International Trade, Corporate Lobbying, and the European Political Project: A Conversation with Pierre Defraigne
Pierre Defraigne is an interesting figure to encounter during this period of transatlantic trade negotiations. Former Head of cabinet of Etienne Davignon and then Pascal Lamy (two important commissioners, one in the 1980s and the other in the 2000s), and ex-director of North-South relations and subsequently Assistant General Director of the European Commission's Directorate General for Trade, he is a professor of economics, until recently at the University of Louvain and currently at the College of Europe and at Sciences-Po in Paris. He now directs the Madariaga Foundation,1 a think-tank closely linked to the College of Europe in Bruges.
We were intrigued by his vigorous opposition to the Transatlantic Trade and Investment Partnership (TTIP) and met him in December 2014 for an informal and open exchange about this issue, and also more generally about the status of the European project and the impact of business lobbying in Brussels. This first meeting gave us the desire to come back with a microphone and more precise questions for a second conversation in early January 2015, of which this is a transcript.
(Original in French – translation into English by Susan Emanuel & CEO).
1The Madariaga-Collège of Europe Foundation is principally financed by the College of Europe, as well as by the American C.S. Mott Foundation It organizes seminars and lectures on EU-China relations with a contribution from the Chinese Mission to the European Union. See http://www.madariaga.org/images/stories/madariaga%20activities%20report%202013.pdf
CEO: Mr. Defraigne, could you introduce yourself in a few words?
My main interest is the governance of the Eurozone as a step toward a model for a Common Europe. So I am interested in the geopolitical dimension of Europe, for I believe you cannot separate model from power. In addition, I have a strong interest in China, which I believe is the real reason for Europe to be fashioned these days.
CEO: What does that mean?
The new situation of the 21st century is the change in economic and geopolitical relations with Asia - mainly China and maybe India eventually. This puts an end to two centuries of Western hegemony, at first principally European and then principally North American.
The first question is whether we are heading toward a multipolar world or whether we are reconstituting bipolarity, as during the time of the Cold War. The second question is about the management of a multipolar world: whether mainly through law, by means of multilateralism, or else principally through power relations, by means of a strategic equilibrium.
In my mind, China is the major issue. First, because China has a different model from ours, which is proving very fruitful in terms of growth and development. Moreover, the rise of China and the North-South convergence that it constitutes and amplifies, pose the problem of the race for resources and the degradation of the climate. This is indeed the major issue of our era.
A second major issue of our age would be the political integration of Europe. The economic integration of Europe does not mean much. It is the shift to a political Europe that will make the difference. For the time being, Europe is simply a customs and monetary super-union, an economic space where companies and nation-states are put into competition.
CEO: So you think that the European project has not yet reached the political stage?
Correct. I think that we are struggling by all means to give it this coloration, for example by advocating a European social model that is not yet a reality. People speak of Europe as a “civil” power, which makes no sense. Soft power in itself does not exist. It only exists if one also possesses a strategic capacity, and one reasonably decides to, instead of using this capacity, play on the influence secured by this strength. This is totally different from having merely soft power, for strength is indivisible.
Institutional Europe does not recognize that, in fact, the model and the strength remain to be constructed. Is this the idea of a self-fulfilling prophecy? We use a vocabulary that is ahead of the reality in order to make it come about. Why not? Some people call this self-persuasion by repetition. I myself am more constructive and I think, let us say, that this is the homage that vice pays to virtue. This means that one cannot do it but admits that this is what has to be done. That is already a lot!
CEO: This goes back to something we were speaking about last time, the fact that European institutions are suffering from the absence of a European public opinion that is necessary for their entry into a properly political age. What do you think are the consequences?
The terrain is occupied by economic circles that are partly European and partly global. Their influence on institutions is considerable. In the absence of a European citizen, moreover, he becomes the factor of adjustment, as a worker and as a consumer.
CEO: Not yet a citizen…
He is the object but not yet the subject of his History. So we are in a very delicate and dangerous phase of the European construction.
CEO: In our last conversation, you said that the Commission had come to perceive that its actual constituency was business groups. This is a rather severe accusation. Could you develop this point?
