Why do Europe’s good intentions often fail?

The Achilles’ heel of European reform programmes has always been implementation and enforcement. The Europe 2020 Strategy – a 10-year plan for smart, sustainable and inclusive growth – was supposed to be different.

Looking back to the Lisbon Agenda, Europe’s original growth and jobs agenda launched in 2000, policy-makers had the benefit of hindsight, following a decade of missed targets, which in many ways laid the ground for the ensuing economic and financial crisis. Instead of two headline targets – striving towards a 70% labour participation rate and spending 3% of GDP on research and development – which often came across as simplistic, the Europe 2020 strategy would have five, making it more comprehensive.

Instead of one target for all member states, there would be country-specific ones, encouraging top performers to get even better and giving laggards goals that were within reach. Instead of being marginalized as a “pro-business” agenda, the Europe 2020 strategy would be inclusive and list poverty reduction alongside innovation and education goals.

While the intentions were good – and the targets reflective of the issues that need urgent tackling – the end result has been a “feel good” agenda that no one could object to, but which also largely lacked the political bite necessary to make policy blueprints originating in Brussels relevant, hard-hitting and effective.

Many analysts argue that the lack of action lies in the Open Method of Coordination (OMC) – a soft law approach that is used in areas where European Union member states have exclusive authority, such as employment, social protection or education. With the OMC, the European Commission does not have the tools to enforce its mandates, while member states have nothing to fear from non-compliance and interest groups are largely disengaged because they tend to rally around targets with legislative teeth.

At the same time – and against the backdrop of years of intense crisis fighting to save the euro and bail-outs of countries with unsustainable public finances and financial sectors – Brussels has reaped significant new powers. This can be seen in the EU’s annual cycle of economic policy guidance and surveillance, as well as in other tools, such as the Two- and Six-Packs – the EU’s fiscal and budgetary monitoring mechanisms – and the fiscal compact. Overall, there has been a real shift in economic power from sovereign member states to the European level.

Far from being a Brussels power-grab, EU member states appeared to realize that greater centralization and surveillance was needed to avoid moral hazard and financial contagion. However, these new powers have also led to a backlash in many of these same countries that now blame Brussels for undue demands to enforce fiscal consolidation and implement measures to help underperforming economies get back on track.

And herein lies the underlying problem: there are still a sizable number of EU member states that cannot find the political will to tackle deep-seated problems. After all, unemployment has never been so high, public finances as unsustainable or long-term growth outlooks more dire. An unwillingness – or inability – to muster the courage at national level to be honest with citizens about why reforms are necessary is in many ways the undoing of the EU. It is either blamed for not being effective, or for being overly intrusive. In many ways, Brussels is dammed if it does, and dammed if it doesn’t.

Solving this conundrum ought to be a key focus of the public consultation of the Europe 2020 Strategy, which is currently underway, as well as a larger reflection on how to bring citizens along on the next stages of the European economic integration process.

Read the 2014 edition of The Europe 2020 Competitiveness Report.

Author: Ann Mettler is Executive Director and Co-Founder of the Lisbon Council, a Brussels-based think tank.

Image: The Euro sculpture is partially reflected in a puddle on a cobblestone pavement in front of the headquarters of the European Central Bank (ECB) in Frankfurt January 21, 2012. REUTERS/Kai Pfaffenbach