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CONGRESS PROGRAMME Interactive Panel Sessions - 1

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					                                                                                 CONGRESS PROGRAMME
                                    Interactive Panel Sessions - 1
                                    Economic Performance




                                    EU financial markets in a wider Europe

      Speakers                      Lutgart Van den Berghe, Member of the Supervisory Board of ING Group (Moderator)
                                    Olivier Lefebvre, Executive Vice-President of Euronext
                                    Tonio Depasquale, Chief Officer Credit Management and Retail Business at the Bank of Valletta
                                    Chris Lebeer, Chief Executive Officer of Banksys
                                    Alfred Steinherr, Chief Economist at the European Investment Bank

      Summary of the discussion
      This discussion focused on the prospect of an integrated EU financial market and the way in which candidate countries
      could participate in it.

      Prof Lutgart Van den Berghe started the discussion by pointing out that the role of financial intermediaries vs. financial
      markets, the role of the stock exchange and the ownership concentration varied substantially between geographical
      areas. Thus, the average EU market capitalization as a percentage of Gross Domestic Product was more than four times
      higher than that of the Central and Eastern European candidate countries in 2000, Van den Berghe said. In terms of
      ownership concentration, the UK and the US have a much lower concentration than other EU or candidate countries.
      Finally, it is important to understand the differences in corporate governance and ownership structures across countries,
      and to analyse the development of capital markets, she said.

      Olivier Lefebvre pointed out that capital market integration is needed since equity market clients have moved from
      traditional country investments to sector investments. However, at the moment cross-border transactions within Europe
      are still too expensive. At the same time, investors want to tap larger markets, but they do not want to be cut from the
      local information base. Therefore, Euronext wants to leave liquidity where it is and expand through mergers &
      acquisitions and partnerships, thus building the infrastructure to facilitate cross-border trade. In this way, Euronext
      currently works in equity markets under four different jurisdictions. Integrating Eastern Europe into this picture is more
      difficult, since the critical mass there is still relatively limited, Lefebvre said. Necessary conditions for them to integrate are
      an established legal system, sufficient IT tools and functioning clearing and settlement systems.

      Tonio Depasquale presented the example of Malta, which is an open economy with strong trade links with the EU.
      The main pillars of the Maltese financial services infrastructure are the Central Bank of Malta, the Malta Financial Services
      Centre and the Malta Stock Exchange. The Central Bank’s primary role is that of monetary policy, maintaining financial
      stability and managing the exchange rate system. The Malta Financial Services Centre is the unified regulator for banking,
      financial institutions, investment funds and insurance companies. The Stock Exchange has strongly increased its role in
      the raising of capital over the last decade. Finally, Malta is in an advanced stage to satisfy the Maastricht criteria, making
      it even more attractive for foreign companies and investors, Depasquale said.




                                                                                                                  Chris Lebeer,
                                                                                                                  Olivier Lefebvre,
                                                                                                                  Tonio Depasquale,
                                                                                                                  Alfred Steinherr,
                                                                                                                  Lutgart Van den Berghe.


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                                                                          CONGRESS PROGRAMME
Chris Lebeer illustrated the consolidation trend in Euroland with electronic payments. In order to efficiently operate a
payment system, full alignment has to be achieved between each element of the value chain: cards, access devices,
networks, and central hosting systems. Furthermore, in order to profit from economies of scale, a single architectural
concept has to be designed, he said. Currently, competition in the payment business is increasing, driven by consolidation
of the banking industry, merchants with significant cross-border payment needs and changing customer loyalty. Yet, more
competing alternatives are needed while standardising the underlying architecture. It should be noted that the cost-
efficiency of payment systems is highly non-linear. One strategy to become efficient is mass customization, as has been
done in the telecommunication industry. New standards such as the EMV (Europay, MasterCard and Visa)-standard may
be the way forward. But in the end, consolidation will probably be selective rather than European-wide, focusing on
stakeholders sharing the same security and performance requirements, Lebeer said.

Alfred Steinherr pointed out that of the foreign investment into Central and East European countries, 90 percent came
from private companies. The other 10 percent came from institutions such as the EIB, the largest provider of money to
the region. The question for the EIB was whether to focus on developing the banking system or the financial market.
Since the former is easier to develop and needed anyway, priority was given to the banking system, Steinherr said.
Hungary provided a good example, he noted. Foreign banks were allowed to take over Hungarian ones and this led to
quick results. If one wanted to create an efficient financial market, there were five conditions to be met: institutional
investors for monitoring, sufficient size, trading platforms, clearing and settlement systems and market integrity. Fulfilling
all five condtions is very difficult. The way out for Central and Eastern Europe may be to hook up to European financial
markets while keeping services at the local level, Steinherr said.




                             E-business and e-government in the new Europe

Speakers                     Erkki Liikanen, European Commissioner for Enterprise and Information Society
                             Jan Muehlfeit, Regional Director of Microsoft EMEA
                             Michael Treschow, Chairman of the Board of Directors of Ericsson (Moderator)
                             Nikolay Vassilev, Deputy Prime Minister of Bulgaria

Summary of the discussion
The discussion on e-business and e-government was a free-flowing exchange of ideas. The central theme was the multi-
faceted benefits of the technological revolution, and the need to channel this energy by a working public-private partnership.
Sponsoring research and development, and the dissemination and cross-fertilisation of new ideas should be the basis through
which governments and the ICT sector, together, can foster growth and innovation. All participants agreed that e-business is
still in its starting blocks. One should therefore avoid an overregulation of a technology that is not yet mature. Governments
should give markets time to develop themselves before they start interfering in them. The e-Europe 2005 Action Plan points
Europe in the right direction, the participants agreed.

European Commissioner Erkki Liikanen pointed out that a comparison between the US and the EU showed that, in order for
the EU to catch up with productivity growth, investments are needed in both research and ICT. The e-Europe 2005
programme does so by taking those policy decisions that really make a difference. The programme focuses on three areas:
e-government, e-learning and e-health, which together make up more than half of each government’s budget. E-government
is much more than putting governments on-line. Liikanen said. It should in particular lead to a reforming of the back offices.
E-learning focuses on life-long learning, while e-health wants to liberate medical personnel from non-medical activities and
thus boost productivity and limit the sharply rising cost. Finally, on the supply side, there should be competition from different
technologies to offer broadband access, with the EU should be assuring a level playing field, the Commissioner said.

