Commission economics pitch falls flat

EU politicians try to sell their ideas, but who is listening?

A mini-speaking tour last week by Valdis Dombrovskis, the vice-president of the European Commission in charge of the euro and economic issues, and economics commissioner Pierre Moscovici was intended to fill Brussels with confidence in the EU’s fiscal future.

Instead, a series of appearances left many scratching their heads about the precise plans to strengthen Europe’s economy and common currency.

The two men made the rounds — Dombrovskis spoke at two breakfasts and stopped in the European Parliament’s ECON committee — to drum up enthusiasm for plans to improve the EU’s economy. Their script? The Five President’s Report, a program to bring Europe closer together on monetary and economic issues. It was released this summer by the EU institutions (the Commission, the Council, the Central Bank, the Parliament and the Eurogroup).

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But the document resulted from a compromise and hasn’t produced the concerted push it hoped for. And since the Greek crisis calmed down and left the headlines, the urgency to follow through on plans to prepare for the next crisis has been replaced by a sluggishness to repair weak spots.

“It’s an interesting document and a substantial document, but the strategy behind it is not entirely clear, which is normal because it’s a compromise document,” said Nicolas Veron, a senior fellow at the Brussels-based think tank Bruegel. “It’s not clear what is rhetorical and aspirational and what is an actual policy commitment. It’s very possible that nothing gets done at all.”

The report includes the launch of a Capital Markets Union due later this month and the completion of Europe’s Banking Union, an ongoing slog.

Some countries haven’t yet implemented laws for resolving failed banks agreed long ago; others haven’t begun building up sovereign funds to rescue banks; and there’s no plan yet on how to create bridge-financing for the eurozone’s Single Resolution Fund, which is supposed to be operational at the beginning of the year.

In his State of the Union speech this month, Commission President Jean-Claude Juncker added a shared deposit guarantee scheme to this docket — a proposal that Germany immediately moved against at a meeting of finance ministers in Luxembourg. To them, it just sounds like the country is being pushed to take on ever-greater liability for risks in other member states.

The resistance from Germany and the lack of attention because Europe is preoccupied with a new crisis — migration, not economics this time — is colliding with a document and sales pitch that is failing to perk anyone’s ears up.

At the breakfast with the European Policy Center on Friday morning, Dombrovskis talked about strengthening the EU’s existing tools for keeping member country economies in step but didn’t say how. He mentioned making the European Semester “more focused” and using the macroeconomic imbalance procedure “more forcefully.” What this focus and force will look like is anybody’s guess. Until Brussels does something about Germany’s primary surplus, nobody can take these threats seriously.

Moscovici spoke on a panel Wednesday about structural reforms at the Center for European Policy Studies, where he discussed “design[ing] a second generation of structural reforms” that were “more targeted and less numerous.” Vagueness is the one thing most of the Commission’s communications about economic convergence have in common so far.

The Five Presidents’ Report “is not based on what’s needed,” said Sven Giegold, an MEP from Germany with the Greens who watched Dombrovskis and Moscovici answer questions side-by-side in the Parliament on Wednesday. “It’s based on what’s easy to sell. And they won’t even be able to do that because even this report is not welcome. It’s quite evident — look around and you see that there is no appetite.”

A conversation among participants tells the tale: Two German men could be overheard walking up the stairs to a breakfast on Friday morning with Dombrovskis. One said to the other “I hope he says more than he did on Tuesday. Last time was so beliebig,” a word that means something between arbitrary and random.