1 PASCAL LAMY WITH CONTRIBUTIONS OF MATHEW J. BURROWS, ANTONIA ERLANDSSON, OLIVER GNAD, DHARMENDRA KANANI, JACQUES BUGHIN AND ROMAN PABLE EUROPE 2030 TOWARDS A RENEWED EUROPEAN SOCIAL CONTRACT Author: Pascal Lamy With contributions of Mathew J. Burrows, Antonia Erlandsson, Oliver Gnad, Dharmendra Kanani, Jacques Bughin and Roman Pable Publisher: Geert Cami Director: Dharmendra Kanani and Nathalie Furrer Knowledge Partner: The McKinsey Global Institute (MGI) Programme Executive: Antonia Erlandsson Editors: Iiris André and Angela Pauly Design: Elza Lőw Programme Assistants: Elisa Abrantes © Friends of Europe - September 2018 1 Remembering the foundations of the European social contract Since the Maastricht Treaty of the European Union, signed in 1992, the EU’s social contract has been underpinned with the following principles (extracts from the Treaty): PEACE, VALUES AND WELLBEING ECONOMIC UNION The Union’s aim is to promote peace, its values and The Union shall establish an economic and the wellbeing of its peoples. monetary union whose currency is the euro. SECURITY AND JUSTICE PEACE AND HUMAN RIGHTS The Union shall offer its citizens an area of freedom, IN THE WORLD security and justice without internal frontiers, in In its relations with the wider world, the Union which the free movement of persons is ensured in shall uphold and promote its values and interests conjunction with appropriate measures with respect and contribute to the protection of its citizens. It to external border controls, asylum, immigration and shall contribute to peace, security, the sustainable the prevention and combating of crime. development of the Earth, solidarity and mutual respect among peoples, free and fair trade, eradication of poverty and the protection of human PROSPEROUS INTERNAL MARKET rights, in particular the rights of the child, as well The Union shall establish an internal market. (…) as to the strict observance and the development It shall work for the sustainable development of international law, including respect for the of Europe based on balanced economic growth principles of the United Nations Charter. and price stability, a highly competitive social market economy, aiming at full employment and social progress, and a high level of protection and RESPECT OF THE TREATIES improvement of the quality of the environment. It The Union shall pursue its objectives by appropriate shall promote scientific and technological advance. means commensurate with the competences It shall combat social exclusion and discrimination, which are conferred upon it in the Treaties. and shall promote social justice and protection, equality between women and men, solidarity between generations and protection of the rights of the child. It shall promote economic, social and territorial cohesion, and solidarity among Member States. It shall respect its rich cultural and linguistic diversity and shall ensure that Europe’s cultural heritage is safeguarded and enhanced. 2 Contents #EuropeMatters, The State of Europe 2018 3 Introduction 5 The Quest for a renewed European Social Contract 6 Global Trends, Key Drivers of Change and Unknown Unknowns 8 1. Demographic Change: Ageing Societies and Migration 9 2. Technological Innovation and European Hesitation 11 3. Emerging Markets 12 4. Endangered Habitat and Dwindling Natural Resources 13 5. A Polycentric World 15 The Future We Face 16 Strategic Foresight – Four Alternative Futures for Europe in 2030 17 Scenario A: Market Maker – A Strong EU with a Domestic Focus 18 Scenario B: Value Setter – A Strong EU with a Global Focus 21 Scenario C: Balancer – A Weak EU with a Global Focus 24 Scenario D: Transactional Europe – A Weak EU with a Domestic Focus 27 Conclusion: The Case for a Renewed European Social Contract 30 About Friends of Europe 32 3 THE STATE OF EUROPE 2018 The fall of the Berlin Wall openness and democratic vibrancy and it is recognised as a region inaugurated the belief in liberal of the political union have not with a strong and attractive democracy and subsequently taken place as planned, despite social contract for citizens, even helped it rise to an all-time high. the improved quality of life for in comparison to other regions There was a sense of hope that Europeans. with similar preconditions. The destructing the symbol of a EU has been more successful More recently – similarly to 9/11 divided continent would help than others in converting putting an end to state security as Europe come together. It was average economic growth into we knew it – the global financial in Maastricht that European social progress and inclusive crisis became the landmark for leaders convened to establish growth. Moreover, it has made the end of economic security. the framework for the future the political and business case In the decade since, multiple of an integrated Europe based for acting on climate change and other foreign and domestic on a common social contract. has made a virtue of its funding crises followed, such as the The philosophy underpinning to accelerate skills development, spread of terrorist attacks in the European project was that innovation in science and Europe, hundreds of thousands economic integration would technologies, rights and equality. of refugees streaming to Europe, lead to political integration in It has been an engine for peace Russia’s annexation of Crimea Europe – neither of these fully based on the principles of and the ongoing civil wars in materialised. Looking back, cooperation and diplomacy. Syria, Libya and Iraq. Europe has developed differently Remarkably, the EU made it from the way many had hoped. Despite this, the EU has become out of recession with over 2% The imagined peace, freedom, the fourth largest trading bloc growth. 