Tomi Huhtanen: EU should revive its drive for technological leadership

I personally would have hoped that the next steps for CSDP would have been laid out but this went unmentioned in von der Leyen's speech

Stimulating the economy is now the only way out of the crisis. But debt creation should be combined with reforms and a vision for how the debt will be repaid in the future. If not, indeed, future generations will be paying not only the bill but also receiving a very fragile European economy, prone to potential future crises, says Tomi Huhtanen, Executive Director of the Wilfried Martens Centre for European Studies, in an interview to Europost. 

Mr Huhtanen, what was for you the main message in the State of the Union address delivered by EC President von der Leyen?

President von der Leyen's address had many messages, but perhaps the most prominent moment in the speech was the reference to Europe's global role, and the call for the EU to take its place in world politics.

Even more so than the political institutions in many EU Member States, EU institutions have been heavily impacted by Covid-19. Normally, the spring months of 2020 would have filled Brussels with different Commission policy initiatives and legislative proposals, aiming to frame the current mandate's political ambitions. I did see the speech as an attempt to regain this initiative on various policy issues.

Von der Leyen's speech included many concrete proposals, many of them continuations of what von der Leyen stated at the beginning of her mandate. It restated the commitment to the Green Deal and emphasised the actions taken to tackle the epidemic, including at the economic level. It also made clear reference to the rule of law and commitment to values.

What is equally interesting is what went unmentioned. Agricultural reform was not mentioned, for example. I personally would have hoped that the next steps for Common Security and Defence Policy (CSDP) would have been laid out. That would have been very timely, given what is happening between Greece and Turkey in the Eastern Mediterranean, also taking into account von der Leyen's background as a former defence minister.

Europe's Digital Decade and Europe's digital sovereignty were also put forward by the EC President. Aren't these ideas too ambitious given the current state of play in the digital innovations?

- It is true that Europe is lagging behind in several fields on the digital front. However, in her speech, the EC President correctly highlighted that Europe must now lead the way on digital - or it will have to follow the way of others, who are setting standards for us.

The EU is being tightly squeezed between Asia and North America when it comes to technology companies, breakthrough innovation and the advancement of cyber-infrastructure. If the EU doesn't revive its drive for technological leadership and industrial strength by effectively pooling its resources over the next decade, it risks losing vital geopolitical influence, and might experience a direct decline of the economic prosperity of its citizens.

It must be said that this conversation is not limited to new digital regulations. The European legislative framework in the fields of data or artificial intelligence is important, but it must be accompanied by strong initiatives to boost our own digital champions, completing the European Digital Single Market, and being independent when it comes to resources or essential technology.

I think that the current Commission, led by EPP's Ursula von der Leyen, is sending the right signals by prioritising the topic of digital, as this will be the backbone of the future economy.

She also announced that there will be legal proposal for setting up a framework for minimum wages in the EU, but isn't it time to think for universal basic income as well?

Labour laws are a competence of the EU Member States, especially when it comes to working time regulations. The question is then what this European framework would be, both legally and operationally.

In various EU Member States, the views and opinions on minimum wage vary substantially. Also, for the countries where salaries are lower than in other EU Member States, wages add to their competitiveness. I see it as very difficult to create a common view on the minimum wage at the European level, and it is an open question what the legal context of this minimum wage would be, unless the idea is to just give recommendations.

Concerning basic income, it is an old concept that enters and leaves the discussion every couple of years. Some favour it and some oppose it, both on the left and the right. The main argument in favour of basic income is the possibility of simplifying the whole state subsidy system, through the use of a singular tool. This is exactly why many on the left are against basic income: it would mean that the majority of the existing support systems would be abolished. It also needs to be financially sustainable, which obviously creates other challenges.

As perhaps one of the most concrete attempts to promote basic income, a few years ago in Finland, there was a basic income pilot project, which was actually received with more enthusiasm outside the country than in Finland itself. Results indicated that while people receiving the income were happier, the income did not have an impact on the employment status of the test group.

In Finland, reactions have been unenthusiastic, as effects on the labour market were minimal, and the survey results demonstrating that basic income recipients had better subjective wellbeing are questionable. Both the left and the right were sceptical about continuing basic income, and so the concept was dropped. Thus, I don't believe that basic income will become a mainstream policy in Europe.

The EU agreed on a huge recovery budget but there are concerns expressed by some observers that this is a debt that today's generation bequeaths to future generations. Are these concerns justified?

Indeed, so much debt has been taken out that many have the impression it will never be paid back. Many EU Member States will be running budgetary deficits for years to come. Realistically, stimulating the economy is now the only way out of the crisis. But debt creation should be combined with reforms and a vision for how the debt will be repaid in the future. If not, indeed, future generations will be paying not only the bill but also receiving a very fragile European economy, prone to potential future crises.