Jan Muehlfeit linked the Internet revolution and e-Europe in a technological context. While the penetration of the
automobile or the telephone took 40-50 years to reach a fifth of Europe’s population, the PCs, the Internet and the cell phone
did it in less than 20 years. To maintain this momentum, the technological industry should continue to invest in infrastructure,
because high-speed connections are essential for the growth of e-government and e-business. In addition, unbundling the
local loop and guaranteeing access to the last mile are critical. Muehlfeit stressed that e-government should also assist the
process of digital inclusion, reaching out to the unemployed, disabled and elderly. Examples of initiatives in government-to-
public in the UK, government-to-business in Spain and government-to-government in Croatia showed that access and
efficiency can be improved, but only if the set-up processes are transparent and if they adhere to neutral procurement rules.



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                                       Michael Treschow,
                                          Erkki Liikanen,
                                          Jan Muehlfeit,
                                        Nikolay Vassilev.


         Michael Treschow began with some R&D examples of his own experience at Ericsson. He noted that the mobile phone
         unit would soon be a centerpiece for moving pictures or a sensor for a plethora of applications. The new generation of
         devices will move away from a mere SMS-chatboard – today SMS still accounts for 15 to 20 percent of mobile operators’
         revenue – to more sophisticated applications as the bandwidth and the transmission speed increase. The economic effects
         of these changes have been studied in detail, but few are looking at other effects, such as environmental ones, Treschow
         said. New applications will, for instance, minimize the unnecessary small car travels within the city.

         Nikolay Vassilev moved to the topic of the future member states. Eastern Europe had missed a part of the industrial
         revolution, but now had a chance to catch up on the electronic side. “The Eastern part of the continent is neither less
         talented in technical skills nor less hungry for technological development,” Vassilev said. All participants agreed on the
         existing intellectual assets in Central and Eastern Europe, but they believed that politics was too involved, while regulators
         were not independent enough. Eastern Europe no longer needs hardware transfers (as technology is omnipresent), but
         good marketing and business skills, the panel agreed. Too much political involvement is not helping here. However,
         twinning programmes are designed to do both: transferring skills and subtracting politics out of these processes.




                                     Strategic alliances and competition

         Speakers                    Mario Monti, European Commissioner for Competition
                                     Jean Lemierre, President of the European Bank for Reconstruction and Development
                                     Dominic Casserley, Director, McKinsey & Company London
                                     Bojidar Danev, Chairman and Executive President of the Bulgarian Industrial Association
                                     Pierre Jean Everaert, Chairman of the Board of Directors of Interbrew (Moderator)

         Summary of the discussion
         Strong competition authorities and strategic alliances together guarantee the correct functioning of the markets, increase
         productivity, and serve customers. This discussion addressed key strategic and organisational considerations in the
         enlarged Europe involved in the creation and management of inter-firm strategic alliances and competition.

         European Commissioner Mario Monti highlighted that the prospect of enlargement had already triggered major
         structural changes in many candidate countries. There is now increased legal certainty, while a modern administration is
         in place in many of them. Issues still exist, however, regarding competitive regulations. Although anti-trust regulations
         have been applied and an independent agency exists in most countries, the regulation of state aid still is problematic,
         especially regarding the restructuring of the steel industry and the issue of tax competition, Monti said. As regards
         strategic alliances and mergers, the candidate countries are already cooperating with the EU in several specific cases,
         e.g. in the case of the merger between Südzucker and St Louis, he noted.

         Jean Lemierre described the essential role of the EBRD – “the single largest investor in the region” – in the development
         of the candidate countries’ economy. This institution establishes a bridge between the private and public world, and
         between a centralized and a market economy. In this sense, the EBRD’s objective is not to compete with the private
         sector but rather to complement it, by assuming its share of the initial risks of the funded ventures, Lemierre said. The
         EBRD also plays a role in creating the right conditions for competition in the candidate countries’ markets. For instance,
         the EBRD serves competitors, favouring none above the others. In many instances, it also takes part in the policy dialogue
         with the authorities, he said.

         Dominic Casserley expressed the view that strategic alliances – both alliances and M&A – are crucial to compete
         successfully in a globalising economy. This is even more relevant for Eastern European countries with the liberalisation of
         formerly public monopolies, the change of ownership from public to more demanding private investors, the need of a


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                                                                        CONGRESS PROGRAMME
massive upgrade of the infrastructure, and the introduction of global brands. Over time, however, different types of
strategic transactions are likely to be used. As privatisation opportunities disappear, competition will increase and the skill
gaps between candidate countries and current member states will also disappear. Lastly, Casserley outlined that the skill-
set that companies will need in order to succeed in strategic transactions, and the framework that regulators will need to
develop, will become increasingly important and complex.

Bojidar Danev discussed the status of strategic alliances in Bulgaria. Although the legal framework is in place, several
aspects inherent in the country – its distance to key European markets, for instance – still hamper the full development
of strategic alliances. Nevertheless, Bulgaria has known several recent success stories that should encourage candidates.
The country also presents significant opportunities such as in the electricity sector, Danev said. He further outlined the
key factors that are beneficial for strategic alliances in Bulgaria: the presence of highly skilled manpower, of adequate
infrastructure, and access to markets, as well as a favourable business climate with low taxes, an efficient administration
and a functioning legal system.

Pierre Jean Everaert argued that strategic alliances can be a valid alternative to mergers and acquisitions. He gave two
examples. The “European Retail Alliance” formed in the ‘90s between Casino, Ahold and Argyll is a good example that
such an alliance can lead to significant value creation for all partners, even if the ultimate objective of the alliance
(merging) is not reached, and without infringing on competition law, he said. Such value creation was also demonstrated
with Philips, Sony and Matsuhita, whose alliance resulted into the revolutionary launch of the CD, CD-ROM and DVD,
even though the alliance was ultimately dismantled. Four factors can push a company to enter into an alliance: the
prohibitive cost of “doing it alone”, the opportunity to benefit from a groundbreaking innovation, the fact that some
markets would not understand the company’s absence, and territorial advantages linked to a brand, Everaert said.