This is not an accusation. I don’t see myself in the role of a prosecutor! I am doing an analysis that is almost functional. Any power seeks legitimacy. Legitimacy comes first from its mission, inscribed in law; then it comes from its analyze and the proposals that it makes on the basis of this analysis; and finally, it comes from a “constituency”.
What have the European institutions found as a “constituency” to make economic integration advance, since that is what we are talking about? They have necessarily found those who benefit from them in the first instance, that is to say the major enterprises that play on economies of scale. The others follow. In this situation, national governments do not push for integration; governments resist it, by trying not to concede sovereignty except in droplets. Thus they are somewhat badly placed to play on countervailing powers of influence to balance the major business milieu in the economic integration of Europe.
So there is de facto a systemic collusion between the Commission and business circles, with the asserted justification of the consumer’s interest, which is the way in which the European citizen is present as a stake in the European decision-making circuit.
CEO: You told us in introducing yourself that you had been the head of cabinet to Etienne Davignon. He played a major role in what you have just described, notably by the creation of a significant lobby group, the European Round Table of Industrialists, with important influence and a de facto alliance with the Delors Commission, precisely in order to re-launch the European political project - blocked at the time – through the economy. One could see this development as a sort of wager that was meant to lead, as a consequence of shared economic responsibilities, to the political aspect. Today we are faced with the failure of this wager. Was there awareness of these dangers at the time?
The Delors project for a single market appeared to be a gamble. The idea was that things were being set in motion, that you could create a virtuous spiral toward political integration by commencing with an integration from above on the basis of the business world and that immediately we would have the counterpart - which in the Delors plan was social dialogue and hence a union counter-power. Starting from this dialogue, we imagined an equitable sharing of productivity gains between capital and labor. This was supposed to bring about a politicization of the whole European debate, which would shift from the economy toward the social, then from the social toward the political.
I believe that by doing so, we did not see coming either the enlargement to the East or globalization. Nobody foresaw that we were trying to make a single market and meanwhile technological revolution and commercial and financial liberalization were going to transform the situation. Globalization created pressure on the immobile or “territorialized” factors that are unskilled labor and public services. The heterogeneity of the enlarged Europe increased the pressure of globalization within it. Due to this, the balance between the economic and the social has not been achieved.
I believe that in this way the “Davignon-Delors” pact did not reach its goal. One could call it as such since the promissory note that allowed Delors to go down the path of the internal market came from Davignon and his offices. By starting from the Davignon experience of industrial policy, rather successful with steel and the Esprit program, we told ourselves that it was necessary to move from a sectorial approach to something more horizontal. Davignon had thought of the internal market as a platform for launching Europe. Delors seized upon this idea and magisterially transformed the attempt. This idea was in fact supported by the European Roundtable of Industrialists. But I ought to tell you that personally I saw the latter as resembling an ancient Greek chorus. They repeated what we were saying and liked it a lot, partly because they did not have any other ideas: great CEOs can excel in the strategy of their corporation, but rarely have a political vision of the same scope.
CEO: But they advocated these ideas in the national capitals…
Exactly. They were a major lever of influence vis-à-vis capitals, which suddenly found themselves a little “provincialised” if they did not enter into the Commission’s grand design.
The Europe of Delors thus took the direction of the internal market. In my opinion, at the time we overly made the case for a formidable campaign launched against Brussels not to turn the internal market into a “fortress Europe”. This essentially Anglo-Saxon pressure forced us to disarm the Community preference - in part because in the greater industrial constituency, beyond the Round Table, there was a large share of non-European interests. This is a hybrid and mixed constituency that has never stopped being so, which is found in Business Europe. Personally, I believe that the European Industrial Round Table has not maintained its former status. In the time of Davignon and Delors it had the status of “evening visitor”. It has become a machine, now superseded by the octopus of mixed American and European lobbies. Of course it is inside, but it is no longer the dominant actor. Alas. I say “alas” because what is most lacking in Europe right now are not only citizens, of course, but also a true industrial and financial constituency that is authentically European. This is our tragedy and TTIP is the product of this confusion of economic interests that weighs on Europe.
