At  “Europe, Les prochaines étapes," a “town hall” meeting in Paris on May 28 sponsored by the Berggruen Institute on Governance and Sciences Po, European leaders called for “urgent action” to respond to the crisis of youth unemployment. There are nearly 6 million young people under the age of 25 without jobs today[1].

The centerpiece of the event was the launch of a “growth initiative for Europe” drafted by the German and French labor ministries in conjunction with the Berggruen Institute.

Ursula von der Leyen outlined the three main elements of the plan:

• Financing for small and medium enterprises (SME) across Europe through a combination of EURO 70 billion made available at favorable rates by the European Investment Bank (EIB); EURO 16 billion in committed, but undispursed, EU structural funds; and EURO 6 billion dedicated by the EU to targeted to fight youth unemployment.

Several participants of the meeting called for “frontloading” the EURO 6 billion to be spent immediately. Prime Minister Rajoy called for a further EURO 30 billion in capitalization for the EIB to fight youth unemployment.

•  A “dual-track” training program for certification in schools and on-the-job training so that new jobs are sustainable and workers are properly skilled;

• Enhancing labor mobility by extending the EU’s “Erasmus Program” for higher education that allows students to study anywhere in Europe to include vocational training -– “Erasmus for all.”  
  
  

Prime Minister Rajoy delivers the closing keynote address

EIB President Werner Hoyer committed the bank to this initiative as a key way not only to fight youth unemployment, but to prevent further fragmentation of European financial markets which have made credit scare for SME, which produce most new jobs.

After the morning session at Sciences Po, the labor and finance ministers met at the Elysee Palace with President Hollande to chart the path forward for this initiative. Ursula von der Leyen laid out a “roadmap” for implementation that will include a summit of all European labor ministers and Heads of public employment services in Berlin in July, hosted by Chancellor Merkel and EU-Commission President Barosso, to finalize the initiative and present it “with a single European voice” at the G-20 Summit in St. Petersburg in September.

She also called on the private sector to “step up to their responsibility” and take part in this urgent initiative. “To be effective,“ the German labor minister said, “any jobs program must be demand driven.

The goal is to mobilize the available sources of funding and link them with effective labour market policy measures. Governments cannot guarantee jobs, only the private sector can create jobs. But the states can conserve and improve young people’s employability. And they can provide European funding for small and medium enterprises to promote growth and employment.

Nicolas Berggruen closing the Town Hall

Nicolas Berggruen and Nathan Gardels gave a talk about their book "Intelligent Governance for the 21st Century: A Middle Way Between West and East" while attending the World Economic Forum. Attendees included the presidents of Rwanda and Iceland, journalists John Micklethwait and Thomas Friedman, and many members of the Institute's 21st Century Council and the Council for the Future of Europe.   

 In the photo, George Yeo is speaking as (left to right) Thomas Friedman, Ursula von der Leyen, Paul Kagame and Laura Tyson listen. 

 Below, Nathan Gardels and Nicolas Berggruen (speaking) discuss their book with Michael Elliott (center):

 Afterward, Berggruen and Kagame talk with Kishore Mahbubani:

Rwandan President Paul Kagame, Nicolas Berggruen, and Jendayi Frazer announced the launch of the East Africa Exchange at a press confference in Davos on January 23.

By Nicolas Berggruen

Late last year, Nathan Gardels and I were in Mexico to promote our book "Intelligent Governance for the 21st Century" at the Guadalajara Book Fair and to attend the inauguration of Mexico's new president, Enrique Pena Nieto. The timing was propitious since President Pena Nieto's new administration marks the return of the once autocratic party -- the Institutional Revolutionary Party (PRI) -- that ruled Mexico for 71 years until the year 2000 when open democratic elections ousted it from power.

 The strength of autocracies like China -- or the old PRI -- is their ability to forge consensus and unity of purpose with the institutional capacity to implement long-term policies. But lacking accountability, transparency and free expression they become hidebound and corrupt, giving way to the power of vested interests and eroding what they have been able to accomplish.

 The strength of democracies like the US is that everyone has a voice and can contend for power. But the inability to forge consensus out of cacophony has created gridlock and paralysis. Its adversarial political system has decayed into partisan rancor and divided the public against itself. The short term mentality and special interests have captured the formal accountability mechanism of one person one vote elections.

The central question we pose in our book is how the unity of purpose and long-term institutional capacity usually associated with autocracies can be balanced by transparency and democracy so that governance can both be effective and accountable as well as inclusive.

Mexico today is in the middle of this dilemma of governance. During the PRI rule, the novelist Mario Vargas Llosa once called Mexico the "perfect dictatorship" because it had the trappings of democracy, but was in fact ruled harshly by one party. The challenge of the PRI under Pena Nieto is to perfect democracy -- and still address the daunting challenges the country faces today.

In spite of the bloody drug war that drags on, Mexico is poised to join the ranks of the fastest growing world economies. It grew over 4 per cent last year, and Pena Nieto promises to get it up to 7 per cent. As China's wages rise, the manufacturing the once fled Mexico is coming back. Mexico's average hourly wage is $2.10 while in China it is now $1.63. The costs of fuel and transportation to get goods from China to the United States means that Mexico now has the upper hand in producing for trade with the world's largest market just north of their border.

Mexico also has a strong skill base in engineering, which has led to the establishment and expansion of large manufacturing operations in Mexico from General Electric to Bombardier, creating hundreds of thousands of high-wage jobs. 

While the US has been endlessly debating Obamacare, Mexico, under President Calderon who just left office, has established a model of universal health care -- Seguro Popular -- that covers nearly everyone in the country, whether they have a job or not.

It is no surprise that a recent Economist cover was titled "The Rise of Mexico." American consumers will soon be seeing "Hecho in Mexico" as much as they are used to seeing "Made in China" labels on the goods they purchase.

To take advantage of Mexico's new opportunity, Pena Nieto must make some tough reforms and take on many of the vested interests that have historically been the very pillars of the PRI -- the teacher's union, the state oil company (PEMEX) bureaucracy and the various monopolies in telecommunications and television.

It is surely a good sign that in his inaugural speech, admirable in both its scope and specificity,  the new president frontally raised all these issues -- with the head of the powerful teacher's union and the Mexican monopolists all sitting right there in the audience a few feet away. He appointed Emilio Lozoya, a long term advocate of modernizing PEMEX by opening it up to outside investment as the head of PEMEX itself. The loudest applause Pena Nieto received in his speech was when he said he would end the practices of the teacher's unions that allows them to sell jobs and appoint teachers themselves.

Whether Pena Nieto succeeds or not in taking on his own political base will tell us whether this is the new PRI or the old PRI. He clearly understands that the Mexican president today is not longer all powerful, but only as powerful as his party -- which got only 38 per cent of the vote and holds only that many seats in the Congress. For this reason, the day after his inauguration he announced a "compacto" -- a long list of policy agreements with the other left and right parties in the Congress -- they promise to pursue together. He also announced he would form an independent citizen's commission on corruption.

Such a "consensus building" and transparent approach is precisely what is needed to move toward good governance. Transparency is key to balancing autocratic tendencies; "consensus building" is what is needed to balance the adversarial contention, discord and diversity that democracy inevitably generates.