                                                                                                        Pierre Jean Everaert,
                                                                                                        Mario Monti,
                                                                                                        Jean Lemierre,
                                                                                                        Dominic Casserley,
                                                                                                        Bojidar Danev.




                             The enlarged single market in a globalised economy

Speakers                     Michel Tilmant, Vice-Chairman of the Executive Board of ING Group
                             Daniel Janssen, Chairman of the Board of Solvay (Moderator)
                             Petras Austrevicius, Chief Negotiator for Lithuania
                             Pascal Lamy, European Commissioner for Trade
                             Martti Ahtisaari, Chairman of the EastWest Institute and former President of Finland

Summary of the discussion
This discussion focused on both the enlargement of the European market and the changing context, notably the aspect
of globalisation. In doing so, the discussion moved from the specific to the general.

Michel Tilmant started the discussion by pointing to the important role that financial institutions such as ING played in
developing the capital markets in Central and Eastern Europe. A strong financial sector is needed for sustainable growth,
including up-to-date regulations, good supervision and accounting standards and a strengthening of domestic capital
formation. Financial institutions played a valuable role in bringing both expertise (in asset management, insurance and
banking) and capital to these countries.

Daniel Janssen presented a different case example, namely the Solvay case in Bulgaria. In 1996, Solvay had the chance
to buy the biggest single soda ash production unit in the world, Sodi Devnya in Bulgaria. At the time, Bulgaria was
bankrupt and had again a communist government. Nevertheless, Solvay decided to move forward with the EBRD and a


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         Turkish group as minority partners. They indeed purchased the plant, modernised it, and turned it into a profitable plant,
         which is currently exporting 90% of its production around the world.

         Lithuania’s Petras Austrevicius moved towards a more macro-economic perspective. He pointed at Lithuania’s solid
         monetary policy resulting in a low inflation rate, exchange rate stability and a high degree of predictability, which has
         been one of the cornerstones of its economic success. On top of that, lower production costs make it an attractive
         investment country, especially when after EU enlargement the removal of customs procedures will make trade even
         easier. Finally, he noted that after enlargement the EU’s border with Russia would expand two times, which meant that
         the Baltic experience of beneficiary cooperation also with non-EU neighbors could be an important asset.

         European Commissioner Pascal Lamy addressed the question of how enlargement would affect the trade aspects of the
         EU. He started by pointing out that the average trade-weighted custom tariffs in the candidate countries were still about
         twice as high as those in the EU, meaning that the candidate countries would have to lower their level of protection.
         Secondly, global trade and economic integration would facilitate the integration of the candidate countries into the EU,
         since the Doha agenda based on increased trade openings and the strengthening of competition rules is in line with the
         European social model. Finally, enlargement would enhance Europe’s weight in the multilateral trade system, since the EU
         would speak with one voice as of the first day of enlargement (no derogations, no transition periods). This one voice
         representing 25-28 countries would obviously weigh heavier than that of the current EU-15, Lamy said.

         Martti Ahtisaari took an even more global perspective. He started from the observation that the global economy is
         becoming a force that has an ever-stronger impact on international politics. At the same time, just advancing trade
         liberalisation is not enough: we need to develop global institutions and international justice as well, he said. The EU
         experience in this process of globalisation is a paradox: while the EU is one of the most influential actors, it does not
         exercise a visible influence on the process of globalisation. Improved coordination of the EU policies in crisis management,
         development cooperation and trade relations is needed in order to increase the EU’s impact in the global arena.
         The importance of the EU’s experience is broader than for Europe alone: many of the principles that the Union is based
         on are principles we would also like the globalised world to respect. Finally, better coordination with the EU’s partners is
         needed. Since the global economy and international relations are often not a zero-sum game, it is important that the EU
         supports Russia in becoming a member of the WTO and that it avoids a trade war with the US, Ahtisaari said.

         During the Q&A session, the speakers touched upon the role the EU could play in addressing the increased insecurity
         after 11 September. Ahtisaari argued that the biggest EU influence could come from influencing the world as a global
         economic power, since it would not become a military power. In order to do so, it is imperative that the EU maintains its
         competitiveness, also after enlargement. Lamy pointed out that the increased security checks had led to obstacles to
         trade and to increased costs. The question is how high a cost we are prepared to pay for that, he said. In the longer
         term, the imbalances in the world to which the insecurity is linked should be addressed by further trade openings under
         the WTO rules, he added.




                    Daniel Janssen,
                    Michel Tilmant,
                Petras Austrevicius,
                   Martti Ahtisaari,
                       Pascal Lamy.




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                                                                       CONGRESS PROGRAMME
                            Interactive Panel Sessions - 2
                            Social Performance




                            Consumer confidence and safe food products

Speakers:                   David Byrne, European Commissioner fot Health and Consumer Protection
                            Antony Burgmans, Chairman of Unilever (Moderator)
                            Dimitris Daskalopoulous, Chief Executive Officer and Vice-Chairman of Delta Holding
                            Roland Vaxelaire, Permanent Delegate of the Carrefour Group to the EU
                            Jim Murray, Director of the EU Consumers’ Organisation BEUC

Summary of the discussion
European Commissioner David Byrne underlined the huge challenge that constitutes the forthcoming enlargement of the
EU. The Commission planned to publish a series of reports setting out its collective view on the state of readiness of each of
the Candidate Countries for accession in 2004. The European Council would make the final decision in December 2002. The
challenge is to bring standards in the Candidate Countries up to current EU standards – and not to tolerate any weakening
of food safety levels within the enlarged internal market, Byrne said. Candidate countries must be involved in the current
debates on food safety in order to ensure harmonised food quality all over the enlarged Europe, he added.
The Commissioner also presented the work of the Commission in the area of food safety for the last two years, while a
whole range of new Commission proposals concerning the whole spectrum of food-related issues – including food hygiene,
feedingstuffs, food supplements and GM foods were currently in the legislative process.
The Commissioner identified three areas of key concern for food safety in the context of enlargement:
1. A major shift in the geographical borders of the EU with the need for a revised network of Border Inspection Posts to
guard against potential threats from imports;
2. TSEs (including BSE) and the need for Candidate Countries to enforce the same rules of public health as those currently in
force in the EU;
3.The upgrading of agri-food establishments in the Candidate Countries to the required EU standards: transitional periods
have been allowed in this matter, although only regarding specified structural deficiencies, but not regarding matters of
hygiene and control.

