EU needs policies to counteract national, regional divergencies

The European Union lacks policies that counteract national and regional divergencies which are on the increase, Maltese MEP Alfred Sant said.

The Labour MEP, who is shadow rapporteur on behalf of the S&D group, was addressing the ECON meeting in Brussels. Although the overall aim is to achieve full economic convergence within the European Union, divergences are growing and the EU still lacks a comprehensive framework within which to launch policies that counteract both national and regional divergences, Sant said.

“Some of us don’t want an economic and monetary union becoming a transfer union. But the reality is that we already are in a transfer union – one by which systemically the rules are benefitting certain economies, which happen to be among the stronger. This is causing a systematic transfer of resources from certain regions to other regions through trade and financial flows,” Sant said.

The Labour MEP said that country specific recommendations were not the right tools to deal with problems: “The situation in Greece shows us that further political risks could be waiting in the shadows in the other Eurozone countries.  Unless the reduction and elimination of economic divergences are given maximum priority, the effective implementation of CSRs will continue to be problematic.”

Sant also called for a critical evalautation by which CSRs are drafted. He said that CSRs were being used in the absence of more organic structures that a deeper economic and monetary union should be able to deploy.

“However the agents who propose the recommendations are not necessarily or invariably infallible. Based at the Commission or wherever, they too can make mistakes,” he said.

Sant said they seemed to share the oversimplified view that structural reforms have a mechanical and automatic impact on jobs and growth so that, if all countries reform their labour markets at the same time, the extra demand coming from more jobs being created will automatically spill over from one Member State to the next.

“To put it differently, alternative policy options to what they propose could quite likely be more effective to stabilize economies and generate growth. One has to reflect therefore on the effectiveness of past CSRs as well as on the need to carry out social impact assessments of recommendations,” Sant said.