From Single Market Act to new energy strategy. The range is getting broader. The attempt by this column to demonstrate that European construction is going through a creative period is based, above all, on progress made in economic governance and financial reform. Soon, we will be able to add two more important domains: the relaunch of the internal market and energy policy. EUROPE 10234 confirmed that the European Commission will approve its “Single Market Act” on 27 October and its new strategy for energy policy for the 2010-2020 period at the beginning of November. There has been talk of this first document for quite some time, with predictions which sometimes did not correspond to reality - so much so that Michel Barnier had to dismiss a number of orientations he was supposed to have advocated. The second document will not yet cover - except for a few aspects - the external dimension of energy policy; this will be the subject of a specific supplementary document next year, which is expected to respond, at least in part, to questions raised in this column the day before yesterday.
The orientations and main substance of the two documents have been reported on separately in the above-mentioned edition of this publication. Future editions, including this column, will return to the issue at the appropriate time. The EU is therefore going to provide a new vision of the internal market, which will not only focus on removing national borders but will, at the same time, include: a certain level of tax coordination, by harmonising, in particular, the basis for corporate tax assessment (taxable base); a legislative framework for public services of general economic interest; a public procurement policy benefiting other policies (environment, innovation, etc). It will also have a more comprehensive vision of the difference aspects of energy policy: European grids, efficiency, technological progress, security of supply, etc. All this already partly exists but is spread out, without any real common strategy, which is then expected to be accompanied by gradual unification (difficulties still remain in this connection) of relations with third countries.
It is therefore legitimate to consider that this current creative period in European construction does not just affect the economy and finance but also other areas.
Controlling banking activity is necessary. The importance, as underlined in this column yesterday, of European initiatives for regulating bankers' pay has been confirmed and consolidated. In the US, where nothing similar exists, variable pay (covering bonuses and stock options) reached a record level this year: $144 billion”. It is the Wall Street Journal which affirmed this, indicating that this amount is two and a half times higher than shareholder dividends and a third of the turnover of the establishments concerned. Professionals in financial services are expecting a relaunch of bonuses in other international financial centres: London, Singapore, Hong Kong and Sydney. This explains and justifies the sympathy that most Community political actors have given to the approval of the directive introducing rules and limits on pay, as well as their support for the CEBS (Committee of European Banking Supervisors) project for the measures of application. It should be noted that this project stipulates that: only a 30% proportion of a bonus can be paid in cash; half of variable pay should be paid in shares; a bonus can be rejected or reduced if performance used to justify it is not borne out in the long term. These rules are even more necessary given that the experts recognise that regulatory control is needed because “self-regulation on this is not possible”.
The only objective that counts. The factors mentioned above highlight the question: shouldn't the investment banks (specialising in speculation) and savings banks, which finance economic activity, be separated? The Americans have applied this separation for 30 years, which proves that it is not impossible. The claim that robust European regulation would cause a “brain drain” to other continents is irrelevant because regulation does not target people but a specific kind of activity, that is to say the degeneration of banking activity towards artificial constructs, this distorted bi-product of globalisation, which transfers astronomical volumes of capital every day (far greater than the world's real wealth) to the detriment of economic activity. Some of the protagonists involved in these deviations have received prison sentences from courts (in the US) or fines that are so high they have become symbolic (in Europe). This kind of activity should be controlled and discouraged and its abuses punished. This is the only objective that counts.
(F.R./transl.fl)