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Fruitful cooperation among several states when history, culture, traditions, etc. are seemingly quite different is deemed to be a rather complicated issue. Initially, this process in Europe has been summed-up under the terms of integration and cohesion. Presently, the global challenges make the process more complex through inclusion of political, economic, social, environmental and corporate priorities: the “balancing” theory might be useful…
EU’s integration is being built on the member states’ active involvement in such policy measures as cohesion, subsidiarity, division of competence, European Semester and other “unified instruments”. Solutions to modern European and global challenges, however, require new approaches to integration and a “directed” re-assessment of the member states’ priorities in growth is needed. EU goals in integration’s successful implementation includes some new tools “to balance” relations and interests between the EU and the member states’ governance.
Political-economy’s facets
During European integration’s fifty-five years numerous positive aspects of “common European” development appeared based on closer connections among the member states and the EU’s institutions. Basic ideological motive in the European “social market economy” involved several new “sectoral unions” (e.g. banking and digital, energy and innovative, etc.), cohesion policy, European Semester, subsidiarity and recent “twin transition”, to name a few.
Current European challenges reflect urgent need for the member states to adopt new political-economy’s guidelines in line with the EU’s political guidance oriented towards twin transition (digitalisation in economy and society, plus sustainability) and adequate climate change measures. Thus, for example, balancing EU-member states’ interests has become particularly important issue during modern globalisation calamities and the Ukraine-Russia military conflict.
About a decade old division of competence is a valuable addition to modern approaches in integration: present version of the EU basic law (the Treaties –TEU and TFEU are in force from the beginning of 2010) made a strong step towards more precise and legally binding instruments in the process of integration by adopting three spheres of the EU-states’ coordination: i.e. exclusive, shared and supporting.
= EU exclusive competence includes just a few spheres: customs union, establishing competition rules necessary for the functioning of the internal market; monetary policy for the member states with the euro currency; conservation of marine biological resources (under the common fisheries policy); common commercial policy; and conclusion of international agreements to exercise the EU international competence in trade and external assistance.
When the Treaties confer on the Union exclusive competence in specific areas, only the Union may legislate and adopt legally binding acts (the member states can do so only if specifically empowered by the EU institutions).
= Shared competence: it implies, ideally, a 50-50 cooperation between EU and the states (in reality “cooperation” is much more complex) covering a wider national “interests”: social policy (only for the aspects defined in the Treaty); economic, social and territorial cohesion; agriculture and fisheries (excl. conservation of marine biological resources); environment; consumer protection, transport and energy; Trans-European Networks (TENs: in energy, transport, telecommunications, etc.); areas of freedom, security and justice; common safety concerns in public health matters (as defined in the Treaties); research, technology development and space; as well as some areas of external development and humanitarian aid (somehow restricted).
As to “shared complexities”, the outcome results depend on the following two politico-administrative factors:
= First, criteria used to assess the commissioners, which include, e.g. the extent of their treaty powers, the size and flexibility of the budgets they control, legislative achievements, their access to the Commission President, his/her chief of staff and a wider presidential team and how they are regarded outside the Commission, as well as the level of influence in their political party groups in the Parliament.
= Second, criteria used to assess commissioners’ chiefs of staff which include: respect from peers; demonstrable ability to cover for their bosses’ weaknesses; their relationship with the Commission President and his/her team; their ability to get a positive result for their commissioner on a blocked or controversial policy file; the relevance of any political party connections; and demand from external stakeholders to meet with them.
= Third in line is the so-called “coordinated competence” (including EU actions in supporting and complementing the member states developmental activity). Among such measures are: industrial development, Culture, Tourism, Human health (protection and improvement); Education, vocational training, youth and sport; Civil protection and administrative cooperation.
Besides, the Treaties in the “provisions of general application” (art. 7-17 TFEU) describes some general approaches to most vital socio-political and economic integration issues: consistency between policies and activities (in line with the conferral principle); environmental, as well as consumer protection (to be integrated into EU policies and activities); promotion of good governance; protection of personal data, and other issues…
Changing political-economic paradigm
National strategies and policies are in large extent governed by political parties and “economic elites”. Domestic lobby (often closely tight with the EU-institutions’ elites) creates new barriers to national growth and European integration; these barriers can only be removed through balancing means in socio-economic modeling.