CEO: Before coming to TTIP but linked to what was said just now, lies the question of the resources possessed today by European institutions, whether ideological, political, human, or financial. The budget for the institutions has been reduced…
That is fortunate, given the use made of them! I am not going to cry over the European budget: too much bad expenditure on agriculture and not enough on research! On the other hand, the Eurozone needs a real solidarity budget.
CEO: Fine. Speaking of other resources, how do you think the internal culture of institutions has evolved during the last two decades? Do institutions, and the Commission in particular, still contain a true diversity of opinions and expertise?
The response to the second question is “no”. This is the real difficulty with the Commission: the expertise is eminent but there is a lack of pluralism in the economic analysis and in the political debate inside the College.
The departments of the European Commission were in the beginning staffed by jurists and economists, some of whom had the culture of effective state intervention, especially the French with the Plan Commissariat that was important in the design of the CECA.1 There was a CECA influence, as there was (elsewhere and more modestly) a Euratom influence2 where public power also played a role.
Sometimes this ran up against German ordoliberalism. But there was a convergence and finally what dominated was the law. The EEC was first of all a Europe of law, of jurists. It was they who caused us never to go backward. The ratchet effect is attributable to this dominance of jurists in European construction. Then the role of jurists was reduced. The rise in power of economists, themselves increasingly neoliberal given their recruitment, modified the course of integration.
This domination of economism is expressed by the role of the DG EcFin3 that followed the advent of the euro zone. It has become the Holy Office of the Commission.
CEO: From Beaulieu (on the outskirts of Brussels) to Charlemagne (the building closest to the Commission’s head office)…
Exactly. These last decades, the DG EcFin has been directed by Commissioners who have not acquired the status once enjoyed by people like Raymond Barre or Ortoli. They were men who when they went before the Council could impose themselves on the Ministers of Finance by their personal reputations. They were men who were listened to, since they had intellectual eminence and strong personalities, and by the same token they had real authority over their offices. Later on, Commissioners became somewhat hostage to their offices, themselves in direct contact with the national treasury directors, who are in fact the veritable managers of the Eurogroup, in interaction with their colleagues in the Central Bank. This duo “Treasury Director – Central Banker” drags DG EcFin in its wake, and this has changed the political relations inside the Commission. DG EcFin has become the leading DG on many issues. But it draws its authority not from its own thinking but from its proximity to the theses that are dominant in the Economic and Monetary Committee, among the treasury directors, and especially those from the countries that count, meaning essentially Germany. Still Germany and always Germany.
Faced with this internal evolution, what has been lacking in the end is a political counterweight at the level of the Presidency of the Commission. There, I think that with Barroso there was an absence of vision that was unprecedented.
CEO: One might have thought that Barroso was very satisfied with changes like the establishment of the European Semester4 since he publicly congratulated himself on the new powers of the Commission. You are telling us that these new powers called out for a necessary counter-power. Is that so?
I believe that there is a trap in these new powers. At the time I called it a “labyrinthine” treaty. I would put in there the Spring Semester and the “6-pack and 2-pack”. I believe that given the basic distrust that reigns between member-states, they could only agree on the rules and made the Commission a notary - a punctilious and intrusive notary. They also entrusted it with the function of bailiff.
CEO: A real pleaser.
Exactly. The Commission believed it would draw its authority from... let’s say, even if this is an exaggeration, its rigor in obeying member-state directives. I think that it has lost its capacity to define a European common good and thus making it the alternative or counterweight to a compromise between states. Here we are at the heart of the European problematic. It is clear that there are still two approaches. You start either from an ideal of the common good or from the positions that dominate among the states that count in order to reach a compromise. What is the gap between the ideal of the common good and the compromise that is realized? Some would say that this is a theoretical question without interest since what counts is power relations and what is achieved at the end of the day. Yet it would be good to measure this gap better. For the general public, the citizen, to realize that, in fact, the intergovernmental method only delivers approximations and solutions that are marginal, tardy, and insufficient – which are at the origin of people’s misery – and that there is a gap in relation to what might have been done if we were in a universe that was more objective and more rational from the point of view of the European common good. I believe that the Barroso Commission has not pointed out this gap. It did not have the political capacity for this..
