Editor's Chair: Brussels is listening - but can it act?

Richard L. Hudson

For decades, European technology policy has been waging a Cold War.

The technocrats in Brussels looked west across the Atlantic, or east towards Asia, with dread. The U.S. and Japan (or China, or India) were stealing their inventions, or customers, or energy – and the only possible response was to engage in the tech-policy equivalent of an arms race. Billions were spent on phone networks (the Race program), computer technology (Esprit), or the favorite high-tech hobbies of Siemens, Philips and Alcatel (the Eureka program.)

Progress was measured in budget numbers, not in scientific talent or technology-spurred productivity gains. The latest number in that game: 3 per cent – as in, R&D spending in Europe must reach 3 per cent of gross domestic product by 2010, up from 1.9 per cent. That was the goal set by EU leaders in 2002, as part of their Lisbon Agenda for reform. More Cold War arms racing.

So it was somewhat of a relief, in an interview we conducted with EU Science and Research Commissioner Janez Potočnik, to hear numbers being held subordinate to policy. Sure, the EU is still dealing in numbers: It’s set to get a rise in its latest tech programs to €54.5 billion over seven years (and grouses that it isn’t getting more.) But the commissioner said the public spending targets are only a part – and the lesser part – of what’s needed.

The real issue, he said, is pushing through policy changes across Europe, to improve the economic and regulatory climate for business to invest more in R&D. That requires a laundry list of changes – in labour-market rules, tax incentives, intellectual property law, and other issues that most politicians prefer to avoid. He and his commission colleagues are following up such talk with a round of new policy proposals this Autumn.

So the Brussels technocrats are listening to what businesses, and liberal economists, have been saying for decades. In fact, Potocnik himself has somewhat of a reputation in his native Slovenia as a liberal economist.

But will it act?

We’re hopeful, but not holding our breath in anticipation. Most of the issues discussed are on the frontline of Europe’s current political wars. Consider:

• Looser labour-market rules nearly brought down the French government in March.
• Ending capital gains taxes for tech companies, or opening new tax loopholes for little tech startups, won’t go far with finance ministries trying to hold the line on Maastricht-busting budget deficits.
• Reform of IP law – well, first you’d have to find a politician in Europe who understands the current system, and thinks it’s important enough to waste any political capital on.

And so it goes. There’s a reason why Brussels in the past preferred to talk about the numbers: They aren’t so charged with ideology. We at Science|Business have been championing the economic policy approach to technology – in fact, it was the topic of a roundtable discussion we held in Paris with leaders of industry and academia. We will publish the conclusions, in our own Innovation Manifesto, shortly.

And Potočnik vows to fight. His challenge to other politicians: “Are you improving the situation for companies, so they invest more in Europe?”