Just and fair “burden-sharing procedures” in European integration –for the benefit of each member states and the EU’s goals – shall be analyzed without compromising the national interests. For example, already in 2020, the EU “State of Digital Report” has shown common interests in such issues as new digital applications and ICTs connections: over 20 new 5G networks were launched in EU-27 in 2019 and over 80 networks deployed in 2020, making Europe one of the most advanced regions in the world for 5G services.
Reference to: https://www.etno.eu/news/all-news.html and https://www.etno.eu/library/reports/90-state-of-digi-2020.html
The need for new approaches to European integration is becoming apparent through numerous global and European challenges being clearly visible during last decades: e.g. digital technologies, climate changes, increasing pollution, sustainability, circular economy, etc. None of these challenges and other contemporary issues can be resolved without “balancing” the interests of the states, local communities and EU’s political guidance. Thus, from the global perspective and changing globalisation patterns there are several challenges to be included into both European priorities and the member states’ growth strategies.
First in importance is the sustainability concept: the global SDGs are transposed into the EU’s sustainable growth directions and that of the member states and particularly into the national priorities. Second in line is another “global challenge” – the climate change factors, which includes the global “climate-change agreement” adopted in 2015 and the EU’s recommendations in mitigating the negative pollution factors on growth in the member states.
Thirdly, it is the so-called digital society and economy challenges (stemming from the global Fourth Industrial Revolution), which have consequently formalized both the EU’s digital agenda and that of the member states.
European growth priorities
Among European challenges there are political and socio-economic priorities for growth; these are the vital elements in the EU’s common approaches to integrating socio-economic development in the member states.
It is important to mention that it was easy initially for the six (then nine, then twelve and even fifteen) comparably strong and equal in growth levels European states in 1957 to pool their economies to create a common market; other countries joined while meeting certain minimum economic conditions. Some correctly argued that the “common market” would not be possible if the EU had started with 27 member states.
Source: Fifty Years of European Integration: foundations and perspectives. – Eds. Andrea Ott & Ellen Vos. –T.M.C. Asser Press. The Hague, 2009, p.409.
Thus, in analysing the European challenges’ role in the “balancing model”, the first element in the EU’s integration shall be mentioned, a social market economy, which in contrast to e.g. a liberal approach to development (so-called “wild-western capitalism”) represents a neo-classical market arrangement structures with a strong social impact, a kind of capitalism with “a human face”. Suffice to say that “liberal capitalism” during last thirty years in the Baltic States some positive but quite a number negative implications…
In the second element are the instruments used in integration: e.g. division of competences (exclusive, shared and supporting); integration’s planning with yearly and MFF budgets; European Semester (combining “partnership” and control over the EU states’ development), etc.
Common currency as a third vital element with the Eurozone states (19) and the rest of the EU member states; thus 19 vs. 8;
The third element is “smart specialisation strategies” (3S) serving as a key enabling growth pattern to be developed by all the EU member states.
Among contemporary European priorities for 2019-24 there the following:
= Green Deal: In December 2019, the new European Commission College unveiled the much anticipated European Green Deal (GD), setting out ambitious priorities for the EU for the next five years. The GD intends to help the EU states to achieve the “2050- climate neutrality objective”, as well as advancing a much wider sustainability agenda, while future-proofing states industries through smart specialisation strategies.
Achieving such an EU states economy’s reform requires changes in non-sustainable financial support for harmful sectors and investing in the circular economy practices. The GD initiates such measures such as “green financing”, through a Sustainable EU Investment Plan with the solid assistance from the EU’s “climate bank”, i.e. European Investment Bank.
The GD, in this regard, is heavily based on solidarity among the member states in the agreement on the role of the EU budget (the Multi-Annual Financial Framework for 2021-27, which is currently being debated with very frugal aspects). It is, actually, to be seen the inherent connections between the financial allocations and the GD’s priorities.
The GD’s vital part is transition issues, e.g. enabling SMEs and citizens to benefit from sustainable and green growth: such measures include structural “key policies” on cutting emissions, investing in perspective research and innovation and preserving natural environment.
So-called “targeted support” in the transition towards the green economy also includes investing in a climate-neutral and circular economy.
