Strategic thinking at all levels — designing better policies for a better life
Interview with Nadia Calviño, Deputy Prime Minister of Spain and Minister of Economic Affairs and Digital Transformation
Strategic thinking is something that happens at all levels of government, be it local, national or European level. How do they align with each other and how does a government reconcile national strategies with European or local ones, and vice versa? Nadia Calviño has been Deputy Prime Minister of Spain since 2020 and Minister of Economic Affairs and Digital Transformation since 2018. Before she worked for many years in the European Commission, from 2014 onwards as Director-General for Budget. So she is well placed to reflect on strategy considerations and how different governance levels can reinforce each other to design and realise better policies for a better life.
By Gaston Moonen
Sharing purpose, goals and priorities to achieve common aims
What do you consider the core added value of having a strategy?
Nadia Calviño: Having a strategy increases efficiency as it provides any organisation with a clear and shared vision about its purpose, goals, priorities, and also allows each person to understand in what way they contribute to common achievements. Throughout my career, I have seen how important it is for team members to understand the mission and priorities of the organisation and to work towards an inspiring aim. Moreover, having a well-known and predictable strategy generates confidence, which is essential for stability and facilitates decision-making by the private sector. A good example is the Recovery Plan for the Spanish economy, which we are currently working on. It provides a clear framework for implementing actions supporting growth and job creation in the short term but also for deploying a reform and investment programme to modernise the economy and achieve more sustainable and resilient growth in the medium and long term.
The current Spanish government has taken a strategic approach to sectoral reforms in different policy areas. It has identified long-term objectives, reforms and measures, and subsequently also specific actions and priorities and resource allocation choices. What are the main long-term strategic goals of Spain in the European arena?
Nadia Calviño: The pandemic has revealed the weaknesses and strengths of our economies and accelerated structural changes, for instance in the area of digitalisation. This makes it urgent and unavoidable to implement, together with a substantial investment plan, some reforms which, until now, have been postponed.
The Spanish Recovery Plan has a clear architecture and a strong focus on four key levers closely aligned with the European agendas : the green transition, digital transformation, social and territorial cohesion, and gender equality. These cross-cutting objectives are deployed through 30 components with investment and reform packages to boost economic growth and job creation in the short run and also support the modernisation of our economic fabric and increase productivity, with a view to enhancing potential growth in the medium term. This unprecedented effort of public investment, around €70 billion in 2021–2023 — with 37 % for the green transition and 33% for digitalisation — will mobilise a large volume of private investment. In order to provide a clear roadmap, the Spanish government has already published detailed plans in the field of digitalisation and energy and climate transition, we have launched several calls for interest, in areas such as connectivity and 5G deployment, green hydrogen, industry transformation or electric mobility.
Strengthening resilience and inclusiveness to address disruption
Disruption is a popular word these days, even more so in these days of the Covid-19 pandemic. What does this word ‘disruption’ mean for you and has this meaning evolved during your career?
Nadia Calviño: Indeed, I have witnessed many situations that fit the idea of ‘disruption’ very well. It applies to the financial crisis but also more recently to the refugee crisis or Brexit and obviously to the severe shock caused by the COVID-19 pandemic. Not to speak of technological change, that has accelerated in the last two decades, opening up unimaginable opportunities but also multiplying the challenges on the economic and social front.
Actually, we should probably get used to uncertainty, intense change and disruption as part of the ‘new normal.’ This requires us to be ready to act in a fast and effective manner in the face of unexpected events, to be flexible to adapt to new needs and circumstances, and also to devote more attention to the need to reinforce our resilience to shocks on the health, economic, social and environmental fronts. Beyond short-term responses, we also need a mid-term perspective to keep on the right track so that disruption does not mean destabilisation.
This is what we have tried to do since the pandemic hit us last March: establish a strong safety net and respond fast, without hesitation, to the health, economic and social crisis but always in a coherent manner with a mid-term strategic agenda. Actually, during 2020 we made significant progress with the modernisation of our energy sector and with the Digital Spain 2025 agenda, and worked hard to put in place the necessary pieces to deploy the Recovery Plan, with a strong investment chapter in the 2021 budget and legal changes for efficient investment implementation. We need to act now to offset the negative impact of the pandemic, but also to ensure that the Next Generation EU investments lead to more sustainable and inclusive growth in the future.
You are Minister of Economic Affairs and Digital Transformation, dealing with topics which typically relate to long-term projects and strategies, if not often initiating them, such as the 2030 Industrial Strategy, the Internationalisation Strategy 2017–27, the Strategy to Counter Demographic Challenges, or the strategy for the Circular Economy. How do you ensure that these strategies match, do not overlap too much or contradict each other, and how do you reconcile the objectives of these strategies with the day-to-day needs on the ground?
Nadia Calviño: As I mentioned before, for the last two and a half years we have been following a coherent economic policy roadmap, driving structural reforms, and this provides us with a solid basis for the Recovery Plan now. We are working on 30 components, coherent packages of investments and reforms to deploy €140 billion of public investments up to 2026, to achieve strong, sustainable and inclusive growth. The plan includes reforms which follow the country-specific recommendations under the European Semester process and are fully aligned with European priorities in the field of education, science, green hydrogen, climate change, digitalisation. They have wide and ambitious coverage, from energy to the labour market, from education to pensions, from science to business climate and the good functioning of the internal market.
