ROMANO PRODI, LIVE INTERVIEW BY CAIXIN GLOBUS
President Romano Prodi, Senior Advisor of the Academic Committee of the Torino World Affairs Institute – T.wai, joined ThinkIN China for our event #60 discussing the future of Europe, check it out!
Posted by ThinkInChina on Thursday, 27 April 2017
Romano PRODI, twice Prime Minister of Italy (1996-1998 and 2006-2008) and
President of the European Commission (1999-2005).
As 2017 marks the 60th anniversary of the Treaty of Rome, the very project of European integration now faces severe challenges. Will the EU members work together to preserve regional peace and security, against rising geopolitical uncertainties? Can Europe benefit from the new trends in the global economy? How can Europe adapt to a changing international order, while shaping its own path as a 21st century superpower? To address these dilemmas, ThinkIN China welcomed very special guest Romano Prodi to share his decennial experience in European politics with young researchers and professionals at The Bridge Café. A talented politician, an economist, a professor, as well as an acute observer of the great transformations shaping our age, Prodi simply enchanted the audience, underlining the main challenges ahead as well as his vision for the future of the EU.
The following Q&A has been edited for brevity and clarity. The complete video of the interview can be found at Caixin Globus’s QQ channel.
Brexit is perhaps the single most pressing issue for the European Union. What are the reasons behind Brexit and what will be the consequences?
Many observers failed to predict the outcome of the referendum, a signal of the deep crisis affecting the European Union. Brexit is a sad event:
Britain was a very important part of Europe and many countries around the world were looking at Europe through British lenses.
On the one hand, we must admit that the UK has always been a reluctant partner in the EU. During my presidency, the Commission was criticized for allowing for too many “British exceptions”, for instance on the Euro and migration policy. However, after so many years of constant campaign in British politics against the EU, blaming the Euro, Brussels’ bureaucrats, and democratic deficit, it is not surprising that people voted to leave. I do think that Brexit will remain an isolated case, since the British are the only people in Europe who see the United States as a “psychological alternative”. On this note, Mr Trump has already praised the British vote, while he unexpectedly did not shake hands with Angela Merkel.
We will see whether a new community between the UK, the United States, Australia, Canada, and New Zealand will be formed. I do not expect any change of mind with the elections called by Theresa May, nor I do think that a mediation will be possible, even though some kind of accommodation is highly likely. Many questions remain surrounding the future relationship between the UK and the EU, such as the future of the City of London, which has also been chosen as a financial hub by China: will this remain unchanged? Disentangling the UK from 44 years of EU membership will be a long and challenging task. But even if the breakup is definitive, Brexit will not stop the European Union.
What was the reaction of European countries to Brexit, and what are the challenges and opportunities of the so-called “multi-speed Europe” project, which has been recently called for by the European Commission? Such kind of cooperation mechanism is already exemplified by the Monetary Union, but how feasible is its application in the defense, fiscal and social policies?
Reactions in the EU were very interesting. For the first time, Angela Merkel accepted the proposal of a “multi-speed Europe”, which I had put forward long ago. This would be a form of differentiated integration within the EU, whereby certain groups of countries would choose to strengthen their cooperation in given policy areas by unanimity. This will be greatly beneficial for the EU’s progress, undermined by a lack of leadership and cohesion. Things have totally changed since I was President of the European Commission, when the Union was jointly guided by Germany, France, UK, with the important role of other players such as Italy and Spain. At that time, Brussels was indeed dominated by the British bureaucracy, since the UK’s power and cohesion were very strong. Today, after the UK committed suicide by taking an irreversible path, France remains the only country with nuclear armaments and veto power in the UN Security Council within the EU, but its influence has been declining in the last 20 years.
We are at very interesting moment: if Macron runs against Le Pen, he will most likely win.
In this scenario, being Macron the first strongly pro-European candidate in French political history, we would witness an agreement between France and Germany, whereby France will use its veto in the UNSC as a truly European vote. This will make both France and Europe stronger. The next step will be coordinating the different European armies and increasing defense spending, a difficult budgetary decision, but one with huge gains in efficiency: in fact, the complete lack of coordination between the British and the French army was a major problem during the Libyan war.
In the economic sphere, coordination will be more problematic; even the former President of the European Parliament, Martin Schultz, has become less optimistic about Euro bonds after strongly supporting them in the past. The real change which happened in Europe is the decreased relevance of the Commission, which represents the supranational dimension of EU’s decision-making, and a complete transfer of power to the Council, the intergovernmental body, and to Germany within it. Things were very different 20 years ago, when Europe was a “union of minorities”, as a representative of the Romanian Parliament perfectly defined it during the first enlargement process.
What is your view of the European Commission’s newly released White Paper “The Future of Europe”, which outlined five possible scenarios for the path of European integration? Does this document, together with the initiative of a “multi-speed” Europe, signify a renewed power of the Commission, and growing consensus among member states?
Quite the opposite. One of the key tasks of the Commission is to put forward policy proposals:
the fact that it made as many as five proposals, ranging from a federal union to a mere free trade area, makes it clear that it is completely powerless.
When it comes to “multi-speed” Europe, the proposal requires political consensus, as it will work only if 9 member states, including some major ones, agree to put it into effect. And at this stage, any further progress in European integration will be blocked by Hungary and Poland.
