Hololei highlights innovation

Henrik Hololei.

PHOTO: Küllike Rooväli

Henrik Hololei, future European Commission deputy secretary-general, says Europe cannot keep riding along old rails.

Is European Union currently having the worst time-period in its history?

There have been crises before, but I would rather say that right now European Union is in the deepest phase of soul-searching of its history.

One factor that has lead to this soul-searching is the expansion that happened nine-ten years ago. The other factor, naturally, being the deepest economic crisis of the last decades. The third being the euro and the euro crisis.

Regarding the euro crisis, there are two assessments, one of which has come true and the other will not. The one that has come true is the claim that a monetary union would not work without a political and a fiscal union. The other thing, which I do not think will come to pass, but is talked about by many sceptics and especially Anglo-American media, is that euro as a phenomenon cannot exist. Yes it can. I just cannot exist in the manner formerly considered possible.

But still: I cannot remember there ever being a time when from such high positions and from so many angles it is being asked if we actually need the European Union at all.

To my above explanations, I would like to add one more aspect. By now, we have lost or are about to lose the generations remembering the horrors of World War II – the generation which saw European Union as a guarantee for peace; who remember, by personal experience why the union was created. These generations are gone and for today’s decision makers, that past experience is no longer important.

Will the Brits quit Europe?

The Britons, indeed, have weighed the issue in the manner most sharp. Should they have a referendum today, it would end 50:50, I think. In some sense, the topic is also a substitute, as by it attention is drawn away from domestic problems.

I check British medial daily, and at a certain moment it was evident that it’s a one way deal. Nobody stood up in defence of Europe until, about a month ago, many major and influential British entrepreneurs came out with a forceful statement that «hey friends stop this nonsense, it will have a bad effect on Britons».

I know that talking about the European Union it is often argued that without the union we would not have this huge single market. What do you think: couldn’t the single market function without the EU? Or, should EU be no more, would the visa requirements return?

So and so, cannot be ruled out. In spite of mistakes made, the functioning European single market still is a huge achievement: thanks to that, we are a global doer, an equal partner to USA and China.

I think visas would not return, but market hurdles and customs duties would.

That would go fast and simple, in the blink of an eye the customs hurdles and other restrictions would be back. For that, the pressure exists in every state.

Without the European Union, internal market would simply come apart. Looking, for instance, at my field – transportation – we do have the single market, but still there remain so many hurdles and restrictions. I see we could save dozens of billions of euros, once these things are settled. Without the single market, more hurdles and limits would be added.

I remember an interview with another senior EU official – [European Court of Auditors member] Kersti Kaljulaid –, who brought an example of how Europe’s place in the world has changed. She said: formerly, Europe talked about catching up with America; now, they are saying that the «main thing is not letting china pass us».

It is quite logical that china will pass Europe by. 1.3 trillion people, they will also pass America. In the European context, drawing comparisons like that is, in my opinion, foolishness, a little bit like the Soviet Union which was also supposed to pass America by, at any moment.

Are you not bothered by Nobel Awards not coming to Europe, that the Googles and Apples do not arise in Europe?

Talking of European innovation, we often forget that in high tech, Europe does not lag behind at all. However, Europe often fails to underline that. Positive examples abound.

However, one thing is true, and here Europe has indeed missed it: with everything that has to do with information technology. Here, America is a sovereign leader and no one has caught up with it.

Paradoxically, many basics of information technology have taken their baby steps in Europe, like Internet, but at a certain moment many new ideas have been entangled. A great European problem being that many new ideas are not applied in society as speedily as in America. In Europe, there is a terrible fear of failure.

Another unbelievably big advantage of Americans is their huge defence industry. By the way, the US defence ministry being the major client of many global US IT-groups. Europe does have a couple of defence industry related projects, but we still lack a consolidated defence industry.

Critics say Europe has much more politicians, than America, who are much more protectionist, more conservative, stuck in the past, with tendencies to over-regulate. At all costs, they cling to status quo, not daring or unwilling to take risks, to advance.

True, Europe has more of that. However, looking at Europe’s internal debates, these often come from member states. In these debates, the European Commission is rather on the opposite side, standing for liberalisation and future oriented.

I would now come to transportation – your field for many years. Estonian Air is in the red, big time. They have made management errors, for sure, but most of European aviation companies are having difficulties.

It depends on business models. Over the last decade, European aviation market has been through a tremendous change. 45 per cent of European market is in the hands of budget airlines, and these are highly profitable.

Let me immediately interject: is the European Commission going to… go after them, you know what I mean? I foreign media, I constantly read that many – mostly the other airlines, of course – want it, hope for it.

No such plans. Their business model works very well. Clearly, their business model also poses questions if perhaps there has been breaches of competition rules or unfair subsidies. Should doubts arise, things will be inspected.

Dozens of complaints are being filed concerning these companies, but, according to my knowledge, no violations have been detected. Like, for instance the Charleroi and Ryanair case in Belgium – no violations were detected. Many cases are still being investigated, I do not know what will appear.

Reality speaks for itself. However, these companies would never be so profitable if the entire business model would be based on merely subsidies or cheating. May-be there are some violation, but, as a whole, they have just done a tremendous job.

Budget airlines have had a tremendous effect on the so-called national flagships. I am thinking, personally, that it is quite absurd for every country having to have a national airline.

It is absurd, indeed. It’s a relic. The next step, in addition to European market consolidation, would be global consolidation, as a large share of global aviation market is highly restricted and very difficult to be accessed by outsiders.

Thanks to global changes, over the last decade, a number of new and successful airlines have entered the market, especially in the Gulf region. Emirates being the best example. Their airlines being special in that all have a tiny domestic market, wherefore, from the very beginning, they have had to think internationally.

Are the Gulf area airlines being subsidised with oil money?

No, rather not.

However, next to budget airlines, the Gulf companies are the next in line for numerous complaints.

Everybody claims they are being subsidised. Emirates says: here, look, these are the audit results, inspect everything. All major European airlines, except British Airways, have come and complained that the Gulf guys are cheating. But if you ask for the facts, there is silence.

The truth, however remains: these airlines are here, they have altered the global market, they are here to stay.

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