Source: https://ec.europa.eu/info/strategy/priorities-2019-2024/european-green-deal_en
More on “green deal” in the Commission web-site:
https://ec.europa.eu/info/strategy/priorities-2019-2024/european-green-deal_en and additional publications in the “Baltic Course Magazine”- www.baltic-course.com
For example, the theme of heavy transport’s de-carbonization and the role of hydrogen is both important for the states and Europe, in general.
In the European Green Deal Investment Plan (January 2020) at least €1 trillion of investments in the coming 10 years are derived from such sources as: – capital from EU and national budgets; – attractive investment conditions; – technical assistance to help investors in selecting sustainable projects; – other public and private investments; and – additional measures to facilitate and boost green public and private investment. To implement these investment ideas two things are required: political commitments and sustainable economic planning, just to name the two (in fact, there are more…). In financial support, the following sources are to be used: a) 30% of InvestEU to projects aimed at combating negative factors for climate change (to make the EU first in the world climate-neutral continent by 2050); b) 25% of all EU funding for climate measures; c) the rest – from “stimulating green investments” with support from the EIB.
More on the EU Green Deal in: https://ec.europa.eu/commission/presscorner/detail/en/fs_20_40
= EU economy that works for people. The EU’s unique social market economy allows economies to grow and to reduce poverty and inequality. With Europe on a stable footing, the economy can fully respond to the needs of the EU’s citizens.
For that, it is essential to strengthen small and medium-sized enterprises, the backbone of the EU’s economy. It is also essential to complete the Capital Markets Union and to deepen the Economic and Monetary Union; a deeper and fairer economic and monetary union: combining stability with fairness and democratic accountability; Internal Market: A deeper and fairer internal market; Jobs, growth and investment: Boosting investment and creating jobs; European Semester: Assessing compliance with the EU’s economic rules, coordinating economic policies across EU countries in an annual cycle; helping European businesses and consumers move towards a more sustainable use of resources.
https://ec.europa.eu/info/strategy/priorities-2019-2024/economy-works-people_en
= European digital agenda: the EU’s digital strategy aims to assist industries and businesses in transformation to sustainable growth and achieving targets of a climate-neutral Europe by 2050. Therefore, the EU’s strategies for artificial intelligence (AI) and open data aim to encourage businesses to include and develop these new technologies, while at the same time making sure that they earn citizens’ trust.
More in: https://ec.europa.eu/info/strategy/priorities-2019-2024/europe-fit-digital-age_en
Digital agenda has a purpose, beyond that of corporate: it is about empowering Europe’s sustainability ambitions through massive ICT uptake, making industries greener and unleashing the enabling digital potentials. Furthermore, 5G and fiber will empower Europe’s new growth and sustainability objectives: i.e. the purpose of European and states’ digital networks.
= European values and justice: The rule of law is central to Union’s equality, tolerance, social fairness, promoting fundamental rights, as well as protecting and empowering consumers by reinforcing the safety of goods, services and food quality.
Source: https://ec.europa.eu/info/strategy/priorities-2019-2024/promoting-our-european-way-life_en
It’s vital to mention the EU values, which are included into the EU’s Basic law (just four lines in art. 2 TEU): “The Union is founded on the values of respect for human dignity, freedom, democracy, equality, the rule of law and respect for human rights, including the rights of persons belonging to minorities. These values are common to the EU states in which pluralism, non-discrimination, tolerance, justice, solidarity and equality between women and men prevail”.
According to the EU Treaties: “On a reasoned proposal by one third of the member states, by the European Parliament or by the European Commission, the Council, acting by a majority of four fifths of its members after obtaining the consent of the European Parliament, may determine that there is a clear risk of a serious breach by a member state of the values referred to in Article 2. Before making such a determination, the Council shall hear the member state in question and may address recommendations to it, acting in accordance with the same procedure”. The Council, acting by a qualified majority, may decide to suspend certain rights deriving from the application of the Treaties to the member state in question, including the voting rights of the representative of the government of that state in the Council (art. 7 TEU).
While EU “attacks” on the judiciary in Poland and Hungary continue in the EU’s political agenda, the need to address the threat corruption poses to the integrity of the rule of law is just as important (e.g. in Slovakia, the murder of Slovak journalist Ján Kuciak). Thus, journalists Daphne Caruana Galizia and Ján Kuciak “were tracing the misuse of EU money” when they were murdered, noted in February 2020 Commission Vice President Věra Jourová.
