Last Wednesday the European commission unveiled its 2021 annual Strategic Foresight Report. In this report the Commission analyzes the strategic situation the EU has to deal with and provides possible approaches. The focus is on the EU capacities and by extension on its freedom to act. A worthwhile topic for discussion to be sure. I read through the document so you do not have to: let me give you the upshot. Although the report addresses important issues it does not always strike the right cord in my opinion. On the topics of climate change, freedom of speech and the labor market the EU is not providing the needed solution. But to end on a positive note the enduring European commitment to international standards is to be applauded.
First of all the report is clear on the negative impact of climate change. Although higher temperatures could be viewed favorably from a northern viewpoint, this is not to be overestimated.
The agricultural activity zones will not move northwards, given that higher average temperatures in Northern Europe will be accompanied by the risk of increased cold waves caused by a weakened Gulf Stream.
European Commission
In the face of this challenge the European Union is charting a strategic path to becoming the first climate-neutral continent by 2050. As the use of fossil fuels recedes the power of fossil fuel exporters will recede, while the power of those countries able to generate and export renewable energy will increase. I believe this to be a fallacy. As the report states the world’s population will reach 8.5 billion in 2030 and 9.7 billion in 2050. As I am sure you will agree with me hopefully these 9.7 billion people will be more wealthy than the current population. This simply means that more and more people will have access to a refrigerator, washing machine, car and in hot areas: air conditioning. The energy needs of the world will increase tremendously. Although the energy mix may change I dare to predict that in absolute terms we will see a strong increase in the use of fossil fuels. The associated decrease in power for the fossil fuel exporters will not materialize. On the other hand the report is very clear about the challenges that Europe will face in its energy transition. The natural resources needed for electrification are located outside of our borders and are also coveted by other powers. If we replace coal and natural gas with cobalt, lithium, graphite, manganese and nickel we will be dependent on China and other authoritarian powers. We would be better off playing to our strengths instead of our weaknesses. As the report openly states the EU financial system also has a key role to play in financing the transition to a climate-neutral economy and resilience against environmental degradation. I for one do not believe that we should use energy policy as a way of once again bailing out the financial sector.
On the topic of freedom of speech the report also makes some crucial errors. It aims, in the same sentence (!) both to counter disinformation and to promote freedom of speech. From my perspective the two interests run counter to one another. While the government has a monopoly on violence it does not have a monopoly on information. In a truly free society there cannot be one mandated version of the truth. To achieve their dual aims the report advises to collaborate more closely with other global public and private players. From my point of view the relationship between governments and information platforms such as Facebook or Twitter has already become far too close. Europe has most to gain by proclaiming itself the free speech capital of the world with full freedom of speech regardless of source.
On the topic of the labor market the report points out a few very serious problems. On the one hand automation has the potential to make obsolete 50% of current jobs. On the other hand our population is rapidly aging. By 2050 there may be 135 dependent non-workers for every 100 workers in the EU. The report proposes to increase labor market participation for women, increase legal immigration and integration and raise retirement ages. In my view all of these policies will only serve to further reduce the bargaining power of labor versus the employers. The decreasing financial situation of average working people is already having a detrimental impact on the labor market. When young people are less secure financially they are less likely to start a family, thus exacerbating the problem of the aging population. A far more useful solution would be to improve employment opportunities in Europe by pushing back against globalization. As the report states Europe should be wary of foreign competitors using unfair trading practices. In addition to this the report states that the EU is a technological champion in advanced manufacturing and material: lets make full use of these advantages and foster more manufacturing inside Europe. In stead of increasing the supply of labor we should be striving to increase the demand for labor.
As promised, I will end on a positive note. The report highlights the tremendous advantage the EU has in soft power. The EU should aim to grab a first mover advantage in standard setting across upcoming industries. The buzzword here is that the EU will support the uptake of human-centered technologies. Currently, data produced in the EU is largely stored and processed in cloud storage operated by non-EU providers, which makes it subject to third country jurisdictions. This creates strategic dependencies and risks for cybersecurity, data protection, access and security. It also implies that non-EU providers benefit commercially from processing this data. Likewise, Brexit gives the EU the opportunity to further regulate financial markets. Supervisory capabilities should be increased while the EU should become less dependent on outside sources of financing. On the other hand the increased use of the Euro worldwide could increase the political clout of the EU. And finally, music to our ears, the report calls for increased defense capacities.
Although on the energy transition, labor market and free speech the status quo must be thoroughly criticized we should not forget the steps forward that the EU is taking on international standards.
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