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Saving Europe’s Economy Further via the Single Market and Higher Employment: The European Council’s Agenda in 2012

dinsdag 18 december 2012, 16:47, analyse van Dr. Petya Alexandrova
Grafiek

In 2012, the European Council in Brussels met seven times, just like in the last two years. It held two informal meetings (January and May) and one special summit (November). One third of its attention went to macroeconomics – the usual suspect, whereas another usually big topic – foreign policy – lost prominence.

The winners on the agenda were issues of banking regulation, Common Market and employment. The European Council launched two new initiatives – a Compact for Growth and Jobs and a roadmap for the completion of the Economic and Monetary Union. The year began successfully with the signing of the Fiscal Compact, agreed upon in 2011, and ended with stalemate in the negotiations of the Multiannual Financial Framework 2014-2020.

The Winners and Losers of Attention

With its 32% share of the agenda macroeconomics is the usual suspect among the winners. The attention it received is quite similar in size to that in 2011 and 2010. As one of the three core themes on the European Council’s agenda generally and with more initiatives being conceived to fight the consequences of the financial crisis in the last few years, its strong presence could be very much predicted. Most of the references in the Conclusions concern general macroeconomic policy, growth, and Economic and Monetary Union (EMU) but issues like budget and debt or fiscal policy are also relatively prominent.

The category of business, finance and internal market matters can be best described as acquiring urgency. These issues gain some 19% of the total attention, almost twice more than in 2011, and generally a larger share compared to the last five years. Within this category the Common Market is the most prominent, which is explained by its key role as a ‘driver for Europe’s economic growth’. Talks focused on the completion of the Single Market, fostering freedom of mobility in the EU and advances in the functioning of the Digital Single Market. Another substantial share of this topic category is occupied by banking regulation, pointing to one of the EU’s core goals in the moment – restoring ‘investor confidence in the EU banking sector’. Some attention has also been dedicated to reducing the regulatory burden on small and medium-sized enterprises, copyright protection, outstanding issues of the patent package and e-services.

While foreign policy appears as the third largest domain in the 2012 European Council Conclusions, with its 11% of the agenda this topic has only rarely been subject to so little attention. Almost two thirds of this attention has gone to general foreign relations and the remaining one third predominantly to international economic development, humanitarian aid and human rights.

Expectedly, the ‘deteriorating situation’ in Syria evoked calls for resolution of the conflict during the whole year, and eventually also a proclamation of support for a ‘future without President Assad and his illegitimate regime’, exhibiting a common position on behalf of the EU. Another foreign question which attracted the attention of the Heads of State and Government was Iran’s nuclear programme. Last but not least, the consequences of the Arab Spring brought the idea of developing partnerships with the Southern Neighbourhood countries in an attempt to promote democratic transformations.

By taking 9% of the agenda space employment became the fourth biggest topic and can be labelled as the necessary newcomer. It is the big winner of attention in 2012 in relative terms. The European Council usually does not discuss employment issues much although they are often mentioned, especially next to macroeconomic concerns. The mean attention to employment during the whole period of existence of the institution (since 1975) is 4% and in the last 8 years this proportion has been even lower.

Only once has employment received more attention than in 2012 – in 1997 when the European Council held an extraordinary meeting on this matter after the Amsterdam Treaty had opened the way for a European Employment Strategy. While most of the attention has been spent on general matters, especially creating jobs or stressing the importance thereof, youth employment has also been very prominent. The European Council spent a large portion of the discussions at its January meeting on this issue but it also persisted throughout the year. Other employment matters featured in the Conclusions include overcoming the mismatch between skills and jobs, reactivation of older workers, etc.

The attention patterns visualised above present content coded quasi-sentences of European Council Conclusions/ Statements issued after the meetings (i.e. the lowest possible meaningful unit of policy content in the documents). Note, that informal meetings rarely produce Statements.

New Initiatives

A Compact for Growth and Jobs was agreed upon in June and reviewed in October. The slow economic recovery and its negative impact on the labour market invoked resolute response, which materialised in a comprehensive framework for action at national, EU, and Euro area levels.

The Compact involves measures in a range of policy fields besides the macroeconomic and employment domains, including transport, energy, digital networks, single market, research, foreign trade, etc. It is designed to help achieving the objectives of the Europe 2020 Strategy.