Antony Burgmans believed that in order to avoid the occurrence of any future food scares, there was a need to distinguish
between scares which are due to criminal acts (such as tampering with animal feed), and scares which occur from a lack of
knowledge or understanding (for example, failure of hygiene), as well as those which are due to “unforeseen”
developments - such as emerging animal diseases - and for which there are no immediate or simple solutions.
For the first type of scares, effective inspectorates and enforcement authorities at Member State level are of paramount
importance. In addition, Governments must take strong and swift action to prosecute criminal acts to ensure that public
confidence in the system is not undermined, Burgmans said. In situations where a lack of knowledge could result in a scare,
access to sound independent scientific advice as well as adequate training for those working in agriculture or the food
supply chain needed to be made available. Finally, it is essential to have good veterinary and public health monitoring
programmes as well as an approach which stimulates drawing conclusions and turning that into action, Burgmans said.
He also underlined that modern food chains are increasingly complex and it is impossible to hold one player responsible for
the entirety of it. He called for a strong and effective European Food Safety Authority (EFSA). He distinguished between the
safety of a food, and the quality aspects which have more to do with its flavour, colour and texture. He stressed that it
should be left to the market which spectra of these qualities are wanted by informed consumers. He also called for clear
legislation on claims that can be allowed to promote food products. He therefore welcomed the Commission’s future
initiative to regulate nutritional, functional and also health claims.

Dimitris Daskalopoulous returned to the definition of food safety. He mentioned that we had now achieved very high
standards of food safety, while at the same time consumers were very defensive about their food. In his view, consumers
must participate in the debate on food safety and must be aware that even higher standards will mean increased costs.

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         Daskalopoulos also made a few proposals for restructuring the debate on food safety: the evaluation of costs and effects
         should be open to public debate; all players in the food chain should be involved; there should be an education and
         communication strategy tailored to the consumers, the media, politicians and scientists and finally, the new European
         Food Safety Authority should implement this strategy.

         Roland Vaxelaire described the achievements of Carrefour in the area of food safety. He mentioned the “Filières Qualité
         Carrefour”, the good practice guides and the policy not to sell any GMO products. In his view, the means to achieve
         these goals were a proper audit and the implementation of HACCP and ISO standards, the training of staff, and finally
         appropriate information to consumers and communication to the media. Vaxelaire also mentioned that Carrefour, the
         1st retailer in Europe, is part of the Global Food Safety Initiative.

         Finally Jim Murray explained that because of globalisation, food is now coming from a greater variety of countries and is
         processed in increasing complex ways. The distribution is also global, with very small enterprises producing products
         distributed globally. This has a price, and the result is greater complexity in the way the food is processed and increased
         difficulty in tracing the countries of origin, Murray said. Labelling has become increasingly important in this respect.
         Claims should be closely controlled and other sources of information such as the Internet should be monitored, he
         added. As regards the EFSA, he agreed that risk assessment of these new methods should be undertaken at the
         European level. Consumers should be involved in this process and participate in the achievement of food safety. The EFSA
         should not be responsible for risk management, Murray said.




                                                                                                                  Dimitris Daskalopoulous,
                                                                                                                  Roland Vaxelaire,
                                                                                                                  Antony Burgmans,
                                                                                                                  Jim Murray,
                                                                                                                  David Byrne.




                                      Meeting the skills gap across Europe

         Speakers                     Antonio Borges, Managing Director and Vice-Chairman of Goldman Sachs (Moderator)
                                      Viviane Reding, European Commissioner for Education and Culture
                                      Umberto Paolucci, Vice-President for Corporate and Government Strategy, Microsoft EMEA
                                      Tjark de Lange, President of YES for Europe
                                      Lajos Nyiri, Chief Executive Officer of the Zinnia Group

         Summary of the discussion
         Moderator Antonio Borges opened the discussion by pointing out that productivity growth in the EU is lagging behind
         that of the US. The main reasons behind this difference were the power of the American university system, which
         managed to attract researchers and students from all over the world; a strong R&D effort, driven by the private sector;
         and a risk-taking attitude towards innovation. In the EU, there is more human capital available than most people think,
         but there is a lack of mobility which prevents people from taking a more productive job. On average people were also
         less entrepreneurial, Borges said. He noted that the main question thus is what the EU could learn from the US.

         European Commissioner Viviane Reding recalled that the Lisbon Summit, by putting forward the idea of the EU as a
         knowledge-based economy, had for the first time launched education as one the main European topics. The task ahead is
         significant, since the EU currently lacks 2 million skilled employees in the ICT sector alone. This skills gap is not distributed
         uniformly across the EU: whereas the Benelux, the UK, Ireland and Germany are doing relatively well, the ICT shortage is
         growing in countries such as Spain and Italy, Reding said. European action is therefore needed to close the gap. This action
         should both address primary and secondary schools, to ensure that pupils leave school with good reading knowledge, with a
         diploma and with the ability to learn more; and universities to create cross-national centers of excellence, Reding said. She
         also pointed out that, regarding education, the candidate countries were already fully participating in the EU programmes.


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                                                                                                     Antonio Borges,
                                                                                                     Viviane Reding,
                                                                                                     Umberto Paolucci,
                                                                                                     Tjark de Lange,
                                                                                                     Lajos Nyiri.