= Stronger Europe in the world. A strong, open and fair trade agenda, making Europe an attractive place for business, is key to strengthening the EU’s role as a global leader (in competitive and innovative sectors) while ensuring the highest standards of climate, environmental and labour protection.
Source: https://ec.europa.eu/info/strategy/priorities-2019-2024/stronger-europe-world_en
European corporate leaders pointed to the Commission that the EU institutions should focus on building an efficient single market and properly implementing market rules instead of dabbling in geopolitics, increasing the EU’s bureaucracy (like a new commissioner for the “European way of life”) and uncertain trends in future enlargement.
= Protecting and strengthening democracy. In order to protect institutions of democracy in the member states from external interference, joint approach and common standards are necessary to tackle issues such as disinformation and online hate messages; including better regulations and open debate on the future of Europe. Source:
https://ec.europa.eu/info/strategy/priorities-2019-2024/new-push-european-democracy_en
“Balancing theory”: creating a working model
The theory, in principle, is to serve as a feasible instrument to correlate efficient national growth patterns with the EU’s innovative and competitive economic strategies; in its part, a national “balancing model” also introduces a new state socio-political economy paradigm through the development of a national progressive developmental narrative.
In the EU-states’ balancing priorities the major issue is that of “smart specialisation”; however, in the academic and undertakings’ communities the emerging item is “business technology”, which unites the aftermaths of the modern digital transformation and consequential changes in corporate management.
There are several ways the Commission can “press’ the member states to follow the EU’s “general trends”, e.g. such a politically charged issue as increasing the 2030 emissions reduction targets by 50-55 % (which, to be adopted by the states, actually requires the Commission to review and “explore options for new emission reduction targets”; so-called “fit-for-55” strategy) compared to 1990-level. The Commission has to carry out an impact assessment, as is required for any new EU-wide legislation; however, the Commission has another option in introducing more ambitious emissions cuts using so-called “delegated acts”, thus making it difficult for the EU states (and the European Parliament) to block such actions.
The EU’s progress in an increasing way is determined by the successful balance of the states’ and the EU institutions’ interests in pursuing the Union’s “common development”. The balancing theory, in combination with the fundamental EU’s integration cross-roads, can serve as “fitting tribute” to the perspective European integration’s process.
Balancing theory has several “conceptual instruments”, e.g. mitigation efforts in contemporary issues are needed with some adaptation efforts. The EU mustn’t lose sight of ensuring fairness and distributive justice while striving for climate change mitigation and protecting the environment and biodiversity. If the present Commission succeeds in setting up a plan for action, inciting member states to collaborate and mobilise resources towards the building of a climate-resilient Europe, multiple benefits would be expected. The “adaptation efforts” is not an option, but a social, environmental and economical necessity: e.g. climate mitigation alone will not be enough to stop the dramatic effects of climate change; it would have to go hand in hand with adaptation efforts. That is the sobering reality European decision- and policy-making to keep in mind in developing nation and EU-wide climate action measures. Given the close interconnections between ecosystems, people and economies in a globalised world, there are strong reasons for EU member states to join forces, pool risks and cooperate across borders.
There is an urgent necessity in the EU-wide “shifts” in the post-factum-reactions to risks and a more proactive approach oriented on prevention measures, risk reduction and resilience capacity. For example, in presenting new EU climate law, the European Commission “asked” the member states to include necessary implementation instruments into national growth strategies.
In a proper implementation, a balancing theory needs fundamental changes in existing education and training patterns: some EU states’ high education facilities take the global and European challenges seriously. For example, one of the Latvian high colleges (Turiba University) has a motto: “Latvian future economy as an ideological core and driving force”.
Two aspects are important in this University’s “message” for a national growth: ideology and “driving force”. One of the publications on these issues specifies most optimal and efficient aspects in perspective Latvian growth.
More in: Eteris E. Latvia in Europe and the world: growth strategy for a new centennial. –Zinatne Publish., Riga, Latvia. 2018. – 208 pp. ISBN 978-9934-549-55-7. Web-link: https://www.janisroze.lv/lv/gramatas/akademiska-un-profesionala-literatura/ekonomika-uznemejdarbiba/latvia-in-europe-and-the-world.html; citation from Turiba’s website: https://www.turiba.lv/en/university/about-us
As to the ideology factor in the balancing theory, Merriam Webster suggests three aspect of ideology: a) a manner/content of thinking; b) an integrated theory for a socio-political issue; and, c) a systematic concept about human life or culture (with the following synonyms to ideology: creed, doctrine, dogma and philosophy).