A roadmap for the completion of the EMU was adopted at the December meeting. Discussions on the topic began already in October, when President Herman van Rompuy presented his interim report on strengthening the EMU, prepared in collaboration with the Presidents of the Commission, the Eurogroup, and the European Central Bank. The final report entitled ‘Towards a Genuine EMU’ was presented in December.

The agreed upon roadmap by the European Council encompasses several important new initiatives. Notably, a Single Supervisory Mechanism (SSM) shall be set, composed of the European Central Bank and national competent authorities up (the deal still needs to be negotiated with the European Parliament). When the SSM becomes operational the European Stability Mechanism shall have the opportunity to recapitalise banks directly.

In addition, the European Council called for new rules of bank capital requirements as well as for the so-called “two-pack”, aiming at reinforcing fiscal surveillance in the Eurozone, to be adopted rapidly. In accordance with the roadmap, legislative proposals on harmonisation of national bank resolution and deposit guarantee frameworks are set to be agreed upon until June 2013.

Achievements and Fiascos

At the margins of the January meeting the Heads of State and Government of all member states besides the UK and the Czech Republic signed the Treaty on Stability, Coordination and Governance in the Economic and Monetary Union. This treaty, known as the Fiscal Compact, was not discussed in Conclusions, since substantive talks took place over the course of 2011.

During the March meeting the European Council concluded the second cycle of the European Semester, evaluating the overall macroeconomic situation in the Member States and suggesting strategic guidelines for the second phase of the annual programme. The European Semester is still seen as a learning exercise with a number of improvements appearing necessary.

The November summit was an extraordinary meeting dedicated to reaching an agreement on the EU’s Multiannual Financial Framework (MFF) 2014-2020. Despite the ‘constructive discussion’ as the European Council labelled the talks, no agreement could be attained, and the pursuit of the goal had to be postponed.

Agenda Forecast for 2013

Predicting the agenda of the European Council for the coming year is quite challenging because the institution’s attention dynamics are highly volatile and EU leaders often discuss unexpected events. Yet, quite some planning takes place and the number of meetings in the recent period has gone up. These factors accommodate opportunities for addressing planned agenda points even in the context of unanticipated events.

A number of economic issues have been scheduled to be discussed in 2013. Besides the European Council’s involvement in coordination of national macroeconomic reforms (within the European Semester), other issues programmed for review are the social dimension of the EMU, the feasibility and modalities of mutually agreed contracts for competitiveness and growth, and solidarity mechanisms and measures to promote the deepening of the Single Market.

The European Council will probably also have to discuss advances in the work on aspects included in the roadmap for the completion of the EMU, e.g. new rules of bank capital requirements. Most importantly, in early 2013 further negotiations of the MFF are set to take place. Whether an agreement can be reached already then is highly doubtful and the issue might have to be stretched over a longer period.

The European Council can be expected to give attention to the European Commission’s Single Market Act II proposals, which have to be ready in the spring of 2013. For the March meeting the Commission is also bound to introduce proposals for reducing regulatory burdens within the “Smart Regulation” approach. These proposals will most probably feature on the agenda for the summit.

A lot of attention during 2012 went to employment matters, and in particular of youth unemployment. This high level cannot be expected to remain intact considering the attention change patterns of this topic over the years (as stated above, employment is a domain which rarely occupies a large portion of the agenda). Work on more concrete proposals and legislation in the coming time has been delegated to the Council and the Commission. The European Council could possibly briefly review developments in this respect.

Some advances in the Common Security and Defence Policy were introduced in 2012 and the European Council promised to return to these issues during the second half of the following year. In particular initiatives aiming at improving the availability of civilian and military capabilities could be evaluated more closely, as well as developments in strengthening Europe’s defence industry. In terms of foreign policy, addressing the on-going matters, such as the Syrian revolution and developments in Iran’s nuclear programme can be expected. An Eastern Partnership roadmap is scheduled to be discussed on the special summit dedicated to the Eastern Partnership in the second half of 2013.

This analysis on the 2012 European Council Conclusions is conducted within the EU Policy Agendas Project. The unit of analysis are quasi-sentences (i.e. the lowest possible meaningful unit of policy content). They are content-coded according to an international cross-country comparative codebook, adapted to the EU and measure attention to policy fields and specific issues within these fields. More information about the project can be found at the Montesquieu Institute – Campus The Hague research website.

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