New era for the political economy and integration

Modern governance is facing a life-saving task of fundamental transformations in economics, politics and societal needs. Although post-pandemic is still a headache for defining policy priorities, in most states the issues of decarbonization, digitalisation and sustainability are becoming the biggest worries in transformations for years to come. Some other issues of importance, e.g. cultural divides, modernizing working/living styles and parenthood, etc. are going to affect wellbeing and modern capitalism’s concepts. In most states new 2022 will be the beginning of a “new thinking” in political economy. 

The present century has revealed the necessity of changes and fundamental challenges facing modern civilization. The list of challenges include extremely vital issues, such as climate feasibility’s actions and environmental quality, reducing pollution, digitalisation of economy and societal needs, etc. For example for the EU-27 it is going to be a year of changes in the pace and magnitude of European integration, with the balancing moves combining exceeding “ever closer Union’s” trends and that of growing nationalism. Most vivid example of radicalism has been the removal of the EU’s flag from the Arc de Triumph in Paris at a time of France’s Council Presidency in EU during first half of 2022…

First, economy…
Several European states expect that they will not be able to meet the climate change targets, at least for the next two years facing socio-economic difficulties. Most countries are going to start 2022 with “dramatic backlogs”: i.e. the need of structural changes brought about by the new climate policies, recovery and resilience plans, while being often faced with sever public frustration. The major task is still there: recovering socio-economic growth…
Probably, re-skilling and work-force adaptations to post-covid situation will not reduce employment and traditional “age-old” profession will not disappear, at least in eastern and central Europe. However, a double transition announced by the EU (i.e. climate change actions and digital society/economy’s measures) will not be quick in implementation, though the EU funds will definitely help national governance to cope with the requirements for the states’ budgetary priorities to finance, correspondingly 37 and 20 per cent on the double transition’s issues.
The EU is going to update customs code: starting from this January, the EU’s import tariffs will be governed by an updated HSM classification (see note below) that will include electronic waste, drones and specific subheadings for smartphones, etc. Besides, the New Year’s amendments of the EU rules on product standards are aimed at meeting organic-quality’s requirements in order to merit an organic label. While they contain some improvements for animal welfare, the amendments also water down the notion of the “EU agriculture” on the label, as a higher percentage of undeclared non-EU ingredients will be allowed. The new EU rules also allow a product to be marketed as organic even when a test finds pesticides on it; it was a big demand from German supermarkets fearing that strict pesticide testing would limit supplies.
Note. Harmonized System’s nomenclature (HSM) is used worldwide for the uniform classification of goods traded internationally; it has been accepted by the EU as well to enter into force on 1 January 2022. Source: http://www.wcoomd.org/en/topics/nomenclature/instrument-and-tools/hs-nomenclature-2022-edition/amendments
As to energy issues, Germany will shut down more nuclear plants: from the start of 2022, three nuclear-fired power plants will be taken off the electric grid as part of the country’s plan to end atomic power. The nuclear phase-out will make the country safer and helps to avoid radioactive waste, argues German federal Environment and Nuclear Safety Minister.
Another EU state, Finland has had another strategy in nuclear energy: a) continued big nuclear plants’ construction, and b) potential use of small modular reactors (SMRs) for both district heating and electricity generation. District heating is used widely in Finland but is fuelled predominantly by coal, which is to be phased out by 2029 with a total carbon-neutrality in 2035. Technical Research Centre in Finland is studying the SMRs effective use. Presently, majority of fossil fuel is imported from Russia and Poland; all of gas consumption comes from Russia and generally Finland imports nearly half of the energy sources, the majority of which comes from Russia.

