August 1, 2007
Europe must heed Lisbon’s lessons on energy
By Jean Pisani-Ferry
The first six months of 2007 have been momentous ones for the European Union. In January, the accession of Bulgaria and Romania completed its eastern enlargement. In March, it set itself ambitious targets for a common energy and climate change strategy. And in June it reached agreement on a new draft treaty. José Manuel Barroso, European Commission president, and Angela Merkel, the German chancellor whose country then held the rotating presidency of the European Council, deserve their holidays: there could have been worse ways to mark the 50th anniversary of the Treaty of Rome.
The EU, however, needs more than a series of successful deals to redefine itself in a fast-changing environment. It needs a purpose and an agenda. The question, therefore, is how those three achievements relate to each other, and whether they jointly contribute to defining a path forward.
Let us start with enlargement. The addition of 12 new members that jointly account for one-fifth of its population but less than one-15th of its gross domestic product has changed the nature of the EU. However the challenge is frequently underestimated. In a nutshell, a more diverse membership calls for decentralisation but a larger membership also means that the transaction costs involved in tailor-made approaches easily become excessive.
Jean Pisani-Ferry is this week’s guest commenter while Martin Wolf is on holidays. The full column can be read here (FT.com subscribers only). Comment from our guest economists is free.
Martin Wolf: I am sorry nobody has commented on this important contribution.
I take it that Jean is saying three things.
First, the new EU treaty does not solve the biggest problem - the horizontal division of powers between the EU and its members. I agree strongly.
Second, the Lisbon treaty method is a failure and should be forgotten. Either something is subject to EU competence or it is not. If it is not, it is unnecessary and unhelpful to pretend that it is. In such cases, we should let countries decide policy for themselves. The single market provides the competitive framework needed to force them to make sensible choices, in the long run.
Third, energy is a big area where EU decision-making makes sense. We need an EU-wide single energy market. I agree. We also need a shared way to deal with climate change (a common tax rate on carbon, in my view, not cap-and-trade) and with energy security.
The latter is really important, given the growing power of Russia’s energy supplies over the EU’s economies. We need to promote diversified energy sources. We need also to commit ourselves to helping one another out in the event of hostile action by a supplier. Otherwise, Russia will successfully adopt a policy of divide and rule, as a way of bringing its former empire to heel. That will prove devastating for the future of the EU.
Posted by: Martin Wolf | August 7th, 2007 at 12:07 pm | Report this comment