Umberto Paolucci recalled that the Lisbon strategy on ICT was to give people the skills to exploit information and
communication technologies and to ensure that no one is excluded from the benefits of the information society. In order
to achieve this goal, public and private partnerships were encouraged. In this context, Microsoft is also working on
bridging the ICT gap in the EU through university programmes, as an authorized academic training provider, and in
retraining unemployed through the European Scholar Programme. The skills gap remained an important issue because
the IT curriculum was not adapted fast enough to ongoing technology developments. Also, the industry needed to work
more directly with educational authorities and academia and to share technology as it developed. Whereas the industry
could act as a “middle man” in closing the skills gap, governments should incorporate the certifications designed by the
industry to meet corporations’ needs into their qualification programs.

Tjark de Lange stated that the challenge is to change the mind-set of people from a national focus to a more European
focus. In doing so, it is probably more important to point out the things Europeans have in common rather than stressing
their differences. Initiatives for European programmes in education are very important, but in the end the individual
countries would have to execute them. These programmes could and should, address the issue of the skills gap. However,
the mentality gap would be more difficult to change, de Lange said. Finally, one should also learn to be patient: Europe
should not be changed completely within one generation. People needed time to start thinking European, he said.

Lajos Nyiri noted that the labour market had undergone various changes, including a closer inter-relationship between
the level of education and employment security and a growing gap between the demand for low- and high-skilled
workers. This meant that the skill and knowledge requirements of potential employees were changing quickly. Skills
nowadays needed to succeed in the labour market included not only technical capabilities, but also communication skills,
learning skills and a multidisciplinary approach. In order to address the skills mismatch, both the rigidity of the labour
markets and the conservatism of the traditional educational system had to be addressed. This was notably the case for
candidate countries, who have seen an FDI increase especially for the manufacturing industries and thus face difficulties
to match the future skill demands with the competences of the current labour force. Two of the measures to be taken
were the adjustment of the educational system to the global labour market requirements and the creation of a local
labour market demand for highly qualified ICT professionals, Nyiri said.




                           Migration of workers in a wider Europe

Speakers                   Odile Quintin, Director-General, DG Employment and Social Affairs (Moderator)
                           Peter Mitterbauer, President of VOI and Chief Executive Officer of MIBA
                           Jan Nijssen, Chairman Central Europe at the ING Group
                           Çelik Kurdoglu, Chairman of Kurdoglu Consulting Inc.
                           Giampiero Alhadeff, President of the Social Platform

Summary of the discussion
Opening the discussion, moderator Odile Quintin pointed out that there were two dimensions to migration in Europe:
the internal and the external dimension. Within Europe, only 0.5% of Europeans migrated to another European country
in 2001. However, it was the external dimension which produced a variety of reactions among European citizens.
On occasion, these reactions have been extreme and have not reflected projections of immigration. According to the
Commission’s Strategy for 2001, immigration from the Central and Eastern European countries would be 1.4 million in
2010. Quintin concluded that Europe needed an effective policy against illegal immigration and coordinated policies to
encourage the promotion of opportunities for the migrants.

Peter Mitterbauer argued that due to demographic changes, Europe will be compelled to open its borders. However,
common European instruments to organise immigration and an immigration policy based on an analysis of the skills


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               Giampiero Alhadeff,
                 Peter Mitterbauer,
                       Jan Nijssen,
                     Odile Quintin,
                   Çelik Kurdoglu.


         shortages and of labour requirements would ensure that Europe remains economically competitive and culturally rich.
         According to Mitterbauer, even in border countries such as Austria and Germany, the necessity for skilled workers
         should encourage national authorities to decide against introducing transition periods for the migration of workers
         from the Central and Eastern European countries.

         The opinion that an influx of migrants from the CEECs was unlikely and that migration will enhance Europe as an
         economic force, was also shared by Jan Nijssen. Nijssen pointed out that structural economic growth is the key to
         encourage workers from the CEECs to remain in their own countries, and that in turn, pension reform is the key to
         stimulate structural economic growth in the CEECs. According to Nijssen, accession to the EU would create new job
         opportunities in these countries by stimulating GDP growth, foreign investment and demand for local employees.
         Pension reforms could contribute towards this economic growth by reducing the yield on government debt and
         encouraging stability through contractual savings, thus making the CEECs more attractive to investors and contributing
         to regional stability. Consequently, there is a need for political agreement to enable European pension funds to operate
         EU-wide, Nijssen said.

         Çelik Kurdoglu commented that the economic contribution of migrants to their host country is often neglected by
         commentators. He gave the example of Turks living in Germany, where the majority are below the age of 50, with 24%
         between the ages of 18-30 and 42% aged 31-40. Moreover, Turkish immigrants have invested 13.6 billion Deutchse
         Mark since the year 2000 and created numerous SMEs (46% employing up to 3 people; 44% employing 4-9 people),
         Kurdoglu said.

         The human dimension of the illegal immigration which is currently taking place in the CEECs was discussed by
         Giampiero Alhadeff. Alhadeff argued that the impact of this illegal immigration on local communities in the CEECs has
         been considerable, and the possibility existed that a skills gap in these countries may emerge in the near future.
         Consequently, there is a need for more investment in these countries, he said. Alhadeff also made the point that more
         efforts were needed to integrate immigrants into the local communities of their host countries, and to educate individuals
         against racist discrimination.




                                      One European social model for 28 countries?

         Speakers                     Anna Diamantopoulou, European Commissioner for Employment and Social Affairs
                                      Etienne Davignon, President of the CSR Europe Advisory Board
                                      Ernest Antoine Seillière, President of MEDEF and Vice-President of UNICE (Moderator)
                                      Emilio Gabaglio, Secretary General of the European Trade Union Confederation ETUC
                                      Janusz Galeziak, former Secretary of State at the Polish Ministry of Social Affairs

         Summary of the discussion
         It was generally accepted by the panel that there is not one genuine social model for Europe although the social models
         in Europe share common features and traits. All the panellists spoke of the importance of the evolution of the European
         social model, as well as the adaptability employed by Central and Eastern European countries.

         An OECD and Commission study highlighted that all advanced countries spend +/- 30% of their Gross Domestic Product
         on social issues. European Commissioner Anna Diamantopoulou pointed out that the issue is therefore not how much
         governments spend but how those funds are used. She also viewed Europe’s pension problems as not about finances but
         as about reaching political agreement on how pension systems should be reformed. Diamantopoulou also stressed the
         role of the social partners to work together to adjust the present European social model and to address the current
         pressures upon it.