Source: https://world-nuclear.org/information-library/country-profiles/countries-a-f/finland.aspx

Policy-makers in 2022 are going to tackle big topics related not only to economy but also to climate change, pollution reduction, sustainability, including rethinking combustion engine cars, truckers’ rights and air traffic control. Some answers are in the Politico’s list of five transport headaches facing Europe this year. See more in: https://www.politico.eu/article/5-transport-problems-europe-2022-borders-car-emissions-infrastructure-air-traffic-mobility-package-fit-for-55/
More often the general public and expert community is asking: is traditional capitalism with its traditional governance system still valid? Modern environmental, political, economic and social governance pledges to net-zero commitments and accurately measuring corresponding progress by companies, governments and civil societies towards halving greenhouse gas emissions by 2030 and reaching net-zero by 2050.
Business communities continue to press governments for stronger collaboration between public and private sectors to implement basic global commitments and standards for sustainability and circularity. Companies are trying to manage financial risks caused by climate change, and create innovative solutions to overcome challenges.
Never before have companies, investors, rating agencies, policy makers, standard setters and other stakeholders been so active in collaboration to make sufficient and sustained progress across industrial sectors and global regions; that really changes the very basic of traditional capitalism based on pure profit.
Investing in economic activity is a priority in European integration; there is a specific EU’s instrument, so-called “taxonomy” (with a science-based transparency tool for companies and investors) in creating optimal steps for investors in socio-economic projects having a substantial positive impact on climate, environment and sustainability; the “taxonomy” will also help to disclose financial market participants. Existing energy mix in EU-27 varies greatly: some states are still heavily based on high carbon-emitting coal; in this regard, the “taxonomy” will assist these states towards climate neutrality. European Commission considers natural gas and nuclear energy as means to facilitate the transition towards predominantly renewable-based energy mix; the taxonomy framework would “classify” all energy sources under clear and tight conditions: e.g. gas must come from renewable sources or have low emissions by 2035 with a generally more low-carbon and “greener” energy mix. Source: https://ec.europa.eu/commission/presscorner/detail/en/IP_22_2

On workforce…
Modern working situation and conditions are changing fast in all countries; hence, mapping present healthy new work models is necessary to channel that change into creation of stronger labour markets with adequate social security’s safeguards. Our institute published some analysis concerning the perspectives of labour issues in Europe in the EII’s “Labour market’s category”. More in: https://www.integrin.dk/2020/10/07/workforce-after-pandemic-the-process-of-continuous-reforms/.
Before the advent of COVID-19 and resulting economic devastation employment and job creation was already high on the global agenda, as well as policy-making helping both workers and employers. The most successful approaches in the states would be to take into account shifting demographics and changing job roles, which would leverage disruption in designing modern workplaces. More in:
https://intelligence.weforum.org/topics/a1Gb0000000LJQ4EAO?tab=publications

According to McKinsey Global Institute’s research, the need for manual and physical skills, as well as basic cognitive ones, will decline, but demand for technological, socially-emotional and higher cognitive skills will grow. Numerous jobs will be lost, but at the same time several ones will be created, such as automation, AI and robotics; the process that stimulated high-level skills that will become increasingly important: apparently, digital- and AI-technologies are transforming the world of work and present workforce will need to learn new skills and learn to continually adapt to emerging new occupations. emerge. The present pandemic has accelerated this transformation; although it is not clear about specific skills tomorrow’s workers will require. Reference to: https://www.weforum.org/agenda/2021/06/defining-the-skills-citizens-will-need-in-the-future-world-of-work/

The World Economic Forum’s “Future of Jobs Report” was considering in 2021 that by 2025 automation and a new division of labour between humans and machines will disrupt 85 million jobs globally. But as the economy and job markets evolve, 97 million new roles will be created, with people having an advantage in tasks such as managing, decision-making, communicating and interacting, to name a few. Besides, about half of those set to stay in their current roles in the next five years will need re-skilling. Source: https://www.weforum.org/agenda/2021/06/workplace-skills-learning-linkedin-report

Then, financing…
The EU states, according to national budget/finances’ policies are split into two unequal groups: 19 states with a common currency euro and 8 states with their own currencies. This “inequality” has certain economic consequences: the former has no national monetary policies; whereas I the latter group can use beneficially both monetary and fiscal policies (i.e. the latter group of states can still use, to a certain degree, national currency’s floatation as an instrument in competition).
The euro is definitely a symbol of EU’s integration and identity: sooner or later, all the EU states will join the euro-zone (except Denmark and Sweden). Today, more than 340 million people use it across 19 EU countries, with 27.6 billion euro banknotes in circulation for a value of about €1.5 trillion. The euro is currently the second most widely used currency in the world behind the US dollar. During last two decades (the euro was adopted in 2002), it has contributed to the stability, competitiveness and prosperity of European economies. Most importantly, it has improved the lives of citizens and made it easier to do business in Europe and the world; thus with the euro saving, investing, travelling and doing business became much easier.

