The future of the European Union is currently under debate and intensely questioned by European political forces. The result of this debate will be the new European political normal for decades, and will heavily influence Romanian society. Unfortunately, Romanian political parties seem to be utterly confused, lacking a clear and cohesive vision on the social, economic, and political implications of the European project. At this crossroad, DEMOS firmly stands for strengthening the social dimension of the EU, national and community democratic mechanisms, as well as their capacity to protect fundamental rights and freedoms.
Over the past few years, the Union has mainly focused on consolidating the European Single Market and on neoliberal economic reforms that have eroded welfare and solidarity in EU member states. The weakening of democratic mechanisms, the undermining of employees’ rights, the adoption of austerity in times of recession, the push for market principles and the privatization of public goods, the poor attention paid to poverty in both Eastern and Western Europe, are all just a few examples of the damaging consequences that result from this political direction. The Brexit referendum, the rise of right-wing eurosceptics, the isolationist practices of the Visegrad Group countries (The Czech Republic, Poland, Slovakia and Hungary) – these are perverse effects of this imbalance. We now have eurosceptics everywhere promoting the simplistic and mistaken idea that the political failures in EU countries can be exclusively explained by the Union’s deficiencies, and that the weakening or dismantling of the EU will solve all these problems.
Its problems aside, the EU has been the main pillar of peace and prosperity on the continent in the post-war period and of democratic construction in Eastern Europe after 1989.
While not considering the EU a perfect or ideal construction, and taking note of the inadequacy of neoliberal policies, we affirm that breaking up or reducing the Union to irrelevance would be a disaster of historic proportions. Our position is that the multiple crises affecting the EU can be an opportunity to reduce the gap between Market Europe and Social Europe. Its problems aside, the EU has been the main pillar of peace and prosperity on the continent in the post-war period and of democratic construction in Eastern Europe after 1989. These are accomplishments upon which we can rebuild a more democratic and solidarity-focused Union than the one existing today. A restating of Romania’s position towards the EU should start from the principle that the Union is not just a market, but rather a space of values, of which social cohesion becomes essential in the new economic and geopolitical context.
Hopelessness and lack of opportunities for a considerable portion of European citizens, especially on the periphery, are real. As such, responsibility for them should be accepted by relevant actors at the EU level. Austerity and the dismantling of Social Europe came with a high price. So did excesses on these fronts of the majority of the Central and Eastern European countries, including Romania. This cannot continue, for Brexit-type scenarios or hostile reactions towards any kind of continuation of the integration process will only serve to deepen crises, especially the social crisis.
Romania is a European country, with strong ties to the continent. This is based on its history, values, interests, and, most importantly, millions of citizens working and educating themselves in other member states. The transition has yet to bring a more equitably distributed prosperity to Romanians. For instance, the level of wage inequality is higher at present than in 2007, when Romania became an EU members. According to Eurostat, Romania continues to be one of the countries with the highest risk of poverty or social exclusion (37.4%).
European integration has brought work opportunities to many Romanian citizens. Yet it hasn’t created mechanisms to protect these citizens. It opened a common market, but it did not facilitate local producers having access to it.
The socioeconomic system of stagnation and inequality that the Romanian elites have maintained is not destiny.
Against this background, we nevertheless think that the main responsibility for failing to build a high-performing system with high levels of integrity, and a socioeconomic system that would reduce the huge social gaps separating us from Western societies, resides with Romanian political and economic elites. The fact that other countries in the region (the Czech Republic, Slovenia or Slovakia) consistently report social cohesion indicators well above the average Union levels shows that being from the East, or being a formerly communist country, does not necessarily mean you are condemned to a socioeconomic system that excludes the greater part of your citizens. Social investment and low inequality complement an economy based on high productivity and high wages. The socioeconomic system of stagnation and inequality that the Romanian elites have maintained is not destiny. It is a deplorable political decision.
Therefore, it is fundamental for us, as a country, to stay close to the European project. We must both support the necessary reform of the EU and building of a new growth model in Romania, one that will foster social inclusion, social justice, and equal opportunity for all Romanian citizens, regardless of their place of birth or residence.
The European strategy of Romania should be that of creating transnational alliances with European actors who demand a more social Europe.
The two dimensions are interconnected: without a strong Union, especially on the social level, building a more prosperous and socially inclusive Romania will not only be difficult but also close to impossible. In Romania, the capital share of gross national income is around 60%, while the labor share is around 40%, the opposite of what usually happens in older EU Member States. We believe that reversing this ratio cannot be done without EU-wide commitment to a more social Europe, regardless of the amount of political will on the national level. From this point of view, the European strategy of Romania, as a less developed country with more social inequality, should be that of creating transnational alliances with European actors who demand a more social Europe.
In light of these considerations, we think that the priorities of Romania’s European policy should cluster around the following:
1. Strengthening the social pillar of the EU, with special attention paid to employee rights, as well as to the rights of those excluded from the labor market and those who are socially disadvantaged and marginalized. Specifically, we have to promote better standards for: social protection; stricter punishments for employer abuse; stronger collective bargaining between employers and trade unions; better regulation of worker’s rights through European law; better gender equality guarantees; and better access to social housing and social policies meant to reduce poverty. The regulation of social rights through soft legislation and that of macroeconomic and financial policies through hard legislation at the community level is exactly the kind of imbalance between Market Europe and Social Europe that we have to correct.
