The Baltic Sea Region - the Best Place to Work and Do Business

Transcription

1 The Baltic Sea Region - the Best Place to Work and Do Business Joint conference organised by the European Economic and Social Committee and the European Commission Representation in Finland Helsinki, 22/23 October 2009 M I N U T E S 22 October, first session: Towards an EU Baltic Sea Policy for jobs and enterprise Eikka Kosonen, head of the European Commission Representation in Finland and chair for the first day of discussions, pointed out that often the environment was at the core of discussions on the Baltic Sea, not least because of the very serious problems in this area. Things, however, seemed to be moving "from tragedy to strategy" with the new EU Baltic Sea Strategy soon to be adopted. As an integrated framework focusing on four main areas - a) a sustainable environment b) prosperity c) accessibility and attractiveness and d) safety and security - this strategy provided a good basis for moving from words to action. Existing structures such as the Northern Dimension gave the EU good opportunities to pursue cooperation with third countries in the region. This conference would focus exclusively on prosperity - how to improve economic development and create more jobs in the region, with a specific view to the role of social partners and civil society. EESC vice-president Seppo Kallio gave the opening address. He referred to the completely new economic environment in the Baltic Sea area after the beginning of the 1990s and the robust growth over the following years. Following the events of the last twelve months, the Baltic Sea region was also in the midst of an economic crisis, with the scale of the problems varying from country to country. However, prospects for recovery were good if the region and the EU together could find ways of promoting development and business activity. He saw scope for improvement: political and economic actions could be implemented more effectively and new technologies could be better harnessed. He praised the strong political commitment behind the EU Baltic Sea Strategy and called for civil society to become involved in making the region a better place to work and do business. Stressing a desire for wider long-term cooperation among the various players in society he expressed the hope that this conference would offer new solutions and ideas for the practical implementation of the Baltic Sea Strategy. Astrid Thors, Finnish Minister of Migration and European Affairs, referred to the upcoming

2 - 2 - celebrations of the 20th anniversary of the fall of the Berlin wall: times had changed and today the Baltic Sea had a great uniting potential. The new EU strategy had been prepared well. It would have a positive impact on the Baltic Sea region and there were hopes that later on it could serve as a model for other macro-regions. She underlined the importance of involving third countries through the Northern Dimension in order to achieve the vision of a clean, safe, attractive and prosperous region. So far, environmental issues had been prominent in the discussions dealing with the Baltic Sea region, she said, pointing out that HELCOM had its headquarters practically around the corner, but this conference took a very welcome broader view on the Baltic Sea. Only today there had been news about job losses in the forestry sector in Finland, and nobody could be unaware of the large scale restructuring of the world economy that was going on. This made the renewed Lisbon strategy all the more important; the EU had to become the most competitive entity in the world in certain chosen areas. It was her hope that the Baltic Sea Strategy could improve the business environment and create jobs in the Baltic Sea region and there were signs of economic actors being present in the entire region, she said, referring to the fact that some groceries already had labels in all the languages surrounding the Baltic Sea. In this context she underlined the importance of jointly implementing EU legislation such as the Services Directive. She would like to see the Baltic Sea region branded as the Green Energy Valley of Europe. According to the Commission there were potentially new jobs in renewable energy in the EU, many of which would logically be created in the Baltic Sea region. Another tool would be the previously announced innovation strategy, she said, and underlined the importance of the "fifth freedom" - the free movement of knowledge - given that at present only a handful of Europe's countries were explicitly committed to removing barriers to research funding. The Finnish government saw a need for more EU funding to be allocated for administrative cooperation but also called for better management of the resources already available. With active cooperation change was possible, she said, and she was certain the conference would bring about new ideas. Maria Åsenius, Swedish State Secretary for EU Affairs, said that it had been her privilege to coordinate the handling of the EU Baltic Sea Strategy for the Swedish government after it had been presented by the Commission in June. Early next week the General Affairs Council in Luxembourg would adopt its conclusions and the strategy was to be adopted by the European Council by the end of the week. The European Parliament had pushed for a Baltic Sea strategy, initially prompted by the poor environmental condition of the Baltic Sea but, as recognised by the Commission, the creation of a broader integrated macro-regional policy instrument had seemed more appropriate, not least in the light of the financial crisis. As to making the Baltic Sea region a better place to work and do business it was, in her view, a matter of thinking bigger and less along national lines. The Baltic Sea region contained some of the most successful innovative economies in the world, and all in all there were excellent preconditions for growth in the area: a well-educated workforce, expertise in knowledge-based innovation, rich natural resources and not least a strong tradition of interregional cooperation. With the right approach it would certainly be possible to increase the attractiveness and competitiveness of the region. Due to small national markets it was essential to upgrade the business environment and stimulate local enterprises to

