Chancellor is not "an enemy" of the Commission. Recent (and resounding) criticism from Chancellor Schröder at the European Commission mainly concerned the latter's alleged negligence with regards German industrial requirements. Other grievances were also expressed, but it was mainly this one that explained the Chancellor's tone, and his bitterness. The quarrel has sent shock waves, triggering a debate that concerns both economics and the society. But I would just like to make a remark to begin with: I do not share the opinion that Gerhard Schröder has become an institutional "enemy of the Commission". When he affirms that the role of the Commission should not be lessened in future reforms, I am convinced of his sincerity, and that, when the time comes, he will be coherent in this affirmation. At the same time, however, for reasons that are partly, but not exclusively, linked to the electoral campaign under way in his country, he does not share some of the directions taken by the Commission, or rather he considers that a number of measures taken in Brussels do not take the interests of his county sufficiently into account. And he expressed his views in terms that could have been better chosen. It may be unpleasant for the targets, but dialectics and even divergence are an essential element of the "Community method" - they are the spice of the matter. This method is based on discussion between the Commission, the Member States (within the Council) and the Parliament. This must be accepted and is even salutary (for those interested, see this heading 28 March).
A German and an Anglo-Saxon conception? Going beyond the specific nature of some of the critical remarks made by the Chancellor at the Commission, the debate gained in magnitude and broader significance, which could - if we simplify in rather an abusive way - be the symptom of antagonism between an essentially industrial notion of the European economy, defended by Germany, and an Anglo-Saxon conception, geared more to banking activity and financial services. At this point, a second preliminary remark is needed: it is not a question of misconstruing reality, that is, the fact that, in Europe, most jobs are already in the services sector, and will be increasingly so. This is a normal development of evolving and advanced societies, resulting from the simple fact that industry uses less labour due to technological progress. It is even a desirable and hoped-for evolution, as already presented with great clarity in Jacques Delors' White Paper. Our society needs more personnel for a larger number of services that are useful to society: nurses, teachers and other educational staff and above all for crèches, help to the aged, etc. What is at stake in this debate is knowing whether Europe must accept or reject an attitude of "benign neglect" towards the risks run by its industrial activity, risks that are mainly caused by the higher cost of labour and by the additional costs resulting from ever more stringent environmental norms. Should one accept relocation of certain activities, applying a logic founded solely on costs? Or should political action intervene to some extent to protect Europe's industrial tradition, given that the industry itself must make the necessary effort at the level of structures, research, and technological progress? The production of goods nonetheless represents the basis of our society, while banking and financial activity (albeit of course indispensable) may sometimes be seen as pure speculation, which makes some of us wealthier but which does not give society as a whole an awful lot.
Blunt talk of an economist. It is Germany that is mainly involved in this debate, being the leading industrial power of Europe. This debate, I believe, must go beyond the national level and above all shake itself free of specialist circles in order to become a European public debate. To a certain degree, the "Lettre de Confrontations" (an association chaired by MEP Philippe Herzog), has begun to do just this by publishing an interview with French economist Patrick Artus on the German situation. Mr Artus attributes the main cause of current difficulties to essentially monetary factors. In his view, Germany entered single currency with "gigantic over-estimation of the deutschmark", and has not stopped paying for that error. He explained: "sharing the same currency as the others but with labour costs that are 25% higher is fatal for this country (…). Germany is condemned to massive destruction of its manufacturing jobs. And the services sector, which is not highly developed, has been destroying jobs for the past two years, although it is a source of job-generation in all developed countries. The thesis of Germany's desertification is not incongruous. To remedy this, Germans should accept that per capita income falls 10% per year over the next ten years". According to Mr Artus, Germany (…/…)
could effectively soon go beyond the 3% deficit point, mainly because of the fall in tax receipts on business (which "could be monstruous"), and the rules of the Stability Pact should be amended: "these rules do not allow a fine analysis of the different situations (…). The countries that have more violent cycles - as in the case of an industrial country like Germany - must have the largest budgetary margins of manoeuvre". He went on to add: "such rules will be renegotiated, but in a political crisis"
Mr Artus' thesis no doubt contains an element of provocation. But there are indeed problems, and the European institutions do have a major word to put in, as their decisions and their behaviour may partly determine future development, from several points of view: taxation, State aid orientation, regional policy, corporate law (mainly the takeover regulation), and application of competition rules. In his "proposals for the Convention" diffused last week, the President of "Confrontations", Philippe Herzog, did not neglect such issues, although he evoked them only succinctly. I read in his document: "the criteria implemented today for mergers, State aid, etc. neglect industrial interests that are essential for development and for the effectiveness of the European productive system. Such criteria must be revised in relation to industrial policy".
This series of questions should reasonably be discussed in the meeting scheduled between Chancellor Schröder, accompanied by a number of his ministers, and President Prodi, surrounded by the European Commissioners concerned. Solemn recognition of Europe's industrial role and the affirmation of the Commission's determination to take this into account (although it is obvious that it must apply the Treaty provisions without complacency) would be welcome to dissipate some misunderstanding. According to some indications, Romano Prodi has the intention to take position. The debate must start up in an enlarged framework. (F.R.)