EUROPE NEEDS ACTION, NOT QUIET CONSENSUS / THE FINANCIAL TIMES COMMENTARY & ANALYSIS ( VERY HIGHLY RECOMMENDED READING )

Europe needs action, not quiet consensus

By Peter Mandelson

Published: November 23 2009 20:11

The fall of the Berlin Wall 20 years ago marked a watershed in European history. It also, in retrospect, marked the beginning of the end of Europe’s unquestioned global influence.

As Asia and Latin America have risen, the proportional influence of even the largest European states has shrunk. As if to make the point, the American president marked the anniversary of the fall of the Berlin Wall by going to ... China.

This is a wake-up call for Europe. Either the European Union develops the capacity to drive and shape the global agenda, or it accepts that the process will be driven elsewhere, above all by Asia and America.

Our success in shaping the coming debates on climate change, financial markets reform, global trade and international economic governance will depend on the ambition and coherence of the joint positions taken by European governments.

Some commentators felt that the EU’s choices for its new president and high representative for foreign affairs lacked this kind of continental ambition. Herman Van Rompuy and Lady Ashton will no doubt aim to prove them wrong.

But Europe’s dilemma is not just one of influence projection. Europe’s influence will inevitably be tied to its economic strength. Over the next decade Europe will have to meet the competitive challenge of the emerging economies, decarbonise its economies and create tens of millions of jobs. Fail in this and the identity and stature of the EU’s president and high representative will hardly matter.

The emerging economies in particular are working hard to replicate Europe’s comparative advantages. Just as they will inevitably exploit a failure to raise European productivity or innovation, they will also use any retreat from market openness to justify closing their own markets to our exports or subsidising industry.

This makes the EU’s strategy for jobs and growth and the distribution of the big economic portfolios in the next European Commission critically important. It is why the UK will publish proposals for a new European growth strategy in December. The men and women that José Manuel Barroso, Commission president, appoints to key dossiers such as competition, the internal market and trade will carry much weight in defining the direction of EU policy.

Mr Barroso must recognise this and shape a team of commissioners that can challenge and reform, rather as he did in 2004 when he took up the reins. Europe’s economic and labour market reform agenda has been rendered more urgent only by the banking crisis. The single market remains incomplete in important areas such as business and professional services. This is not a matter of arcane theory: it is vital for the creation of jobs.

Political suspicion of globalisation remains strong in Europe, as I know only too well from my time as EU trade commissioner. Many on the European left believe the banking crisis has handed them a trump card in the debate about open markets. The new Commission needs to insist on a more reasoned view.

The decision to loosen EU state aid rules to allow for emergency measures after the banking crisis was unavoidable, but it needs to be reversed in 2010. There will be pressure to turn the imperatives of recovery into arguments for subsidising or protecting jobs and industries that are losing their viability. It will need to be tactfully but firmly resisted.

The new commissioners will have to be much more than quiet consensus-builders, because there is little to recommend European consensus for its own sake. Most European consensuses gravitate towards the lowest common denominator. Europe needs to set its sights a lot higher than that.

However, even the biggest personalities and most inspired leadership in Brussels will be hobbled unless European states recognise their European interests as well as their national prerogatives. The institutional reform in the Lisbon treaty will have achieved little without the political will to work together at the European level.

This is the moment when we have to be asking what kind of Europe we want. The answer to this question was never going to rest on the identity of Europe’s president or the new Commission alone. Mr Barroso must lead with direction and drive. But the future of Europe will ultimately be defined by the vision and ambition of European governments themselves.

Lord Mandelson is secretary of state for business

Copyright The Financial Times Limited 2009.