2020 vision

The Lisbon Agenda failed to meet its targets, but the Commission has high hopes for its replacement.

The European Commission will report in the coming weeks that the Lisbon Agenda, launched in 2000 as a project to turn the EU into the world’s “most competitive and dynamic knowledge-based economy” by 2010, has failed to meet its objectives. In early March it will present a detailed proposal for the Lisbon Agenda’s replacement, the EU2020 strategy. Governments will discuss EU2020’s aims and structure at summits on 11 February and 25-26 March, before finalising it in June. 

José Manuel Barroso, the president of the European Commission, has declared that EU2020 holds “the keys that can unlock Europe’s potential” and boost recovery from the economic crisis.

Like Lisbon, EU2020 is expected to take the form of a series of policy objectives to be achieved by member states, including structural reforms (such as reforms to labour law and welfare systems), reduction of administrative burdens on businesses, education reforms, and increased spending on research and development. It will also include initiatives to be taken by the Commission.

What is emerging as one of the most contentious points is the extent to which the EU collectively can impose its agreed ambitions for economic reform on a recalcitrant member state.

EU leaders agreed in December that the new strategy would need a “more efficient” governance structure “geared towards reaching tangible results”. They also agreed that thought should be given to how to enhance “national ownership” of the strategy.

The Commission says that Lisbon was not a total failure (see box), but that nevertheless lessons have been learnt from the old strategy in designing the new one.

Doubters, including the European Parliament’s socialist, liberal and green groups, argue that the glimpses of EU2020 offered so far (most recently in a consultation paper published by the Commission in November) suggest that the strategy will be largely a Lisbon re-run, with similarly underwhelming results.

Stephen Hughes, a UK Labour MEP, has described the contents of the consultation document as “woefully inadequate”. The Greens/EFA group has said that more time is needed for a “thorough evaluation of the failed Lisbon Agenda’s weak points”, and that adoption should be postponed until December 2010.

Fact File

LESSONS FROM LISBON

The Lisbon Agenda, as revised by EU leaders in 2005, had two ‘headline’ targets: that the EU should invest 3% of its gross domestic product in research and development, and that it should have an employment rate of 70%. Neither of these has been achieved. Research and development investment remained stuck at around 1.85% throughout most of the strategy’s period of operation, rising to 1.90% in 2008 (the latest available figures). This means that Europe’s commitment to research remains behind the US (2.67%), Japan (3.44%) and South Korea (3.21%). Employment levels rose in the years leading up to the financial crisis, but not by enough to reach the target. The EU’s total employment rate was 65.9% in 2008, compared to 62.2% in 2000. Much of what was achieved will be reversed by the economic crisis – the European Commission estimates that employment fell 2.3% in 2009 compared to 2008, and that a further fall of 1.3% can be expected this year. The Lisbon Agenda, however, contained far more than the headline targets – it was a sophisticated package of policy goals covering reforms to education and training, the slashing of administrative burdens placed on businesses, infrastructure investments, and structural reforms to reduce budget deficits and boost economic growth. The most recent monitoring reports published by the Commission suggest that, although significant progress was made, it was patchy, varying between policy initiatives and member states. A report published by the Commission in January 2009 said that progress in reducing burdens on businesses had been “slow”, and that political support for it “is missing in some member states”. But it said that some successes had been achieved, including a drop in the average number of days necessary to start a company in the EU, from 96 in 2004 to 35 in 2008. The Commission’s most recent set of country- specific reports, published in January last year, revealed that a number of member states were not showing sufficient urgency in their structural reforms, including Greece (which suffered a financial emergency in December when credit rating agencies expressed increasing doubts about the country’s ability to pay its debts), Bulgaria, Italy, Lithuania, Hungary, Romania and Latvia. Nevertheless, significant reforms were achieved: for example most member states have overhauled their pension systems since the start of the Lisbon Agenda.
Commission officials argue that Lisbon Agenda reforms played a significant part in the drop in unemployment that occurred in the years immediately prior to the financial crisis. Unemployment in the EU fell to 6.7% in the period February-April 2008, its lowest level for decades.