CEO: A final question on the Commission, about which you have just recalled to what extent the political dimension was lacking under Barroso. We now have the Junker Commission whose first declarations insisted heavily on this matter. Yet today we see that the General Secretariat is the major winner in the reorganization of departments in the Commission, with the posts of vice-presidents who are very dependent on it. Is this not going in the opposite direction to the goal announced by Junker?
In this room a few months ago Etienne Davignon said something very true: the General Secretariat and the legal office should become once again services for the whole Commission and not just for the President. I think this is fundamental.
A priori Jean-Claude Juncker has a real political dimension. But is the vice-presidential structure strengthening the presidential character or on the contrary reestablishing a balance within the College? The experiment will tell us. Let us do the experiment. The personalities are going to reveal themselves. Certain vice-presidents will be weaker than their Commissioners. The machine is really going to function with some vice-presidents who will fulfill their role and others who will be short-circuited, and a balance will occur.
CEO: You wrote an article titled “Europe or TTIP: We Must Choose”. Are you still of that opinion, and if so, why?
More than ever. You cannot achieve two mutually exclusive goals at the same time. The single market needs to be finished, and we are now in the difficult, strategic part of it: energy, finance, telecommunications, the digital, the defense industries, financial services, etc. The Common Agricultural Policy has to be reviewed, it is both a progress and a dead end. So there is enormous work of integration to be done! We ought to have a unified energy policy, which automatically implies a foreign policy. But to have a foreign policy, you need to have a European defense. In short, to have a capacity that I would say is both for Europe's inner development and for projection in the world, one has to refine the unity of Europe, meaning political unity. When you put so many things together, you can’t find a way out without a European political government. Go and negotiate with the Americans at the same time is simply impossible.
The Americans are united. They are our protectors. They have a single currency, we have eight of them. They have one energy policy, we have several of them. They dominate all the most advanced technologies. Thus negotiations are fundamentally asymmetric. The idea of making a bloc between Europe and the United States versus the rest of the world appears to be an alliance of the past to prevent the advent of a new international order that is more balanced, as well as, I hope, more multipolar and multilateral. I don’t believe we are going in this direction when we make an alliance with the United States. We are playing with fire, with Europe and with the world’s geopolitical balance! This is a double mistake for Europe, I believe, to be starting along this path.
CEO: Why do you think it started “along this path” in the first place? Who defends the TTIP and out of what interests?
There are several factors. There has always been this strong Atlantic tropism among some member-states, starting with the United Kingdom and in certain circles of the Commission that think it is the normal vocation of Europe to be a sub-ensemble of the Atlantic ensemble – that is undeniable. They do not see a basic incompatibility between a European model and a “transatlantic internal market”, to use the term of Karel De Gucht.
Then there is the German idea: some think, lacking a European demand, you have to develop exports elsewhere and they have detected certain niches for themselves in the United States. Since they are the nation that matters, since Germany is the creditor nation, they are able to carry the message that their export interests, given their very particular international specialization, should be taken into consideration by debtor states. This played a big role.
There is also the domino effect of the series of free-trade zones negotiated a few years ago by the United States and by Europe. They said to themselves: “Hey, in the end why not do that between ourselves?” These are reactions of negotiators. It is a strange logic. The negotiators desert the strategic ground to concede to an ultimately rather corporatist culture.
Finally, there is a “CNN” effect that is not to be neglected, that gave Barroso and De Gucht a certain visibility, their moment of glory. Their hour of glory was to launch the negotiation. Will there be an hour of glory that will conclude the negotiation? I absolutely doubt that.
CEO: You spoke to us about the norms of the European Union as public policies that should not enter into the field of commercial negotiations. So what is your judgment of the provisions about regulatory cooperation within the TTIP?
This is an absolutely fundamental issue. The norms and standards, and generally speaking services regulation are not primarily tools of trade policy. They relate to a societal project, but also to power relations among member-states, and necessarily behind that to particular industrial interest, I don't dispute it. But they indeed foremost a matter of legislation for Europeans: workers, consumers, savers, etc.
