Akava’s programme for the EU elections: A strong EU means a strong Finland
1. A vision of a strong EU
The European Union is doing better than it has in years. The economic crises have been overcome for now and economic growth has picked up in Europe. The fact that Britain is soon leaving the EU has united the EU member states and reinforced citizens’ support for the Union. Now is a good time to look towards the future.
There is much to do. To be able to respond to the challenges of global competition by means of sustainable solutions requires new types of competence and major investments in research and innovations. The revolution and digitalisation of working life call for the creation of commonly shared European rules for the labour market. By advancing a responsible, free and innovative economy, Europe can lead the way for the rest of the world. How will Finland be positioned in the future European Union?
The European Parliamentary elections and the appointment of the new Commission in 2019 are an important milestone in terms of continued positive development. Correspondingly, the election of the Finnish Parliament in 2019 signifies a national EU milestone. The Finnish ministers contribute to the decision-making in Brussels, and the Finnish Parliament plays a key role in defining Finland’s European policies.
Akava (the Confederation of Unions for Professionals and Managerial Staff in Finland) would like to see a competent and educated Europe with solid economic growth as well as a functional internal market and mobility. Akava’s objective is for Europe to seriously invest in science, research and sustainable development. We are hoping for such European co-operation that will extensively create added valued for all citizens. In other words, we need a strong European Union.
This would also mean a strong Finland, since we are economically, politically, and in many other ways, extremely dependent on the EU. Moreover, the EU provides us with one of our principal channels for influencing development at the European and global levels.
For the vision of a strong Europe to come true, we need solution models and also practical proposals for their implementation. Citizens should be extensively engaged in the discussion, not just as voters in elections.
Akava has supported Finland’s EU membership from the beginning and, consequently, taken an active role within the EU through co-operation with European organisations. Whenever deemed necessary, Akava has suggested improvements to the operations of the EU and exerted influence through directive initiatives. To contribute to the discussion concerning the future of the EU, Akava outlined its opinions in the document entitled Towards a new European Union (1 March 2017), and the present document is an updated and revised version thereof.
Through its vision of a strong EU, Akava aims to contribute to the post-election term of the EU by influencing, among other things, the action programme of the new Commission and the activities of the European Parliament, to be elected in 2019, as well as the national discussion on European issues. It will also serve as a foundation for the Finnish EU presidency in 2019.
The EU has become like health:
you only see its value when it is threatened.
2. How to create a strong EU?
The cornerstones for a strong EU, as envisioned by Akava, include the ability to respond to global competition by means of sustainable and innovative solutions, the strengthening of competence, and the safeguarding of a fair European labour market through shared rules of the game. To promote these aspects, we need to take action in a goal-oriented manner on many different fronts in the coming years.
Focus should be placed on proposals for best practices, thus outlining how EU citizens could optimally benefit from EU activities in their everyday lives, and on visions for the direction of the development within the EU.
A new growth strategy for the EU is necessary
There is no magic trick that would create a strong EU. Hard work is required in various areas throughout the following term of the EU Parliament and Commission. To serve as a foundation, the EU needs an extensive growth strategy and a vision of the directions in which the community should be steered.
In Akava's opinion, the focal areas should include the following.
Competence growth: The Lisbon Strategy, which was launched at the start of the millennium, laid out as the overall goal for the EU to become the most competitive region in the world based on knowledge and expertise. Today, this goal is an even more essential objective for the future. The EU must be developed into a global competence hub.
Participatory growth: In order to maintain the EU, its internal market and the European social model, it is necessary to curb the unemployment trend, significantly increase the employment rate and strongly reduce the number of persons lacking education.
Financial growth: There is no chance for a participatory Europe without economic growth and productivity, both of which must be raised to a new level. The strong decline in the EU member states’s share of the global GNP need not be an inevitable trend.
Growth of competitiveness: Competitive employees, entrepreneurs and companies are the key success factors for the EU in terms of globalisation and ever accelerating changes in terms of, for example, the technological evolution.