Source: https://www.merriam-webster.com/dictionary/ideology
“Balancing” within core EU-states’ interests
Controversies among the member states appeared constantly on various pretexts: thus, during debates on the present EU multi-year budget (MFF) in February 2020 the EU countries have been divided into two big “camps”, i.e. frugals and big spenders. Moving towards compromises needs balancing national and European interests; besides all EU states are presently affected by global and European slowdown in economic development.
Main budget’s share in most EU states is personal and corporate taxation, e.g. about 80 percent comes from these two sources. However, when growth in EU and the states is stagnating, the role of these sources to the budget is reducing.
From the global and the EU’s point of view, the new European priority –the “green deal” – is an ambitious package of measures that should enable states and businesses to benefit from the green transition. EU-wide measures (including a roadmap of key national policies’ “re-making”) include drastic reduction of all sorts of emissions, investing in adequate research and innovation, as well as rational use of natural resources and protecting environmental quality; the actions that are often not in line with states’ priorities. Therefore, the EU provides assistance to the member states in “investments in green technologies, sustainable solutions and new businesses”.
The EU efforts to become “climate-neutral by 2050” suggests that all national resources would be invested to boost renewables, energy efficiency, green research and, ultimately, “green economy”. However, the European Commission’s “Research Fund for Coal and Steel, RFCS” in 2020 spent €40 million/year on projects which are often contrary to the EU’s commitment to carbon neutrality.
Examples in: https://meta.eeb.org/2020/02/06/european-commission-funding-coal-lobbyists-is-unacceptable-its-time-for-answers-about-the-rfcs/
In the transition process to sustainable growth, the circular economy efforts will play crucial roles, alongside the digitalisation and other technological achievements. However, the importance of potential synergies between circular and digital agendas in national planning takes additional attention in the priorities’ agendas; the member states are obliged to see and explore the opportunities and challenges regarding the inherent connection between circular and digital agendas, mainly within the transition to a sustainable circular economy.
Modern challenges in “balancing” theory
Attention to issues concerning “integration vs. balancing” is becoming more vital due to present complexities in European and global agendas. Turning to basics, “integration” is an act of bringing together smaller components into a single system that functions as one. No doubt, the Collins Dictionary describes it as “the act of combining or adding parts to make a unified whole”.
Source: https://www.collinsdictionary.com/dictionary/english/integration
In the European context, integration was aimed at bringing together states into a single and unified system that functions in concert as a “whole one”. Because of integration’s difficulties, generally, some short- and long-term strategies are formulated.
For example, in business, a “horizontal integration” is a strategy where a company acquires, mergers or takes over another company in the same industry value chain; this type of strategy usually mergers or acquires another company that is in the same production stage, e.g. Daimler Benz and Chrysler merger.
Initial attention to the European “integration” as the optimal approach to growth patterns among the member states has been feasible and correct: up to enlargement in the then “communities” from 6 to 15 states the integration concept worked perfectly well. Suffice it to say that all the member states were having almost the same level of welfare and prosperity with little difference in peoples’ life styles.
However, since the beginning of the 21st century and the EU enlargement in 2004 by ten eastern-central European members (plus Cyprus and Malta) to 25 states and in 2007 to 27 (Bulgaria and Romania) the integration concept did not satisfy any more the initial purpose: differences among the new and old member states were dramatically different.
Even presently, most of the “new members” socio-economic development is at the level of 65-70 percent below the old members’ level. For example, average wage’s difference between the Baltic States and German workers is about 6-10 times lower… Presently, the highest minimum wage in the EU states/per hour (in euros) is ranging from about 12,7 in Luxembourg and about 10,3 -10,2 in France and Ireland, to the “lowest” 9,8-9,5 in Belgium and Germany; this is more than ten times higher than in some eastern EU member states.
More in: https://www.integrin.dk/2021/07/06/minimum-wage-issue-resolving-inequality-in-europe/
These and other disparities in the quality of life among the old and new member states do not qualify for integration: there is only one way forward, i.e. cooperative efforts among the states and the EU institutions could only be beneficially “balanced”.