Considering this legislation as an obstacle to trade is terribly narrow. It is not a tariff, not a quota. Certainly it does have an impact on trade. But one would have to act with extreme finesse to determine what in a norm, a standard, a regulation, comes from the collective project of the nation or else contains elements protecting a particular industry in a nation.
That work is extraordinarily ungrateful. Personally, I have nothing against the idea that there be technical accords with the Americans, and with others, on standardizing norms, like the classic case that is always invoked (rightly) of automobile crash tests. Why not? And that there be a procedure for mutual recognition, why not? Personally, I still have some reservations about mutual recognition: it takes place between countries that resemble each other, but this has a very discriminatory effect on less developed countries that cannot offer the same guarantees. This is a new North-South barrier. We should remember that. Still, with a transatlantic regulation coalition, there is a diversion of commerce, to use the phrase of Jacob Viner, the grand theoretician of free-trade zones and customs unions; he demonstrated that for tariffs and quotas. But in reality, that plays even more into regulation. Regulations, norms, and standards signify that yes or no, your exports enter or not. This aspect should be taken into account, even when a simple technical agreement is negotiated.
CEO: Who do you think will benefit most from TTIP - if it is signed?
I don’t know, since I have not seen the 28 studies of the national economies. Because let’s not be mistaken, Europe exists. But when it is a matter of external trade, it exists to define the commercial regime of imports. But with respect to exports and attracting foreign investment, the 28 member-states are in competition! Thus it is necessary, whether one wants to or not, to do an inventory of costs and benefits of TTIP at the level of 28 states. If we had a Community budget that divided up and redistributed the gains obtained by one country to compensate for the losses suffered by another country, as is the case of the states within the USA, one might consider only the whole. But here not! At this moment, if one has an analytic approach, which is by the way very difficult to do, one would immediately see that there are countries that are going to benefit and other that are going to lose. For there will be sharpened divergence. I find that obtaining even very weak growth (we speak of 0.5 points after twelve years if one has successful negotiations), at the cost of increasing the already worrying divergences within the Eurozone, is to my mind a very dangerous game for the cohesion of the European Union.
CEO: The Commission has made efforts of transparency and dialogue in relation to negotiations. Do you think they meet the challenge?
Frankly, I do not believe that in the framework of commercial negotiations one can easily resolve the problem of transparency. Commercial negotiations are by nature secret. One does not show to the opposition one’s red line. That is not done. If not, you don’t need negotiations; you go from the start to the solution along a minimalist line. You have to have secrecy, which is in the nature of negotiation.
But this also signifies that you cannot resolve this issue of regulatory convergence by trade negotiations. You have to create an institutional framework. But does it make sense to construct an institutional framework with the United States? Are we going to put the Congress of the United States and the European Parliament side-by-side to have debates?
The fundamental vice of TTIP is that it wants to make by means of a tool of trade policy, a very narrow and very specific one, an internal market project that goes well beyond the frontiers of trade exchanges.
CEO: What is your opinion about CETA?
I see no difference in nature between CETA and TTIP. They are necessarily the same schemes. For example I think that the specific point of the arbitration clause has no more place in CETA than it does in the TTIP. This seems obvious. Canada is a civilized country, Europe too. We should not short-circuit our jurisdictional systems by private arbitration. But for the rest, I believe the disadvantages found in the TTIP are less in the CETA simply because Canada is a small partner who adjusts to us more than we adjust to it. When we move to negotiations with America, we are playing with someone stronger than we are. What leaves me speechless is the fantastic (tartarinesque)5 argument that you should not go into negotiations with America in a defeatist spirit. I think that it is the height of absurdity!
CEO: The heroism of cavalry charges against machine guns…
Yes. This is truly in the realm of anecdote and caricature.
CEO: Will EU-United States trade be modified by the ratification of the agreement with Canada (CETA), taking into account the free trade agreement with North America (NAFTA)?
