Antonio Tajani is a European politician, who started his career in Italy and since 2010 has been the vice president of the European Commission, responsible for Industry and Entrepreneurship. In an interview with ForUm he spoke about the state and outlooks of the EU economy, as well as Brussels' opinion on Ukraine's integration.
- Mr. Tajani, in the second quarter of this year EU GDP grew by 0.4% against the previous quarter, and experts say the regions is finally crawling out of recession. Are the estimations correct?
- Indeed, the positive dynamics is observed and preliminary data for the third quarter says the trend will continue. Growth drivers include economies of Germany and France, grown by 0.7% and 0.5% respectively. The unemployment situation has improved and makes 12% now. In general, we expect that in the second half of the year the economic recovery of the EU leading countries will follow the growth path of the second quarter, which showed better results than expected. Moreover, growth of the US, Great Britain and Canada will keep speeding up as well.
However, it does not mean the risks are all over. It is just the beginning of the path, and the situation remains fragile due to uncertainty on financial markets and growth of interest rates, which in turn may block the positive inertia of growth of big developing countries, including China, India, Brazil, Indonesia. Countries with large amounts of portfolio investments and current account deficit still risk capital outflows and devaluation of national currencies. Moreover, since the beginning of 2012 the dynamics of world trade remains weak and shows no signs of stabilization due to low demand on both mature and emerging markets.
- And how does European production sector feel?
- The demand remains low. Thus, in August the Producer Price Index in the euro zone grew by 0.1% against July, which is hardly a progress and can be considered a statistical error. We do not hurry to express optimism, as the situation remains difficult. Investors do not hurry to invest in the EU enterprises, and I want to point out that to a large extent the low demand for European goods is caused by overrated euro, which in turn blocks the economic recovery.
At the same time, the positive global trend holds the situation together: industrial production in the developed countries grew by 5% in the second quarter, though the similar rate for emerging markets reduced by 1%. In general, we should be able to handle the problems, and we intend to make the real sector of economy the center of economic policy. In the past the EC was wrong to stake on finances and services, while industry and entrepreneurship ended up in a corner. Now we should make finances serve the real economy.
It concerns, for example, metallurgy. Now I am working on what Europe can do more to strengthen its one of the key industries. Of course, there is a competition problem with Chinese and Far Eastern companies. Thus, we need a single strategy and real plan of actions to protect this vital for economy sector.
- And does "production outflow" from the EU to countries with low costs mean something in this situation? It is not a secret that for the past 15-20 years many big companies have moved their production platforms to China, India, Malaysia.
- Indeed, if we want to overcome the crisis we should stop production outflow. We cannot focus on the reduction of state debts only. Our goal is to make the production sector bring 20% of EU GDP by 2020. It is a realizable strategy of industry recovery, considering that the production sector used to have such share in the economy in the past. We must develop a new type of industrial policy and improve our competitiveness in order to win the market fight against China, India, Russia, US, Brazil.
- And what can you tell about the financial sector?
- I am not a financial expert, but I want to mention the sound policy of the European Central Bank (ECB) on keeping base interest rates at a low level of 2%. It cheapens loans and support the economy. The ECB pledges to maintain this policy as long as needed. Moreover, the regulatory authority says the long-term refunding operations, including cheap loans like in 2011 and 2012, may be introduced again. And finally, the financial consolidation in the euro zone continues and the ECB has already obtained the status of the single regulator for the biggest banks in the euro zone, which is a significant step to finally establish a banking union.
- We are having this conversation on a conference in Germany, and here many expect that strengthening of the position of Conservatives in Germany will strengthen both political and economic consolidation in the whole EU. What do you think on this?
- There is certain logic in this. At least for the last five years Germany has been the drive of European consolidation. Of course, the motives include country's national interests, but it is a normal situation, as the EU is a dual unity of common and national. At the same time Berlin has done and keep doing a lot for the whole Union, take for example financial support of Greece and other economically weak countries of Mediterranean. Moreover, granting ECB with the status of the single regulator was an idea of Germany in the first place. The majority of observers agrees that it is a progressive decision, which will make our economy stronger. I agree as well, and not because I am a European Commissioner (smiling - ed.), but because it is true.
