26 January 2015
Council for the Future of Europe Meets in Brussels on the Topic of Fiscal Discipline and Public Investment
On December 10, 2014, the Council for the Future of Europe of the Berggruen Institute and the Friends of Europe, co-hosted a seminar in Brussels on the topic of Fiscal Discipline and Public Investment.
Among the speakers and participants of the seminar was Jörg Asmussen, State Secretary, Ministry of Labour, Germany; Mateusz Szczurek, Minister of Finance, Poland; Benoit Coeuré, Executive Board, European Central Bank; and Marcel Fratzscher, President DIW, Berlin, among many others.
The group considered options for adapting the fiscal constraints imposed on national governments by the EU rules in order to encourage public investment that will stimulate growth. While the recently introduced plan by the new President of the EU Commission, Jean-Claude Juncker concentrates on promoting investment at the EU level, national-level investment will also be needed if Europe is to reverse its economic stagnation.
The seminar is the first in a series of activities that the Council for the Future of Europe will engage in on this topic. The concept paper – which was written to stimulate the discussion - was drafted by the Chairman of the Council, Mario Monti and senior advisor, Sylvie Goulard, and can be found here. Over the coming months, the ideas will be further developed through engagement of various leaders and other stakeholders. In addition, a follow up seminar and a public event are planned for later this year.
9 October 2014
Faculty and European Leaders Deepen the Debate at the 2014 Summit On The Future of Europe at Harvard
Carl Bildt addresses the 2014 Summit on the Future of Europe
On September 22, 2014 the Minda de Gunzburg Center for European Studies (CES) welcomed a distinguished group of participants at the 2014 Summit on the Future of Europe – a cooperation between CES, the Berggruen Institute on Governance and The WorldPost. The day’s speakers included Carl Bildt, Vuk Jeremić, and Mario Monti as well as Mark Blyth, Richard Cooper, Niall Ferguson and Joseph Nye. Below is a summary and select highlights of the proceedings.
Over the course of an off-the-record round table in the morning, a lively debate over lunch, and a public lecture in the afternoon, most participants agreed on three key points:
While most participants agreed on some of the analysis, they vividly disagreed on the best course of action. In Joseph Nye’s terminology (see article “A Western Strategy for a Declining Russia" in Project Syndicate ), the Summit debates crystallized along two axes: the "squeezers" who favored applying serious economic and military pressure on Putin and the "dealers," who advocated for resolving the conflict through negotiation.
The squeezers believed that Putin respects strength more than weakness. They argued that he acts opportunistically, trying to increase Russia's reach when he sees a tactical opening, but that his fundamental position is ultimately weak. The West, they were convinced, can manage Putin's ambitions by demonstrating strength and adopting policies that will weaken his position. But if Europe fails to help Ukraine, it will, as Carl Bildt put the point, face "an even more complicated future."
L-R: Mario Monti, Grzegorz Ekiert
To confront Putin, Europe will have to make changes that will be deeply controversial on a continent long committed to environmentalism and marked by an aversion to the use of force. The squeezers suggested tough sanctions on Putin; one speaker at the morning session suggested – a little mischievously – that Europe could raise the stakes by sending its own set of "volunteers" to defend Ukraine. Beyond that, the squeezers agreed, European countries would need to beef up their defense budgets; buy LNG terminals; build a pipeline from Spain to France which would make it easier for North African gas to reach large parts of Europe; and re-activate atomic power plants lying idle in Germany .
The dealers, on the other hand, argued that Putin is feeling genuinely threatened by the Eastward expansion of NATO and the EU. They therefore believed that negotiations with Russia could lead to an agreement that will be respected by both sides, and set the stage for easing tensions between Russia and the West. Though they did not foresee Russia's hostility towards the West disappearing anytime soon, they were more optimistic about the country's long-term future: a liberal, economically successful Russia, they argued, will come about – but its arrival is a matter of generations, not years.
This still leaves open the question, put starkly by Graham Allison over lunch, of who Europe would fight for? Mario Monti and Carl Bildt were adamant that Western Europe would uphold its NATO commitments. But whether the West would risk a major confrontation over non-NATO members, like Ukraine, remained an open question. Bildt's observation that the crisis had already succeeded in making half of Europe – the states that had once been under the control of the Soviet Union – increase their defense budget was as eloquent in what it left out: so far, most Western nations have not upped their commitment to military spending. At the same time, Vuk Jeremić's criticism of the West's supposed disregard for Serbian sovereignty highlighted that the countries west of Ukraine have some lingering disagreements of their own to overcome.
L-R: Niall Ferguson, Carl Bildt, Mario Monti, Vuk Jeremić
Also at lunch, a number of economists sought Monti’s thoughts on Europe’s monetary policy. Monti posited, somewhat humorously, that German economists still regard monetary policy as a branch of moral philosophy: they do not believe in fiscal expansion because sin can only be expiated by atonement. Though Monti defended the need for fiscal discipline, he implicitly criticized such a moralized approach.
Another topic that elicited both agreement about the basic choice set and disagreement about the best course of action was the future of Ukraine itself. All participants agreed that the West could only co-opt the country by promising it a better economic future. But they diverged about how difficult it would be to proffer a real prospective to Ukrainians. Dealers emphasized that Ukraine's economy is in terrible shape, and its government rife with corruption. Squeezers retorted that Ukraine's long-term prospects were excellent thanks to its highly arable land and a long tradition of manufacturing; if Ukraine can access world markets and its politicians carry out the right reforms, they suggested, the country might have a more prosperous future than pessimists predict.
The 2014 Summit on the Future of Europe is a partnership of Harvard’s Minda de Gunzburg Center for European Studies, the Berggruen Institute on Governance and The WorldPost. It was launched to convene scholars and policymakers at Harvard University in order to deepen the debate on critical challenges facing Europe, as well as generate ideas that support effective policy responses.
15 July 2014
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- Mario Monti
- Mario Monti
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- Tony Barber
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The Financial Times
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Council for the Future of Europe Meets in Brussels on the topic of Fiscal Discipline and Public Investment.