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30.05.2017

THE COST OF A WORKING EU

A reform of the European Union might not solely be a matter of structure. More and more politicians claim that an effective European collaboration requires more flexibility - and perhaps some compromises, also by the industry.

By Eike Radszuhn

Günther Oettinger is not known for mincing his words. In this regard, his appearance at VDMA's evening reception at the trade fair in Hannover was no exception. "The Hannover Fair is a symbol of Germany's competitiveness," said the German EU Commissioner in his speech to the 140 guests, many of them entrepreneurs from the mechanical engineering industry. "However, we have to take other countries along with us." In the future, the Germans should not expect to get their way during every decision in European politics. The EU, Oettinger said, will only work for all of its member states - or not at all.

For the seventh time, VDMA brought together decision makers from EU politics and industry at the reception on Monday, April 24. This year, the event took place against the backdrop of the political crises in Europe and the attempts in Brussels to reform the European Union. In Italy, the Netherlands and France, Eurosceptic parties recently seized significant support from voters. In Oettinger's view, the solution would not only be a reform of structures and procedures, but also a new spirit of collaboration among the member states.

With his remarks in Hannover, the 63-year-old indeed anticipated a discussion that then fully unfolded after the success of Emmanuel Macron in the French presidential elections recently. Many people regard the presidency of Macron, a frenetic supporter of European integration, as the last chance for the EU. If he fails, the French might really turn to one of the extreme parties to the right or left next time, which would be equivalent to the end of the EU as we know it.

However, Macron is not only a Europhile, but also represents economic ideas that are not always in line with those of German politics, or in particular, the ideas of the German industry. During his electoral campaign, the 39-year-old made the case for more protectionism and direct investment by the EU, and he openly criticized the size of the German trade surplus. To save and reform the EU, Macron can certainly be a decisive partner. But, as it is becoming apparent, this kind of partnership might require more commitment and understanding among member states, including their industries.

In other words: A working EU is possible - but it has a price tag.

Less power, more benefits

One of the first German politicians who formulated this idea was Foreign Affairs Minister Sigmar Gabriel. In March, the social democrat called for more German contributions to the EU budget, since the country would also profit the most from EU money. "Every euro that we make available for the EU budget comes back to us - directly or indirectly," Gabriel wrote in an article published by the Frankfurter Allgemeine Zeitung. "So what if we do something unheard of in the next debate on European finances? Instead of calling for a reduction in our EU payments, we should show a willingness to pay even more."

Meanwhile, even politicians from conservative parties are publicly toying with the idea of giving more power and potentially even more financial resources to Europe, for example Macron's idea of a eurozone budget, finance minister and parliament. When the freshly elected president visited Angela Merkel in Berlin on May 15, the German Chancellor declared that in order to make the EU and the eurozone more efficient, changing EU treaties was "no longer a taboo". Merkel said: "If we can justify the why, the what for and what the point is, then Germany will be ready".

Recently, VDMA also published its ideas for a reform of the European Union. In the paper "Ensuring the future of the EU", the idea of being more open to compromises for the sake of European unity is expressed, for example in respect to the call for a clearer definition of sole EU competences. "Individual states can no longer have a veto right," the position paper underlines. "This, of course, also means that in a strong Europe, the German position will not always prevail. This will be uncomfortable and painful in individual cases. However, provided the decision-making processes are democratically legitimate and transparent, this is preferable to a divided Europe that is not capable of overcoming the greatest social and economic challenges of our time."

At the same time, VDMA also formulated clear limits concerning those compromises. Social policy and the regulation of the labor market should clearly remain the competence of the national states. Concerning fiscal policy in the eurozone, VDMA has always argued that solidarity would be necessary, but that financial aid cannot be granted without requirements, and that liability and control must remain in one hand. The price of the EU can neither be a European superstate, nor the limitless redistribution of wealth within Europe.

First concrete example: Brexit

There is already an example of what compromises among the EU member states made for the greater good might look like: the Brexit negotiations between Great Britain and the remaining 27 member states. For both the British and the European industry, a lot is at stake in these exit talks: the UK is aiming to keep as many of the benefits of European integration as possible, while being more independent from Brussels at the same time. Industry wants to remain a close partner with Great Britain and its clients and business partners, while also securing the unity of the EU.

In the past few months, European politicians have urged industry not to push for individual deals with Great Britain that might benefit specific sectors, but undermine the European position in the Brexit negotiations. And indeed, many business associations, including VDMA, have declared the EU and the preservation of the Single Market as top priority. "The long term preservation of the Single Market is more important to industry than short term trade facilitations with Great Britain," said VDMA Chief Executive Thilo Brodtmann in a statement issued in March.
The upcoming Brexit negotiations were also an example used by Commissioner Oettinger in Hannover in calling for more solidarity within the EU. "The UK will still be our neighbor," said Oettinger. "But when it comes to the exit negotiations, the British are opponents as well as partners." He expressed praise for the industry in holding back on special requests so far: "Companies know that the remaining EU member states must speak with a single voice, otherwise we all lose."

But Oettinger also gave an advance warning that, in the future, European companies might need to bite the bullet more often in order to make an EU reform happen. As he put it: "We need to think in terms of the overall economy."

Further Information

VDMA European Office |   VDMAimpulse 02-2017: "The future of europe: five options, no alternative"   |   VDMA European Office: "Ensuring the future of the EU"

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Contact
Eike Radszuhn, VDMA European Office.