The USA and China want a dependent Europe. Either the EU changes or a Union is created between a few countries. Draghi’s lash
According to Mario Draghi, the European Union must equip itself with a real industrial policy and new internal rules to support competition with the United States and China. Here's what he said (and why) in his speech in La Hulpe, Belgium
“We need a European Union that is fit for the world of today and tomorrow. What I will propose in my report is a radical change: this is what we need." It is the most impactful statement of the speech that Mario Draghi – former Prime Minister, former President of the European Central Bank and former governor of the Bank of Italy – held today in La Hulpe, Belgium, during a conference on social rights in the European Union. The report Draghi refers to is the report on the future of European competitiveness that Ursula von der Leyen's Commission commissioned him last September.
EUROPEAN COMPETITIVENESS ACCORDING TO MARIO DRAGHI
At the La Hulpe conference Draghi therefore anticipated some of the themes present in his report. “Restoring our competitiveness is not something we can achieve alone or by competing with each other,” he said, because “it requires us to act as the European Union in a way that we have never done before.” “I believe that the political cohesion of our Union requires that we act together, if possible always. We must be aware that political cohesion is threatened by changes in the rest of the world."
A EUROPEAN INDUSTRIAL STRATEGY TO RESPOND TO THE USA AND CHINA
According to Draghi, in Europe "we have never had an industrial strategy" capable of responding to the United States and China, which have both launched public incentive programs for strategic sectors for the energy and digital transitions: semiconductors, batteries, quantum computing, hydrogen, new generation nuclear reactors and more.
“Despite the positive initiatives underway,” continued the former Prime Minister, “there is still a lack of a global strategy on how to respond in multiple sectors. We trusted in the global level playing field and the rules-based international order, expecting others to do the same. But now the world is changing rapidly, it has taken us by surprise” and others “no longer respect the rules and develop policies to strengthen their position”.
It is a position, that of Draghi, very similar to that expressed a few days ago by the French Economy Minister Bruno Le Maire, who on the occasion of a meeting with Adolfo Urso and his German counterpart declared that "the days of happy globalization are over. This has given way to a globalization of rivalries. We urgently need to redefine a common European economic and industrial policy strategy."
THE RISK OF TECHNOLOGICAL DEPENDENCE
In his speech, Draghi explains how the industrial policies of Washington and Beijing "are designed to redirect investments towards their economies to the detriment of ours or, in the worst case, are designed to make us permanently dependent on them": in fact, there is a risk that the European Union develops a technological-industrial dependence on China for devices useful for decarbonisation. While Joe Biden's administration has moved to recover the manufacturing disadvantage compared to the Chinese, launching public stimulus plans for clean tech and microchips (the Inflation Reduction Act is worth 369 billion dollars and the CHIPS Act 280 billion), Europeans still lack “a strategy on how to protect our traditional industries from the uneven global playing field”.
Competition is unequal because China subsidizes its own companies but does not guarantee reciprocity to foreign companies (the Chinese market is much more closed than the European one, for example). America, on the other hand, has allocated large sums and defined convenient rules "to attract high-value national manufacturing capabilities within its borders, including that of European companies", also leveraging "its geopolitical power to reorient and protect supply chains”.
IS DRAGHI PROPOSING A TWO-SPEED EUROPEAN UNION?
This being the case, Draghi believes that “we do not have the luxury of delaying responses until the next Treaty change. To ensure coherence between different policy instruments, we must be able to develop a new strategic instrument for economic policy coordination. And if we come to the conclusion that it is not feasible, in some specific cases we should be ready to consider moving forward with a subgroup of states, for example to move forward on the Capital Markets Union to mobilize investment.”
In short: the ex-premier specifies that "as a rule" the European Union must "act together"; but where unanimity is not achievable, a small group of member countries could decide to move on their own. This is a compromise that Draghi considers necessary, given that “our rivals are ahead of us because they can act as a single country, with a single strategy, and align all the necessary tools and policies with it. If we want to match them, we will need a renewed partnership between member states, a redefinition of our Union that is no less ambitious than what the founding fathers did seventy years ago with the creation of the European Coal and Steel Community."
BRUSSELS “FOCUSED ON THE WRONG THINGS”
According to Draghi, the European delay is also due to the fact that up to now “Europe has focused on the wrong things. We have turned inward, seeing ourselves as our competitors, even in sectors, such as defense and energy, in which we have deep common interests. At the same time, we did not look outside,” that is, to developments in America and China. Compared to the two superpowers, Brussels' response "has been limited because our organization, decision-making and funding are designed for a world before the war in Ukraine, before Covid, before the Middle East conflagration."
In other words: the European Union must change because the international context around it has changed. And therefore, in conclusion, “we will have to achieve a transformation of the entire European economy. We must be able to count on decarbonized and independent energy systems and an integrated defense system, on domestic production in the most innovative and fast-growing sectors, and on a leadership position in deep-tech and digital innovation."
This is a machine translation from Italian language of a post published on Start Magazine at the URL https://www.startmag.it/mondo/mario-draghi-discorso-competitivita-europea/ on Tue, 16 Apr 2024 14:08:18 +0000.