Short notes on euro’s history. In 1999, the euro was launched in 11 Member States as an accounting currency on financial markets and used for electronic payments. It was finally on 1 January 2002 when Austria, Belgium, Finland, France, Germany, Greece, Ireland, Italy, Luxembourg, the Netherlands, Portugal and Spain swapped their national notes and coins for euros. Slovenia joined the euro area in 2007, followed by Cyprus and Malta (2008), Slovakia (2009), Estonia (2011), Latvia (2014) and Lithuania (2015). Currently, Croatia is taking the preparatory steps to join the euro area, which it plans to do in January 2023, provided it fulfils all the convergence criteria. Sixty other countries and territories around the world (home to some 175 million people), have chosen to use the euro as their currency or to peg their own currency to it. Today, the euro is used for almost 40% of global cross-border payments and for more than half the EU’s exports. More in: https://euro-at-20.campaign.europa.eu/index_en

Health and cities’ environment
Cleaner air is becoming a hot issue in the European capitals: most states are tightening pollution rules; Brussels, e.g. will deny access for Diesel Euro 4 vehicles. Only residents or cars with special authorization will be allowed to enter Madrid if they don’t have an environmental sticker.
A whole series of new rules and driving restrictions will come into force in 2022; but the covid-pandemic forced many municipalities to postpone introduction of environmental zones or to abandon it because pollution levels had improved; the latter is directly related to the decreased traffic during increased restrictions in movements.
Safer cars is another urban issue; the following “novelties” will be introduced in 2022: new cars sold in the EU will need to come with safer seatbelts; better protection for cyclists will be introduced; speed-limits for cars and alcohol interlock’s control; drivers’ attention warning systems; as well as event data recorders. Some examples from European cities are showing the countries’ attention to residential air quality:
= The German’s capital, Berlin is one of about 80 environmental zones in the country; the first zone in the capital was launched in 2008 as “green environmental zone”; ten years later, a NOx zone, known as a diesel driving ban zone, was added. A green environmental sticker is required for the green environmental zone; though no separate sticker is required for the diesel zone, while a “blue sticker” is still being considered. In Germany, due to the high NOx (nitrogen oxide) levels, diesel driving bans are continuously increasing; in addition, the E-sticker for electric vehicles exists in Germany on a voluntary basis, which provides various benefits in different cities, such as free parking and use of bus lanes with an electric vehicle.
= In the French capital, Paris the environmental zone is one of over 35 zones in the country; the greater Paris area has four environmental zones with different rules and areas -some zones are permanent and others temporary. In the permanent zones (known as the ZPA zones), the French environmental sticker (Certificat qualité de l’air) is always mandatory. The temporary zones are only active when air quality requires it: thus, if an air pollution peak is reached, the zone comes into effect and the sticker is becoming compulsory.
= The Danish capital, Copenhagen’s environmental zone (Miljozone) is the first of the environmental zones established in Denmark in 2008; it applied initially only to domestically registered vehicles. This zone mainly covers the city’s centre and the municipality of Frederiksberg. In order not to hinder commercial traffic/ferry traffic to and from Copenhagen too much, a transit route from Nordhavnen passes through the environmental zone. In addition to Copenhagen, the registration requirement in Denmark also applies to the environmental zones in Aalborg, Aarhus and Odense. An infringement can be punished up to €1,700.
= The Spanish city of Barcelona’s “low emission zone” covers 95 km2, within the ring road (Rondas); it is one of 7 zones presently in the country and is permanently valid from Monday to Friday from 7 am to 8 pm. Unlike Madrid, Barcelona introduced a registration system with camera surveillance. The Distintivo Ambiental sticker, which is valid nationwide, is only valid in the capital for vehicles registered in Spain; for foreigners a registration is required. Other cities still have temporary, i.e. weather-dependent environmental zones, as well as zero-emission zones. All references to European cities’ situation are from the “Green-zones.eu” website at: https://www.green-zones.eu/en/ ; Note: environmental stickers are from about €10 to €98.
More in: https://www.green-zones.eu/en/products#c13249