Strong leadership from the top is key to ensuring that there is a common view and coherent action on the part of all players involved in such a massive endeavour. But there is also a need for appropriate governance to ensure dialogue and close cooperation with the regions, companies, social partners and others. This is our philosophy, not only for the Recovery Plan. Cooperation between all levels of administration and stakeholders is key to ensuring that investments lead to permanent changes and reforms have broad social and political support.
The year 2020 has been very different from what most people expected it to be. By many people, the COVID-19 pandemic is seen as a black swan that may have a large and game-changing impact. To what extent has this affected strategic thinking in your ministry in particular and in the Spanish government in general?
Nadia Calviño: Indeed, the pandemic has caused an unprecedented and severe economic shock. Moreover, the pandemic has accelerated structural trends and there is a clear risk that inequalities will widen, affecting especially the younger generations and women. In order to avoid a structural impact, we acted fast and in a coordinated manner to establish a safety net, which has been instrumental in protecting the economic fabric, jobs and household revenues, in protecting a basis on which to build the recovery. Beyond action to support economic activity, there is an even larger need for an inclusive strategy focused on closing social, territorial and gender gaps, reducing inequalities, and taking actions to provide good personal and professional prospects for future generations.
Our first priority in the coming months must be controlling the pandemic and accelerating vaccination, since the economy and health go hand in hand. But in parallel we must continue to support our companies, workers and families until we´re back on the path of sustained economic growth, and launch the Recovery Plan which is key to increasing potential growth in the medium term, too.
Bundling forces for impact on the ground
In 2015, when you were Director-General for Budget at the European Commission, you were among the leaders who launched an initiative entitled ‘The EU budget focused on results’, described as a long-term strategy aimed at making results a more horizontal priority in EU budgeting. How does strategy development in the European Commission differ from the strategy development your ministry has been/is working on?
Nadia Calviño: As I indicated earlier, strategic thinking is necessary at all levels of management. Establishing objectives, analysing our weaknesses and strengths, will allow us to make better decisions. This is particularly the case when we are dealing with public funds, which require good mechanisms to ensure sound financial management, not only from the formal point of view but also in terms of substance. Indeed, having good audit and control mechanisms is a must to ensure that all formal rules are followed. But we must also be able to explain to citizens what we have achieved with the public investment, in what way it has improved people’s lives.
We made good progress on this at the Commission, with clear results, I think, in terms of awareness and communication. And this same philosophy underlies our current work for the Spanish Recovery Plan, which has a clear focus on achieving results on the ground in key areas, such as education and vocational training, energy, sustainable mobility or the modernisation of public administration. Structural reforms aim to increase potential growth by more than 2%, and should allow us to reduce structural unemployment, to increase productivity and move towards a more inclusive and sustainable growth pattern, not only from the financial point of view but also from the environmental and social perspectives.
The current Commission has evidently formulated a number of long-term strategies, for example relating to digitalisation or climate action. How would you describe their influence on your strategy development in your areas of responsibility? And where do you see a clear impact of Member State strategies on EU strategy development?
Nadia Calviño: European agendas are of course very relevant for the design of national long-term strategies. Climate action and digitalisation are global challenges that require well-coordinated action at EU level. Spain always has a constructive and ambitious approach, contributing actively to the design of these common agendas so that we can maximise the impact of actions at national level and also reinforce our voice at global level.
In the context of the pandemic, the work of the European Commission — and all European institutions — has been instrumental. This time around, the EU has responded in a strong and united manner to the crisis, ensuring financial stability and supporting national governments in an effective manner. Beyond the ECB, the creation of new instruments, such as the SURE mechanism to provide funding for short-term work schemes, sends a strong message that the EU supports jobs and people. We need to continue working to ensure cooperation and a coordinated approach for it is clear that united we are stronger. The Next Generation EU programme is really key to moving in this direction.
Audit input to align ourselves with the highest European standards
Public auditors often seem to be concerned with the past, looking at past events. How do you think audit reports influence strategic developments?
Nadia Calviño: Audits are useful tools to learn from the past and improve our systems. We have recently adopted an executive order (Royal Decree Law 36/2020) to put in place a more streamlined administrative process to deploy the Recovery Plan, trying to remove the many overlaps and procedures which did not provide added value in terms of sound financial management. We are currently setting up the information and control systems, building on the strong public audit framework in place, to ensure swift implementation of investments, fully aligned with the highest European standards.
Auditors have a special responsibility to help improve and reinforce our systems. In order to be valuable, audits must be constructive, balanced and realistic, taking into account the specific features of different situations, so that they are a tool for learning and create the right incentives to improve financial management and the impact of our policies.
What are the three key elements for you to ensure that you can achieve the strategic objectives you are directly responsible for? And what is for you the most useful contribution public auditors in general and the ECA in particular can make to help you in your current work?
Nadia Calviño: A roadmap — with a coherent set of milestones and components — a timeline — for a clear understanding of objectives — and dialogue, are three key elements for a successful strategy . This last point is particularly important, in order to make sure that all players are aligned and that there is no unexpected backlash. And I would add a fourth element: hard work!
I would think that the main contribution the ECA can make is an open mind, constructive approach, flexibility and good understanding of the different nature, the complexities and challenges of the new mechanisms we are launching right now. The next Generation EU instruments are absolutely essential for the EU to recover and get back on the path of sustainable growth. We have a shared responsibility to make them a success.