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ANALYSIS-"Brussels consensus" widens gulf with EU electorates

Source: Reuters - Mon, 9 Dec 2013 06:50 AM
Author: Reuters
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* Liberal, free-market principles not shared by all citizens

* Gulf in outlook set to boost sceptics in parliamentary election

* Changes in "Brussels consensus" likely to be only limited

By Paul Taylor

PARIS, Dec 9 (Reuters) - Call it the Brussels Consensus. A system of beliefs rooted in European Union treaties helps explain the growing gulf between policy elites and ordinary citizens that may cause a political earthquake in European Parliament elections next May.

These articles of faith are widely regarded as self-evident truths in the European Commission and the European Central Bank but are often regarded by voters as the cause of their misfortunes rather than the solution to them.

This disparity, exacerbated by a four-year slump and soaring unemployment due to the euro zone's debt crisis, is fuelling attacks on the EU itself and on its single currency, the euro, by populists of the far right and the radical left.

Like the free-market Washington Consensus that prevailed in the 1990s after the collapse of communism, there is no official definition of the Brussels Consensus.

Economist John Williamson coined the Washington Consensus in 1989 to describe a set of neo-liberal economic policies prescribed by the U.S. Treasury, the International Monetary Fund and World Bank for developing countries in trouble.

Here is a rough outline of its European cousin, with apologies for journalistic simplification and exaggeration:

1) Brussels knows best. The answer to the financial and economic crisis is "more Europe".

2) Free trade is always better than protection.

3) The free movement of workers and services within the EU's single market takes precedence over protecting the rights of workers in their own country.

4) Europe needs more immigrants to boost growth and pay for our pensions and welfare benefits in the future.

5) It is better to tax consumption and carbon dioxide emissions than labour and high incomes.

6) Free and unfettered competition takes precedence over promoting national or European industrial champions.

7) To fight unemployment, you need to reduce the protection and sometimes the pay of workers currently in jobs.

8) The "community method" of European integration is always better and more legitimate than intergovernmental cooperation.

9) National sovereignty is an outdated idea, both in Europe and around the world.

10) The market should prevail in all things, including public services - except agriculture.

DIFFERENT NATIONAL DEBATES

Some of those principles, such as free trade, have broad support in most of the 28 European Union countries, while others, such as increasing immigration or reducing job protection, are widely disputed.

"The EU is a patchwork of different national debates. The French national debate leans more than others towards protectionism," said European Commission Vice-President Olli Rehn, a contender for the Liberal group's nomination to head the EU executive next year.

"I'm a free trader since it has been a key source of growth and prosperity for Europeans. I know there are different views in many parts of Europe, but a majority of European people are more for free trade than for protection," he said.

The European credo is resolutely post-national, based on an assumption that ever fewer problems can be solved nationally given globalised supply chains and cross-border problems such as pollution, climate change, resource shortages and migration.

But critics say it takes too little account of the losers that EU free market policies create, as well as the wider circle of people who fear they could become losers.

In Germany, the EU's economic powerhouse, a major concern surrounds preserving parliamentary budget sovereignty amid fears of a "transfer union" that would hand over hard-earned taxpayers' money to profligate European partners.

Issues of migration are high on many Europeans' worry list, though not always for the same reasons.

MIGRATION ISSUES

Britain has just announced plans to restrict the welfare rights of migrants from poor EU newcomers Romania and Bulgaria, who will be able to work freely throughout the EU from January after a seven-year transition period expires.

Eurosceptical politicians and media drove Prime Minister David Cameron to respond by waging a campaign against alleged "benefit tourism" by poor east European migrants, even though official figures show migrant workers pay more into the British welfare system than they take out, and make up proportionately far fewer claimants than British nationals do.

France and several other states are fighting to curb abuses of another EU rule that allows workers posted on temporary assignment from other member states to pay social charges at home rather than in their host country.

Companies in countries such as France, Germany, Denmark and Belgium use this system to sub-contract lower-cost labour from eastern Europe, notably in the construction sector, doing some higher-cost local workers out of a job.

To supporters of the Brussels Consensus, this is simply the operation of the European single market bringing economic efficiency to overtaxed countries.

Rehn said countries such as France, Italy and his native Finland face deeper problems of cost competitiveness, which explain in part why they keep losing world market share.

While each national debate is self-contained, there is a strong prospect that parties hostile to the Brussels Consensus will between them draw perhaps one in five voters on a low turnout in the European Parliament elections.

Whether that jolt will be enough to change the prevailing wisdom among European policymakers remains to be seen.

It took two decades, and the shock of the Asian financial crisis, to change the Washington Consensus. The IMF now accepts a bigger economic regulatory role for the state, temporary capital controls and other ideas that were once heresy.

Some EU insiders believe a modified Brussels Consensus may emerge from next year's elections and the change of leaders of EU institutions that will follow.

The new consensus may be a bit more socially conscious and a bit less market-driven, reflecting the left-right coalition of conservatives and Social Democrats set to take power in Germany. But it is unlikely to placate the sceptics. (Writing by Paul Taylor; Editing by Kevin Liffey)

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