Sustainable growth: The current consumption and production methods exceed the limits of long-term sustainability many times over. In addition to causing environmental harm, they will also increasingly become a limitation to economic activities. Global leadership in sustainable growth would offer countless new jobs in addition to ensuring a better living environment.
Democratic growth: Europe is the cradle and, hopefully, also the future of democracy. The EU must be an example to its member states in terms of transparency. Authoritarian alternatives must not be allowed to expand, especially not within the EU.
Growth of values and rights: The EU is a community founded on values and basic rights, and it shall maintain and strengthen its leading position in this respect. Equality, rule of law, and equal rights are among the shared values.
To maintain the European social model, it is necessary to curb the unemployment trend, increase the employment rate and
reduce the number of persons lacking education.
Sample figures for a growth strategy
The EU’s vision for 2030 can be presented through a set of figures:
3. EU’s new growth strategy in practice: What are Akava’s expectations for the next EU Parliament and Commission?
To be able to realise the new growth strategy, a number of practical actions are needed. The key roles in this work will be played by the new European Parliament, to be elected in spring 2019, and the new European Commission, which will start in autumn 2019. During the next 5-year term, it is essential to focus on the creation of a new and stronger European Union with a higher level of competence and security.
Akava’s proposals are as follows:
3.1. A more competent EU
The strengthening of competence shall be a cross-cutting theme in all EU policymaking. Knowledge and expertise constitute the foundation for the competitiveness of Europe, while also being prerequisites for sustainable growth and increased prosperity. The EU can be developed into a global competence hub. In spring 2018, the Commission presented initiatives for building a European Education Area by 2025, and it is essential to continue this work, and set the targets even higher. For example, in terms of lifelong learning, the target for participation among the adult population should be raised from 25 to 100 per cent, and the focus must be on the quality of training and education. Other major targets include the significant expansion of the Erasmus+ programme and activities to increase language learning and facilitate student mobility.
Investments in research and innovation within the EU should be doubled from the current level. This concerns both the future EU Framework Programme for Research and Innovation (Horizon post-2020) and the member states’ national R&I investments. Active participation by the member states is vital for the advancement of competence. For this reason, the European Semester should be utilised more efficiently in order to strengthen the factors supporting competence.
We now have an opportunity to reform the structures of the EU budget so as to provide, in the future, stronger support for growth and innovation, and for the readiness to face new risks. Particular difficulties will be posed by Britain’s withdrawal from the EU and the resulting necessity to reconsider the EU budget funding. Therefore, new solutions are called for also in terms of increasing the EU’s own resources own investments. Instead of conservative subsidy policies, it is vital to promote growth and the creation of new jobs.
3.2. A globally responsible and competitive EU
The initiatives concerning the investment plan, energy union, capital market, future transport infrastructure and other similar undertakings shall be implemented with determination and ambitious goals.
The EU internal market is by no means complete. Occupational licensing, standardisation, professional mobility, smooth e-commerce, functioning digital and data economies, as well as public procurement markets are among those issues that still require elaboration. Competition-distorting government subsidies must be significantly reduced.
In the future, the economic leadership and jobs will be taken by those players that are at the forefront of changes related to robotisation, automation, platform economy, artificial intelligence, digitalisation, bioeconomy and similar areas. For the purposes of Economy 4.0, a broad EU programme is required with a focus on, among other things, research, an appropriate regulative environment, financing opportunities and support for innovative high-growth entrepreneurship.
The EU shall enter into new trade agreements that support growth, job creation and rule-based globalisation. They must, however, be negotiated in a transparent manner. The new partners shall also sign the Paris Climate Agreement and the eight ILO Core Conventions, and any violations of the agreements shall result in the loss of trading benefits.
The trade agreements should be upgraded to include digital economy and the fact that information will be the primary merchandise in the future. It is necessary to break the vicious circle of protectionism and stop the crumbling of the World Trade Organization in order to “Make the WTO Great Again”.
