Jul
23
I will be suspending the blog during the summer recess and will be resuming it in early September.
Writing this blog from Seattle on America’s West Coast, while visiting the Microsoft campus to discuss some strategic issues concerning long-term trends, I am once again struck by how quickly the world is changing as it adapts to new circumstances and fast moving information technology.
The US has been in the headlines for us this week with the successful visit of David Cameron - carefully prepared and well-executed, focusing on Afghanistan, the economy and BP - where he will have found US politicians politically absorbed by domestic concerns in the run-up to the mid-term elections where the House of Representatives could well be taken back by the Republicans.
A major priority for Microsoft is to remain focussed on emerging markets, not least China, and to see how best to engage the Chinese government and businesses to take advantage of the huge opportunities available (see blog of 15 Jan). More of this in a future blog.
From a European perspective, what are the likely priorities ahead over the next six months (see more here)? Under the coordinated 18-month work programme of the Council, the following three issues are likely to get most debating time:
- Greater effectiveness, coherence and visibility in the EU’s external actions, as well as the effective implementation of the European area of freedom, security and law. A more coherent EU on the world stage would be welcomed in the US, as it is yet to be seen whether the European External Action Service, implemented with the new budgetary rules of the Lisbon Treaty in place, will make the EU a more results orientated partner.
- Implementation and revision of the legislative package on energy and climate, taking into consideration the Copenhagen Summit. Here it is essential to ensure that ambitious targets are not set which will stifle Europe’s manufacturing base. Will focus be sufficiently strong in enabling investments in alternative technologies and nuclear energy to deal with our energy and climate change concerns?
- Most important will be the economy and the ability to get Europe out of the current economic and financial crisis. This will mean getting the right balance in the austerity debate (see the FT for more). And there will be significant discussions, in particular on greater supervision of the financial markets and social agenda. But will there be sufficient political will to push the Digital Agenda with increased investment in both skills and education in IT, as well as infrastructure?
Much of the success of Europe’s future competitiveness depends on the successful implementation of the EU 2020 strategy. That brings me back to where I started. We cannot make a real success of this strategy without fully understanding the global picture and where Europe fits into this. Readers of this blog will know that long-term trends point towards a diminishing part for the EU and US in economic and wealth terms. Those are themes to which I will return in the autumn but it would be really helpful if Commission President Mr Barroso took the lead to encourage Europeans to think more strategically about the global environment and how the transatlantic partnership can help Europe to solve the challenges ahead.
As the European Parliament moves towards summer recess, and Members move into holiday mode - its a good moment to look back over the past six months to understand why politicians feel relieved that they have survived the unexpectedly tumultuous times through which they have lived (next week’s blog will be looking at the key priorities emerging for the period up to the end of the year). My comments will refer to activities at home, in the EU and internationally.
At Home…Coalition Government hard at work
We have witnessed extraordinary events in the past couple of months. No one would have predicted during the General Election campaign that we would see a coalition government agreed between the Conservatives and Liberal Democrats - the first in Britain for 65 years. Not only does the coalition appear to be wholly focussed on the huge economic and financial challenges the country faces: but it gives the impression that this is not simply a marriage of convenience but a firmly built linkage which will last because its based on a similar outlook to the challenges ahead (see ‘David Cameron and Nick Clegg : We’ll transform Britain by giving power away’)
The measure of their success is the remarkably rapid action taken to reduce the deficit which appears to still have majority acceptance across the country.
The European Union: New personalities and structures in place
At the turn of the year, there was a new European Parliament in place but no equal stability in the European Commission. All Commissioners are now up and running, beginning to put out new ideas on a wide variety of policy areas, for example on the digital agenda. At the tenth anniversary of the European Internet Foundation (see here), Commissioner Kroes came to appeal to us to work with her on no less than 100 proposals to shape up Europe to be competitive in the Digital World of the 21st Century.
In recent weeks, the new External Action Service, provided for in the Lisbon Treaty, is now in place and we have a new President of the European Council, Herman Van Rompuy, looking to implement an agreed strategy for ’smart, sustainable and inclusive growth’ by 2020.
