Strategic planning in the European integration: Commission’s complex approach

Perspectives in the European integration have been always in minds of EU’s governance; presently, the “future” -called strategic foresight – is being formulated in seemingly plain words, i.e. towards a more resilient Europe. The latter is approached through four main directions: socio-economic, geopolitical, green and digital. However, European integration’s political economy – more than ever – needs a strong and forward-looking integration strategy covering not only a swift recovery from the pandemic crisis and creating long-needed resilience structures, but a common vision of the EU’s future.

  After a dramatic socioeconomic downfall during the first half of 2020, some EU states’ economies have shown positive signs of recovery; however, new restrictions being imposed made these efforts questionable. Uncertainties remain high and the pace of recovery varies markedly both among the EU states and between economy-corporate sectors.

  Hence, the prospects for sustainable, resilient and inclusive growth will depend on a range of such factors as, e.g. health measures, consumer and business confidence, as well as governments and the Union’s support in maintaining employment and entrepreneurship. National and the EU’s governance have to draft and implement sustainable recovery/resiliency’s plans and generate investment into digital and green economies, the measures that are generally called strategic governance. The latter, as a rule, is composed of both short-term and long-term (at least for the next 20-30 years) visionary priorities.

 

  As anything in the world, the EU integration is subject to planning: the process occurred by formal as well as in non-formal structures; the former are realised through the legal means (e.g. the EU basic law, European Semester and inter-institutional relations, etc.), the latter are performed through EU’s numerous research and innovation structures. The EU institutions are expected to play a bigger role in the new policy areas like migration, internal and external security, defence and “new Unions” – energy, innovation, digital, etc.

  Besides, the European socio-economic development has been guided by yearly, multi-yearly financial programming and Commission’s five-year general political priorities. And additionally, during last two decades, the Commission has been concentrated on preparing a couple of ten-year strategic guidelines.

  Existing arsenal of planning means in European integration has been enriched recently by a new one in the form of a “strategic foresight report, SFR”, which is being prepared by a team of the Commission’s Vice-President Maroš Šefčovič, in charge of inter-institutional relations and foresight. Present “strategic foresight” has been unveiled for the first time in over seventy years of European integration (!), which requires a special attention.

  COVID-19 has left many people jobless, furloughed and financially vulnerable, often feeling isolated and pessimistic. It has become clear that the status quo is no longer sustainable or desirable. The political and economic response needs to take these changed attitudes into consideration: the EU decided to concentrate on three pivotal issues – economic recovery, the digital agenda and the “green transition”.  

 

First EU strategic foresight

  Introducing the SFR-2020, Commission President Ursula von der Leyen underlined that in the post-pandemic times, political leaders in the stats have to be forward looking; the report not only recognizes the importance of resilience for a strong and lasting recovery but formulates the necessary transitional steps towards sustainable, fair, and democratic societies.

  Commission Vice-President Maroš Šefčovič, responsible for inter-institutional relations and foresight, argued that the pandemic had not only shown the EU and states’ vulnerabilities, but also reaffirmed the need to make socio-economic policies “evidence-based, future-proof and centered on resilience”. Therefore, he underlined, the first-ever strategic foresight report has drafted the necessary efforts to make EU states more resilient; i.e. by boosting “EU’s open strategic autonomy, building a fairer, climate-neutral and digitally sovereign future.”

Source: https://ec.europa.eu/commission/presscorner/detail/en/IP_20_1586. 9.09.2020.

 

 In adopting its first-ever Strategic Foresight Report (SFR-2020), the European Commission aimed at identifying emerging challenges and opportunities to “better steer the EU’s strategic choices” and “inform major policy initiatives”. The general logic suggests that there are several available “choices” as well as policies’ initiatives!

  The SFR-2020 serves at the same time as an internal working document “supporting the Commission in designing future-proof policies and legislation” as well as in: a) “presenting the rationale for using foresight in EU policy-making”, and b) “introducing a comprehensive concept of the EU’s resilience”. The SFR-2020 also serves as an “information intake” into the EU’s annual State of the Union addresses and yearly Commission Work Programs; thus, for example, the SFR will “chart the EU’s political priorities and key initiatives” for the latter.