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                                                                     CONGRESS PROGRAMME
Emilio Gabaglio perceived one social model in Europe, although with diversity in its implementation at the national
level. Throughout Europe there were shared features in the social models: high social protection, public services and the
role of the social partners. Together these produce a system of shared values, he said. Unsurprisingly from the ETUC
head, he also stressed that workers’ rights in Central and Eastern Europe should not be secondary to economic growth as
they face difficult economic challenges. ETUC is playing its part there, helping trade unions democratise and bringing
them into ETUC. Gabaglio argued that managing social change with the proper institutions is critical to the success of the
European social model.

Janusz Galeziak spoke not only about Poland’s situation, but also about the broader agenda established at Lisbon in
2000 and the challenges facing it. Galeziak noted that critics of the European social model point to economic indicators
unfavourably comparing them to USA and Japan; whereas its supporters highlight the values within it. He also recognised
the need for immigration and migration. However, any such strategy should include ways of fighting and preventing
racism and xenophobia. Galeziak noted that Central and Eastern European countries were mostly excluded from the
discussions around the Lisbon Process despite the strategy applying to them for six out of the ten years of its lifespan.

Etienne Davignon commented that the current social model in Europe is distinctly a European one, with European
traditions in it. The current environment has created new challenges for business, in particular increased calls for
companies to act in a socially responsible manner.

Moderator of the panel, Ernest Seillière also expressed his opinion on the European social model. In agreement with
Gabaglio he noted the benefit of the institutions, with the advantage of Europe over USA being the inclusion of the
social partners.




                                                                                                     Ernest Antoine Seillière,
                                                                                                     Anna Diamantopoulou,
                                                                                                     Etienne Davignon,
                                                                                                     Emilio Gabaglio,
                                                                                                     Janusz Galeziak.




                                                                         European Business Summit Report - 2002 Edition          - 17 -
                                                                               CONGRESS PROGRAMME
                                     Interactive Panel Sessions - 3
                                     Environmental Performance




                                     Global climate change obligations in a wider Europe

         Speakers                    Jacqueline Aloisi de Larderel, Assistant Executive Director at the United Nations
                                     Environmental Programme
                                     Paul Skinner, Group Managing Director of Royal Dutch / Shell
                                     Fabrizio d’Adda, Chairman and Chief Executive Officer of Polimeri Europa and Chairman of
                                     the UNICE Working Committee on Environment (Moderator)
                                     Tony Long, Director of the WWF European Policy Office
                                     Perry Fredriksson, President and Chief Executive Officer of Global Responsibility
                                     International AB

         Summary of the discussion
         The panel explored how Europe can best meet its obligations under the Kyoto Protocol. Participants also had a discussion
         on the best way forward towards sustainable development.

         The sustainable development goals can be reached by using a mix of policy instruments, according to Fabrizio d’Adda.
         These should be characterized by clear and sound objectives, a mix of environmental effectiveness and economic
         efficiency, policy coherence and practicality in terms of monitoring and adjustment. d’Adda also emphasized the need for
         implementing the objectives by using voluntary approaches, market instruments and regulatory simplification with impact
         assessment.

         Jacqueline Aloisi de Larderel pointed out that climate change has an impact on a wide range of sectors such as
         insurance companies, tourist companies and the agricultural sector. There is today a need to change the energy and
         consumption patterns of both industry and consumers. In order to do so a mix of policy instruments is needed: cost
         inventorisation, institutional measures and raising awareness. Greater emphasis should also be put on research and
         innovation, while voluntary initiatives by business should be encouraged, Aloisi de Larderel said. She also pointed out to
         the need for a worldwide network of energy centers of excellence.

         Paul Skinner emphasized the role of natural gas in combating climate change. Expanding the use of gas for electricity,
         heating and transport could help in meeting this challenge. Shell sees an important role for the Kyoto flexible market
         mechanisms, he said. In 2000, Shell set up an internal emissions trading scheme and in October 2001 the scheme
         included external emissions trading. The next challenge is the EU-wide emissions trading scheme, where mandatory
         participation with absolute caps is the way forward, according to Skinner. He also gave a couple of examples of how
         Shell applied its sustainable development criteria in practice. The Athabsca oil sands project is a concrete example of
         meeting North America’s demand for low-sulfur transport fuel, Skinner said.




                                                                                                              Tony Long,
                                                                                                              Fabrizio d’Adda,
                                                                                                              Perry Fredriksson,
                                                                                                              Jacqueline Aloisi de Larderel,
                                                                                                              Paul Skinner.


- 18 -        European Business Summit Report - 2002 Edition
                                                                     CONGRESS PROGRAMME
According to Tony Long, there are four steps towards sustainable development. These are maintaining natural capital,
wise management of resources, the eco-efficiently use of these resources and the reduction of per capita consumption.
Business should aim for the “smart zone”, which is equal to a public acceptance curve and not to keep the lowest
compliance curve, Long said. He noted that WWF has initiated a climate change campaign, which includes a campaign to
green the power sector, strong policies to support renewable and energy efficiency and the climate savers’ initiative.
Under the climate savers’ initiative, companies can enter into agreement with WWF to set short-term and ambitious
targets on CO2 emission reduction.

Perry Fredriksson argued that stakeholders want to be able to measure a company in order to evaluate its performance
on health and environmental grounds. Therefore, the most important actors are the companies and its business leaders,
according to Fredriksson. Public procurement rules, where taking into account of environment aspects are a requirement,
is one way of moving forward but this is difficult to achieve. Measuring companies, evaluating quality, environmental,
health and security will soon have the same future and weight as credit financial ratings have today, Fredriksson
concluded.




                            Sustainable energy supply in a liberalised and enlarged market

Speakers                    Jean-Pierre Hansen, Chief Executive Officer of Tractebel
                            Angelo Airaghi, Chairman of Ansaldo Energia
                            Michel-Marc Delcommune, Chief Financial Officer of MOL Hungarian Oil and Gas Plc
                            Guy de Selliers, former President of EBRD and expert in EU-Russia relations

Summary of the discussion
In November 2000, the Commission adopted its Green Paper “Towards a European Strategy for the security of energy
supply”. The aim was to open a broad debate for a long-term strategy that ensures uninterrupted physical availability of
energy products on the market. In this panel discussion, speakers focused on questions regarding sustainable energy
supply in an enlarged Europe.




