Cause and Effect in European Politics and Law

EU Will Sound Hollow at the G20 Summit in St Petersburg

Adelina Marini, September 5, 2013

Jose Manuel Barroso and Herman Van Rompuy will probably feel very isolated and very lonely, representing only themselves in St Petersburg during the G20 summit under the presidency of Russia, because their agenda differs significantly from the agenda of the rest around the table. On the one hand, they are facing again growing intergovernmentalism in response to the Commission's ambitions to hold the reins of the member states and on the other side are the emerging economies, thirsty for more growth and disagreeing with the European or American recipes. US will follow their own agenda, the EU is too tight for UK and Russia wants its near abroad to be left alone so that it could freely exercise its political racket without its objects to be distracted with some European dreams.

Although Russia's ambition, too, is the main topic to be economic growth and employment, the number one issue will be Syria - an issue on which the EU is passive, divided and not prepared. Moreover, the gentlemen Barroso and Rompuy are in their last year in office without having any clarity how will the developments unfold within the Union itself and for this reason they are trying to play a game both with the member states and the rest of the partners in the G20. The paradox is further enhanced by the fact that the EU participates individually as a unity in the group of the most influential countries in the world, together with some of its most powerful members - France, Germany, Italy, UK. However, they are definitely not looking in the same direction neither in terms of Syria nor in terms of growth and employment measures.

Against the backdrop of the cooling of the Chinese economy and, therefore, of the other most influential economies in the world, more than ever the issue of economic growth and employment seems to be able to find a common denominator among the twenty. However, it only seems so because there is a huge obstacle in front of finding the common denominator and that is growing protectionism. Two days before the beginning of the summit in St Petersburg, the Commission published its tenth report that monitors freedom of trade. The conclusion in the document is that last year the trend of increase of protective measures has been reaffirmed instead of going for further simplification. Moreover, now more than ever, protectionism represents a significant threat шд global growth and wealth, especially bearing in mind that the effects of the economic downturn are still quite tangible.

Between May 1st 2012 and May 31st 2013 totally 154 new measures have been introduced and only 18 were abolished. The pace of removal of restrictions is rather weak and the increase of restrictive measures is growing more concerning, is the conclusion in the report. Most restrictive are the emerging economies, led by Argentina, Brazil, India, Indonesia, Russia, China and since recently South Africa and Ukraine.

But protectionism is an issue that is not on the summit's agenda. In his official statement before its beginning, President Vladimir Putin summarises what has been achieved so far recalling that a commitment was made to remove protectionism, that new principles of financial regulation were developed and the targets of the future economic policy coordination were defined, as well as the reforms of the financial institutions. All measures undertaken up to date have helped overcoming the crisis, stabilising the financial markets and increasing supervision over systemically important financial institutions, Mr Putin believes.

And although global economy is still in the risk zone, according to him, the main strategic goal should be ensuring strong, sustainable, balanced and inclusive growth for all, without mentioning whether removing protectionism would have a positive impact on achieving this goal. The chiefs of the Commission and the European Council are determined to bring the issue forward and they share the opinion that growth must be a top priority for the Group of Twenty, although this is one of the areas that commitments can be made on national level only and are not as binding as, for instance, making a pledge to remove trade barriers.

Barroso and Rompuy call on the leaders to come up with a strong "St Petersburg Action Plan" focusing on a package of measures for balanced growth and sustainability. The appeal is directed both to the non-European countries and the member states. The two leaders again recall that the EU have work to do which both leaders summarise in four points: measures to stop financial fragmentation and ensuring financial stability, including by clearing the balance sheets in the banking system; structural reforms and tailor-made fiscal consolidation to restore competitiveness and debt sustainability.

The third point in EU's strategy should be undertaking immediate initiatives in support of growth as here the two leaders cite as good examples the Growth and Employment Pact and the new Youth Employment initiative. The former is already one year old and its impact is still in the area of philosophical debates, while the latter is brand new and was approved together with financial assistance of 8 billion euros at the June EU summit. In other words, it is hard to outline something different than simply a commitment. The fourth point in the Union's strategy should be a quick completion of the banking union with a focus of the establishment of a single resolution mechanism. A mechanism on which the division in the EU is very wide and more clarity on how it would look can be expected in October at the earliest.

Having in mind that every country is focused on its own problems - in Germany elections are coming and Chancellor Merkel will probably be cautious in every aspect, especially on the issue of Syria, British Prime Minster David Cameron was undermined by Parliament on Syria, there will be elections in Australia, too and China has a new leadership and a colling economy, so it is very likely that this summit will not deliver anything apart from reproducing a kind of outdoor session of the UN Security Council.