Experts say that most urban development today still harms nature. However, by designing, planning, building, renovating and managing cities with nature-positive interventions city planners can use a most feasible approach in tackling climate change and biodiversity loss. This can be achieved both by integrating nature into the urban infrastructure, as well as redirecting their footprint on city’s environment. Presently, the issue of harmful incentives (both public and mixed investment programs) aimed at economic growth in strategic sectors developing around the cities can cause irreparable environmental degradation.
As soon as about half of present global population lives and works in cities, making progress in this sustainability’s direction is a vital part of modern political-economy’s transformations. To accomplish this transformation, strong and effective governance from cities and metropolitan authorities is needed supported and integrated with the efforts of business, finance and society in general, underlines the “Global Commission on BiodiverCities by 2030”. There is no single solution; but post-2020 global biodiversity framework and the UN’s 2030 Agenda for sustainable development can for sure serve as the guideline towards achieving transformative changes.
More in: https://www.weforum.org/agenda/2021/11/nature-positive-cities/

Lobbying in political economy
There is specific issue closely connected to changes in modern political economy patterns, i.e. promotion of “sectoral” political and economic interests. Lobbying in general is not to be demonized, e.g. representation of interests by itself is often important; without interest representation, it would be difficult for politicians to make decisions. For example, in a draft law about social policy, the welfare associations and trade unions have to be consulted; and these social institutions of course do represent “certain interests”.
But important still is that all “discussions” among legislative and executive branches have to be public (i.e. “getting some light”). It is important that a political decision-making process shall be presently shall be stripped of confidentiality; most discussions are still behind closed doors to public and free from any interference from outside. Sometimes, lobbyism is seen as an opinion-forming process that does not take into account views of particular interest groups. Therefore modern governance needs a “lobby register” that includes all groups to make the process really transparent showing the respective lobby representation, its ways of influence and how lobbying is financed, etc. However, these views are not really popular among political-economy’s participants, particularly in the legislators’ community…
A good initiative the new polit-econ process has come from Germany in early 2021 with the new law on lobbying, which has been agreed by the Grand Coalition under former Chancellor Angela Merkel. The law, titled Lobbyregistergesetz (Lobby Register Act), aims at curtailing non-transparent lobbying operations’ processes beginning from the start of legislative process and final law’s drafting by introducing stricter rules on parliament deputies’ meetings and ministries’ staff to disclose the discussion processes. Suffice it to say that in several EU states, as well as among the EU institutions, such transparent system exists already for years.
Already existing in Germany definition of transparency is quite vague: for example, there are phrases in the law saying that contacts with interest groups have to be registered if they occur on a regular basis”; however, a term “on a regular basis “leaves too much space for lobbying efforts. Besides, there are numerous exceptions allowed for by the law: e.g. “churches, lawyers, employee associations, etc. performing lobby activities are currently do not have to be recorded”.

Conclusion
A sketchy picture of some critical issues in the New 2022 Year is not aimed at frightening our readers; on the contrary, it is to encourage them to take an active part in modern transformations. The enumeration of European challenges can be definitely much longer; but one thing is at least clear: people shall be more active in defending their rights to welfare, an issue which is presently imbedded in all states’ basic laws (either in the text or/and a preamble).
That makes a final point in this small introductory article on perspectives in European integration and that of the changes in the political-economy’s patterns. As the main task of any socially-oriented governance is the pursuit for happiness of its citizens!

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