International: Financial and Economic instability and uncertainty
These changes at home and the rest of the EU have taken place in the context of huge financial upheavals as the effects of the global financial and economic crises of the last years continue to be felt. Much of the focus of the uncertainty has tested the viability of the Euro to the limit with particular pressures on Greece (see FT Brussels Blog for more).
No Member State has escaped the need to introduce austerity measures: the UK has taken the first step towards implementing the most wide-ranging budget cuts in a generation with savings of £6.2bn (€7.2bn) planned for 2010-2011, while Germany has committed to cut spending by £70 billion (€80billion) over four years, France has announced plans to cut spending by £40 billion (€45billion)) over three years and the Italian government has approved austerity measures worth £20 billion (€24billion) over the next two years. In this light, I have called for a budget freeze in the EU (see here).
There are still some substantial reasons to fear that we are not yet out of the woods even if Europe may be putting its house in order. For example, there are currently no signs of an uplift in the US housing market and the developed world is truly reliant on ongoing double-digit growth in India and China to provide an outlet for consumer products. More of this international focus in next week’s blog.
If it can be said that we’ve steadied the ship, we must now trim our sails and catch the prevailing winds to ensure we engage in the global challenges ahead.
Readers of this blog will know that a favourite theme of mine is looking at the digital economy, which is now becoming the economy as technology permeates every aspect of our lives today. I touched on the subject of the Internet being friend or foe on 19 June last year and this very much remains the case as technological advances - which are developing with increasing speed - can be used for either good or evil. My view is that the more we can understand the technological revolution underway, the better placed we will be in the UK to be competitive in the global system.
Back when I co-founded the European Internet Foundation (EIF) as a cross party initiative in 2000 with the aim of making fellow MEPs (and myself…) more aware of the coming technological revolution, I do not think that any of us could have predicted the pace with which technology would change our lives - Facebook, MySpace and YouTube have only been with us for the last five years. We cannot predict exactly what new products will emerge from technological companies but its a safe bet that we can expect as many or more technological advances in the following ten years as we have experienced in the last ten. Do policy-makers have any idea what these changes might mean in practice?
Part of the exercise of trying to assess long-term trends in this field was completed with the EIF’s ‘Digital World in 2025’ report, published in late September last year (see blogs of 2 Oct and 22 Jan). In its introduction, the report points out “…many millions of 10-year-olds in Europe and around the world are already “digital natives” – born and raised in a world of digital communications. Behind them will come wave upon wave of youngsters, particularly in today’s young emerging societies and economies, with increasing numbers growing up with ever-more powerful digital tools.”
We recently had two meetings in the EIF based on this document with ICANN, the leaders of the global coordinating authority for domain names. One of the key points made was that only 6% of the 200 million domain names registered today are still available under the old system of IPv4. This is why a transition is underway to the new IPv6 system with trillions of names available. How can we be ready for this new world in the Thames Valley, Britain and the rest of Europe?
Two major factors which will be of real importance to us will be skills and education in IT, and infrastructure. The EIF’s report says “…a generation of school teachers with self-taught e-skills, often also ill-equipped, will not prove adequate to prepare youngsters for the digital economy of 2025. The key to success…is to redesign education itself around participative, digitally-enabled collaboration within and beyond the individual educational institution.”
Relating to infrastructure, anyone living in the Oxfordshire region will know how difficult it is to get even basic access to the mobile Internet. This is why I initiated a campaign to highlight this issue earlier this year and am working with the Oxfordshire Economic Partnership to organise the county’s first so-called ‘Digital Summit’ in late September. This event will bring some leading politicians, businessmen and academics together to see what changes are necessary for the region to remain competitive in a digital world.
The internet is not going to go away - indeed for most of us it is in the palm of our hands. But we need to be prepared to take full advantage of its huge potential or else risk being left behind by younger, more dynamic nations which adapt quicker to the changes underway. One of the key conclusions of an excellent Microsoft presentation on the international challenge (available here) is that “…lack of ICT skills will be the bottleneck that prevents the EU from being competitive in the global economy”.