3 - 3 - expand into new markets and attract more foreign investment. Within each of the 15 priority areas in the EU strategy there were both strategic actions and more detailed and concrete so-called "flagship projects" that should be implemented relatively quickly. One strategic action was to "establish a common Baltic Sea region innovation strategy" that would address the following four challenges: a) reduce existing innovation barriers b) facilitate transnational cooperation for the development and commercial exploitation of joint research projects c) promote mobility of researchers and d) jointly develop new and better innovation support instruments. She gave some examples of ongoing and planned flagship projects, firstly to "develop a Baltic Sea region Programme for Innovation, Clusters and SME-Networks" that was scheduled for launch in January next year. It included a full-scale transnational support programme, and the main philosophy was to build on existing industrial, academic and social institutions but reshuffle innovation resources to facilitate the birth of new solutions for future markets. The challenge was to interconnect the different parties in order to attain a critical mass in research and development and to help SMEs increase their exports. The Swedish government was convinced this project would promote innovative clusters and increase global competitiveness and supply and demand for sophisticated products and services. The second flagship example she mentioned was "setting up a Baltic Science Link" that would be aimed at building strong networks between universities, research institutes and industries in order to create research infrastructure facilities. She referred to already existing infrastructure installations and to the European Spallation Source in Lund (Sweden) that had originated from a consortium of leading Scandinavian universities. As a third example she mentioned the "Baltic Sea Fund for Innovation and Research" that aimed at promoting research infrastructure tailored to the strengths of the region. There were successful models to look at when pooling national and private funding, and the Nordic Council of Ministers was currently defining the structure of a capital fund together with the European Investment Fund. It was evident that the single market had to be further developed as rules were not transposed, applied or enforced properly in all Member States, and SMEs were not able to exercise their rights. These issues were also addressed under the action to "remove remaining barriers to the cross-border provision of services". All Member States were under the obligation to implement the Services Directive by the end of this year, and close cooperation had been established within the "Nordic-Baltic cooperation group". Obstacles to trade in goods and services continued to exist at a practical level in the Baltic Sea region. In the case of Finland, for instance, 90% of goods exported to the internal market were carried by sea, and most obstacles resulted from the fact that vessels were considered to first leave and then re-enter EU customs territory. This created a lot of unnecessary bureaucracy. Consequently another flagship project was to "implement a European space for maritime transport without borders in the Baltic Sea region". In the turmoil of the financial crisis and the structural changes that inevitably would follow, only the most competitive industries would survive. The crisis could lead to the depletion of sectors but also give rise to new industries and new sectors. In her vision, she said, the Baltic Sea region was the model of a properly functioning internal market. Inspired by the enthusiastic response she had received from Member States around the Baltic Sea, she stressed the importance of taking the ownership of the Baltic Sea Strategy seriously and making sure things evolved on the ground.

4 - 4 - Nataliya Antyushina from the Russian Academy of Sciences said it was high time for a Baltic Sea Strategy, for two reasons: the upcoming UN climate conference in December in Copenhagen and the financial crisis. In her view the EU Baltic Sea Strategy seemed to coincide with the interests of Russia although some specific projects still might need to be agreed on. It was her hope that Russian authorities would contribute actively to the realisation of the strategy. The Baltic Sea region was unique because of its innovative strength as reflected in technological and social innovations such as Danish wind-power energy, Norwegian aquaculture and offshore energy, Sweden's commitment to cut carbon emissions and Finland's long cooperation with Russia. The four pillars of the strategy were in line with this and made good sense. The Baltic Sea Strategy should be a long-term strategy, she said, and there were many factors to take into consideration. GDP levels within the region varied greatly and trade between Baltic countries was not balanced. For big economies like Germany and Russia - the only countries that actually had a surplus in trade with other members of the Council of the Baltic Sea States (CBSS, that included Norway and Iceland) - other markets were of course more important. She then pointed to some elements that could hamper cooperation, underlining the dividing line between Russia and some Baltic countries. This was a matter of bilateral relations but certainly something that affected multilateral relations as well and did not fit in with the logic of Baltic cooperation. On the other hand the innovative character was a positive factor and new lucrative markets could certainly emerge, especially if the Baltic Sea countries managed to strengthen their cooperation in the area of environmental sustainability. Such cooperation should be accompanied by cooperation in the area of social affairs. Finally, for the purpose of the following discussion, she made the point that the "characteristics" of the Baltic Sea region would be further strengthened through the Baltic Sea Strategy. This could benefit the global image of the region if a real effort was put into branding it. While acknowledging that the scope of the conference went beyond the EU Baltic Sea Strategy Filip Hamro-Drotz, president of the EESC Section for External Relations, pointed out that the EESC in a recent opinion that would be presented later at the conference had given its full support to the strategy as a fundamental building block for the future of the region. Recently he had heard French president Nicholas Sarcozy claim that the future of Europe was in the South. He, however, would like to think that the future of Europe was in the ability to coordinate and cooperate and gather strengths from different sides, including from neighbouring third countries. It was all about working for a common interest and creating mutual confidence. The inclusion of the framework provided by the Northern Dimension was an important aspect of the Baltic Sea Strategy but direct relations with third countries in the region were equally important. Russia especially was an essential partner: At a recent joint seminar between the EESC and the Civic Chamber of the Russian Federation there had been full support for the external dimension of the Baltic Sea Strategy. He mentioned five areas where there was a need for cooperation: infrastructure and transport, energy safety, environmental and maritime safety, investments and economic growth and, finally, stability and security. He underlined the importance of a full contribution from all countries in the Baltic Sea region in order to make it the best place to work and do business. As he said: "We are similar enough to work together but different enough to