2. The adoption of a European New Deal, possibly starting from the European Fund for Strategic Investments (or the Juncker Plan), but one that aims for the disadvantaged regions of the Union. In this sense, we propose the establishment of a public development bank for development in Romania (a la KfW), one that is able to harness the massive financial resources of the Juncker Plan. According to the White Book regarding the Future of Europe, 18.6% of European youths under 25 will be unemployed by the end of 2017. As such, the European Union’s Youth Guarantee, currently woefully underfunded, needs to be significantly increased in order to allow for the creation of decent jobs for the massive percentage of young people in unemployment.
3. The consolidation of the free movement of citizens and their social, cultural, and economic rights on the European level; the establishment of strategic socio-economic partnerships with the countries hosting large communities of Romanian citizens in order to protect former’ rights and stimulate their economic activity in host countries and in Romania.
4. The explicit and formal relaxation of the rules of the Stability and Growth Pact regarding the exceeding of budget deficits in times of recession, with spending targeted at investments in social infrastructure, public transportation, education and research, as all these improve working conditions and spur high value added and more inclusive growth. Without substantial reformulation of the neoliberal principles that the Stability and Growth Pact and of the Maastricht Convergence Criteria, as well as of the strategies that produce precarious work forces, member states will not manage to generate inclusion and social equity on a sufficient scale, and will thus keep fueling eurosceptic, right-wing populism.
5. The consolidation of social cohesion policy in all its dimensions – social, economic, and territorial – with a greater focus on developing local economies, protecting the environment, and creating decent work (in the ILO sense of the word).
6. The reorientation of the Common Agricultural Policy from large farms and agribusinesses towards farming that provides decent employment, a fair distribution of income in this sector, and higher environmental standards: small and medium farms and producers, cooperatives. We also badly need measures to improve the access of small and medium agricultural producers to urban markets and modern retail.
7. The adoption of tax reforms at the EU level. Countries with the least just distribution of income, such as Romania, are those who have the lowest level of tax revenue collection. It is in Romania’s best interest to escape this vicious cycle through fiscal harmonization at the community level. Only through Union-wide coordination can Romania curb transfer prices and tax avoidance through use of fiscal havens. To this end, Romania is best advised to back EU level policies that crack down on illicit financial flows and aggressive tax planning (with country-by-country reporting being an ideal antidote). Our country should also back taxes on cross-border financial transactions and ask for the use of tax havens to be curved. Big capital is organized at a transnational level. Therefore, appropriate taxation cannot be suitably conducted strictly at the national level. Without tax integration social Europe is hard to fund.
8. A common industrial policy to consolidate the European economy in a global context, in which big players support their exporters increasingly and aggressively, and are blocking imports, thus threatening wages, jobs and work conditions throughout the Union. From this point of view, transforming the European Investment Bank into a genuine development bank and coordinating its workings with those of national banks for socioeconomic development can be the financial basis for this initiative. Located in the semi-periphery of Western industrial production, Romania is particularly exposed to the risk of relocalization of production that seeks out ever lower wages and work standards. An active industrial policy, with adequate instruments and with the reconsideration that state aid policy is necessary to strengthen the foundations of the Romanian economy, and to allow for living wages in line with the current Romanian cost-of-living.
9. Support for green development. Specifically, we ask the Romanian government to help with the transition towards renewable energy sources, improvements in the quality of the energy transport infrastructure and better access to clean and cheap energy for household consumers. We need more active measures to fight global warming and pollution, while protecting biodiversity.
10. Uphold the principles of openness and solidarity with those who flee war, persecution and famine, who seek protection in the EU. The EU needs to provide better support for frontline countries that are first points of entry for refugees.
11. Reevaluate the ‘Bologna Declaration’ and the harmful transformation of the European higher learning system. In our view these reforms have excessively pushed for market principles, competitiveness and the ‘knowledge economy’. A direct result of the Lisbon Strategy, the Bologna process has forced, through a neoliberal vision that targeted standardization, privatization and instrumentalization of the European educational systems in order to globalize production and financialize the economy. This came at the expense of serious consideration to cultural, social and critical components of learning. Moreover, the creation of a European Space for Higher Learning cannot turn a blind eye to the gaps between Eastern and Western member states in terms of investment into the educational infrastructure. In the absence of adequate policies in this field, Eastern European countries risk to stagnate as periphery economies, and primarily supply EU investors with a semi-qualified and cheap workforce.
It is up to us to mobilize a bigger project, by which the Union can be both a framework and a pillar of support.
The defensive reactions and stories on morality that underpin right-wing eurosceptic populism do not provide genuine solutions to the problems that EU members are facing. Only measures to consolidate Social Europe – such as those mentioned above – would be able to ensure European citizens that the Union can be a source of systematic and effective protection against the dislocations and inequalities produced by the common market and systemic changes in the global economy.
The European Union is a continuous guarantee that authoritarian missteps can be limited, that fundamental rights are respected and that there are robust protection systems for individuals and communities. Romania has an important manoeuvring margin, but it also has a greater development gap to overcome. It is up to us to mobilize a bigger project, by which the Union can be both a framework and a pillar of support.