For a really good summary of the views of ICANN, here is Rod Beckstrom, CEO ICANN, talking to the EIF on Tuesday 22 June:
This week I return to familiar ground and make no apology for having another look at demographic trends and our ageing population, a subject which has recently been the focus of attention for the new coalition government.
Last week Jack Goldstone, the author of ‘The New Population Bomb’ was speaking in Brussels, and gave some striking statistics of how the developed and developing worlds will change over the next 30-40 years:
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The proportion of global GDP produced by Europe, the United States, and Canada fell from 68 percent in 1950 to 47 percent in 2003 and is expected to be less than 30 percent by 2050;
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In the near future, for the first time in history a third of Europe’s population is expected to be over 60. Even if only 10-20% of this part of the population requires medical care, the costs will be huge, he said;
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90% of those aged under 15 years today live in developing countries.
So what action is being taken at the national level? Over the last two weeks, the UK government has introduced two proposals with regard to meeting the twin challenges of our ageing population and immigration. First of all, the Work and Pensions Secretary, Iain Duncan Smith, last week announced plans to raise the pension age to 66 by 2016, ten years earlier than planned by Labour, and to scrap the default retirement age of 65 while also planning to take “…a frank look at the relationship between state pension age and life expectancy”, something suggested in this blog late last year.
Then on Monday this week, the Home Secretary, Theresa May, announced a cut of 1,300 in the number of skilled workers coming to the UK from outside the EU while the government carries out a consultation on proposals for a permanent cap. Immigration minister Damian Green said it was important to “….strike the right balance so that we can bring in the people that Britain needs but not at the rate we have had over the past decade that has given rise to so much tension”.
With people living longer, the government is right to encourage people to work longer and to make sure that we continue to attract the most skilled workers available to contribute to our economy, while recognising also the reality that Labour’s open door approach to immigration has produced real tensions in some of our towns and cities.
It would be forward looking if there was to be a third set of proposals setting out how technologies can facilitate the ageing process. At a seminar which I organised in Thame earlier this year on the subject, it was mentioned that new Japanese initiatives for monitoring of the elderly have been tested in Buckinghamshire, while future developments could include tele-care and tele-medicine. Supporting investments in new technologies which could reduce medical costs (for example by changing the way we store medical records) and also increase the ability of less-mobile, older workers to work longer will be a crucial element to any future strategy.
For those interested, the short video below highlights some more information on the pace of technological change currently underway:
Tags: ageing, immigration, New Technologies
Like all of those in our country watching the World Cup this month, we can breathe a huge sigh of relief that England is through to the last 16. We can take some comfort - perhaps only small - that a number of big European teams have also been struggling - Germany losing to Serbia, the European champions Spain losing to the Swiss, and the 1998 winners France leaving the Cup in utter disarray and now joined by the Italians.
What is stunning to realise is that even if Europe’s national teams have had a shaky start to the competition, Europe dominates the skyline in terms of its global influence on the game with over half of the non-Europeans at the World Cup playing for European clubs. Indeed, out of 736 players in South Africa, 545 are with European teams.
But there is another angle to this which is striking. Capello, Wenger, Fabregas, Torres, and Ballack are names which dominate the back pages of the tabloid British press. They mix seamlessly with our own UK stars such as Rooney, Lampard, Gerrard and Terry and yet, the very same papers - including the Daily Telegraph - take a markedly different approach on the front pages to European politics when unless your name is Angela Merkel or Nicolas Sarkozy, you are very unlikely to get any serious mention.
Why we have great European footballers playing in the English league is because of the so-called Bosman judgment in 1995 which facilitated the free movement of footballers across the EU. Indeed, the Single Market, providing for the free movement of goods, capital, services, and people, has influenced millions of people in our country to take up jobs, buy homes, or simply to go on a package holiday across the continent. But we’re not so relaxed about Europe’s politicians.
Perhaps we should now change this attitude? Now that substantial constitutional change in Europe is off the agenda for at least a decade, we have to focus right across Europe on how collectively we can face up to major global challenges like the economic shift from West to East; energy security and climate change concerns; as well as demographic change. The world is getting smaller, flatter and smarter.