                      Michel-Marc Delcommune,
                             Jean-Pierre Hansen,
                                 Guy de Selliers,
                                 Angelo Airaghi.


According to Jean-Pierre Hansen fossil fuels are pushed back due to their environmental damage and we are moving
towards a carbon constraint economy. There is no single solution and there is a need for a technological research mix of
renewable energy, nuclear energy, demand-side management and efficient use of fossil fuels, Hansen said. He argued
that the market economy, coupled with constraining mechanisms, is the best way for channeling benefits towards the
customers.

Michel-Marc Delcommune pointed out that there is a strong growth in motor fuel consumption in the Central
and Eastern European countries. The economic growth feeds the purchasing power, but there is a lack of
diversification of energy sources. Gas prices in Hungary are subsidized and as a result of the cheap prices, there is
no incentive to save energy or for monitoring purposes. The consequences are a severe peak demand for industry.
In terms of the gas assets, there is a need to control transit facilities better and investment is necessary. Hungary
could become an excellent hub in storing gas for providing access to northern Italy, Spain and France. In terms of
the quality of oil products, Hungary has the three best refiners in Europe with a strong commitment to the quality
of the products and processes. There is however a need to a better implementation of the regulations and to
financing the exploration.



                                                                        European Business Summit Report - 2002 Edition     - 19 -
                                                                                 CONGRESS PROGRAMME
         Guy de Selliers pointed out that Europe currently imports 50% of its gas, of which 40% comes from Russia. In its
         Green paper on security of supply, the European Commission forecast that in 2020 the import dependency of gas would
         increase from 50% to 75%. de Selliers argued that European industry has to be more optimistic towards Russia, where
         societal changes have taken place. An energy strategy for Russia would require an annual investment of 5-10 billion US
         dollars per year for projects such as the Barents Sea. de Selliers also stressed the importance of the energy dialogue
         initiated by the Commission between Russia and the EU. The challenge is to find a way to finance all the energy projects
         possible in Russia, he said.

         A possible way to moderate the impact of the energy and transport sectors on the environment is the increase of
         efficiency in energy production, distribution and utilisation, the support of renewable energy and an increased focus on
         traffic management, according to Angelo Airaghi. He emphasized that more and important public investments are
         therefore needed in sectors such as new nuclear fission, hydrogen as a fuel and new renewable energy. There is an
         urgent need for policy makers to give high priority to research and development in the energy sector, as this has not been
         done so far, Airaghi concluded.




                                     Mobility and the development of new transport modes

         Speakers                    Isabelle Durant, Belgian Deputy Prime Minister and Minister for Transport and Mobility
                                     Uwe Doerken, Chief Executive Officer of DHL Worldwide
                                     Heather Allen, Corporate Affairs Director ar the International Association of Public Transport
                                     José Ignacio Gafo Fernández, President of the Transport and Energy Sectionat the
                                     European Economic and Social Committee
                                     Beatrice Schell, Director of the European Federation Transport & Environment (Moderator)

         Summary of the discussion
         In its second White Paper (WP) on the Common Transport Policy the European Commission proposes an action
         programme that should lead to more sustainable transport. To this end, the Commission suggests new principles for
         infrastructure with a view to internalise external costs, improving quality of the road sector and revitalising the railways,
         encouraging research and technological development in areas of intermodality and clean and safe transport. Since its
         adoption, the WP has triggered many reactions from supportive to strong opposition. As the document contains a series
         of key questions, which are wide in scope and cover many issues, each speaker in this discussion focused only on a few
         key questions.

         Isabelle Durant stated that technological achievements in the transport sector have brought considerable benefits to
         society. However, transport became a victim of its own success: congestions, 44,000 fatalities a year in road accidents,
         high emission levels of CO2. She pointed out that mobility is in itself sustainable: it promotes growth, maximises benefits
         to the society and minimises negative impacts on the environment. However, the benefits of mobility may be limited by
         an unnecessary growth of transport. This is particularly important in the context of enlargement. She argued that
         technological solutions, such the super Airbus, the new intercontinental Boeing and Segway could alleviate but not solve
         the negative effects of the increased volume of traffic. She therefore called for an integrated policy. Also, a more
         sustainable mobility in an enlarged EU should result in applying fairer pricing to transport and internalising external costs
         and by making better use of existing infrastructures and improving the management of transport demand. She concluded
         that individual behaviour and choices are as important, if not more so than the political decisions that surround them.

         Uwe Doerken stated that mobility is a human need and should therefore be helped and not curtailed by politicians.
         Transport is sustainable in itself as it promotes economic growth and development. Statistics on the impact of transport
         on the environment during past decades showed that economic and technological progress could assist the returning to
         pre-industrialisation pollution levels. Looking at air pollution, technological improvements over the past years have led to
         a significant decline in dangerous commodities, in particular lead and sulphur dioxide. Technological progress has led to
         reduction in noise pollution. Accident records show that all transport modes have become significantly safer. However,
         11 September has brought an additional dimension and complexity to safety related aspects, which need to be further
         reinforced, he said. Doerken called for a level playing field between countries, regions and transport modes. In his view,
         air transport needed global regulation regarding the issues of landing rights and the environmental impact of aircraft.
         Finally, he called for promoting transport within the framework of strict environmental and safety standards and “wise”
         equitable taxation.


- 20 -        European Business Summit Report - 2002 Edition
                                                                            CONGRESS PROGRAMME

                                                                                                             Heather Allen,
                                                                                                             Beatrice Schell,
                                                                                                             José Ignacio Gafo Fernández,
                                                                                                             Isabelle Durant,
                                                                                                             Uwe Doerken.