Citations from the Commission press release: https://ec.europa.eu/info/live-work-travel-eu/health/coronavirus-response/recovery-plan-europe_en

 

  The SFR-2020 is a result of the expensive work taking place within the European Strategy and Political Analysis System (ESPAS), which is an inter-institutional collaboration among such EU institutions as the European Commission, the European Parliament, the Council of the EU, and the European External Action Service, with the support of the Committee of the Regions and of the European Economic and Social Committee. The ESPAS, among other things, monitors global trends and offers strategic foresight to the EU’s decision-makers.

Source: https://ec.europa.eu/knowledge4policy/organisation/espas-european-strategy-policy-analysis-system_en   

  The ESPAS’ annual conference (planned for November 2020) is going to discuss the issues to be included into the next SFR-2021 and perspectives of an EU-wide Foresight Network.

https://ec.europa.eu/info/strategy/priorities-2019-2024/new-push-european-democracy/strategic-foresight/2020-strategic-foresight-report_en

  The SFR-2020 can assist in development of shared reference foresight scenarios to inform future policy debate, to ensure coherence across policies, and to serve as a shared, forward‑looking framework for policy proposals; all that can also feed into the Conference on the Future of Europe. General source:

https://ec.europa.eu/commission/presscorner/detail/en/IP_20_1586

 

The EU’s recovery program

  The SFR-2020 approaches the member states’ resilience in four dimensions: a) general socio-economic perspectives, b) green, and d) digital growth, as well as c) geopolitical (mainly, for the EU as a whole). In each dimension, the capacities, vulnerabilities and opportunities are identified, which should be addressed in the medium- and long-term national strategies.

  An ambitious European recovery plan (proposed in May 2020) has already drafted the ways the MFF-budget and other financial resources would assist the states in repairing economic and social damage brought by the pandemic. In July, the EU member states’ leaders agreed on the recovery plan and the multiannual financial framework for 2021-27 to facilitate the process of reaching modern and more sustainable growth in the states. As is known, there are 3 main blocks of financial support in the EU-states’ recovery and resilience programs:

  First, supporting the states’ recovery through the following EU programs: – Recovery and Resilience facility; -Recovery Assistance for Cohesion and the Territories of Europe – REACT-EU; – Reinforced rural development programs; and – Reinforced Just Transition Mechanism. 

 

  Besides, there are two “supporting measures”: a) in investments and reforms; and b) in so-called just transition (within the European Semester).

  Second, supporting economic growth and private investments through: – Solvency Support Instrument; – Strategic Investment Facility; and – Strengthened InvestEU program. There are as well three additional “steps” in: – supporting key sectors and technologies; – investing in key value chains; and – solvency support for viable companies.

 

  Third, “post-Covid” recovery measures through the following EU programs: – new health program; – reinforced rescue program; and – reinforced programs for research, innovation and external actions. Plus, additional two: – supporting key programs for future crises and – supporting global partners.

On financial components in the EU’s resilient program in:  

https://ec.europa.eu/info/live-work-travel-eu/health/coronavirus-response/recovery-plan-europe/pillars-next-generation-eu_en

 

 

The SFR’s program for the states’ resilience

  The SFR-2020 specifically underlines some sectoral sub-strategies both in the recovery and resilience “packages”:

  • A new pharmaceutical strategy will address risks exposed during the crisis, e.g. pharmaceutical production capacities, thereby securing Europe’s strategic autonomy.
  • A new Action Plan on Critical Raw Materials will strengthen crucial markets for e-mobility, batteries, renewable energies, medical components, aerospace, defence and digital applications.
  • A revised EU Trade Policy to ensure the continuous flow of goods and services worldwide and to reform the World Trade Organization.
  • Reinforcing Foreign Direct Investment approaches with attention to instruments in foreign states’ subsidies in the EU.
  • Reinforcing the Commission’s rescEU program to create a permanent capacity to handle all types of crises, including by establishing emergency response infrastructure, transport capacity and emergency support teams.