5 - 5 - learn from each other". "Complementarity" and "synergy" were the key words for the future. There then followed a general debate with comments and questions from the audience and answers from the panel on the following issues: The Danube macro-region, energy supply and the possibility of extending the Nabucco Gas Line to the Baltic Sea region, cooperation with the Black Sea/Caspian Sea region, the importance of a strong involvement of big countries like Germany, the Lisbon Treaty and the involvement of citizens, the inadequate treatment so far at the conference of labour market aspects, expectations regarding the EU Services Directive, how to make companies grow and commercialise innovations, how to promote cross-border cooperation between small companies on innovation, the role of Kaliningrad and the potential of the EU's Baltic Sea Region Programme. 22 October, second session: How to create jobs and prosperity in the Baltic Sea Region Juris Bone, the ambassador of Latvia to Finland, would not try to deny that Latvia was in a difficult situation but he found some consolation in the fact that the economy at the beginning of the 1990s had already started from scratch once. An important reason for the problems in Latvia was the bursting of the real estate bubble: from June 2001 to December 2006 real estate prices went up by 650% (compared to 250% for wages) and price increases were to a great extent financed by credit. In late 2006 the current account deficit was 25% of GDP. In the present situation the government had taken various measures such as adopting a programme for the stabilisation and revival of the national economy with the aim of ensuring adequate liquidity while maintaining the exchange rate of the Latvian currency. A legal framework to promote selfemployment and the development of micro-enterprises had been adopted along with business support programmes for medium-sized and large companies. There had also been tough structural reforms in state administration, healthcare and education. He considered joint action by all governments in the Baltic Sea region crucial for recovery. He called for business information to be available on the Internet, which would make it easier for any company in need of a service to find a provider in the vicinity. Many types of cooperation were already in place, he said, mentioning the Baltic Assembly and international contacts between municipalities. Another important aspect of the exit strategy was to reach a level of sustainability in the economy that would allow the Baltic States to introduce the euro. The global financial turbulence had underlined the risks of sustaining separate currencies in small, open economies. A fixed membership date and fixed conversion rates would greatly benefit the financial markets in the region and re-establish internal capital flows. Piotr Serafin, Polish Under-secretary of State, focused on the long-term challenge of creating a balance between cohesion and competitiveness. He pointed out that the gaps in economic development in the EU were widest in the Baltic Sea region and also said that Poland probably was the only country in Europe to achieve a positive growth rate in 2009 (about 1% of GDP). He divided his presentation into three parts: Firstly, he looked at the consequences of the crisis. The

