Tuesday, August 31, 2010

The European Union and the Crisis

The EU monetary crisis - all what Eurosceptics or Euroholics are constantly talking about. An interesting piece, which has been published on the webzine of Young European Federalists is definitely worth reading to understand roots and consequences of the EU policy ever since it has been established. 
Room for social policies
In order to understand the current situation, it is appropriate to analyse the social policies in Europe in a historical perspective. Since the end of the Second World War, Western Europe has developed a welfare system completely different from that of the United States, especially from the one put forward by the republican governments. Actually, the US themselves contributed to establishing the European social model through the Marshall Plan.
Post-WWII Europe needed to meet the citizens’ social needs
Post-WWII Europe needed to meet the citizens’ social needs which were already present prior to the conflict such as: large-scale public education, certainty of a home and work and a health care accessible to all. In each European national state the peculiar pattern of divergence between governments and social groups caused the emergence of different models of social state. Since then, the European institutions have had an inadequate and uneven approach in this area. In its early years the ‘ECSC’ developed its own model which was about trying to find a harmony between employers and workers and eventually turned out to be successful. Moreover, this model allowed the matching of the monetary, fiscal and political needs with those of the historical contrasting conditions of the Cold War.
In particular the ECSC model managed to align the necessity of a relation with the US with the approach of the trade unions that were far too close to the national communist parties. In practice the social policy realised by ECSC addressed the social problems caused by ECSC itself: the reorganisation of the coal-mining and steel industry. The means used were the most common ones: funds to protect workers and the industries themselves. The European communities that came later did not commit themselves in the same way in the social field. Actually the only country among the six founding members that pushed for a European common approach on the topic was Italy (because of her strong regional imbalances). This lack of European commitment in the social area meant a strong boost to the free movement of labour, to the protection of workers’ rights in destination countries, anti-unemployment measures, training plans and professional preparation. Hence, a long work was done to include these issues in the treaties of Rome.
At the end of the 1960s the European Community had to again address problems such as unemployment, immigration and education. The European Economic and Social Committee was an important but often forgotten innovation introduced by the treaties of Rome and progressively deprived of its real potential. When employers and their associations found out more suitable channels to lobby their interests, they quit this institution and left it to trade unions. Moreover, the very functioning of the EESC has made it eclipsing and caused its main problems such as opinions remained unheeded and recommendations sent too late. EESC represents the emblem of what the European institutions have not been able to do for years: use their position to be heard. Few years later, during the 1970s, the European structure changed radically and also in its approach to social issues. The turning point was the movement of 1968. Up to that time the Common Agricultural Policy and the free movement were the only common policy areas of the EEC with repercussions to the social field. Eventually, social policies were included among the competences of the EEC as one of the result of the Council of Paris in 1974. The ambitions in the social field were great and to achieve them a Community action was fundamental.
The 1970s witnessed severe crisis, especially for young people looking for their first job. Of primary importance became reducing unemployment and therefore vocational training was funded. In this context the European Centre for the Development of Vocational Training was established. This European agency started to draw attention, but it was evident that adequate social policies needed more money, yet there was a lack of political willingness to fund such programmes. For this reason the main measures adopted were legislative acts, as in the cases of equal opportunities, disabled people and the European Social Dialogue (within which the European Trade Union Confederation was established). These actions did not represent any cost for the European Institutions, gave leeway to national states and allowed the European Community to avoid facing its social responsibilities. Only after 1985 social issues went on the agenda again. This is the case of the White Book of the Delors Commission “Completing the internal market” which seemed to be based on notions of neoliberalism but came from people who were not really neoliberals (such as Mitterand, Kohl, Delors). Rather than proposing a common European social model however, the European Union since then sends recommendations to national states. The only area where the European intervention appears to be relevant is the employment but also in this case is limited to the financing of unilateral programmes undertaken by singular European states.
At this point an important question is: why in this context the EU did not start from the bottom by establishing an authentic European society to which it would be easier to apply a unified European policy? We should properly estimate however, the real achievements of the Union.
Welfare is costly!
These achievements are few, but should be considered in a historical perspective: the European project started in a continent destroyed by the most devastating war ever. Nowadays it would be senseless to find excuses and to not see the reality: welfare is costly! Welfare states were established in a historical moment that made it possible. The not so easy task of reallocating the resources for social purposes was lightened by a great economic growth, in a moment of relatively weak global competition. In the light of what is happening today the main objective is therefore to save what is still left of these welfare systems: namely to save what we still can.
Consequently, the German proposal should be considered in relation to the current global situation. In a globalised economic system competition is strong. Economies such as the Indian and Chinese ones have a better position in the global competition due to their less developed welfare system and lower labour cost. The rapid decreasing of resources’ availability is a matter of concern not only for Italy but for the entire Europe. In the European Union what has been the role of the Commission and what of the national states? They normally propose solutions for the short term but the question is constantly the same: who has to pay for the crisis? Can we afford to keep spending relatively more just because we are protected by our euro ‘shield’? If the holder of the shield is weak, how can we bear this situation in the long run? Hence, when the last breaking point is reached a domino effect for Europe and then for the whole world will become a possible scenario.
The functions of Euro
Is the only function of Euro is to protect us? Or do we need something else for our development? Here we should not underestimate the power of a strong currency. Americans can take advantage of the dollar as there is somebody ruling over it. The European integration reached thanks to the Euro should remind us of the power of currencies for specific purposes. Nevertheless, we should learn how to make use of currencies. In order to do so there is only one way: equalising the value of the currency with the real value of the economy. Today, the problems are the substantial economies and the governments that control them. This does not mean that the Euro has been poorly managed. Actually the contrary is true, the good management of the Euro is due to the fact that the European Central Bank has been based on the principle of responsibility. Therefore, the ECB has properly addressed the crisis but keeps tottering because of the lack of a unified government supporting its action.
United or we will perish
In this moment of crisis who looks after the European Economy? And who will look after it in the future? Is the option proposed by Zingales of a pull-out of Greece from the Euro feasible? This solution would not we just create further gaps? Once again there is only one way out: a common European fiscal and economic policy ruled by a European government which is properly empowered and thus able to provide an appropriate guidance. We also need a common European budget in support of the economy and of the people. The solution for the crisis should not necessarily be at citizens’ expense. Either we become united or we will perish, for the umpteenth time.