We need a sustainable EU. The EU shall be a pioneer in circular economy, climate and environmental solutions, energy savings and other sustainable economy initiatives. Responsible consumption and production methods are a necessity, and declining environmental biodiversity is a threat, even to the economy.
In globalisation issues, to fill the void resulting from the disengagement of the USA, the EU must lend support to the UN as well as to the international development aid and and multilateral systems, while also acting, at the global level, in compliance with its values concerning democracy and human rights.
The EU shall be a pioneer in circular economy,
climate and environmental solutions, energy savings and
other sustainable economy initiatives.
3.3. A socially strong and fair EU
Only an economically solid and stable EU is capable of securing the services of a model society and a safety network for its citizens. The Economic and Monetary Union (EMU) shall focus on stabilising the economies of the member states (see p. 11).
The European pillar of social rights initiative shall lead to practical legislative undertakings in the field of working life, occupational health and safety, and equality. In particular, this should concern the new economy, new forms of work, and work in the digitalised information society. In addition, minimum security must be provided for the self-employed, and EU-wide protection must be ensured for whistleblowers.
The internal mobility of workers within the EU is still not fully smooth and flexible. There is a need for a European social security number, further development of the system for recognising occupational qualifications, and increased dissemination of information about matters related to internal mobility.
The EU aims to create an immigration society similar to Canada through the revision of the Blue Card Directive. This calls for the successful integration of immigrants and understanding of employee mobility as a ‘brain exchange’ instead of a ‘brain drain’. The investor visa practices applicable in the member states should be harmonized.
An arrangement must be established to end cross-border tax evasion, tax haven operations and aggressive tax planning. Taxation issues related to digital economy should be resolved. Minimum levels need to be determined for those forms of taxation that are linked with internal market operations, and the methods provided by the EU’s competition policy should be applied systematically to curb the harmful tax competition.
The EU decision-making shall be efficient, transparent, and anchored in democracy. The decision-making of the Council of the European Union must be based on a qualified majority, and the principle of unanimity should be renounced, for example, in all matters related to working life and taxation.
Supervision of the rule of law and democracy (Article 7 of the Lisbon Treaty) shall be significantly strengthened. Any decisions related to these issues shall be made by the Council with a qualified majority, the member state in breach shall lose not only its voting rights but also the right to receive EU funding, and the EU Court of Justice shall have the jurisdiction to place the member state concerned under observation, which may ultimately lead to the state being expelled from the EU.
From the point of view of citizens and in terms of both political and economic stability, the implementation of a security union is important. Controlled immigration, the prevention of cyber and terrorism threats, and the promotion of stability in the EU’s neighbourhood are examples of the most essential issues in this respect.
The EU decision-making shall be efficient, transparent, and
anchored in democracy.
4. Finland and the EU: What is our policy?
Finland’s position in the EU after the elections and under the new Commission should be reconsidered. In Akava’s opinion, the following ideas should serve as the starting point:
In Finland, EU membership and the Euro zone are widely supported. The past years, however, have shown that there is a need for constant motivation for and maintenance of the membership.
Finland must not remain at the outer edges of EU operations. We must actively look after our interests and opportunities to influence. This is best implemented at the core of the decision-making power.
Finland shall play a solution-oriented role. In the long term, one’s own interests are best served through a shared interest. Individual interests and shared interests are not opposing or a case of a zero-sum game.
It is in the interest of Finland to support a strong EU. The more influential the EU, the greater Finland’s opportunities to influence.
Within the EU, Finland can effectively advance globalisation, together with the Nordic countries. Nations that have created open economies and participatory growth will benefit from international collaboration.
Even though the Euro countries are the most important reference group for Finland within the EU, Finland shall co-operate and seek support widely from all directions. The EU is not an arena for matches between national teams.
FInland’s ability to discuss and deal with issues together and in an engaging manner, as exemplified by the strong role of the Finnish Parliament, serves as a model on a broad basis.
Finland’s pragmatic approach must, however, not mean that we only concentrate on implementing decisions that have already been made, visionless technocracy or a narrow-sighted net payer role.
Finland must not remain at the outer edges of EU operations.