When was it you could last tune into a continental programme on TF1 (France) or TG1 (Italy) on SKY? Indeed, when could you last hear a European debate on any channel on how we are facing up to these challenges collectively? Debates take place regularly in the European Parliament on the major issues of our time but there is great reluctance on the part of our papers and media to give coverage to them - and yet they affect us all in the laws passed and applied in our country.
Now with a coalition government looking to be actively engaged at government level with major politicians across the continent, isn’t it time for a few leading continental politicians to be engaged in British debates? And would it not be better for us as Conservative MEPs, not just to be restricted to working with Central and Eastern Europeans but positively encouraged to work with our friends from countries such as France, Germany, Spain, Italy and others to win support for our views?
Tags: Football, Single Market, World Cup
One of the principal bases for this weekly blog is to look at long-term trends. Most of my information, for want of any other source material, comes from the NIC Global Trends 2025 report. With the current focus on energy security, I looked up what the document says about a transition to a post-petroleum world:
”…in the energy sector, it takes an average of 25 years for a new production technology to become widely adopted. A major reason for this lag is the need for new infrastructure to handle major innovation. For energy in particular, massive and sustained infrastructure investments made for almost 150 years encompass production, transportation, refining, marketing, and retail activities”.
This reflection is interesting in the light of the enormous outcry following the oil spill in the Gulf of Mexico which now looks much more serious than originally thought. President Obama, during his election campaign, said “I will set a clear goal as President. In 10 years, we will finally end our dependence on oil in the Middle East”, a goal for which I praised him in this blog, calling on President Barroso to do likewise. The question is how should this be achieved? In recent months President Obama advocated further oil exploration off the US East Coast and the Gulf of Mexico but with developments relating to the spill, the tune is now radically changing.
On Tuesday this week he started to address the fundamental challenges ahead, calling on the US to change the way it thinks about energy forever, saying the path to ending America’s century-long addiction to fossil fuels has for decades “…been blocked - not only by oil industry lobbyists, but also by a lack of political courage and candour.” He added that “The consequences of our inaction are now in plain sight. Countries like China are investing in clean energy jobs and industries that should be right here in America. Each day, we send nearly $1 billion of our wealth to foreign countries for their oil.”
Pursuing this line of thinking Anatole Kaletsky picked up on the theme in the Times on Wednesday saying that “The Obama Administration’s strategic objective, beyond sealing the gusher and cleaning up the mess, should be to ensure that drilling for oil becomes prohibitively expensive. The oilmen and investors must be forced to recognise that the true costs and risks to society of oil exploration are far greater than the costs and risks of investing in alternative energy or nuclear power”.
Last word - as often is the case - comes from Thomas Friedman who commented in his article on Tuesday that if we really want to end our oil addiction, we all need to do more as individuals - it was ‘we’, he said, who “…sent BP out in the gulf to get us as much oil as possible at the cheapest price.”
In this saga, the British government is right to protect British interests but we should remember that BP is a major global operator and is now more of a transatlantic company than a British company with more American employees than those from the UK and with roughly equal American/British ownership. Perhaps Lord Browne was right while CEO when he commented that ‘BP’ should stand for ‘Beyond Petroleum’.
In conveying the need to end our oil addiction to a sometimes sceptical public, however, wouldn’t we be better off in Europe by having a similar long-term planning system to the NIC in place which could help us understand the full scale of the energy challenge we face and investments needed including energy security considerations?
For supplementary thoughts on this look at the recently released Chatham House report ”Sustainable Energy Security: Strategic Risks and Opportunities for Business“…
Tags: Global Trends 2025, New Technologies, Obama
Last week’s blog covered the Daily Telegraph’s series ‘Rebuilding Britain’ and regretted that no one was listening to the call for better long-term planning (more of this in future blogs). For now I will continue looking at some of the themes that the series might have dealt with had they continued to focus on current and future trends.
One of the government’s main aims is a low-carbon economy and increasing the role of clean technologies. At the EU level Member States have already agreed ambitious targets for 2020, including a commitment to:
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cut greenhouse gases by 20% compared with 1990 levels (rising to 30% if international agreement is reached);
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reduce energy consumption by 20% through increased energy efficiency, and;
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meet 20% of our energy needs from renewable sources.