Saturday, August 21, 2010

Blind Love of the EU

I've recently glimpsed the data of the research, conducted by the Caucasus Research Resource Centers back in 2007, which in a broad extent reveals an attitude of the people of South Caucasus countries towards the EU. Expectedly majority of the population in all three countries are keen on further integration with the European Union and despite the fact that research was carried out 3 years ago, I doubt any significant changes have occurred in the meantime.
Should  country cooperate  with the EU? (%) 2007 
You may ask what is so special in this report. Quite normal that people support tighter cooperation/integration with the organisation which has been deemed as a relative success at least before the ongoing financial crisis. Hence the result summed in all three countries is 78%. In the data, the figures are given separately for economic and political integration, but I won’t distinct it as the difference teeters between 1-2 percents. In any case, the number is indeed very high. Some of the recently joined countries had much less figures when it comes to popular support. In the survey which has been published in 2008 by the EUROBAROMETER, overall figure in the member and membership aspiring countries slightly exceeds 50 percent. More than half of Europeans consider that their country’s membership of the European Union is a good thing (52%), while three out of ten (29%) think that it is neither good nor bad and 14% think that it is a bad thing. Comparing to this data, people of South Caucasus have rather positive attitude towards the EU. But this data gets meaningless with the next figure, which shows that for instance 48% of people in Armenia think that their country is already a member of the European Union.

Is your country a member
of the European Union? 2009
On comparatively the similar question, EUROBAROMETER gives us vague numbers, taking into account the age, sex, social status etc. of respondents which of course differ from this particular data revealed by the CRRC. However the figures are still very low. Not only in the South Caucasus, but even within the European Union people lack knowledge and information about the EU. We can certainly blame the knotty structure of the EU or the indifference of citizens, but in any case it is EU’s ineffectiveness to be blamed on the first place.
 EU’s supranationalism has already far prevailed national governments with a significant degree, but people tend to be more informed on their domestic issues, which has a logical consequence on EP elections afterwards. As an outcome, the EU should probably address the issue on country to country bases, as the situation differs in every member/membership aspiring countries. More formal and non formal educational programmes and maybe less funds on Erasmus type projects, which is clearly ineffective for various reasons. As for the Neighbourhood countries, I presume European Neighbourhood Policy gravely lacks efficiency in this particular aspect. Thanks to the EYP I have examined this issue even further and what I assume is that the rift in awareness of the EU matters between the youngsters from the EU 27 and peers from candidate/neighbourhood countries is huge.