Individual interests and shared interests are not opposing
or a case of a zero-sum game.
5. Appendix: Background analysis and further proposals
A. Many achievements, some mistakes
During its 60-year existence, the European community, today known as the European Union, has achieved a lot. Never before in history has Europe experienced a similar period of peace in which citizens can move and work freely throughout the continent, and the cross-border co-operation has expanded to unforeseen dimensions.
The internal market has facilitated business and created growth. Without this development, the gross national product within the area of the EU would be as much as 5 per cent lower than it is today. The elimination of the Schengen Area alone would result in billions of euro as additional annual costs.
Especially for smaller countries like Finland, the EU has opened a significant channel for making a difference in global development. In terms of its activities to stop climate warming, Finland would hardly have come this far if it were not for the EU.
Mistakes have also been made. EU scepticism gained strength within many trade unions when nearly all the activities related to working life were frozen under the Commission led by José Barroso. Citizens’ trust in the system as a whole was weakened by the secrecy surrounding the negotiations related to the transatlantic trade agreements, the EU-USA TTIP and the EU-Canada CETA treaties.
Nevertheless, the cause of many problems does not necessarily lie in the EU itself, but is attributable to the member states. For example, due to the attitudes of some governments, the activities to harness international tax evasion are progressing sluggishly. Nor are Brussels or the EU economic policies to blame for many countries drifting towards a state of weakened competitiveness or excessive indebtedness.
The discussion on Brexit in Britain is a symptomatic example. The former Prime Minister, David Cameron claimed that the EU immigration was “unbearable” and yet the net immigration to the British Isles was not much greater than that seen in Finland at that time. Even if each member state is a part of and included in the Union, the accusations are often vaguely directed at the EU, and facts can be replaced by ‘alternative truths’ even in Europe.
Neither Brussels or the EU economic policies are to blame for many countries drifting towards a state of weakened competitiveness
or excessive indebtedness.
B. The current EU: difficulties and strengths
The European community is characterised by many challenges, but the system also has many strengths. One may say that the EU is in a cross-swell caused by forces pulling in opposite directions. For this reason alone, the future EU decision-makers are required to have a clear understanding of the direction in which the EU shall be navigated and of the methods for creating a strong EU.
The challenges are numerous:
Europe is still facing significant economic problems, and up to every fourth EU citizen is at risk of poverty or marginalisation. Finland, for example, continues to become increasingly indebted despite the upswing in economy.
Conflicts and disagreement have repeatedly plagued the progress of many initiatives that are important in terms of employment and the global competitiveness of the EU (for example, a sharing economy). The unified support from the Finnish Government and labour market organisations for a balanced TTIP agreement was a unique phenomenon within the European framework.
The EMU and Euro zone are still not functioning properly and, even if the acute crisis is over, there has been an inability to make sufficient decisions regarding their development.
Anti-EU movements and populism are challenging traditional political decision-making and the mere existence of the European Union. These movements have recently experienced setbacks in national elections in some countries, but they have also succeeded in other countries. These phenomena are not expected to disappear in the near future.
Britain is about to leave the EU. Although the country is causing the greatest harm to itself, there are no winners in this case. On the other hand, there are new candidates aspiring to join the EU, but then again, the attitudes toward further enlargement within the EU are partly reserved.
In some member states, the majority of the population view globalisation as a threat and the EU as a contributor thereto.
Although the wave of refugees has slightly calmed, the southern immigration pressure may increase drastically in the future and, again, create additional tensions between member states.
External relations are facing greater challenges than ever in relation to, among others, Russia and China. The Western community has become fragmented due to the development in the United States.
As a community based on shared values, the EU is suffering from the developments in Poland and Hungary, in particular. The value-based community reflects the unifying spirit of the EU. Some of the current member states might, perhaps, not be accepted if they were to apply for membership today.
Europe has many strengths:
The member state economies have successfully resumed a renewal track, the employment rates are increasing and unemployment is declining. It has recently been stated that 90 per cent of future global growth will happen outside the EU, but this statement is not necessarily true.