Furthermore, the potential weakness of the now-agreed recovery package is that the EU still lacks some kind of own resources. Ideas like a plastic tax and a digital tax have been discussed. These 'EU taxes' will most likely not be very popular among EU citizens, nor be welcomed by the Member States, but they would prevent, to some extent, the eternal discussions about how much each country needs to contribute, which currently take place every EU budget cycle.

How important are the Commission's measures in place to help EU countries to curb the spread of the virus when in the Member States, with some small exceptions, there are still chaotic rules for the 14-day quarantine, and with the testing becoming a very profitable business?

Indeed, there are substantial differences between countries over the different policies and restrictions used to tackle the Covid-19 challenge. In addition, the challenge is that we don't know what the situation will be a few weeks from now, let alone a few months. For example, the limits on infection rates proposed by the Commission at the beginning of this month could soon mean that none of the countries are considered a green zone anymore.

Within many EU Member States, the discussion has been very heated between those who want to follow precautions and those who are concerned with the economic impact of restrictions. The Commission's proposal has given a positive reference point, and in many countries, policies have been adapted accordingly. National differences remain, but a certain uniformity of policies will help travellers within the EU.

Certainly, there is a sudden market for testing, and in some countries, test prices are very high. Nevertheless, testing has become a central tactic to tackle the challenge in most countries, and part of lowering the threshold for testing is a reasonable price for citizens. Also, in many EU countries, central governments bear the majority of testing costs, for example when it comes to airport testing. In many countries, testing is not yet perfect but is improving. Also, more and more laboratories are now able to offer the service, thereby reducing the price.

How do restrictive measures and lockdowns affect our fundamental rights and to what extent could our rights be ceded?

For the European Union, the Four Freedoms are essential; the free movement of goods, the free movement of capital, the freedom to establish and provide services, and the free movement of persons. These were all very heavily challenged when the epidemic started and borders were closed. EU Member States are now actively working towards borders and restrictions not hindering the movement of goods, services and people, and the EU Commission is actively defending the Four Freedoms. We need to ensure that there is no long-term harmful impact.

Another issue is the impact of Covid-19 on the functioning of state institutions, especially democratic institutions. The priority in many countries has been to ensure that the executive power remains functional. However, in some European countries, parliaments have been operating in a more limited manner. We need to make sure that the epidemic does not harm the functioning of our democratic institutions.

Von der Leyen made suggestions for a European Bauhaus as well. Was it a romantic reference to German design or a return to the 'human size' architecture and an attempt to bring back art in life in an environment that is changing too quickly into a vague direction?

A direct reference to culture is important, not in the sense of creating some artificial 'European culture', but rather to understand that one of Europe's greatest strengths is its pluralistic cultural richness. The European Union can be an important platform to embrace and celebrate our cultural heritage in different EU countries.

Culture in this context is not an issue for an elite few, and is instead deeply important for all citizens, given the rise in importance of identity. As stated by President von der Leyen, how to concretely set culture and sustainability hand-in-hand remains to be seen.

According to you, is there still a possibility for a post-Brexit free-trade agreement to be concluded before the end of this year?

It is very difficult to foresee how the negotiations between the EU and the UK will end. On the one hand, both parties have huge incentives to reach an agreement. On the other hand, the concern is that the UK government's approach is dogmatic, preparing to explain to British citizens the possible negative economic consequences, additionally using Covid-19 as a reason for economic hardship.

However, the existence of many open issues with the agreement, and the UK openly taking action to disrespect the withdrawal agreement between the EU and the UK, which forms the basis for any potential future agreement, both give a bad indication for the future. Personally, I don't expect there to be an agreement, but there may be some last-minute solution, when cruel realities begin hitting at the end of the year.

 

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Tomi Huhtanen has been Executive Director of the Brussels-based Wilfried Martens Centre for European Studies (WMCES, previously Centre for European Studies) since 2007. The WMCES is a European political foundation and the official think tank of the European People's Party (EPP). He is also Editor-in-Chief of European View, the academic journal of the WMCES. He was previously EPP Senior Adviser, focusing on Economic and Social Issues. Before that, he worked for the Finnish EPP Delegation to the European Parliament. He studied International Politics and Economics at the University of Helsinki and spent a year in Spain at Universidad Autonoma de Madrid, studying International Law and Political History. He also holds an MBA degree from the United Business Institute in Brussels. He speaks Finnish, Swedish, English, Spanish, French, Italian, Greek, and has basic knowledge of German.

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