As is clear from the rise of populist parties in Europe, but also from what is happening in other regions, democracy and its foundations are experiencing a major evolution; people no longer trust democracy based on its underlying values, they are concerned about whether or not democracy is capable to deliver. We are witnessing a structural change in our democratic institutions, whereby populist movements gain prominence at the expense of traditional parties, and these movements all have strong and uncontested leaders, such as Marine Le Pen in France. The reason behind Euro-skepticism is precisely that Europe has not been delivering. A “multi-speed” trajectory will allow it to finally implement policies that benefit the people, relaunching the European project. The paralysis of Europe today is not a by-product of its bureaucratic system, it is simply a result of its failure to provide for the people.
Another major contradiction is that Europe is absent in major geopolitical crises such as in Syria, Ukraine, and Korea. While it is still the leading global power for industrial production and export, as well as a fantastic and progressive giant on the global scene, Europe still lacks a political union. This task is not easy, as the dichotomy “nation-community” is deeply embedded in the EU’s identity, with a variety of languages, cultures and historical experiences among member states. The European challenge is difficult yet fundamental, as people increasingly feel the necessity of Europe.
People want more Europe to balance against the power of China and the United States. In front of these powers on the global stage, Europe virtually disappeared just in the same way as Italy, a major power during the Renaissance, disappeared after the discovery of America and the first globalization; Europe is now similarly obscured by the competition of China and the United States, who are producing the new “caravans” of the global economy, such as Google, Apple and their Chinese equivalents: Europe has no such giants. The European citizens are now beginning to understand that they will simply be left out of history if major changes do not happen. However, when I proposed the Galileo project to integrate European GPS systems through an agreement with China and Russia, I was blocked because of British opposition, backed by the United States, so that Europe today still does not have a unified system. This is the demonstration that together we can do everything, but divided nothing is possible.
Speaking about economic competitiveness and innovation capacity, Europe has more start-up entrepreneurs per-capita than the United States do, but few European companies manage to scale up shaping the landscape of the global ICT industry. Can greater technological cooperation among European countries bridge this gap, and does linguistic, cultural and geographic diversity within the EU raise transaction costs for new hi-tech startups?
It is absolutely true: the key players in Information and Communication Technology are American and Chinese. However, the strength of European industry is absolutely remarkable. There is indeed great room for product and process innovation, in which Europe is already performing very well; it is a leading player in sectors such as machinery, chemical and pharmaceutical. The challenge is to act as a unique and coherent actor, in order to make the most out of this strong industrial potential and to lead in innovation. In fact, Trumps is trying to defend the American industry not only from China, but also from Europe. German commercial surplus as a percentage of GDP is over 8%, much higher than the Chinese surplus. Of course, if this could be used in a way that benefits European growth, we would be in a much different situation. Italy also has a conspicuous surplus in industrial productivity. While language barriers are easily overcome, what is needed is a real European policy union, in which, for instance, the President of the European Commission is democratically elected through competition between national parties. To bring change with peaceful means, however, takes a long time. The Westphalian system of nation states was based on two pillars, currency and army; the former has already experienced a major change with the monetary union, but longer time will be required for the latter to change. What is sure is that political integration is a matter of survival for Europe.
You mentioned European defense; after the election of President Trump, the United States have become an unstable factor for NATO …
Trump’s decisions are impossible to predict even for the smartest political scientists. Think about the recent changes in Trump’s Russian policy. On a related note, we should bear in mind that interference is not a unique characteristic of Russia: The United States have always interfered with European politics. Today, cyber war magnifies the possibility for countries to interfere in each other’s political and military affairs, and we are witnessing new modalities of interference that we cannot fully identify. Cyber security systems have reached such a sophistication that they are radically changing not only defense policies, but relations between world powers more generally.
Technological transformations have a huge impact also on the labor market; it was estimated that around 59% of European jobs in the manufacturing sector will be lost because of automation: how will the EU respond to this challenge?
This is a global problem. The world has always witnessed great technological revolutions and countries have successfully adapted to those revolutions. Now, the difference today is that no new jobs are created to replace those which are lost due to automation, and at this stage there are no foreseeable solutions to this problem. The world will envision more productive capacity than potential demand. The only possible remedy would be a worldwide agreement to reduce working hours, but this is still unrealistic. In fact, unemployment is the number one problem of our age, and millions of people could be fired around the world.
Prodi concluded by responding to some pressing issues raised by the audience. On the refugee crisis, he pointed at two correlated challenges: on the one hand, the drastic population aging in many European countries, a burden for the economy; on the other hand, the lack of solidarity among member states when it comes to formulating a joint refugee policy, as well as the absolute failure to develop a coherent EU’s African policy to pacify the region. In 2002, he had proposed the creation of an EU-backed Mediterranean Bank, which remained unnoticed. On the One Belt, One Road initiative, he sees its potential as a formidable change in the center and direction of the global economy. However, sooner or later China will be forced to strike a balance between domestic and foreign investments; the recent investment spree in the football industry, in his view, is not a wise choice. The last comment was about his country, Italy, squeezed between economic stagnation and a consistent debt to GDP ratio. On a positive note, foreign debt is still limited, while industrial competitiveness and a wise energy policy represent important strengths for the country. Reducing public spending and repaying debt are now the steps needed.
By Rebecca Arcesati