The EU continues to be a major internal market with high-level knowledge and expertise, and from many different perspectives, one of the most attractive regions in the world. For example, in a recent innovation ranking (2018 Bloomberg Innovation Index), five out of the top 10 positions were held by EU member states.Along with Brexit and other similar events, civic support for EU membership and Euro currency has even increased. The EMU is supported by three out of four citizens within the Euro zone, including Finland. In Finland, an attempt to initiate the exit process did not succeed because of the failure to gather the 50,000 signatories required for a citizens’ initiative.
Despite the difficulties, the EU is capable of carrying out its normal legislative work and producing added value on a daily basis for citizens, entrepreneurs and member states. The education programme, Erasmus, and the research programme, Horizon, represent European success stories.
In recent years, transparency in the EU has clearly improved and, along with the reinforced status of the European Parliament, democratic anchorage has also been enhanced. Since 1972, a total of 56 referendums on various EU themes have been arranged, and a majority of these have resulted in a positive outcome. The Internet has fundamentally improved everyone’s possibilities to follow the activities of the EU.
A clear change in the course for the EU operations started during the current Parliamentary term and under the Commission presided by Jean-Claude Juncker. According to a survey, citizens in the member states trust the EU even more than their own governments. The argument about the politics being in crisis cannot be targeted at the EU.
The understanding of the EU’s value in terms of keeping peace in Europe has again reached public awareness. Two thirds of the citizens in the EU member states view peace as the most important achievement of the EU.
The demand for the ‘services’ provided by the EU has not weakened. The desire is for the EU to be active in many new areas, including, for example, the digital single market, energy union, tax haven issues and whistleblower protection.
Regardless of its difficulties, the EU has remained attractive and is currently negotiating with dozens of countries either on membership or other collaboration agreements.
Not many functional alternatives to the EU have been presented, and Brexit will show what it means to leave the Union.
C. Future issues to resolve
During the new term of the Parliament and Commission starting in 2019, the European Union will have to deal with plenty of questions that call for strategic policies and long-term work, all this in addition to the daily work on directives. Let’s take some examples:
Returning power to the member states or more power to the EU?
From time to time in EU related discussions, it is demanded that power be taken back from Brussels. This was seen, for example, in the Brexit debate in the UK. The proposals vary in terms of their contents. For example, economist Oliver Hart, who, together with Professor Bengt Holmström, received the Nobel Prize in Economic Science in 2016, has argued that the EU’s decision-making power should not cover trade policies or employee mobility.
In citizens’ opinion, however, the freedom of movement is precisely one of the greatest achievements and benefits of the EU. In a recent Eurobarometer survey, 81 per cent of EU citizens were in support of free mobility, and in Finland, the rate was as high as 85 per cent. Trade policies are considered as one of the most important EU tools for promoting growth and employment.
These reflections on the EU’s decision-making power (or the ‘competence debates’ as they refer to the issue in Brussels) are endless, but they have not resulted in any generally approved proposals on how to reduce the power of Brussels. There have been critical surveys (for example, by the Dutch government in 2013), but not even these have proposed that the EU’s power (competence) be reduced, and in fact, the EU is constantly expanding into new areas of operation. Some states east of Central Europe have recently demanded the return of power to the capitals, but what would it mean in practice?
On the other hand, different member states, organisations and citizens continually present hopes for additional tasks to be taken on by the EU. The suggestions clearly outnumber the demands for downsizing. This fact has largely gone unnoticed in the public debate.
Even if no actual proposal for the EU to transform into a federation has ever been expressed, the topic is often brought up in debate (a federation would mean that the ultimate power of decision concerning the EU Treaty and the EU’s competence would be transferred from the member states to the Union level). No such change of the EU into a federal state is anticipated in the near future. The EU, however, already features many federal-type characteristics, including a common currency and the central bank, the defence and security dimension, majority-based decision-making and extensive common legislation together with the primary status of the European justice.
