monitor to guide unemployed citizens to unfilled jobs. However, he offered few details about the EU bond, except to say it would be formally proposed later this year and would include EIB participation. There was also a hint that the Commission would press for some kind of direct taxation mechanism for the EU – an idea fiercely opposed by many Member States.

Despite the main focus of his speech clearly being on the economy, Barroso received most applause when he turned to immigration, saying “governments must respect human rights”. The remarks were an apparent criticism of France’s recent expulsion of Roma. However, this was only the beginning of the ongoing spat between the European Commission and France that reportedly culminated in a shouting match between Barroso and French President Sarkozy at the European Council meeting on 16 September.

Commissioners call for common strategic framework for EU funds
In a letter¹  to Commission President Barroso obtained by a Brussels based media organisation, Commissioners László Andor (Employment and Social Affairs), Dacian Cioloş (Agriculture), Maria Damanaki (Maritime Affairs and Fisheries) and Johannes Hahn (Regional Policy) call for EU funding tools under their control to be brought under the same "strategic framework" after 2013. At present, the funds in question – the European Regional Development Fund (ERDF), the European Social Fund (ESF), the Cohesion Fund, the European Agricultural Fund for Rural Development (EAFRD) and the European Fisheries Fund (EFF) – have separate "strategic guidelines". The Commissioners argue that common strategic guidelines would "ensure greater complementarity" and "limit the fragmentation of the different instruments", effectively acknowledging that the current situation is far from optimal. Furthermore, it would help bringing the funds closer in-line with the Europe 2020 priorities.

A first reaction from the Council of European Municipalities and Regions (CEMR)²  indicates that local and regional authorities would very much welcome streamlining the main funds, arguing that they have had problems achieving the coherence of their projects in the past, precisely because of "the fragmentation of EU funding programmes".

Movers & Shakers
Putting its stamp on an agreement that took a year to negotiate, the European Parliament voted on 22 September overwhelmingly in favour of establishing the following three new European financial supervisory authorities.

• European Banking Authority (EBA), based in London;
• European Securities and Markets Authority (ESMA), based in Paris;
• European Insurance and Occupational Pensions Authority (EIOPA), based in Frankfurt;

The new authorities that will be given the status of EU regulatory agencies form part of the EU's response to the financial crisis and build on the recommendations of the de Larosière Report³ . They will be the key element of the new oversight and supervision system of financial markets. The three new financial watchdogs will start work in January 2011.

 
2. Competitiveness and Sustainable Development

"European semester" to enhance economic and fiscal policy coordination
With the approval of the so-called "European semester" by the Economic and Financial Affairs Council (Ecofin) on 7 September 2010, the EU has created an additional instrument for closer surveillance of the economic and fiscal policies of its Member States. Essentially a cycle of economic policy coordination, the main new aspect of the European semester is that the enforcement of economic policy coordination is now being extended right through to the budgetary process of every Member State. The European semester is based on an annual coordination process lasting several months with the following fixed calendar deadlines.

• In March, the European Council will set economic policy priorities on the basis of a European Commission report (entitled: “Annual Growth Survey”). This will provide the foundation to derive recommendations on budget policy (stability and convergence programmes) and economic policy (national reform programmes).
• In April, Member States will submit to the Commission their medium-term budgetary and economic strategies along the lines of these target recommendations. The Commission will assess the strategies and propose how the Council should vote on them.
• In June and July, the European Council and the Council will provide country-specific policy advice on general economic policy and budget policy. The Commission’s reports in the following year will assess how well these recommendations have been implemented.

The picture below provides an overview of the process and the institutions involved:

The first cycle is to begin in 2011 and will necessitate short-term changes in the budget processes of Member States as they are now obliged to submit a financial outlook for the following year by April. By introducing greater transparency and an element of peer pressure, the EU hopes to spur countries to step up their consolidation efforts. The annual assessments by the Commission will also make the European semester interesting as a source of information for the financial markets, which could lend additional credibility to the process.

The European semester is a first step in a raft of planned reforms that will substantially change the face of European economic policy. As long as the Commission and the Council maintain their current thrust and policymaking ambition in the coming years, the subsequent steps could also prove successful. The next big project now is to add some teeth to the Stability and Growth Pact (SGP) for sanctioning budget offenders for which the Commission is expected to table a proposal on 29 September. A new stricter set-up for the SGP could in theory be finalised by Council and Parliament as early as summer 2011. However, any measure akin to EU-level veto power over national budgets can be expected to be highly unpopular among many Member States.