6 - 6 - crisis had hit hard in the Baltic Sea region and we still had not seen its full impact on employment. The social costs could trigger unwanted political changes that, in their turn, could seriously endanger the internal market, the most precious achievement of the EU, and indeed the prospects of recovery. There were serious risks that Member States would take to protectionist measures. Europe also had to get better at addressing the issues of globalisation. Secondly, he looked at two major items on the EU agenda: post-lisbon and the future of EU financing. Concerning post-lisbon, growth and jobs should still be at the centre of the debate but he called for more focus on output and delivery mechanisms with a specific view to the internal market, infrastructure and intellectual capital, especially education. As to the future of EU financing, resources should correspond to the challenges that had been collectively identified such as climate, energy and competitiveness. Very importantly, however, economic and social cohesion, not least in the Baltic Sea region, should be seen as a prerequisite for tapping into the potential that was there. The talk about social dumping within the EU reflected the very existence of a problem. If we forgot about this it would be much more difficult to find common ground on lots of other issues, he argued. Thirdly, he looked at the Baltic Sea Strategy itself. In his view the strategy would make cooperation in the region more visible, and a challenge would be to create a Baltic one-voice coalition in the important discussions that were to take place in Brussels. He pointed out, however, that Poland as a central and eastern European country did not only have a Baltic identity. Therefore, for Poland the best way to create jobs and prosperity in the Baltic Sea area was to make sure that the European integration process as such flourished. Wilfried Grolig, the ambassador of Germany to Finland, admitted that Germany was not at the centre of the picture when discussing the Baltic Sea area. Nevertheless, the region was very important to Germany. Even for the best strategy to work the support of the people and the companies concerned was needed. In this respect it was essential to refer to the Baltic Sea area as a historical entity. The current gaps and differences, however, also reflected history. He called for a more level playing field and for simplified administrative procedures in order to strengthen labour market mobility in the region. It might be useful to try to look at the Baltic Sea region from the outside, he said: How could the region be attractive from, say, a south-east Asian point of view? He pointed out that there were some 100 universities in the region, a long academic tradition, an excellent research infrastructure and an advanced level of technological competence. Why not try to make the area a real academic hotspot and create a "Baltic Ivy League" of universities with a power to attract businesses worldwide? It was also crucial to make the region attractive to qualified third-country nationals and arrange immigration policies in order to avoid labour shortages in a not too distant future. Talking of demographic change, he saw a huge global potential in the market for services and technologies for old people. Referring to the Öresund bridge and the new dynamism it had created he called for better intra-regional links, for instance between Finland and Estonia. In his view it was important to keep individual cultural identities while joining hands in order to become more efficient. He also saw potential in a broader commitment in the area to the single currency. Finally, he underlined the importance of involving young people in the Baltic Sea project and in this context civil society had an important role to play.

7 - 7 - Peter Egardt, president and CEO of the Stockholm Chamber of Commerce and president of the Baltic Sea Business Advisory Council (BAC), referred to the dire economic situation in Finland and Sweden at the beginning of the 1990s and saw hope for Latvia. Just as winners of the Nobel Prize in Literature often went from being unknown to becoming well known, it was his hope that the Baltic Sea Strategy would slowly gain recognition. The strategy itself showed that the EU saw a special potential in the region. In his vision the region would become the hotspot for growth in the entire world. He saw high productivity growth in the years to come if we could use our combined strengths and expand our home markets to the million people living in the Baltic Sea region. It would also help if Denmark and Sweden joined the euro. In general the private sector was strong and only governments could ensure a positive business climate that would benefit greatly from an expanded home market. It was essential to have a properly functioning internal market, which was not really the case today. Governments often added something when implementing the EU directives that in reality were barriers to internal trade. We could show the rest of the EU that real harmonisation could be achieved. Cooperation on implementing the Services Directive was a good first step that could later be extended to other parts of the acquis. This way the Baltic Sea region could become a role model for the rest of Europe. From a business community point of view, however, he found the strategy too projectoriented. The important thing was to achieve results and 5-6 accomplished priorities were preferable to unaccomplished ones. The first assessment was to take place in 2011 and in this context he called for the business world to be represented at the table; only businesses had the required experience with trade barriers. In the follow-up he also wanted the EU to name and shame the countries that did not do their job. The Baltic Sea region should take the lead in Europe and take on the challenge of post-lisbon. In his view regional experiments should also be set up in a couple of years when a special budget line was in place and things were starting to move in the right direction. There then followed a general debate with comments and questions from the audience and answers from the panel on the following issues: the potential of green growth (with a reference to the fact that 27% of venture capital in the US was now being invested in green-tech), opportunities in globalisation, harmonised consumer legislation in the whole Baltic Sea region, the importance of taking environmental issues into account, the role of a single currency and the present difficulties in expanding the euro zone, the need for a social market economy and the importance of social cohesion, the role of industries versus services, internal competition in the EU, the different agendas in the region at both national and business level and the importance of acting as a coalition, investments in research and development, possible social and environmental dumping in Poland (dismissed by Piotr Serafin), the Baltic Motorway of the Sea, the divide between richer and poorer EU countries and the importance of the catching-up process, the regional imbalances of the European Economic Recovery Plan and the energy infrastructure. On the basis of the first day of discussions Eikka Kosonen concluded that politicians had seen that there was a need and the preconditions for improved cooperation in the Baltic Sea region. He