An integrated EU requires the inclusion of all citizens
The lack of prospects and the feeling of becoming a loser had a powerful effect on, for example, the outcome of the Brexit vote. The number of marginalised and low-educated individuals and their share of the population in the EU member states are significant. In Finland, the share of young persons known as NEET (=20–24-year-olds who are Not in Education, Employment or Training) was 17.4 per cent in 2016. Europe is ageing, so it is vital to increase the employment rate in order to maintain the European model of a welfare state (the EU accounts for approximately 40 per cent of the social security expenditure in the world).
The feeling of being an outsider nurtures the growth of populism and alternative truths. Resistance to the internal market and trade agreements originates partly from the same sources. Inclusion of all citizens is a prerequisite for the continued integration of the EU, political stability, and maintenance of the internal market; it is not just a social policy issue. From this perspective, one of the most important topical EU initiatives is the European pillar of social rights and, in general, participatory growth.
In this context, we need to outline what the EU can and cannot do. The EU has no power over the social policy within the Finnish conceptual framework, but according to the EU Treaty, the Union has the duty to promote the minimum working conditions and fundamental rights. The common labour market and freedom of movement also call for commonly shared rules. In addition, by means of the European Social Fund and the exchange of experiences, the EU can have an impact on activities intended to combat unemployment and marginalisation. Finally, the social dimension of the EU plays a vital role in the context of the EMU, for example, through the assessment of the sustainability of the pension schemes and similar systems.
New initiatives within the social pillar are needed, at least, on the following topics: the reform of the European Works council directive, the ergonomics directive including psychosocial loading, the renewal of the working hours directive, the trade unions’ right of action, the updating of equal pay issues, restrictions concerning non-competition agreements, as well as harassment, violence and work-related stress.
In terms of the future, it is vitally important to guarantee basic rights and minimum security within the new forms of work and economy. Otherwise, it may happen that the majority of the energy will be used for resolving disputes rather than advancing the economy. Ongoing debates on ‘uberisation’ are an example of the wrong type of direction for development.
The common labour market and freedom of movement call
for commonly shared rules.
Economy 4.0: The Luddite way would mean self-destruction
The battle for the future leadership in economy and jobs will take place on several fronts involving mainly robotisation, automation, artificial intelligence, platform economy, digitalisation, smart traffic, environmentally-friendly energy production, circular economy, block chain technology, and similar issues. These aspects are the foundation for the new Economy 4.0 emerging in the near future. The way to Economy 4.0 goes through a number of creative disruptions. Productivity is anticipated to increase like never before, and the pace of structural change will accelerate further.
In the 20th century, the global division of work was based on the know-how of the traditional industrialised countries and the cheap production costs of the developing countries. In the new Economy 4.0, this setting will break down and there will be a new division of work globally. The risk for the EU is to be caught between the USA and China in the competition.
According to the latest statistics (International Federation of Robotics), the volume of robotisation, for example, is advancing in Asian countries at a triple rate in comparison to the EU area. The majority of the platform economy hubs and headquarters are situated in the USA. In the European countries, the employee unions should be alarmed by the robotisation: the fact that the development is so slow on the old continent.
The situation within the EU is by no means hopeless. The World Economic Forum has highlighted the fact that smaller European countries, like Sweden or Finland, have been able to nurture world-class leading businesses in certain future fields. In addition, there is only limited resistance to new technologies: people understand that taking on the path of the Luddites, who resisted the first industrian revolution, would lead to self-destruction. According to the Eurobarometer survey, three out of four EU citizens consider the effects of, for example, the Internet and digitalisation as being positive.
Europe must create functional markets for these areas, but without compromising the related health, safety and ethical issues. By taking the right action, it is possible for the EU to become a growth centre for Economy 4.0 and, thus, turn the direction of the global job stream back to the old continent.
Within the EU, employees should be alarmed by the robotisation:
the fact that the development is so slow on the old continent.