4 Meanwhile, massive external shocks, such as to grips with countless dilemmas and ambiguities. the sovereign debt crisis, the Euromaidan, the To list a few: competitiveness in a global economy exposure of corruption and poor governance, and vs. social equality at home; the free flow of capital, most significantly the migration crisis, together goods, and ideas vs. the preservation of intellectual with the subsequent perception of citizens, have property and entrepreneurial spirit; security (also driven a wedge between EU member states and in cyberspace) vs. individual rights, liberties and societies. self-determination; the free movement of people, migration, and political asylum vs. the preservation Traumatised by events, Europeans’ faith in the EU of traditions, cultural identity and the ability to project has become a casualty. For the first time integrate – a list that could be extended at will. since the end of the Cold War, the younger generation faces the prospect of a life that is less secure and We need to understand that the future does not prosperous than that of their parents. The broken simply happen or is imposed upon us. Rather, European Dream has led to a creeping erosion of the future is the outcome of the decisions we trust and confidence in institutions, political classes, take today. Government on autopilot will not be and elites at large. sufficient, nor will muddling through or constant crisis management. Or, as Yogi Berra once said: “If “The post-1989 dream painted an you don’t know where you are going, you’ll end up image of economic integration someplace else.” leading to political integration in Europe - neither of these fully This paper sets out a set of scenarios on the possible materialised” futures of Europe in 2030, in order to stimulate discussion and debate on the implications of today’s Today’s globalised and polycentric world with its policy choices for Europe’s future. #EuropeMatters rising insecurities, conflicts, uncertainties and the is our initiative to build policy choices and lack of clear-cut solutions have enforced a ‘hide in recommendations for the incoming European your shell’-reflex. Social coherence has long been leadership in 2019 to make informed decisions challenged by change and transformation – be it framed by an evaluation of these scenarios and the the rise of non-state (violent) actors, soaring social choices that lay ahead of us. media, the change of labour due to digitalisation and automation, or the degradation of our habitat “Government on autopilot will not be because of climate change. sufficient, nor muddling through or As a result, nationalism and populism have become constant crisis management” political mainstream in many European countries. The upcoming elections of the European Once again, Europe is being put on the defensive Parliament and the subsequent inauguration of by external shocks, including Brexit and a growing a new European Commission will trigger a new transatlantic divide. Ahead of the European elections political cycle. Brussels and the EU member in 2019, we are at the crossroads of making Europe’s states should seize the opportunity to create an future matter to its citizens. atmosphere of departure and engage in a debate about Europe’s future until 2030. Thinking about The lesson learned from a decade of crises and plausible alternative futures would be a creative disruptive events, within and outside Europe, is that way to reach out to policymakers, entrepreneurs basing our responses to our future can no longer and civil society representatives alike. All this could be determined by the past alone. Whilst learning culminate in a renewed European Social Contract is key, the current vortex of events has shown us between European citizens and their institutions to that we are ill equipped to deal with the pace and provide for prosperity, security and a sustainable unpredictability of simultaneous change. livelihood for generations to come. Before we enter into an intense debate about Europe’s future, we need to better understand the forces, factors, actors and developments that will Pascal Lamy shape our future. It is not only about substance Trustee of Friends of Europe (“what”) but also about institutions and processes Brussels, 27 September 2018 (“how”). If we do not want to leave politics to populists and radicals in the streets, public policies and procedures need to change.