More EU money for urban and local development?
After a period of relative neglect of urban issues in the EU's regional policy, the European Commission and Parliament now appear to be increasingly open to the idea of giving cities a more central role in the future EU cohesion policy. Speaking at a conference in Brussels earlier this month, Regional Policy Commissioner Hahn presented himself as a strong advocate of urban issues. He called for an ambitious urban dimension of cohesion policy during the 2014-2020 funding period, stating that "one of the lessons we have learned during the current period is that regional policy money should also be spent in the cities." He also pointed to the fact that during the current programming period "there was only one or two cities, for instance Rotterdam, where the government together with regional authorities decided to have a dedicated operational programme for a city. This is a very positive example, but an exception," he said. The European Parliament's Committee on Regional Development and the so-called Urban Intergroup established within the Parliament are also supportive of the idea of closing the gap between regions and cities in terms of access to EU funding.

Alongside the current push to allocate more cohesion money to urban areas in the future, there is also renewed interest in the local development approach. During its most recent meeting on 23-24 September, the so-called "High Level Group reflecting on future Cohesion policy", established by the Commission's Regional Policy DG in April 2009 to provide a platform for discussion between Commission services and Member States on the on post-2013 Cohesion policy, discussed possibilities of strengthening the local development approach with European Regional Development Fund (ERDF) support.

3. Social Policy

"Youth on the Move" officially launched
The European Commission has now launched Youth on the Move⁴ , an initiative aimed at helping young people to gain the knowledge, skills and experience to be successful in the labour market. Youth on the Move forms part of the EU's new Europe 2020 strategy and proposes as total of 28 actions aimed at making education and training more relevant to young people's needs, enhancing student and trainee mobility and improving the overall quality and attractiveness of education and training in Europe. Youth on the Move, a joint initiative by DG Education and Culture and DG Employment, is supposed to be instrumental in achieving the Europe 2020 headline targets of reducing the share of early school leavers from 15% to 10% and increasing the share of young people with tertiary education or equivalent from 31% to at least 40% by 2020.

The 10 most concrete actions are listed below:

• Launch of a dedicated Youth on the Move website⁵ , to provide a single point of access to information about opportunities to study or gain work experience abroad, including advice about EU grants and individual rights.
• A pilot project "Your first EURES job" will provide advice, job search and financial support to young jobseekers who want to work abroad and to companies – particularly SMEs. The project will be managed by EURES, the network of European Public Employment Services, and will be operational in 2011.
• A mobility scoreboard will benchmark and measure progress in removing legal and technical obstacles to learning mobility.
• The Commission is examining, in cooperation with the European Investment Bank, the creation of a European student lending facility to support students who wish to study or train abroad.
• It will publish the findings of a study to test the feasibility of a multi-dimensional global university ranking system, to provide a more complete and realistic picture of higher education performance than existing rankings.
• It also plans to develop a Youth on the Move card, which would provide benefits and discounts for young people.
• A new European Vacancy Monitor will provide an intelligence system on labour market demand across Europe for jobseekers and employment advisors. The launch is planned later this year.
• The Commission's new European Progress Micro-finance Facility will provide financial support to help young entrepreneurs set up or develop their businesses.
• It will encourage Member States to introduce a youth guarantee to ensure all young people are in a job, training or work experience within six months of leaving school.
• The Commission will propose a European skills passport, based on Europass (European online CV), to allow skills to be recorded in a transparent and comparable way. The launch is foreseen for autumn 2011.

In light of the ambitious Europe 2020 headline targets that Youth on the Move is expected to be instrumental in achieving, there appears to be a mismatch between this ambition and the concrete actions proposed. Education and training related policies remain firmly in the hands of Member States and their actual commitment to achieving the Europe 2020 goals in this area is still untested. Furthermore, the European Youth Forum – a young people's lobby group – already criticized that Non-Formal Education (NFE) is receiving insufficient attention in Youth on the Move and is only mentioned with reference to disadvantaged youth.
 
4. Announcements and Happening Soon

Events

• 22-23 November 2010, Governments and Markets after the Crisis: 7th Annual Research Conference, DG ECFIN, Brussels.
  http://ec.europa.eu/economy_finance/events/2010-11-22-arc2010_en.htm
• 24-25 November 2010, European Employment Forum, Brussels.
  http://www.employmentweek.com/cms.php
• 30 November – 1 December 2010, Urbact Annual Conference, Liège.
  http://urbact.eu/en/header_main/annualconference/
• 6-7 December 2010, European Development Days 2010, Brussels.
  http://www.eudevdays.eu/
• 31 January – 1 February 2011, 5th Cohesion Forum, DG REGIO, Brussels (date tbc).

 -.-.-.-.-.-.-.-

1:  http://www.euractiv.fr/sites/default/files/jhmdladc_-_barroso_30082010-sign.pdf
2:  http://www.ccre.org/communiques_de_presse_detail_en.htm?ID=299
3:  http://ec.europa.eu/internal_market/finances/docs/de_larosiere_report_en.pdf
4:  http://ec.europa.eu/education/yom/com_en.pdf
5:  http://europa.eu/youthonthemove/index_en.htm

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