CORRESPONDENCE FROM POLAND - THE KRYNICA ECONOMIC FORUM Investments in increasing competitiveness, a solution to the European crisis

Government officials and the representatives of the major companies in the European Union consider that in the coming years, the cohesion funds need to be directed towards increasing the competitiveness of the European economy, which is losing ground to countries with accelerated development, such as China, India, Brazil. These days, they are talking at the Economic Forum of Krynica - Poland, about the solutions for exiting the current crisis which Europe is going through.

Mario Baldassarri, the president of the Finance and Treasury Commission of the Italian Senate, yesterday said: "The European Union and the US have been buying goods from China for years. China has saved up the Europeans' and Americans' money and with it, it has begun buying up their debt. It is insanity to allow China to continue buying up the debt of the European Union. This is not a solution to the crisis".

He says that the solution for the exit from the crisis is to change the manner in which the global economy is governed: "The countries of the European Union need to change, together with the USA, the system for the governance of the world economy so we can exit the crisis. We need new institutions which will face the new era and which will generate engines for durable growth for the next 50 years.

If we don't do that, the alternative is for the US to continue to be like a locust that consumes more than it produces and keeps increasing its debt. Europe's economy is no longer competitive on the global market and an increasing number of products and goods will be bought from developing countries. China currently has 40% of the US debt. China will buy the entire world if we do not exit this vicious circle by finding a new governance system".

Hendrik Bourgeois, General Counsel, Europe at General Electric Company (GE), said that the new cohesion policy of the European Union needs to generate durable economic growth, stability, jobs. Thus, Europe will need to focus its cohesion funds towards increasing competitiveness on the global market.

He said: "We have to protect the benefits of the single European market and expand them. Major multinationals present in Europe need major markets, a stable and transparent legal framework, investment and infrastructure facilities, and a flexible regulatory framework.

The GE official considers that the EU should not just spend money on reducing the differences between the various regions: "The EU needs to spend money on increasing competitiveness and helping countries which have absorption problems. There is no need to allocate more money, but rather to help the beneficiaries of the funds to create durable, good projects, which they would implement correctly and quickly".

Mario Baldassarri also said that the European Union should not be focused on saving banks and the financial markets, but should instead focus on the economy and the community: "We need to have public savings and stop spending more than we can afford. The zero deficit target only brought us higher taxes and lower investments. Under these circumstances, the European economy can't grow".

Hendrik Bourgeois said that the economy needs lending, but within reasonable limits. The economy needs to grow based on principles of healthy growth and Europe is not lacking opportunities, especially in the Central and Eastern Europe. According to the GE official, the Union needs to identify the new growth opportunities, and in his opinion energy will play an essential part. "More fiscal, economic and political integration of the EU is the solution for the crisis", Mr. Bourgeois said.

The Economic Forum of Krynica has reached its 22nd edition, whose topic is "New visions for hard times. Europe and the World facing the crisis".