In order to meet those targets the EU’s new Energy Commissioner Guenther Oettinger has already expressed his view that investment in cleaner technologies in the European Union should more than double to €8 billion a year. However, a recent report by market researchers Cleantech Group and Deloitte has found that Europe has been lagging in comparison to the US when seeking venture capital for clean technologies with the US taking 62% of global share in comparison to the EU’s 29% in 2009. So, are we doing enough in Britain and the rest of Europe to take up the opportunity offered by clean technologies?
This issue, amongst others, was raised during a discussion of SAP’s latest Sustainability Report which I attended this week. The crucial question also raised is what role information technology can play, as well as how can European policy makers deliver on their ambitious emission reduction commitments without jeopardising the competitiveness of European industry?
Leading the discussions, SAP’s Chief Sustainability Officer, Peter Graf gave an interesting appraisal of the prevailing support for sustainability in business “…Today, despite the uncertainty of the outcome of the international climate change negotiations at COP16 (the next round of climate change negotiations at Cancún, Mexico) and despite the economic crisis, companies still invest in Sustainability, because consumers demand sustainable products and services, because Sustainability investment reduces costs and because it creates a competitive advantage,” he said.
During the discussions, he also highlighted differences in approach to investments in clean technologies by the EU and US. “In Silicon Valley”, he commented, “Clean Tech development is booming. There are high investments in Sustainable Technology Start-Ups - regardless the lack of political commitment and guidance on Sustainability in the US. This is due to the fact that Clean Tech is seen as a future market with high business potential and because in the US the access to risk capital is much easier”, while “…In Europe, on the other hand, the key driver for Sustainability investment is rather regulation than market forces.”
The debate about a future energy strategy for the EU is about to heat up with the Commission due to publish an “Energy Strategy for Europe 2011-2020″ in time for the December Energy Council and a roadmap to 2050 also promised. Increased investment levels in clean technologies, driven by market forces, should be a central core of that strategy. This is an issue our new Energy Minister, Charles Hendry, should not let up on with his new EU colleagues…
In the introductory article of the Daily Telegraph’s recent stimulating series ‘Rebuilding Britain’, Philip Johnston rightly says that better planning would help us in Britain no end. He comments that the British - though not uniquely - are bad at formal planning. It is not as if there are no bodies carrying out strategic thinking… the problem is that “…politicians either aren’t listening or are reluctant to do anything that requires looking beyond the short-term for fear of frightening the voters.”
In my last blog, I focused on how the leading global powers will have to find a way to handle the major challenges ahead and urged that we needed to see how best to work with America as our primary strategic partner in doing so. What is the impact that this likely external environment over the next decade will have on our approach to domestic issues?
Many issues were covered in the following articles to this excellent trailer, covering questions of UK governance, society, and industry. But others for some reason were less well covered.
The issue of welfare reform was fully discussed but given the demographic trends foreseeable, it would have been good to have more discussion of the urgent need for pension reform - Europe’s population is set to decline after 2035, and the ratio of active to inactive workers set to change from 100:50 to 100:80 (see Transatlantic Week conclusion summary here) - there is a real need to act now. The subject is now being picked up by the new Secretary for Work and Pensions, Iain Duncan Smith. He has suggested the state pension should be ‘indexed’ to increasing life expectancy, a reform first introduced in Denmark, and suggested in this blog late last year (see here).
On energy policy, Johnston noted that a decision was “…only taken in the past two years to proceed with a new generation of nuclear reactors without which the lights would go out by the end of the decade”. But there was no follow-up article dealing with this issue in further depth. With some estimates predicting that the European Union will import almost 70 % of its energy needs by 2030 while at the same time facing much intensified competition for energy resources from emerging powers such as China and India, this is another key issue which requires strategic thinking and long-term planning…clearly this has not been the case to date.
Lastly, there was surprisingly no mention throughout this series about the digital agenda and the vital importance of information technology (IT). Although he says Singapore has “…transformed itself from a high unemployment, low production economy going nowhere to one of the world’s strongest economies”, there was no mention of the urgent need for e-skills in the UK in order to best take advantage of the major changes underway in the digital economy. When one considers that Microsoft has estimated that within five years across the EU over 95% of future jobs will require IT skills and that over 30% of the population still don’t have them, it is clear that we have a long way to go.
