This is a hurdle to a communication but is worth trying to explain in a simple way by listing main forthcoming challenges to European Union and to Lithuania, in particular, which now prepares in the second half of 2013 to take over the EU Council Presidency*.

The main challenge for the EU, which is now in a “near to zero” territory, is sustained GDP growth, which goes together with employment creation and with higher revenues to national budgets. This can be done with structural reforms to boost productivity and improve starting positions in the competitiveness of the economy as combined with R&D investments into new technologies to boost innovation and maintain an export led growth. It all requires a stable macroeconomic and FDI friendly environment, which also includes a discipline of public finances. These elements will be crucial among Lithuanian EU Council presidency priorities.

Lets start with economic and monetary union, or the euro, which now is at the epicenter of EU decision-making. The EU is facing the multiple pressures and primary tasks to advance in supervision and further integration of its financial and banking sector, have more Brussels-centered national budget oversight linked with automatic deficit and debt correction and with more binding relationships. Finally, EU urgently needs to design a blueprint project for a political union with full democratic legitimacy. With the latest set of proposals made by Herman van Rompuy this process will have to crystallise in 2013 with an operational roadmap to a genuine economic and monetary union, while not excluding a possibility of EU Treaty change if that would deem necessary.

The second challenge is employment. The European Commission within the framework of Europe 2020 and European Employment Strategy will table in 2013 new employment guidelines after 2014. These guidelines will be part of the country-specific recommendations for EU member states, especially concerning their labour market policies. The youth employment in this context will be central to make sure that new jobs in the labor market will be within reach through a set of mobility programmes, including a support to a first-work experience, internship or youth entrepreneurship schemes. In addition to that, peer-review mechanisms should be enhanced further focusing at exchanges of good policy practices in education and national qualification frameworks as well as aiming at open and flexible regulation of domestic labour markets. One should well recognise that unemployment levels of youth in some EU member states are reaching up to 50 per cent which simply cannot be tolerated.

Next to employment led growth we need technology innovations to sustain it in a longer term. EU innovation policy will have to reach a critical mass to kick of with EU Digital single market in 2015, to adopt in 2013 a new EU framework programme for research and innovation up to 2020 (Horizon 2020) and to establish a European research area in 2014. This would require an intense preparation throughout 2013.

Competitive and secure EU energy market is the next crucial element of EU growth. The EU internal energy market will be fully functional in 2014 and will have an integrated energy network from 2015 onwards. In the meantime remaining bottlenecks should be well addressed together with a forthcomming contribution by the European Commission. To this end, a set of clear actions will have to be taken to finalise unbundling of the EU energy market and foster investments into a smart energy infrastructure and a competitive energy policy mix.

A well-functioning EU Single Market is a precondition to a competitiveness and in order to foster the competition across the sectors, its implementation should be further improved and adapted to specific sectors. It must be well integrated in to the next railway package, supported by effective public procurement policies and followed with reduced administrative burden. The single market should meet with growth-friendly tax policies and be well-connected to the EU economic migration policies. These and remaining programmes for the implementation of the next EU financial framework (2014-2020) will be taken in the course of 2013.

* [The Council of the European Union, as an executive branch, every six months has a new rotating Presidency from a list of EU Member States. Today, in the second half of 2012 we have Presidency of Cyprus and in 2013 the EU Council of Ministers will be chaired by Ireland (first half) and Lithuania (second half).

The presidency of EU Council should not be confused with the President of the European Council, who is chairing the European Council for the term of up to maximum 5 years at the level of EU Heads of State or Government. Currently this post is held by Herman van Rompuy, who is a former prime minister of Belgium. It should not be confused with the President of the European Commission Jose Manuel Barroso, either, who is a former prime minister of Portugal and now serves a second term of 5 years as a head of the European Commission, a body which has wide powers to initiate EU legislation. Then there is the EU High Representative responsible for the Common foreign and security policy of the EU, which is served by Catherine Ashton, a former Commissioner for Trade and (sic!) Leader of the House of Lords of United Kingdom. Confusing, isn’t it? Not to say, that the competences executed by these institutions in most cases are shared with national administrations of the EU member states, be it Finland or Italy.

Within the EU Council the decisions are being negotiated by national representatives from all 27 EU member states (28 – with Croatia which will join the club on 1 July 2013). The negotiations continue across a wide spectrum of sectoral policies, be it in economic and financial affairs or in employment and social policies. The negotiation between 27 is not easy and requires not only good brokering skills, but also a deep knowledge of EU affairs, which are to a great extent technical, sometimes even hardly comprehensive and led by few hundred different expert working groups.]

Photo: Lithuanian Association Of Graphic Design