Source: https://ec.europa.eu/info/live-work-travel-eu/health/coronavirus-response/recovery-plan-europe_en

 

  Example: recent Communication on Critical Raw Materials intends to boost the EU’s open strategic autonomy, which is going to be achieved through: – systematically conducting foresight exercises for all major policy initiatives; – publishing forward-looking, annual strategic reports, analysing emerging trends and challenges to inform policy- and decision-making; – supporting the development of foresight capacities in EU and the member state’s governance; and – building collaborative efforts with the international institutions and partners.

  Whereas, the Action Plan on Critical Raw Materials is aimed to: -develop resilient value chains for EU industrial ecosystems; -reduce dependency on primary critical raw materials through circular use of re-sources, sustainable products and innovation; -strengthen domestic sourcing of raw materials in the EU; and -diversify sourcing from third countries and remove distortions to international trade, fully respecting the EU’s international obligations.

  In this way, the “strategic foresight” will help to improve policy design, develop future-proof strategies and ensure that short-term actions are being coherent with long-term objectives. The Commission has relied on foresight for many years; it now aims to embed it into all policy areas, to exploit its strategic value.

More on critical raw materials in: https://ec.europa.eu/commission/presscorner/detail/en/ip_20_1542

 

  There is also a vision of monitoring resilience process: the SFR-2020 proposes prototype resilience dashboards to start discussions among the EU states and other key stakeholders on how best to monitor resilience. These discussions would help identify and assess strengths and weaknesses at both the EU and the state’s level, in view of emerging trends and challenges. The discussions will finalize the most optimal socio-economic policies for both the optimal recovery strategies and states’ resilience.  

 

Background

  The SFR’s idea is having a solid background in several decades of perspective future-like research. Thus, even during the present century, the EU’s strategic planning was part of the two “fundamental plans”: the Lisbon Growth Agenda, i.e. the Lisbon strategy 2000-10, with numerous intermediate assessments (e.g. during 2004-05) and the EU-2020 Strategy with the common integration ideas for another decade.

  The latter needs a special attention: it is not only a still valid strategy for another three months, but mainly serves as background on which a new “foresight strategy” might be built on. The EU-2020 strategy has had the following main aims: – successful exit from the financial crisis; – leading global efforts on climate action and energy efficiency; – boosting new sources of growth and social cohesion to renew the EU social market economy; – advancing “people’s Europe’s” concept with freedom and security; and – opening a new era for “global Europe” in full compliance with the UN Millennium Development Goals. Of course, some important additions shall be included too, such as Paris Climate Agreement and the UN Agenda -2030, both adopted in 2015.

  The three EU-2020 Strategy’s goals are still vital and shall be guiding the states’ growth in the coming decade with three relatively new additions.  

  1. Growth based on knowledge and innovation: – improving EU productivity by increasing R&D and innovation performance; – better exploiting the potential of ICTs and creating a digital single market; – raising education outcomes and – promoting perspective work skills.
  2. Inclusive and high employment, which includes: – empowering people through high levels of employment, using flexicurity; – modernising labour markets; – social protection; and – combating poverty, with a view to building more inclusive societies.
  3. Greener growth, which means: – building a competitive and sustainable economy; – tackling climate change; – accelerating the roll-out of smart grids and genuine EU-wide energy and transport networks; – modernising the EU’s industrial base; and – turning the EU states into resource efficient economies.

  All EU member states have elaborated their own “national strategies” for the period up to 2020; with some specific priorities; in this way, the EU states made their adequate responses to the “common EU strategic guidelines” in their socio-economic development.    

  Hence, rebooting the European economy shall focus primarily on the EU recovery/resilient plan and the necessary steps to restart the member states’ growth during and after the COVID-19 pandemic. However, it is already clear that the key words to reboot are hidden in transitions to the digital agenda, green growth solutions and increased entrepreneurship.

 

Assessing the EU and states’ economic governance

  The process of creating effective EU-wide economic surveillance framework needs an analysis of at least three key substances: a) ensuring sustainable member states’ financial services to avoid macroeconomic imbalances; b) closer coordination of the member states socio-economic policies; and c) promoting further integration and convergence of the EU states’ economic performance. In this way, the EU-wide surveillance is able to support possible corrections of existing macroeconomic imbalances and the reduction of public debt. This, in turn, will help to create proper conditions for sustainable growth, strengthening resilience and reduce vulnerabilities to future economic shocks.

