Functioning of the European Economic Union
At a recent seminar of European business executives, to discuss the current functioning and future prospects of the European Union, the general perception was that European leaders have to perform better to meet the demand for action from individual Governments and the Union itself. The European Commission, the bureaucratic division of the European Union, also needs to be streamlined. Mr. Jacques Santer, the new head of the Commission, has already initiated changes in its financial management and personnel.
Spain has assumed the rotating, six-month-long presidency of the European Union and its term will end at the Madrid summit in December. The current problems for the Prime Minister, Mr. Gonzales, whose socialist Government has been in power for 13 years, have been compounded by the recent phone-tapping scandal Mr. Gonzales reshuffled his cabinet over the weekend to contain the political crisis that has forced two Ministers to resign.
The latest opinion poll reveals that only 28 per cent of the Spaniards feel that their country’s membership of the European Union has positive value and, as in Britain, Euro-scepticism is growing. The statue of Europe’s political leaders has diminished in the public eye, particularly in Spain, Britain, Germany and Italy, Western Europe, like the rest of the developed world, is also witnessing the economic and political embarrassment of nearly 11 per cent of its work force remaining unemployed.
European competitiveness has been eroding during the last two decades according to Mr. Perigot, president of the European Employers Federation. Most of the businessmen feel that European politicians are not doing enough to check the decline of competitiveness and the growth of unemployment. Europe is losing out in programmes for job creation, with more and more people becoming dependent on social security handouts. European business has appealed to the Governments to lead the way towards lesser bureaucracy, lower cost and realistic goals, to ensure the survival poof European manufacturing and service industries, which are heartened by competition from North America and the powerful economies of emergent Asia.
It was also argued that the European Union’s political success of recent years has not been matched by public enthusiasm for its goals and institutions. Only in Portugal and Greece has the European Commission a fifty-plus approval rating. This is partly due to Greek and Portuguese farmers receiving vast agricultural subsidies, which are bleeding the European Union’s public finances. In Italy, there is lukewarm support for the European Union (45 per cent), and, in Britain (25 per cent) and France (26 per cent) it is downright negative.
Mr. Olf Henkel, President of the Federation of German industry, says that Germany needs to overhaul both its over-regulated economy and its welfare society which has grown accustomed to social security handouts. Mr. Henkel says that the rest of Europe is no different. Employers all over Western Europe are reluctant to create jobs because of the forbidding social security costs, which, in some countries, amount to 50 per cent of the employee’s gross salary. Most unemployed people find that they are better off living from social security benefits than working in poorly paid jobs. Employers complain about the culture of idleness creeping in, and worry about the social and psychological damage such a mentality can cause.
It is against this background that the business community is making a fresh appeal to the European Governments to streamline national economies, where governments are seen as supporting the costly welfare system, which Mr. Eberhard Von Koerber, head of Asea Brown Boveri (ABB), described as “poison” for innovation and new ventures. With growing unemployment, falling purchasing power of European currencies, inflationary pressures and the erosion of European competitiveness, many business leaders have also serious reservations about the idea of a single European currency.
It remains to be seen what emerges from the Spanish presidency of the European Union for the next six months. Spain is working on a Euro-Mediterranean summit conference in Barcelona, in November. Spain also wants to step up the European Union’s trading and investment links with South American countries. At the December summit, the European Union member-states will be required to clarify plans for a single currency and perhaps give it a name if there is consensus.