Guy Verhofstadt, the leader of the Parliament’s liberal ALDE group, presented an alternative EU2020 strategy last week (8 January), which contains rival policy ideas such as encouraging a group of willing member states to proceed with closer economic integration while reluctant countries lag behind. He also proposed that member states could be punished for failing to implement reforms by reducing their allocations from the EU’s regional aid funds.

A common concern among MEPs is that the ‘governance’ of the Lisbon Agenda was too weak – in other words, that not enough EU-level pressure was placed on countries to implement agreed reforms – and that this will be repeated under EU2020.

Verhofstadt wrote to Barroso on 8 January, saying that the governance planned by the Commission for EU2020 is “doomed to fail”, because it will follow the “open method of co-ordination” (essentially a voluntary co-operation) already tried with Lisbon.

But Commission officials argue that Lisbon’s governance process should not be dismissed as completely ineffective, notably because it was reformed and improved during the agenda’s lifetime, with one of the most successful innovations, the publication of country-specific recommendations (CSRs), introduced only in 2007.

One official said that, despite the popular impression that member states were apathetic about Lisbon, in reality they lobbied furiously, in some cases at ministerial level, to change the wording of CSRs.

Barroso has said that he will push governments to accept stronger governance and tighter policy co-ordination under the new strategy compared to Lisbon. He said last week that it was “essential” for governments to feel committed to agreed EU2020 policies.

Herman Van Rompuy, the president of the European Council, said last week that EU2020 should have “stronger engagement at the highest level” than the Lisbon Agenda enjoyed. “We need tighter governance and a better control of the process,” he said, adding that he would present recommendations for EU2020’s governance prior to the February summit.

Benchmarks

The Commission is likely to propose the introduction of ‘benchmarking’: drawing up categories (such as performance in improving skills training, or in encouraging innovation) and grouping member states according to whether they are one of the best performers in this area, around the average, or lagging behind.

Benchmarking was proposed by Wim Kok, a former Dutch prime minister, in a report in 2005 on how to improve the Lisbon Agenda, but was rejected by national governments. Barroso said last week that he felt governments would now be more open to Kok’s ideas than they were in 2005, notably because of the need to boost recovery from the economic crisis.

Olli Rehn, the European commissioner-designate for economic affairs, said that he will make use of a new power, granted to the Commission by the Lisbon treaty, to issue ‘formal warnings’ to member states that pursue economic polices contrary to those agreed at EU level.

Other ideas being considered include making greater use of legal instruments to enshrine policy goals. The Commission will also push for EU leaders to devote more time at their summits to discussing the implementation of EU2020 than they gave to Lisbon.

Positive reception

There are signs that a push from Barroso for stronger governance could be positively received by member states.

Spain, which holds the rotating presidency of the EU, has been notably enthusiastic about penalties for countries that do not comply. José Luis Rodríguez Zapatero, Spain’s prime minister, said last week that EU2020 “must include, in my opinion, incentive measures and, if advisable, introduce corrective measures”.

“[We need] to make sure each member state has a binding incentive,” Zapatero said. He added that the Commission should be given “new powers” to ensure compliance with the strategy.

Zapatero said that economic co-ordination under the Lisbon Agenda was “not an experience one could call satisfactory”, and that governments had “failed” to comply with the strategy. He said EU2020 should “introduce a qualitative leap in our economic union”.

Diego López Garrido, Spain’s Europe minister, has suggested that member states could be given larger allocations from the EU structural funds if they comply with EU2020 goals.

Germany, never a great Lisbon Agenda enthusiast, said in its formal submission to the Commission’s consultation that the Commission should use formal warnings to keep member states in line.

But officials consider it unlikely that governments will agree to radical changes to governance compared with Lisbon. Spain was isolated in its call for binding rules and penalties. The German government described Zapatero’s comments as “not very useful”.

Barroso wants EU2020 to form an important part of his legacy as Commission president. Whether the strategy will be a success, however, rests – as with the Lisbon Agenda – in the hands of the member states.

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