A clear need for a competence leap
The essential aspects of the new economy and, thereby, the labour market are knowledge, competence and innovation ability. They are also essential for the purposes of employment, growth of productivity, civilisation, and civic engagement and participation in general. Along with some other EU member states, Finland has, at least, moderate rankings in, for example, the PISA comparisons, and Europe continues to be the globally leading area for the production of scientific publications (The Science, Research and Innovation Performance of the EU 2018). Nevertheless, there is cause for concern.
In 2017, China’s research investments exceeded the overall value of research and innovation investments across the entire EU, and additional investments are underway. The tremendous economic rise of South Korea, which was one of the poorest countries in Asia after World Word II, is partly due to the fact that nearly 5 per cent of the GNP is invested in research. Canada decided, in early 2018, to make a clear turn in terms of the country’s research resources. In Europe, similar turns are yet to be seen. The Science, Research and Innovation Performance of the EU (SRIP) report also points out that the science and research based on old knowledge and competence is not sufficiently transforming into practical results. The Commission’s member state evaluation from March 2018 gives the same remark for Finland.
On the other hand, there are some 70 million individuals within the EU who have difficulties with very basic skills. Only 10.7 per cent of the adult population is participating in lifelong learning activities. The Times Higher Education World University Rankings list will not have a single institution of higher education from any EU member state once Britain leaves the EU. Against this backdrop, it is essential for the EU to make a substantial turn in this area.
Within the EU, there are some 70 million individuals who have difficulties with very basic skills.
It’s time to reform the EMU and also renew Finland’s views on the EMU
The money market crisis and subsequent economic difficulties in the member states resulted in one of the most feverish debates within the EU. Reforms versus expansive stimuli have been the core issues in the struggle concerning the EU economic and fiscal policies. The current situation is a mix of savings, reforms and expansion. The EU regulations for economic governance (the ‘six-pack’) and budget coordination (the ‘two-pack’) were intended to strengthen compliance with the Stability and Growth Pact, but they are being interpreted by stretching the limits. This eased Finland’s position in the EU’s fiscal policy procedures, but once again, weakened the credibility and steering capability of the system itself.
Even if the popularity of the common currency remains stable and the ecomony has turned in a better direction, the EMU is still an incomplete structure. Its reform must, first, be based on the rehabilitation of the member states' (public) economies and banking sectors as well as the strengthening of their competitivess. Second, any member state that fails to maintain its economy should more strongly be exposed to market reactions, since the political steering is not enough for reforms to actually take place. Third, we need to strengthen and complete the bank union, establish a European monetary fund and appoint an EU Minister of Finance, in a similar manner as the EU has succeeded in combining the many overlapping positions related to external affairs. To be able to respond to asymmetric shocks, a mechanism for the provision of restricted and temporary assistance is worth consideration, a kind of a fund for rainy days, as suggested by the IMF.
Those highly indebted Euro member states that fail to carry out the necessary reforms and are losing their competitive ability will have to understand the necessity of changing the course. On the other hand, shared responsibility for debts would have a decaying effect on the EMU. The stand taken in March 2018 by the smaller Nordic EU member states on the EMU and related issues is more than understandable.
On the other hand, the actions the European Central Bank, in fact, signify strong solidarity. Shared responsibility accounts for 80 per cent of the EU budget (structural and agricultural funds). Morever, Finland has actively advocated solidarity within the EU in its most accentuated form, that is, in military and defence issues.
Finland, as well as those member states that are in support of a different line in terms of developing the EMU, should now avoid being limited by their own narrow viewpoints and, rather, attempt to find solutions based on shared interests. We all need a strong economy, a well-functioning economic and monetary union, and solidarity for matters other than debts.
Finland, as well as those member states that are in support of a different line in terms of developing the EMU, should now avoid being limited by their own narrow viewpoints and, rather, attempt to find solutions based on shared interests.
The EU is worth your 5 euro
The EU budget is facing its greatest challenges of all time, because Brexit will cut the budget by, at least, 10 billion euro on an annual basis. The situation is made more difficult by the fact that the EU budget income relies more clearly on direct contributions from the member states, while the proportion of the EU’s so-called own resources is diminishing. As a result, budget discussions are often carried out using the member state-specific net formula. While this approach may have resulted in short-term benefits for individual member states, it definitely has caused harm for all in the long run.