Heather Allen argued that by 2020 almost 70% of the world population would live in urban areas, which means 50%
extra mobility requirements. If nothing is done to reverse this growth, this would lead to an increase in the automobile
sector. On competition policy in public transport, she stated that there is no clear model pointing to a successful
introduction of a completely deregulated market. Concerning rail, she believed it must be revitalised. The past 50 years
have showed an explosive growth in population and car use in urban areas. This is of great concern, especially in the
view of future enlargement. She thus called for a change in users’ habits by stressing the need to educate young people
and the important role that employers play in developing these habits. Finally, she underlined that a successful mobility
and public transport system of the future relied on everybody co-operating, in order to achieve both economic viability
and sustainable transport networks for the future.

José Gafo Fernández pointed out that there is a serious debate on the cost of mobility (congestion, environmental
impact, social disruption) and less on fiscal revenues that mobility produces (taxes and levies). On the White Paper, he
commented that it has progressed too fast from liberalisation to intervention without giving enough importance to the
social dimension in transport. He argued that the WP establishes too much competition in some sectors and distorts it in
others. In his view, there is a need to take a realistic approach to rail and air potential. Fostering multimodality, inland and
maritime motorways are important, along with a more rational approach to critical bottlenecks (Alps and Pyrenees) and a
better use of Community funds. He also called for the creation of a real mobility to all citizens including remote regions
and handicapped people.

Beatrice Schell, the panel’s moderator, emphasised that transport has to play a more serious role in sustainable
development. In her view, achieving sustainable development in transport means simultaneously promoting economic,
social and environmental pillars. She believed that obstacles to creating sustainable mobility lie with the external costs of
transport and that inclusion of these costs into prices would lead to a fairer and more efficient distribution of wealth
among economic actors. As for the Trans-European Transport Networks, she called for better decision-making, increased
public participation, strategic environmental assessments, as well as improved cost benefit analyses across the EU.




                                                 H.R.H. Prince Philippe of Belgium attended
                                                 the interactive panel session on mobility.
                                                 Georges Jacobs, Luc Vansteenkiste and
                                                 Tony Vandeputte accompanied the Prince.




                                                                                 European Business Summit Report - 2002 Edition         - 21 -
                                                                                  CONGRESS PROGRAMME
                                       Interactive Panel Sessions - 4
                                       R & D Session




                                       From Lisbon to Barcelona and beyond: what next to
                                       consolidate a competitive and innovative europe?

         Speakers                      Myles Staunton, Irish Representative at the Trilateral Executive Committee and
                                       former Member of the Irish Parliament
                                       Jacques H. Schraven, President of the Dutch employers’ federation VNO-NCW and
                                       Vice-President of UNICE
                                       Philippe Busquin, European Commissioner for Research
                                       Scott Beardsley, Director at McKinsey & Company (Moderator)
                                       Valdis Lokenbahs, President and Chairman of the Board of DATI

         Summary of the discussion
         In its 2000 Lisbon meeting, the EU set the ambitious target of becoming the most competitive and dynamic knowledge-
         based economy in the world by 2010. At the Barcelona Summit in early 2002, progress was judged to be too slow.
         In this panel discussion, speakers focused on questions regarding overall competitiveness and two particular factors to
         foster it: R&D and innovation, and ICT and telecommunication.

         Giving an example of a European best practice, Myles Staunton presented the Irish case of how a radical tax reform
         had helped to boost economic growth and increase government revenues at the same time. Corporation tax, capital
         gains tax and income tax had all been drastically lowered over the last decade in Ireland, resulting in a Gross Domestic
         Product growth of more than three times the EU average. At the same time, net tax receipts increased almost by a factor
         three. The English language abilities of the population and the good relationships with the US also supported this
         economic growth, Staunton said.

         Jacques H. Schraven pointed out that there were three main obstacles for EU businesses to increase their participation in R&D.
         First, the output markets for innovative products and services are not sufficiently developed and suffer from fragmentation and a
         high number of regulations. Secondly, the availability of people with excellent education and skills is insufficient. And finally,
         there is a lack of good R&D input factors, notably insufficient government schemes to help fund companies’ R&D.
         The European Commission’s plan for a European Research Area seems to provide a good way to tackle these problems.

         Putting the EU’s competitiveness in a wider perspective, European Commissioner Philippe Busquin pointed to the rapidly
         rising research investment gap compared to the US, 90% of which is caused by a lack of business R&D spending in the EU.
         By 2010, the objective for the EU is to spend 3% of its GDP on R&D, with two-thirds of it coming from the private sector.
         In order to achieve this, specific measures are needed at both the European and national level, including benchmarking of
         innovation and research performance and improving the mobility of human resources.




                   Philippe Busquin,
               Jacques H. Schraven,
                    Scott Beardsley,
                    Myles Staunton,
                  Valdis Lokenbahs.


- 22 -        European Business Summit Report - 2002 Edition
                                                                      CONGRESS PROGRAMME
The panel’s moderator, Scott Beardsley, argued that telecom sector reform and funding would play a key role in
achieving Europe’s knowledge economy aspirations. The EU and the candidate countries would need to meet the
challenges of broadband and Third Generation Mobile Phones (3G). Europe is currently lagging behind: at the start of
2002, South Korea alone had more broadband connections than all of Western Europe, Beardsley said. In 3G, the
investments needed are huge. The total cost of setting up 3G in Europe, including the UMTS license fees and the cost to
build the infrastructure, is estimated at 350 billion Euro, not including 100 billion US dollars in new handsets.
This compares to a relatively modest 21 billion Euro of EBITDA (Earnings before interest, taxes, depreciation and
amortisation) that the current mobile operators are earning. The challenge to fund this with money from the industry, the
consumers and/or public sources is huge.

Valdis Lokenbahs presented Latvia as a case example of a country that can profit from its specialisation in IT. Latvia is an
obvious choice for IT outsourcing, since it has a historical specialisation in IT. The last years, the Latvian IT market has
grown by 40%, more than three times the EU average. Boosting education in the technical universities had been a key
success factor in supporting this growth, as well as the development of clusters of IT companies. The fact that Latvian
employees can work, next to Latvian, in Russian, German and English also presents an added advantage, Lokenbahs said.




                                                                          European Business Summit Report - 2002 Edition       - 23 -

				
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