  It can also promote sustained convergence of the EU states’ economic performances and assist in closer coordination of fiscal policies among the eurozone members.

 

Additional activities

  There have been several additional activities embedded in the present drive for a “foresight”, including:

Five Presidents’ Report (June 2015, based on a previous version one from 2012) on completing European economic and monetary union.  

Five scenarios: recently suggested Commission’s five scenarios for the Union’s future (published in March 2017) could be a vital integral part of the narrative that would most probably affect future development in the states. The Commission’s White Paper offers some suggestions into potential EU-member states’ relations by 2025 depending on the governments’ choices. The EU’s five scenarios included: 1. Going towards current reform agenda (“carrying on” scenario), 2. Supporting, generally, only the single market agendas (“doing less together”), 3. Allowing states proceed where they decide do more (“some do more”), 4. Radical re-design of the EU-member states’ cooperation, and 5. Doing more in common socio-economic policy areas (“doing much more together”).   

Source: Reflection paper on the future of EU finances. COM (2017) 358; 28 June 2017. ISBN 978-92-79-68286-5. – 40pp; More on issues in: – European Commission White Paper on the future of Europe; – The European Story: 60 years of shared progress; – President Juncker’s 2016 State of the Union address: Towards a better Europe – a Europe that protects, empowers and defends. Reference: http://europa.eu/rapid/press-release_IP-17-385_en.htm?locale=en   

  In this regard, it seems correct that the Commission would like to use already existing scenarios to formulate “foresight”: “strategic foresight involves exploring scenarios, identifying trends and emerging issues, using them to steer better-informed decisions, build dynamic policy coherence, and to act in the present in order to shape the future”

Reference: https://ec.europa.eu/commission/presscorner/detail/en/qanda_20_1588.

 

Smart specialisation

  Another vital possible component in the “foresight” might be the “smart specialisation” idea (so-called 3S). The EU institutions during the last decade highlighted for the member states the necessity to take up numerous challenges in economic modernisation: i.e. embracing innovation, digitalisation, economy’s decarbonisation, developing perspective people’s skills, etc. To be competitive in the world, the states have to develop their own “smart specialisation strategies, 3S”, providing new vision for entrepreneurship.

 The EU’s “smart specialisation” approach dates back to 2011, when the European Commission started to give advises to national authorities on developing and implementing their “specialisation strategies and platforms”. The 3S approach is a kind of innovative instrument with the aim of boosting growth and jobs by enabling each state to identify and develop their own competitive advantages. Using 3S, the member states through Union-states’ partnership can bring additional opportunities and incentives to local authorities, academia, the civil society at large and business community in using modern technologies. 

  Important, that 3S uses so-called bottom-up approach in the member states, where smart specialisation brings additional tools for the implementation of both EU and the states’ long-term growth strategies.

  The three words in smart specialisation concept needs additional explanation: thus, “smart” – means identifying for all states and regions innovative and digital technologies based on existing resources (both human and natural) to provide for “smart” growth. The word “specialisation” means for all states and regions their own development strategies which are specific for their states and/or regions being unique in Europe and the world. The word “strategic” means defining long-term priorities for states in socio-economic development using latest science, research and innovation components.

 

 Finally, there are six Commission’s political priorities including green growth, digital agenda, sustainable economy and employment, EU’s role in the world (open strategic autonomy), European values and the rule of law, and European democracy.

References to: https://ec.europa.eu/info/strategy/priorities-2019-2024_en

 

  However, an analysis of the issues addressed in the “foresight” and new State of the Union ideas can show a lack of long-term vision in the former: generally, it looks like a replica of the Union’s address, except of migration and a new “health union”. As the Commission President underlined: “… it is crystal clear – we need to build a stronger European Health Union. And to start making this a reality, we must now draw the first lessons from the health crisis. We need to make our new EU4Health programme future proof”.

More in the Commission President Ursula von der Leyen State of the Union address:

https://ec.europa.eu/commission/presscorner/detail/en/IP_20_1657 and

https://ec.europa.eu/commission/presscorner/detail/ov/SPEECH_20_1655

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