Switzerland and Norway, which have gained access to the internal market, are, in practice, paying a membership fee without any possibilities for influence. The actual membership fee for Finland, for example, is around 0.14% of the GNP. In 2016, Finland received 1,530.8 million euro in the form of different transfers and paid a total of 1,828.6 million euro. Thus, the net sum paid by each Finnish citizen for the EU membership is about 5 euro per month, but whether the price tag is 3, 5 or 8 euro is not the most essential aspect.
The essential aspect is that this small sum of money enables us to freely export our products to the internal market with a population of 500 million people, or to move and work across the continent, while also offering us strong support in situations related to climate change or trade negotiations. The benefits are huge in relation to the price tag. Yet, even in Finland, the EU budget is too often viewed from the one-sided net payer perspective with the maximisation of the incoming money as the primary goal.
Already at the start of the millennium, a fundamental reform of the EU budget was proposed by a high-level EU task group led by Belgian Professor André Sapir. The Sapir report, An agenda for growing Europe, encouraged the EU to give up subsidy-based thinking and to promote growth and competence. These ideas have only been implemented to a limited degree. A task group led by Italian Professor Mario Monti brought up ideas on how to increase the proportion of the Union’s own resources in the EU budget. Many proposals and ideas have been presented, but they have not led to actual changes.
In addition to the post-Brexit adjustments, the EU budget would thus need major structural reforms. The proportion of activities related to the future and creating growth (Erasmus and Horizon) is only one tenth of the total budget. By using the carrot and stick approach, the EU funding should be linked with the demand of compliance with basic rights and the implementation of reforms as agreed in connection with the economic and monetary union.
Pressures on the EU to become a genuinely global player
The EU is struggling with many internal challenges, but the greatest pressure may, however, come from the outside. In the neighbourhood, Russia has not moved towards democracy and rule of law, but rather continues to violate international law in Ukraine. From the viewpoint of the EU, it is problematic that the eastern neighbour sees ‘co-operation’ as some sort of zero-sum game. Nevertheless, the country is and will remain our bordering neighbour, one that also provides many opportunities.
The United States has taken an inward turn along with its new administration. The planned leadership of the EU and USA in managing globalisation with the help of the TTIP agreement has been replaced by uncertainty. On the other hand, there will be another change of power some day, and the US public opinion is that one half of the most important allies of the USA come from the EU. The co-operation between the EU and USA will continue, and we should be prepared to resume TTIP negotiations once the power changes again in the USA.
China has already openly declared its willingness to assume a leading position in the world. It is possible for the EU to co-operate with the Asian giant, for example, in climate and trade issues, but the views concerning democracy and fundamental rights are far apart. Of the EU states, Finland is the second most dependent on China in terms of added value in exports. The planned free trade agreement between China and the EU is worth considering, but no negotiations can be initiated unless they lead, among other things, to the abolition of distortions of competition and the ratification of the ILO Core Conventions.
The EU’s external borders are challenged by the situation in Turkey, the Middle East and Africa. There is a particular link between Finland and Turkey: during Finland’s EU presidency in 1999, Turkey was approved as an EU candidate state at the EU Council’s meeting in Helsinki. It appears that, during Finland's future EU presidency in 2019, Turkey will be as far away from the EU membership as it was in 1999. No stability in the Middle East is in sight in the near future. In Africa, the population is anticipated to grow by more than 100,000 persons per day. Many of them will view Europe as the beacon of opportunities and a land of dreams. The refugee wave due to the Syrian war might have been just an overture for the future. The African issue was brought up during the presidential election in Finland.
The fundamental question is whether the EU will grow from being an incoherent group of states into a strong player with world-class influence. It has already succeeded in doing so, for example, in the context of climate and trade policies and in development co-operation. The EU is under great pressure to become a global actor with broad and strong influence. To hinder this development by prioritising short-term national interests would inevitably mean that all EU member states lose their position as world-class players.