Coming back to Philip Johnston’s introduction to the series, he called for more to be done on long term thinking. He said we have “…nothing in this country like the National Intelligence Council, an arm of the US government specifically charged with taking a long-term view and advising on how to prepare for the future. The NIC does not pretend to possess a crystal ball or to be able to predict the future. Rather it offers ‘a range of possibilities and potential discontinuities, as a way of opening our minds to developments we might otherwise miss.’”
Not only do we need a broader debate on the likely impact of foreseeable long term trends on our domestic policy agenda, we also need to urgently assess how the UK and/or the EU could introduce a strategic assessment system to sharpen up future perspectives for policy makers. Is anyone listening?
Last week the Daily Telegraph concluded its ‘Rebuilding Britain’ series with a lead article calling for a foreign policy for Britain’s future - one which would be based on a lightly regulated, trade hungry British economy…equipping our businesses to meet the commercial challenges of Shanghai and Bangalore. This, the leader argued, was vitally important because as Lord Powell pointed out in one of the series articles, the world system is renationalising.
In his article, Lord Powell continued, “The world system is going to re-nationalise. Multilateral institutions will be there as enablers. But the decisions will be in the hands of the major powers, such as Brazil, Russia, India and China, as well as the US, as we saw at the Copenhagen climate change summit. It will feel more like the 19th century than the late 20th century.”
He concluded by advising that the Foreign Office “will need to shift from its love affair with multilateral institutions and rediscover its historic skills at bilateral relations and forming shifting alliances or coalitions of the willing”.
Is this the correct analysis? How can we best deliver those conditions to ensure we have a vibrant, prosperous and stable economy? The vital question it raised is how leading powers resolve major global challenges, which are mostly global in nature, requiring decisions to be made at a global level? Do we consider that 21st Century problems should be resolved by 19th Century decision making processes? Or do we dare to think that new ways can be found - particularly through the internet - to proceed in a different way, enabling regional groupings to play an important role as building blocks in the global economy?
The principal flaw in Lord Powell’s analysis is that he treats America to be on the same basis of shifting alliances as such countries as China, India and Russia with which I fundamentally disagree. For what stands out from the NIC’s Global Trends 2025 report more than anything else is that most of these rising powers do not share the same commitment that Britain, the EU and US do to democracy, the rule of law and respect of human rights. The report says:
“Today wealth is moving not just from West to East but is concentrating more under state control….With some notable exceptions like India, the states that are beneficiaries of the massive shift of wealth—China, Russia, and Gulf states—are non-democratic and their economic policies blur distinctions between public and private. These states are not following the Western liberal model for self development but are using a different model—’state capitalism’”.
Surely what we must work to fight for and promote is to preserve and develop a transatlantic view of the global system which can only be done by developing a coherent and far-sighted transatlantic strategy to deal with global challenges. This will not only mean reshaping the NATO Strategic Concept (already underway); it will also involve deepening a bridge across the Atlantic on a wide range of economic and political issues important to our people like the digital agenda, research and innovation, energy security and climate change. Such an approach is set out in more detail in the document “Towards Strategic Thinking in the Transatlantic Partnership”, available here.
At the Transatlantic Week event I spoke about last week, Ziga Turk, Secretary General of the Reflection Group on the Future of the EU, gave an excellent presentation (available here) in which he said that while we in the West will not have the quantity and we will not be the only ones with quality, what we do have are culture, tradition, and values that empower: respect for the individual; freedom; democracy. These values empower, he said, especially in an information economy and economy of meaning.
This means that not only do we need to strengthen the transatlantic bonds to deal with global challenges but strengthening Britain’s links with Asia might well be more effective were we to do this together with our European partners rather than by ourselves.
Should this be the basis for our policy-making over the next decade or so, this will inevitably change the way we should look at domestic issues for ensuring we have a stable and prosperous Britain in the first half of the 21st Century. My next blog will deal with these issues in more detail.
Tags: China, Global Trends 2025, India