8 - 8 - referred to the Action Plan of the strategy and the four concrete goals under the heading "to make the Baltic Sea region a prosperous place", that in many respects corresponded to Peter Egardt's wishes. There were economic and, in some cases, political differences in the region but there were also well-tested forms of cooperation. Only implementation was now missing and much depended on the interest of businesses. He underlined the importance of having the social partners involved in the process and having the support of the general public. The Baltic Sea region might be an example for other macro-regions but in order to achieve the possible synergies it was ultimately all about the European project as such. 23 October, first session: Commitment of the social partners and other civil society organisations: What role can civil society and local and regional actors play? Leila Kurki, president of the EESC Section for Employment, Social Affairs and Citizenship and chair for the second day of the discussions, commenced by referring to what was said on the first day about winning the hearts and minds of people and their civil society organisations; she hoped that today's discussion would bring new answers. Vesa Vihriälä, Finnish State Under-Secretary for Economic Affairs and Secretary-General of the Economic Council of Finland, briefly presented the Economic Council. Two years ago this council had prepared a report on the Baltic Sea region that highlighted the great importance for the various countries, not least Finland, of being part of the region. The economies had developed significantly since the early 1990s. The gap between them and the old EU Member States in terms of GDP had been halved in only 15 years. Although economic development had been positive the full potential of innovative capacity, natural resources and the level of education had not been harnessed. There were still big gaps in the region in terms of productivity, employment, infrastructure, innovative capacity, the rule of law and environmental policy. As for competitiveness, there had not been much progress compared to the rest of the world over the last 10 years. The recession had hit the Baltic Sea region harder than the rest of the EU, not least export-oriented economies like Finland (Finland's GDP was expected to fall by 7% in 2009). Some of the new EU Member States in the region were now experiencing what Finland and Sweden had experienced in the 1980s. Because of the recession public finances were deteriorating and the question was how to support convergence and the conditions for growth while maintaining social cohesion. It was very important to motivate and involve social partners in solving this problem. A better employment situation in one country might prolong unemployment in another. The Finnish government had drafted a report on the Baltic Sea policy that was being discussed in parliament. It pointed to some solutions for Finland and was very much in line with the Commission's proposals in the Baltic Sea Strategy. The four objectives of the strategy were not very controversial, he said - the question was rather whether the proposed measures would lead to the desired results. Although labour market mobility was not very good it had already put workers' rights under pressure. Another question was progress on the rule of law and whether Russia was sufficiently integrated into the process. Without Russia the potential of

9 - 9 - the region could not be fully utilised. Finally, he pointed out that the involvement of businesses and the support of social partners and civil society was essential in order to create some sort of identity for the region. There then followed a brief general debate with comments and questions from the audience and answers from Vesa Vihriälä on the following issues: the gender aspect, the involvement of various parts of civil society in the discussions of the Finnish Economic Council, the reasons why this region was hit so hard by the financial crisis, the extent to which other Baltic Sea countries could draw on Finnish experiences in their recovery and the possible "exportability" of the structure of the Finnish Economic Council. Thomas Janson, member of the EESC and rapporteur of a forthcoming EESC opinion on the "social dimension of the internal market" focused on social challenges linked to work and how the quality of work in the Baltic Sea region could be improved in order to make the region more attractive. Quality of work was essential for the quality of products and services and not least for workers' quality of life. In his own experience the region seemed well interconnected and it was a fact that EU membership had opened up a lot of possibilities for crossing borders. In the forthcoming opinion the EESC looked into the important social dimension of the internal market. Yesterday Peter Egardt had referred to the crisis in Sweden at the beginning of the 1990s as a passing phenomenon but in Thomas Janson's view both positive and negative effects were still visible. On the positive side Sweden, like Finland, had joined the EU, while on the negative side social exclusion was more pronounced and work-related health problems were still increasing 15 years after the crisis. Financial crises indisputably had a social impact and that was why the social dimension was a fundamental component of any economic cooperation. The social dimension was often seen as subordinate to the internal market. The retention of social rights was especially important for mobility. A number of developments gave rise to concern: unemployment had risen and would continue to be at a high level for at least another two years. Because of reforms in benefits systems in many countries people losing their jobs faced worse risks than before. There was also concern about a number of judgments of the European Court of Justice that in his view went against the fundamental rights of workers. Turning to statistics on the social situation in the Baltic Sea region he showed that the degree of trust in national parliaments (an indicator of the perception of democratic values) differed widely, from only a few percent in Poland to about 35% in Denmark. The percentage of people being worried about their income in old age (an indicator of social stability) varied from more than 50% in Poland to about 10% in Denmark. The differences in the extent to which people perceived they could influence the organisation of their daily work (an indicator of quality of work) were also significant, varying from about 25% in Russia to more than 60% in Denmark. The general trend for the Gini coefficients (measuring the inequality of income or wealth) from the mid-1970s was that income equality had decreased. He called for social justice and equality to become a priority in the EU, including the Baltic Sea region. He saw a need to strengthen fundamental social rights in relation to market freedoms. The functioning of the European Court of Justice should be looked into and the Posting of Workers Directive might need to be revised. The goal should be to create a climate of equality that