- Ukraine has been talking for years about significant role of small and medium business. How do matters stand in the EU?
- We work on improvement of business environment for small and medium entrepreneurship, but the situation is not all roses. In particular, our priority is to reduce administrative load on entrepreneurs. Being a member of the EC, my task is to create conditions enabling potential businessmen to open a new business within three days and to pay only 100 euro for the procedure. Moreover, we try to facilitate access to loans. I believe it is important for your country as well, though the specifics are different.
- Speaking about Ukraine, how do you estimate its eurointegration chances?
- First of all, I want to opine that there are good reasons to expect the signing of the Association agreement as early as during Vilnius Summit. One does not need to be a wise analyst to see relevant signals of Brussels and its authorized representatives. This rhetoric evidently changed in July-August, especially against the background of Russia's behavior. And I believe the EU leadership takes right steps.
My colleagues from the EC, engaged into these issues, can give you a wider explanation about Ukraine's eurointegration possibilities, but on my "industrial" part I can tell that you need to bring your production sector to the level of international standards. There is something being done already now, but it is not enough. Anyway, rapprochement with Europe will force your industrial producers to improve, and it is a benefit. However, there won't be an immediate effect, but don't worry, it will come eventually. It includes such basic national sectors as metallurgy: I know some of you believe that the free trade area agreement will degrade the metal production, but remember that nothing of the kind has happened to Poland or Hungary, which on the contrary have strengthened their positions as regional metallurgic leaders. The key factor here is not the EU itself, but general metal market situation, which is rather weak now. The European integration is not the end, but the beginning for a quantum leap, a motivation to carry out reconstructions, pending for years.
-What would you wish Ukraine in this respect?
- First of all, I wish you sound understanding of your present and future interests. Integration with the European Union is not an end in itself, but a mean to reach your goals. At the same time, delay or suspension of this integration may backfire. And it is not the matter of remaining dependent on Moscow. It is about losing an opportunity to carry out economic reforms and modernization your country badly needs. You know, people are always afraid of big changes, but Ukraine should be brave and smart to take decisive steps.
Andriy Boyarunets
- Mr. Tajani, in the second quarter of this year EU GDP grew by 0.4% against the previous quarter, and experts say the regions is finally crawling out of recession. Are the estimations correct?
- Indeed, the positive dynamics is observed and preliminary data for the third quarter says the trend will continue. Growth drivers include economies of Germany and France, grown by 0.7% and 0.5% respectively. The unemployment situation has improved and makes 12% now. In general, we expect that in the second half of the year the economic recovery of the EU leading countries will follow the growth path of the second quarter, which showed better results than expected. Moreover, growth of the US, Great Britain and Canada will keep speeding up as well.
However, it does not mean the risks are all over. It is just the beginning of the path, and the situation remains fragile due to uncertainty on financial markets and growth of interest rates, which in turn may block the positive inertia of growth of big developing countries, including China, India, Brazil, Indonesia. Countries with large amounts of portfolio investments and current account deficit still risk capital outflows and devaluation of national currencies. Moreover, since the beginning of 2012 the dynamics of world trade remains weak and shows no signs of stabilization due to low demand on both mature and emerging markets.
- And how does European production sector feel?
- The demand remains low. Thus, in August the Producer Price Index in the euro zone grew by 0.1% against July, which is hardly a progress and can be considered a statistical error. We do not hurry to express optimism, as the situation remains difficult. Investors do not hurry to invest in the EU enterprises, and I want to point out that to a large extent the low demand for European goods is caused by overrated euro, which in turn blocks the economic recovery.
At the same time, the positive global trend holds the situation together: industrial production in the developed countries grew by 5% in the second quarter, though the similar rate for emerging markets reduced by 1%. In general, we should be able to handle the problems, and we intend to make the real sector of economy the center of economic policy. In the past the EC was wrong to stake on finances and services, while industry and entrepreneurship ended up in a corner. Now we should make finances serve the real economy.