The rules on the country of origin make that rather difficult. There will be a temptation to do so. There will be inevitable hijackings. I simply think it will complicate things even more. The rules on the country of origin are the Achilles’ heel of all these bilateral agreements. Here we are going beyond the question of the TTIP. This is the great weakness of everything bilateral compared to the multilateral. You add up layers of country of origin rules and in the end only the largest multinational corporations, that have specialized departments to make everything compatible, know how to navigate these waters. In this whole affair, SMEs are ejected from the system. Moreover, I find it rather cheeky now to come up with the argument that SMEs will be the great beneficiaries of the TTIP or the CETA. It is obvious that some SMEs are going to win. We already know which ones and these are the ones who will be pushed to the front as examples. But we will not see, and not want to see, the mass of SMEs that are going to suffer.
CEO: Much is done in the name of SMEs at the European level, including by Business Europe...
On this distinction between multinationals and SMEs I want to stress something important and I think essential. We are coming back to the discussion on the weight of neoclassical and neoliberal thinking within the European Commission, and notably on the refusal in principle to center economic policy on redistributive growth. So de facto they chose to privilege inegalitarian growth. If these neoliberal economists of DG EcFin had a little culture, meaning had seriously studied economic history and the history of economic thought, perhaps they would have encountered in their reading the distinction made by Braudel and others between capitalism and the market economy. This distinction in my opinion is foundational to all policies that we should be following at the European level. It is not a matter - to my mind, anyway – of opposing them to each other by saying that the market economy is good and capitalism is bad. They are different systems even if they are deeply entangled in each other. But one of them dominates: capitalism. So if you do not have a very clear vision of the way you are going to regulate capitalism, SMEs will always get gobbled up. To not even perceive this problem, including through very technocratic frames like perfect competition, imperfect competition, and to imagine that this might evacuate the basic tension between multinationals and SMEs, is not convincing! Europe does what it can about competition. It has some trophies to show but it is rather defensive on the whole. This policy has not had the strong effects that were expected.
Personally, I believe that what Europe needs is an industrial policy on which the commercial policy, the competition policy, the innovation and research policy, would depend. If we want to reindustrialize Europe and give it its place in the new international division of labor, we have to use much more powerful tools. We need active policies, not only make passive integration, especially in energy and info-tech. We have to do more to make finance subservient to the real economy. This will obviously demand a political Europe, a political power. An Executive with discretionary power, no longer simply governance by rules.
CEO: Does this mean you are in favor of re-establishing Community preference?
No, but I regret that we have given way too easily to the polemic over “Fortress Europe”. I think that we were a little complacent with third countries on this point. I believe we made an even more serious mistake with article 63 of the Treaty, on the obligatory liberalization of capital flows with third countries. I think that we should not have inscribed that in the treaty. It is fine to have the irreversible liberalization of capital flows inside, but it is serious to make that a constitutional element of relations with the rest of the world. When I think of the Community preference, I think of an active industrial policy. I think we need European industrial groups, which also implies European financial groups, because Europe remains a puzzle and an industrial kaleidoscope - much more than is thought. There are almost no real European groups. And even at the level of the banks, we see the fragmentation of the banking system. So when I think of a Community preference, I think of an active industrial and financial policy.
CEO: All this presupposes that policy is able to retake the upper hand, but since the start of this conversation we have been dwelling on the contrary. Once noted the domination of economic interests over the decision-making mechanisms of the institutions, we notice that the future projects of the European Union like CETA and TTIP do not have the goal of re-establishing the preeminence of the political, but quite the contrary, constraining it even more.
CEO: Alas, the prime causes of public hostility to the European political project, specifically the capture of the Union by economic interests, were not either mentioned or challenged during the recent European elections, nor by the Juncker Commission. So do you think that the European political project, whatever its manifestations, can survive much longer under these centrifugal forces, and if yes, under what conditions?
I am going to make a distinction between philosophical approaches and (shall we say) an anthropological approach to your question.
On the philosophical level, it is quite clear that we have been confronted for a long time by what some have called the problem of the disembededness of capitalism in relation to society. This is the “grand transformation” analyzed by Polanyi. This has merely strengthened with globalization. So we may be worried and say that the capacity of the political to assume control is deteriorating. There is a loss of power and hence a real danger for democracy. On the level of principles, I am of the school that thinks that the profound sense of European construction is to reestablish a balance between the market and the political, between capitalism and democracy through regulation. In short, you have to take control and recreate the possibility of regulation inside and negotiate multilateral regulation outside. For me this is fundamental. This is from my perspective of political philosophy.