10 motivated people to move between countries for employment. Marja-Liisa Peltola, EESC member and rapporteur of the EESC own-initiative opinion on the "Baltic Sea region" adopted on 13 May 2009, presented her opinion that had fed into the Commission's preparation of the Baltic Sea Strategy. The EESC had supported the four objectives and proposed to establish a consultative "Baltic Sea Civil Society Forum" in order to ensure the involvement of organised civil society and to encourage public awareness of the strategy. The EESC had called for the external dimension to be linked to the cooperation within the Northern Dimension and expressed fears that without a separate budget the strategy would merely remain a political statement. As had already been pointed out, the Commission had instead decided to focus on using its present funding instruments better. Particular attention should be given to coordination and a reasonable administration of projects aiming at concrete results. The economic opportunities could only be exploited if the international treaty base was strengthened. Russia's membership of the WTO and the new EU/Russia Agreement did not concern the Baltic Sea region exclusively but were very important for growth in that region. Extending the economic and monetary union to include all EU Member States and ensuring that the internal market functioned properly were also very important aspects. According to a recent analysis from EUROCHAMBRES there were significant gaps in the implementation of the Services Directive. It was very important to create as uniform a market area as possible so that trade, public procurement and investment flows were unimpeded and capital and labour markets functioned smoothly. The EESC had underlined the importance of mobility, not least mobility of knowledge and cooperation between researchers, teachers and students. The EESC had also called for the creation of a Baltic Sea Brand. Economic growth did not necessarily need to be in opposition to environmental concerns. Eutrophication and the high level of toxins in the Baltic Sea, however, were a concern, and the challenge lay in the fact that there were a dozen countries at different stages of development situated in the drainage area. The HELCOM Baltic Sea Action Plan seemed to be the best instrument for improving the situation. The EESC had urged the Baltic Sea countries to develop a joint monitoring and information exchange system to promote maritime safety. Finally, the EESC had expressed the view that citizens' active participation through the private and third sectors would become more important in the future, even in areas traditionally managed by the public sector. Michael Smyth, member of the EESC and an economist at the University of Ulster, welcomed the Baltic Sea Strategy as a new approach to macro-regional development that, if it was to succeed, was most likely to do so in the Baltic Sea region due to an unprecedented level of cooperation between EU Member States. So far the EESC had been rather in favour of the Baltic Sea Strategy but he was currently working as rapporteur on an opinion that was likely to become more critical. There were a number of challenges facing the strategy which it had to overcome if it was to prove effective, such as a) its added value b) the issue of governance c) the attitude of the wider EU to the Baltic Sea region and d) the suitability of the Northern Dimension for addressing the unusual configuration of the Baltic Sea Strategy. As regards added value, he saw a risk that the strategy had taken on too much. Trying to be all things to all men might endanger its