It concerns, for example, metallurgy. Now I am working on what Europe can do more to strengthen its one of the key industries. Of course, there is a competition problem with Chinese and Far Eastern companies. Thus, we need a single strategy and real plan of actions to protect this vital for economy sector.
- And does "production outflow" from the EU to countries with low costs mean something in this situation? It is not a secret that for the past 15-20 years many big companies have moved their production platforms to China, India, Malaysia.
- Indeed, if we want to overcome the crisis we should stop production outflow. We cannot focus on the reduction of state debts only. Our goal is to make the production sector bring 20% of EU GDP by 2020. It is a realizable strategy of industry recovery, considering that the production sector used to have such share in the economy in the past. We must develop a new type of industrial policy and improve our competitiveness in order to win the market fight against China, India, Russia, US, Brazil.
- And what can you tell about the financial sector?
- I am not a financial expert, but I want to mention the sound policy of the European Central Bank (ECB) on keeping base interest rates at a low level of 2%. It cheapens loans and support the economy. The ECB pledges to maintain this policy as long as needed. Moreover, the regulatory authority says the long-term refunding operations, including cheap loans like in 2011 and 2012, may be introduced again. And finally, the financial consolidation in the euro zone continues and the ECB has already obtained the status of the single regulator for the biggest banks in the euro zone, which is a significant step to finally establish a banking union.
- We are having this conversation on a conference in Germany, and here many expect that strengthening of the position of Conservatives in Germany will strengthen both political and economic consolidation in the whole EU. What do you think on this?
- There is certain logic in this. At least for the last five years Germany has been the drive of European consolidation. Of course, the motives include country's national interests, but it is a normal situation, as the EU is a dual unity of common and national. At the same time Berlin has done and keep doing a lot for the whole Union, take for example financial support of Greece and other economically weak countries of Mediterranean. Moreover, granting ECB with the status of the single regulator was an idea of Germany in the first place. The majority of observers agrees that it is a progressive decision, which will make our economy stronger. I agree as well, and not because I am a European Commissioner (smiling - ed.), but because it is true.
- Ukraine has been talking for years about significant role of small and medium business. How do matters stand in the EU?
- We work on improvement of business environment for small and medium entrepreneurship, but the situation is not all roses. In particular, our priority is to reduce administrative load on entrepreneurs. Being a member of the EC, my task is to create conditions enabling potential businessmen to open a new business within three days and to pay only 100 euro for the procedure. Moreover, we try to facilitate access to loans. I believe it is important for your country as well, though the specifics are different.
- Speaking about Ukraine, how do you estimate its eurointegration chances?
- First of all, I want to opine that there are good reasons to expect the signing of the Association agreement as early as during Vilnius Summit. One does not need to be a wise analyst to see relevant signals of Brussels and its authorized representatives. This rhetoric evidently changed in July-August, especially against the background of Russia's behavior. And I believe the EU leadership takes right steps.
My colleagues from the EC, engaged into these issues, can give you a wider explanation about Ukraine's eurointegration possibilities, but on my "industrial" part I can tell that you need to bring your production sector to the level of international standards. There is something being done already now, but it is not enough. Anyway, rapprochement with Europe will force your industrial producers to improve, and it is a benefit. However, there won't be an immediate effect, but don't worry, it will come eventually. It includes such basic national sectors as metallurgy: I know some of you believe that the free trade area agreement will degrade the metal production, but remember that nothing of the kind has happened to Poland or Hungary, which on the contrary have strengthened their positions as regional metallurgic leaders. The key factor here is not the EU itself, but general metal market situation, which is rather weak now. The European integration is not the end, but the beginning for a quantum leap, a motivation to carry out reconstructions, pending for years.
-What would you wish Ukraine in this respect?
- First of all, I wish you sound understanding of your present and future interests. Integration with the European Union is not an end in itself, but a mean to reach your goals. At the same time, delay or suspension of this integration may backfire. And it is not the matter of remaining dependent on Moscow. It is about losing an opportunity to carry out economic reforms and modernization your country badly needs. You know, people are always afraid of big changes, but Ukraine should be brave and smart to take decisive steps.
Andriy Boyarunets
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