This week the European Parliament approved the new Commission that will lead the EU in the coming five years. This Commission will include John Dalli as the Maltese Commissioner, whose portfolio includes Health and Consumer Affairs.
Later on this year there will be the appointment of the new head of the European Central Bank. The individual members of the Commission shall each have their own priorities to push. However, collectively and together with the European Central Bank, they cannot escape the fact that their number one priority is the economic recovery and a number of peripheral issues that serve as an accompaniment to this key issue.
These peripheral issues have been known for some months while others are emerging now. They include the new regulatory framework that must be put in place in relation to the banking sector and the wider field of financial services. They include the unemployment problem that must be tackled vigorously in order to avoid a jobless recovery and in order not to weaken social cohesion. They include measures related to climate change and the need to avoid further burden on businesses. They include the need to stimulate investment within the European Union and not outside it. They also include the issue of how to rein in the national governments' fiscal deficit to a sustainable level while maintaining the stability of the euro.
The length, breadth and depth of these issues are so immense that it is no wonder that there are many who feel that work of the new European Commission is already cut out.
There is so much to focus on that one wonders whether there is time to focus on anything else. Moreover, those Commissioners whose portfolio does not touch any of the issues mentioned above, would need to be constantly on guard to avoid causing further damage to the competitiveness of companies operating in Europe. This may explain why it was necessary to keep Jose Manuel Barroso as the head of the Commission. The European Commission, together with the European Central Bank, have to tackle the issue of fiscal deficits that in some countries run even into double digits. There are some others where the deficit is less than 10 per cent but well above the five per cent mark. In Malta we are not in as bad a state as some people think we are. Given that our fiscal deficit is one of the lowest in the whole of the EU. More specifically, the Commission will need to tackle the problem of Greece and possibly of Spain and Portugal.
These three countries may have different issues to tackle but they all point in one direction to bring their fiscal deficit under control. But this is not the only challenge that the EU has. It needs to ensure that investment continues to happen. European businesses cannot be lured to low cost production areas outside the EU or risk going out of business. The new European Commission needs to ensure that businesses continue to find it profitable to operate within the EU.
Two examples exemplify this fundamental point. At present in Italy there is a big debate because government shall be eliminating the incentives for the automobile sector. As a result of this decision, Fiat is expecting to close one of its plants.
The other example is what the head of a global company that has most of its operations based in Europe, told me recently. He said that he never expected to have to spend so much time in Brussels having to lobby against initiatives that reduce profitability.
Having grown from 12 members to 27 members in the space of 15 years, the EU is probably facing one of its toughest challenges yet. Can the European model continue to work as it has done in the past in the aftermath of the recession? I believe the European model can only to be successful if the new Commission tackles the economic recovery effectively. It will not be enough to take note of this recovery - the European Commission will need to work hard to help individual member states tackle fundamental economic problems such that the recovery would be long lasting.
Yes, I do believe that the work of the new EU Commission is already cut out!