Verheugen strives to combat fear and loathing

By Tim King

Date: 21/04/05

Future expansion of the European Union depends on reinvigorating the European economy, says Günter Verheugen, the European commissioner for enterprise and industry.

"For the time being, economic circumstances in Europe make it more difficult to continue with the enlargement process," says the commissioner, who, in 1999-2004, was responsible for the negotiations to admit new member states.

Seated in his office in the Berlaymont, with a Bulgarian sculpture on the coffee table in front of him and a Romanian oil painting on the wall opposite, it is plain that Verheugen is still emotionally and politically committed to the expansion of the EU.

Recalling his oft-repeated talk of "a window of opportunity" for enlargement, he says, "in 2003 the window began to close because the economic situation in Europe was deteriorating".

Clearly he sees his new role, spearheading the "growth and jobs" policy of the Commission as helping to re-open that window.

But the commissioner does not hide his "concern" at the current state of discontent with the EU. He is caught between a rock and a hard place and he knows it.

Looking at the contrasting reactions to enlargement of the EU in both old member states and new, he concludes: "We have fear on one side and disappointment on the other."

"We are seeing," he says, "very strong, robust and sustainable growth in the new member states. Domestic demand in these countries is growing and business in the old member states benefits from this.

"The situation we have promised is already visible, already there."

And yet...and yet the citizens of Europe are not grateful.

"People are afraid that cheap labour will take their jobs away and they think that is the result of enlargement, of course," he says.

The new member states are now complaining that old member states apparently do not want competition and are imposing restrictive measures.

Verheugen believes that citizens have to be reassured that the EU does not want "a downward spiral". "The whole purpose of the exercise was not to decrease the level of prosperity and income in Europe," he says. "The whole purpose was to increase the level of incomes and make Europe richer."

The Commission believes that the average EU citizen is now experiencing the effect and "pressure" of globalisation. "The problems are already there as a result of low demand and in some member states problems of an ageing population," he says. But it is not right to lay the blame for these problems at the door of the EU, though he acknowledges that "Europe is always very useful as a scapegoat."

He wants "a much better system of communication" including "transparent ways of decision-making".

"We should not hide the fact that we have not managed to close the gap between European citizens and European institutions. I am even afraid that the gap is widening."

That said, Verheugen is assiduously respectful of his colleagues' responsibilities. He will not pre-empt Margot Wallström's proposals on communications strategy.

Nor will he be drawn into indiscretions about Charlie McCreevy's tactics on the services directive. (McCreevy had made some thinly-disguised jibes against Verheugen.) But does he not think that the Commission's failure to sort out its line on the services directive has contributed to the sense of unease in old member states - the fear of job losses?

"It [the directive] is now in the process of legislation and during that process it will be reviewed and will be changed where it is necessary." Changes, he suggests, "in the sense of clarifications". March's meeting of the European Council, he reiterates, "agreed that we need a services directive". "Nobody questioned the principle of free movement of services," he adds, emphasising, lest the French President Jacques Chirac should miss the point, "this will help France and other member states to get higher growth rates".

"It must be crystal clear that freedom of services does not mean that we will have lower standards everywhere."

On that other contentious legislative proposal, for the regulation of chemicals, Verheugen claims that the boil has been lanced. "When I started REACH was a very hot issue, but I am very happy to see that we have managed to get a very broad consensus that we need to find a workable solution. There is very broad agreement about which parts of the regulation need to be examined very closely.

"There is a broad understanding that we need to be pragmatic here."

But some months ago Verheugen seemed to follow the line taken by Cefic, the chemicals industry group, and UNICE, the employers' organisation, that REACH would have a devastating effect. A UNICE-Cefic commissioned study now reports otherwise. So what does Verheugen think now?

"My services are still examining it...I see myself as an honest broker here."

The battle over REACH has informed discussion of the Commission's 'better regulation' initiative. Better does not necessarily mean less, he says. But legislative proposals must be subjected to what he calls "a Kafka test".

The complaints about the quality of legislation and the burden of red tape are what most concern European business leaders.

But the arguments for better regulation are not just economic.

"There is also a political and cultural side. I think the better regulation is a very good instrument to demonstrate that the EU is open and transparent. We are not a bureaucratic monster threatening people."

The commissioner would like the EU to be loved. Then, perhaps, it could enlarge again.

Comments by European Commissioner for Enterprise and Industry, Günter Verheugen, on current challenges of the EU and the prospects of further enlargement.