The Brief – The Gospel of Letta

So Moses went back and summoned the elders of the people and set before them all the words the Lord had commanded him to speak. The people all responded together, “We will do everything the Lord has said.” [Exodus 19:7-8]

When former Italian prime minister Enrico Letta presented his long-awaited report on the future of the single market to European leaders on Thursday (18 April), he was careful not to play up its significance.

“It’s not a Bible, it’s a toolbox,” Letta was quick to stress to attendees of the two-day special European summit, which mostly focused on addressing the bloc’s recent alarming slide in competitiveness. “You have many tools and many possibilities to choose [from].”

Notwithstanding Letta’s warning, many already appear to have ascribed the report a quasi-biblical significance. Indeed, much like the Bible itself, the report is almost universally revered although very few people have actually read it.

“I’m very grateful for Enrico Letta’s excellent report and presentation today,” said European Commission President Ursula von der Leyen, adding that the “report is both wide in scope and ambitious in its proposals.”

Asked to name the “tools” from Letta’s toolbox she would use if reappointed as Commission president later this year, von der Leyen replied that she could not.

“I have not seen the whole width and the richness of the toolbox,” she admitted.

Her failure to read the entire report is perhaps understandable, given that: Firstly, it was published just two days before the summit got underway; and secondly, it is 147 pages long.

Still, a healthy scepticism about Letta’s proposals is certainly warranted. At the very least, one should surely refrain from describing a report as “excellent” before actually reading it.

So what does the report actually say?

As it turns out, quite a lot.

Among other things, it calls for a “unified IPO gateway” to public capital markets for small and medium-sized businesses; greater “cross-border consolidation” of Europe’s telecommunications market; and an overhaul of Europe’s energy infrastructure “to ensure seamless connectivity of the… electricity, hydrogen, carbon capture, and storage sectors.”

In broader brushstrokes, Letta urges European policymakers to “complete” the work of Jacques Delors, the founding father of the EU single market, by properly integrating the bloc’s financial, telecommunications, and energy sectors.

Arguably, however, it is at the level of even broader brushstrokes that the true significance of Letta’s proposals becomes clear. For there is, in fact, a common theme underlying many of his recommendations: deregulation.

Interestingly, Letta never once uses this word — a likely consequence of deregulation’s reputed responsibility for the 2008 financial crisis.

Instead, the report uses a smorgasbord of other euphemisms, including the need to “reduce” or “cut” companies’ “administrative burden” (eleven times), “red tape” (four times), “regulatory burden” (three times), and “bureaucratic burden” (twice). 

Indeed, on one occasion the report explicitly denounces the “over-regulation” faced by European businesses — which, Letta claims, “inadvertently favours non-European companies that are not bound by the same stringent rules”.

Regulations being the bane of business, it is not at all surprising that European companies are especially enamoured of Letta’s proposals.

“We very much agree with the key message of the Letta report,” Markus Beyrer, the director general of pan-EU corporate lobby group BusinessEurope, said in a statement.

“Mr Letta rightly draws attention to the worrying trend of companies and investment leaving the European Union due to an overly complex and bureaucratised regulatory framework, which is also a source of fragmentation,” he added.

It would, however, be unfair to admonish the report for being some kind of pro-corporate manifesto. For instance, Letta explicitly affirms the importance of “clear conditionality criteria” — including protecting workers’ rights — when spending public money.

Such policy proposals have been warmly welcomed by European labour groups, including the European Trade Union Confederation (ETUC), which represents 45 million workers across Europe.

Nevertheless, the ETUC’s reaction to the report is noticeably — and revealingly — frostier than business groups’ reaction.

Thus the ETUC has openly criticised the report for its denunciation of “gold-plating”, or member states’ practice of going beyond EU directives by imposing additional regulations (including extra protection for workers).

“The threat of governments using the gold-plating agenda to limit employment rights to what is in employment directives must be taken off the table,” said ETUC General Secretary Esther Lynch.

“It is particularly worrying that this push back against national regulation comes amid a campaign by businesses for deregulation at EU level,” she added.

Should we then read Letta’s report? Absolutely. We should probably even implement some of what he suggests.

But, perhaps even more important than this, when Letta tells us that his report isn’t a Bible, we should actually listen to him.

The Roundup

A European Parliament push to ease new EU rules on seed marketing has sparked concern in the potato sector, as stakeholders warn that the draft legislation could increase the transmission risks of crop diseases.

European Council President Charles Michel said the EU leaders’ competitiveness summit was tough, but significant decisions were still taken, as calls for harmonising corporate tax rules and centralising the supervision of financial sector firms were scrapped from the Council’s final conclusions.

The EU’s latest electricity market reforms will shortly enter into law but the ongoing dramatic transformation of Europe’s electricity system means that these reforms may be one building block in a much wider policy revolution.

After the first campaign of attacks on Ukraine’s transmission infrastructure in 2022-23, Russia has recently started focusing its airstrikes on electricity-generating thermal and hydro powerplants, causing an electricity deficit that may take years to make up for.

For more policy news, check out this week’s Tech Brief, Agrifood Brief, and the Economy Brief.

Look out for…

• Commission President Ursula von der Leyen delivers a speech at the opening ceremony of Hannover Messe on Sunday.
• Foreign Affairs Council on Monday.
• European Parliament’s final plenary in Strasbourg Monday-Thursday.

Views are the author’s

[Edited by Zoran Radosavljevic/Alice Taylor]