11 success. There was an argument for concentrating efforts on a small but strategically vital set of objectives. For example, the progress made in the last three years in terms of halting the decline in fish stocks in the Baltic was largely down to HELCOM and what value could a Baltic Sea Strategy add to that? Turning to the question of governance he said that those Member States that were in most need of the strategy seemed to be the ones that were the least involved in its implementation. The Commission was faced with a juggling act in that directorates-general were going to be involved in the coordination of the strategy. With horizontal actions and crosscutting themes it would all be very complicated. The original momentum to create the strategy had come from the European Parliament, which clearly wanted to include Russia and other nonmember states. The Commission and the Council had gone for an internal EU-perspective. The Commission focused on the coordination of existing initiatives and wanted to keep institutional mechanisms to a minimum with no additional funding. The Parliament - supported by the EESC - proposed a specific budget line for the strategy, an annual Baltic Sea summit and an expansion of regional organisational bodies within and outside the EU system. The strategy was essentially transnational in character and there might be a need for mechanisms within the strategy for linking the internal and external interactions, especially at an operational level. Despite having expressed interest in the strategy, Russia did not want to be formally involved at a political level. Based on his own experience Uno Aldegren, member of the Committee of the Regions and second deputy chair of the Regional Executive Committee of Scania (Skåne, Sweden) saw a great potential in developing cooperation between regions and cities in macro-regions. Cross-border and trans-regional cooperation had proven positive effects on economic growth. However, a central leadership with the capacity to highlight goals and visions was necessary. The Baltic Sea Strategy was one of the first attempts to put this into practice and so far it looked very promising. He did not see any need for a specific budget line in the beginning but the available funds should be spent better. He saw potential in the fact that the strategy put the EU and Russia on an equal footing as partners. The Scania region cooperated with Danish and German regions in areas such as research, infrastructure, communication, culture and tourism. In the area of research and research facilities in particular, much had been achieved: two large research facilities were to be established in the Scania region: the European Spallation Source and the MAX-lab. Similar facilities were planned for building in Hamburg, and soon an extraordinary regional base for world-class research would be in place. The main priority in relation to communications was the traffic corridors between the Baltic Sea region and central Europe; a decision had already been taken on a fixed link over the Fehmarn Strait and it was generally recognised that there was a need for a fixed link at the northern end of Öresund. Together with an upgrade of the rail tracks and new highways this would be of great importance to the development of the Baltic Sea region as such. Cooperation in the Öresund region was rather formalised: back in the 1990s a committee was set up with political representatives from both sides of Öresund, with a specific view to developing a common labour market. Today some people commuted across Öresund but the number was rising steeply. Culture and higher education was another priority area: the socalled Öresund University was a cooperation venture between 11 universities on both sides of the sound with a total of students and researchers. He underlined the importance

12 of the democratic process: the decision-making process had to be open and participatory with a broadly approved political leadership. There was a clear connection between good political leadership, democratic institutions, sustainable economic growth and positive regional development. This was also supported by scientific research. Uno Aldegren had written a report on "Good governance - a key factor for the sustainable economic development of regions" that he had presented to the Congress of Local and Regional Authorities of the Council of Europe in March this year. Briefly summarising this report he said that citizens demanded more public involvement in economic affairs. The regional level could be a driving force behind innovation and sustainable economic development. Economic success depended greatly on intangible assets such as confidence, attractiveness and dialogue. Regionally-elected representatives needed to improve the transparency of decision-making, foster efficient management and guarantee respect for the rule of law. The regional level of governance was well placed to strengthen partnerships between all stakeholders. There then followed a general debate with comments and questions from the audience and answers from the panel on the following issues: Lithuanians leaving the country but not going to other Baltic Sea states, the differing views on the European Court of Justice and the Posting of Workers Directive, what organisations representing entrepreneurs could be expected to do, the role of a Baltic Sea Civil Society Forum, the fact that many Baltic Sea states would hold the EU residency in the years ahead, which would give the strategy considerable visibility, the linking of internal and external interactions through a special interest group, the importance of the social dimension of the internal market and the EESC acquis in this respect, the Viking and Laval judgments and restrictions on mobility, the role of the Council of the Baltic Sea States, the gender aspect when discussing democracy and trust in societal stability, the involvement of citizens in the implementation of the strategy, the need for additional funding and for making more effective use of available funds, how to measure the success of the strategy, the long and comprehensive consultation process preceding the strategy and the effect of the crisis on national contributions to projects within the strategy. 23 October, second session: Economic development and employment prospects in the Baltic Sea region Programme manager Bo Storrank presented the Central Baltic INTERREG IV A Programme , one of the cross-border cooperation programme under the European Territorial Cooperation Objective (objective 3). These programmes were relatively small players compared to objective 1 and 2 programmes but instead their strength was in the focus on their international dimension. He pointed out that in addition to the Baltic Sea Region Programme there were a number of cross-border programmes in the Baltic area, one of which was the Central Baltic Programme. The various programmes were coordinated at different levels and within the Central Baltic Programme a task force had been set up to look into practical ways of linking the Central Baltic Programme to the Baltic Sea Strategy when choosing projects. The Central Baltic