That being so, when I look at the life experience of people today, from an anthropological standpoint I am struck by a kind of consensus (a little worrying from certain respects) about the fact that people trust themselves to capitalism rather than to the political. This is strange to observe. Twenty years ago I wrote about globalization and I reached the conclusion that what we were witnessing was more the product of capitalism than of political choices. We would have no doubt preferred that convergence be born from development policies, from policies of commercial preference, from cooperation between states. But what do we find? In fact, we have sub-contracted the work of North-South convergence to worldwide firms that, through the chain of added value, are occupied with integrating the world via the world economy. They do it in their own interest and not at all in the interest of people. But it happens that globalization by the market has made China and others enter into the circuit. Thus, I tell myself, here is something that people somewhere have integrated: they see that globalization is dangerous but that there is a good side and that it works. We cannot ignore this intuition so widely shared in public opinion. What is terrifying is not seeing – or not wanting to see – that inside our societies, this globalization, along with technological progress, and with the destabilization of our social institutions – the family as much as social security – result in aggravating inequalities. I believe that this refusal to see the question of the internal inequalities that have already resurged again and that threaten to downgrade middle classes is very grave.
Fifteen years ago, with Pascal Lamy, we tried to launch a debate in the Commission on the rise in inequalities as a challenge to Europe. No success. I want to say that at the time what was still dominant in the consciousness of the College was the thesis of “trickle-down growth”: don’t worry about sharing the cake, make it grow and everybody will have his portion. All that was authenticated by a certain social-liberal thought of the Rawls type. People who did not take inequalities seriously were not only on the radical right; I think for example of the role played by former French Prime Minister Bérégovoy when he was Minister of Finance: he made himself the champion of financial deregulation to make Paris the continental financial place in Europe. So inequalities at the time did not interest anybody. But it is an idea that now starts to make inroads. Here I thank people like Piketty and Stiglitz who, each in his own way, pose the problem and come along with solutions. And I believe that this debate is open and that it is over this that we must now play: to place the distribution of income and wealth back at the heart of European economic policy.
CEO: But who can play?
That’s it… I think that we should construct a European citizenship on a certain preference for equality, since I believe that the preference for equality is inherent in democracy. One does not make a democracy with gaps in wealth that are excessive. People have to have the feeling of belonging to the same family. If you have a cleavage in society, you have a breakdown that prevents the effective exercise of democracy.
When I see in the United States or the United Kingdom that almost half of the people, and the most needy, no longer vote, I wonder about the democratic character of these countries. We ought to think about that in Europe. I am not an egalitarian, far from it. I think that a preference for equality does not exclude being concerned to encourage elites. A society needs elites. A democracy needs elites. The point is how you define these elites. Is it in inherited income? Or is it on effort? Enterprise? Knowledge and expertise? Moral purpose ? What Europe needs is a cultural revolution. We have to make an aspiration that is still very confused and embryonic to citizenship coincide with an aspiration to justice, which is the condition of freedom for the most vulnerable and the weakest.
CEO: In 2001, a French rap group (Lunatic) brought an important album, “Mauvais Œil” (Evil Eye). The lyrics to one of the songs said, “They have their tax heavens; we, lacking this, impose our non-law zones”. In your opinion, what direction should European citizenship take?
This is an excellent line and I am glad you mentioned tax heavens, which are zones of non-law, in effect, but protected by laws. There is a perversion of public power in a series of countries. Here it is only European regulation that can reestablish equilibrium. The small countries that act as stowaways in fiscal matters make us hostages of the major corporations and huge fortunes. Harmonization in taxing big business and the wealthy is the first stage in redirecting the European model towards justice and solidarity.
1European Coal and Steel Community
2 I.e. EAEC, the European Atomic Energy Community
3Direction Générale aux Affaires Economiques et Financières = General Office of Economic and Financial Affairs
4The European Semester, the “Six-pack” and the “Two-pack” are new tools for coordinating the national economic and budgetary policies within the European Union.
5 Tartarin de Tarascon is a literary character imagined by Alphonse Daudet, famous for his rants and fictive exploits.