You can find the full data of the research on CRRC website

Wednesday, August 18, 2010

The Coming Fiscal Bankruptcy of the West

Not idealizing as some of my friends might blame me, but Jose Pinera was one of the best speakers I’ve listened so far. Academic and practitioner (won’t use the word ”Politician)  who has been in the front of Chilean economic reforms in the end of 70th. Simply to put - the architect of the private pension reform, which was based on the personal retirement account.

Mr. Pinera indeed has a lot to say and he does it in a manner that will definitely tie you up during the lecture. I won’t prolong further as his biography says more, just will present the recording of the lecture he has delivered in the Neuwaldegg Institute Summer Seminar 2010 (August 9th - 15th) in Castle Neuwaldegg, Vienna, Austria. Unfortunately, it covers the lecture on European monetary crisis only. Due to some circumstances I was unable to record entire lecture on Chilean Pension Reform itself. But taking into account the fact that European crisis is an ongoing matter, from my standpoint it should be more interesting. 

Especially in the meantime of the crisis of the EU welfare system, which is going to have a serious consequences as Mr. Pinera assumes. Hence, an assessment of the man who has transformed and revolutionized Chilean pension system is undoubtedly interesting to listen. As the existing Bismarkian system is about to collapse in Europe, it is indeed very timely to use an example of already long tested system, which has played a significant role in entire of process of  soaring Chilean economy. Then why don't we consider it as a possible outcome for many European countries. It can be considered by Georgian government as well, as the country hasn’t yet reformed the existing system (if one can call it that way at all). Just to note, Kazakhstan is the first and so far the last post Soviet country which has chosen Chilean way of pension reforms.

I'll stop here and let you enjoy Professor Pinera. For further information about him/his viewpoints you can visit the web page www.josepinera.com and also feel free to follow him on twitter on English language account http://twitter.com/pinerajose.

Here is the recording of the lecture and the PPT he used during the lecture. Thanks to Youtube restrictions I had to upload couple of parts of it. But I strongly recommend to everyone to watch/listen them till the end.

Part II, Part III, Part IV, Part V and Part VI.

Saturday, August 14, 2010

How to travel almost for free

How many of you have heard about carpooling/car-sharing? I knew that something like this existed in some European countries, but never thought that it could work for me as well. Travelling by car almost for free from one to another country is indeed a great opportunity for wanderers like me and seems like many people around me are using it quite efficiently. I myself have discovered this service recently and enjoyed it so much that I cannot refrain from writing about. Have to say that I liked the idea of using sort of new means of transportation from the beginning, but as I had to be in Vienna at least by 9th in the morning, i was not sure how trusty it was. Finally had no choice as train was extremely expensive and there were no cheap flights operating from Frankfurt to Vienna/Bratislava. I won't go through the details of the trip, just wanted to state that it cost only 25 Euro (300% cheaper than train) and was absolutely amazing experience. Probably not every of them is going to be the same, but I recommend it to everyone who is going to have a trip within Central and Western Europe. 

For more information/particular route visit the web page  http://www.mitfahrgelegenheit.de/

Tuesday, August 3, 2010

Country which always amazes me

My summer vacation is approaching to its finish. 3 months were quite long anyways, feel sort of tired of packing/booking/wandering. Though cannot complain as I am unable to live otherwise. Maybe I'll summarize my thoughts later as two more trips are ahead, but the recent one on Iberian Peninsula was probably the best part of summer'10. Even though I've already visited all the major cities before, it's always nice to be back, especially the countries which I simply adore. 
Portugal due to the reason of Football national team already long ago became one of my favourite countries in Europe, but it is indeed more than football. Fado, Portuguese culture, people and stunning cities/beaches are sufficient reason to consider going back in there. I cannot go into details of each and every of them as it takes really long, short stories always make a trip unforgettable especially countries like Portugal and Spain, wherein once can always find something unique, which is not so common in other parts of the continent. I remember once after spending a year in northern Europe,  felt like at home while seeing people shouting each other in the street. I know locals usually are fed up with this type of noisy way of life, but after 2 years of living in North I can fully appreciate this sort of "South type" behavior of people. Where else will you be offered a weed right in front of the building of Ministry of Justice? :D never tried it though

This was my second time in Lisbon and I've once again enjoyed its Arabic influenced architecture, not really clean but still very special streets of it. Traditional cuisine which is relatively cheap in comparison of other western European countries and delicious Port wine. These and other things which I didn't mention in this post truly makes Portugal place worth visiting, this country will perfectly fulfill the requirements of even the pickiest tourists.