13 programme covered parts of four Member States: Sweden, Finland (including the Åland Islands), Estonia and Latvia. There was a rather long tradition of cooperation in this region, including in an EU context. The vision of the Central Baltic Programme was to create a globally recognised, dynamic, sustainable and competitive region that was attractive for business and visitors and where people wanted to live, work and invest their money. Its three priorities were: 1) a safe and healthy environment 2) an economically competitive and innovative region and c) attractive and dynamic societies. The last priority especially offered opportunities for people-to-people contacts. He elaborated on the second priority, which was the one most clearly linked to the theme of the conference. The promotion of entrepreneurship was a declared goal as the area in question was underdeveloped in this respect. One project was focusing on female entrepreneurs and there were also activities targeting young people. Another goal was to make better use of the labour force, for instance by increasing mobility. Other sub-priorities were access to information and communication technology and providing support for the development of new business opportunities. Local and regional authorities, state organisations, non-governmental organisations, general interest organisations and, to a limited degree, private enterprises could apply for project funding. The financial crisis had resulted in Latvia and Estonia in particular having certain problems with the so-called own-share of the funding. Finally, he pointed out that there were still around 60 million EUR left for the rest of the funding period. Mikä Häkkinen, executive secretary of the Baltic Sea Trade Union Network (BASTUN) and communication manager of the Baltic Sea Labour Network (BSLN), first spoke about BASTUN, a network between 21 trade union confederations in the Baltic area representing some 11 million workers in total. He was concerned about the lack of debate on the social dimension of economic growth and more particularly on the labour market and workers. The Baltic Sea region could roughly be divided into two, with a considerable gap between the two sides in terms of prosperity: on the one hand there were countries that could be characterised as welfare states with regulated labour markets, collective bargaining and agreements between strong social partners and a fairly well functioning public sector. On the other hand there were countries with a more liberal labour market model with no collective agreements, a fairly weak public sector and a low level of social protection. He pointed to a number of possible problems: the rights of workers were under pressure and there was a risk of social dumping and informal employment that in Finland alone amounted to a loss of some 5 billion EUR in tax income. There was also the problem of a brain drain. In the Baltic States the crisis had led to more cooperation between employers and workers but they did not get their voice heard when turning to politicians. All in all it seemed evident that the Baltic Sea region could benefit from transnational bodies or forums and there was also a need for more information about the situation on the labour market. The Baltic Sea region should be a model for the rest of Europe in terms of sustainable labour markets. Trade unions should cooperate in order to make sure that the quality of labour markets was improved. Cooperation between social partners and political decision-makers had been one of the keys for success - a real social innovation - in the Nordic countries and this mechanism should be implemented in the whole region. He then put on his other hat and presented the Baltic Sea Labour Network (BSLN), a transnational INTERREG project with 26 partners from 9 countries

14 and a budget of 2.7 million EUR. Its priority countries were Estonia, Latvia, Lithuania and Poland. It sought to solve problems due to the economic crisis and the mobility of labour in the Baltic Sea labour markets by means of active labour market policies and social dialogue. This project had been designated as a flagship project within the Baltic Sea Strategy. The idea was to connect both experts, through a network of knowledge, and decision-makers - including social partners - through a forum of development. New approaches should be tried out. The first meeting of the Steering Committee had taken place only a few weeks ago and a memorandum would soon be published. Pekka Nurminen, head of the European Parliament s Information Office in Finland, pointed out that there was a considerable amount of parliamentary activity and forums relating to the Northern Dimension and the Baltic Sea region. He mentioned the 18th Baltic Sea Parliamentary Conference that had been held from 30 August to 1 September 2009 and where the European Parliament and the Nordic Council of Ministers along with national parliaments and regional assemblies including some from Russia - were represented. The Finns had been particularly active, across party lines, and next year s conference was to be held on the Åland Islands. He also referred to the Conference of Parliamentarians of the Arctic Regions, the Network of Barents Parliamentarians and the Northern Dimension Parliamentary Forum hosted by the EP in February this year. The funding of the Baltic Sea Strategy was a major concern for the Parliament. However, he could deliver the news that only the previous day the Parliament had adopted an amendment to the 2010 budget that would give the strategy its own 20 million EUR budget line for funding coordination and pilot projects. The initial EP resolution from 2006 had already called for a specific budget line, and the 2009 budget had a zero budget line for the strategy. There were still going to be negotiations on the issue and a legal basis would also have to be put in place but with yesterday's decision the Parliament had at least put some pressure on the Commission. Finally, he summarised the conclusions of the September conference in relation to the growth and employment prospects that included the following: a) a positive branding of the region was required b) barriers to the development of cross-border mobility should be identified and prevented, and information centres should be set up and c) social dialogue in the region should be strengthened. There then followed a general debate with comments and questions from the audience and answers from the panel on the following issues: The exportability of the Nordic labour market model to the new Member States in the region versus a compromise between the two systems, the good societal results achieved with the presence of strong social partners, the adoption of a legal basis for spending the 20 million EUR proposed in the budget, the role of the information centres proposed by the Baltic Sea Parliamentary Conference, the amount of red tape when applying for INTERREG funding and the possibilities of reforming the procedures, the accessibility of the Central Baltic Programme secretariat and the possibility of smaller organisations linking up with bigger and more experienced ones when applying for funding, and the lack of real decisionmaking power within the BASTUN network.