The Brief – The industrialists are back

History is a circle and the 90s are back: Look no further than the gatherings of Europe’s industrialists.

Founded in the 1980s, they became a driving force of European integration – things like the single market and the euro were, in part, their ‘invention.’

Successful lobbying by big companies is now history, but one magic word that has reawakened the industrialists is “competitiveness”, or a lack thereof. 

With systemic issues accumulated like ticks in spring, Europe is many things: a great place to live and a global leader on climate action, but competitive, it is not.

The European Central Bank’s Isabel Schnabel summed it up like this: “At the turn of the millennium, the euro area was operating at the global productivity frontier. But in the following years, it fell behind … and has not been able to recover.” 

An hour worked in the US produces 50% more output than the same hour worked in Italy. For the EU’s biggest countries, that same hour produces 20% less output than in the US.

It’s a drastic diagnosis that has EU bigwigs running from event to event in an attempt to understand the issue and how to fix it. “Super Mario” Draghi, erstwhile ECB chief and Italian former premier is currently labouring away at a fix-all report. 

On Tuesday, European Commission President Ursula von der Leyen met with industrial stakeholders hidden away in an Antwerp chemical plant.

Commission Vice-President Maroš Šefčovič, who also attended the Antwerp huddle, is hopping from event to event. Brussels is in a frenzy because the current Commission is being blamed – rightly or wrongly – for the malaise.

Launched in 2019 in response to widespread youth protests about the climate, the EU’s Green Deal turned the bloc into a world leader in climate action. But it also sought to tackle nature deterioration, human rights violations, and biodiversity loss, not only at home but abroad.

This determination – and the greenest European Parliament in history – spawned a set of ‘woke’ laws like stringent supply chain rules, anti-deforestation rules, rules for financial markets on what constitutes “good” investments and much, much more.

It doesn’t matter that Europe’s economic problems run deeper. The Green Deal, compounded by the COVID-19 pandemic and Russia’s attack on Ukraine, was the last straw.

Much like in the 1990s, industrialists – with their privileged access and influence – are again ready to call the shots.

In 1995, they got the Commission to establish a “Competitiveness Advisory Group”. Expanding the EU was similarly done to boost the bloc’s economic outlook.

Faced with either rehashing these policies or striving to blow the Green Deal to smithereens, the industrialists will probably opt for the latter.

When everything looks doom and gloom, destruction comes easier than creating a forward-looking growth narrative.

Still, parts of the Green Deal will survive. ‘Woke’ laws that far exceed the standards in third countries will go first, while laws to protect nature will be second in line for the cull.

But these policies won’t go down without a fight.

When industrialists last called the shots in such a dominant manner, green groups were underfunded and green parties were a confused mix of pacifists, anti-nuclear activists, and hippies.

History is a circle, but not a smooth one, and it often comes back with important tweaks. In this iteration, Laurence Tubiana, the CEO of the European Climate Foundation, with billions of dollars at her disposal, and her backers won’t go down easily.

Her slogan: “Europe’s climate targets and long-term industrial competitiveness are not just compatible, they are complementary.” 

Expect European NGOs and think tanks who receive ECF funding to bash out a similar message in the coming months.

With this battle of narratives, the EU will have more to discuss. Let’s hope politicians seize the opportunity for a comprehensive and honest discussion in the election campaign for the European Parliament.

The Roundup

EU member states agreed on Wednesday to ban exports to three mainland Chinese firms and blacklist North Korea’s defence minister in new sanctions for the second anniversary of Russia’s war on Ukraine.

The World Trade Organisation confirmed that the anti-dumping and anti-subsidy duties imposed by the US on ripe olives from Spain are not consistent with international trade rules, and the EU expects Washington to take action to comply, with limited “scope for compromise”, an EU Commission note seen by Euractiv stated.

Euractiv got hold of the Belgian Presidency’s plan to unblock the EU Energy Taxation Directive, which is currently stuck because of the unanimity rule applying to tax matters.

In the wake of a dispute between France and Spain over a fishing ban in the Bay of Biscay, the European Commission and MEPs reiterated the need for such bans but called for coordination between member states when enforcing them.

The European Commission announced on Wednesday a consultation on the EU’s telecom market, open until June and committed to a post-quantum cryptography recommendation.

While the EU’s Corporate Sustainability Due Diligence Directive (CSDDD) is currently being blocked by Germany and Italy, high-profile food corporations are calling for its swift adoption to allow for “coherent and harmonised legislation” at the EU level.

Retired Austrian centre-left lawmaker Pamela Rendi-Wagner has been chosen for the top job at the Stockholm-based EU disease prevention centre, an appointment bringing the accomplished tropical disease expert back to her roots.

Environmental groups were quick to criticise the French government’s plans to cut the green transition budget by €1.4 billion, including for energy-efficient home renovations, while others called the move “pragmatic”.

New parties joining the Belgian political system face an uphill battle to establish themselves alongside well-funded and already-established groups, MEP Sophie in ’t Veld, running with Volt Belgium, told Euractiv in an interview.

Spanish farmers on Wednesday staged their biggest rally yet since protests began two weeks ago, as the ruling Socialist party and the centre-right opposition clashed in parliament over border controls and ‘mirror clauses’ in EU trade deals.

The provisional agreement on new rules for air quality across the EU is hailed as a step forward despite not aligning with World Health Organisation (WHO) recommendations.

The European Commission accepted on Tuesday (20 February the €18.6 billion deal between Orange and MásMóvil in Spain, provided that spectrum bandwidths are divested to the Romanian mobile operator Digi.

For more policy news, check out this week’s Green Brief and the Health Brief.

Look out for…

• Commissioner Janusz Wojciechowski speaks via videoconference at 9th European Congress of Agrobusiness Managers in Poland on Thursday.
• Commission Vice-President Maroš Šefčovič chairs, together with President von der Leyen, clean transition dialogue on clean tech on Thursday.
• Informal meeting of economic and financial affairs ministers on Thursday-Saturday.

Views are the author’s

[Edited by Zoran Radosavljevic/Alice Taylor]