The common debt, the threat from China, innovation and automobiles: ‘Euronews’ summarizes the more than 400 pages of Mario Draghi’s historic report.
The long-awaited report by former Italian Prime Minister Mario Draghi on Europe’s competitiveness has finally seen the lightand its first lesson for the slowdown in European growth since the turn of the century is that we have to stop procrastinating things.
“We have reached a point where, if we do not act, we will have to compromise our well-beingour environment or our freedom,” Draghi warned at the presentation of the report on Monday, September 9.
In your 400 page reportDraghi recommends how to finance and coordinate European policies to avoid being left behind on the world stage. ‘Euronews’ collects his main ideas so that Von der Leyen’s second Commission can put them into practice if it wants to avoid a “slow agony.”
Common debt, the way forward to finance needs
Europe needs mobilize at least between 750,000 and 800,000 million euros a year to keep pace with competitors such as the United States and Chinaaccording to Draghi’s report.
“To achieve this increase it would be necessary for the percentage of EU investment will go from 22% of current GDP to around 27%thus reversing a multi-decade decline in most large EU economies,” says the report, which underlines the need to common financing along with the mobilization of private investment.
According to Draghi, joint EU borrowing should be regularly used to meet the bloc’s ambitions in terms of digital and ecological transformation, as well as for the necessary boost of Defense capabilities.
“The EU should continue, following the model of the NGEU (the new generation funds), issuing common debt instrumentswhich would be used to finance joint investment projects that increase competitiveness and EU security“, subrayó Draghi.
If public goods such as networks and interconnections, Defense equipment and Defense R&D are not jointly financed and planned, there is a risk that they will be under-resourcedwarns the report.
Europe has “a problem” with China
China appears repeatedly in Draghi’s analysis, which could portend a change of tone towards Beijing. In recent years, the bloc has seen China as a cooperative partner, an economic competitor and a systemic rival, and now also as a “threat”.
Greater dependence on China could offer a faster, cheaper way to meet Europe’s decarbonization goalsDraghi notes in the report, adding that Chinese state competition also poses a “threat” to the bloc’s clean technology and automotive industries.
Wopke Hoekstra, the Dutch commissioner nominated to become the next trade commissioner, made similar comments in a speech to students at Eindhoven University of Technology last week.
“China is challenging us in such a fundamental way that It would be naive to deny that Europe has a problem with China“Hoekstra told the audience, emphasizing that while the bloc did not plan to cut ties with China, it would have to act to restore balance if competition remained unfair.
Presenting the report on Monday, Draghi specifically recommended that the bloc analyze the situation case by case and will act accordingly. “Trade policy has to be pragmatic, prudent, case-specific and defensive,” the former Italian prime minister told reporters.
Draghi also said that the bloc must continue reducing your economic dependence to increase its internal security, warning that Europe depends especially from a handful of critical raw material suppliers and digital technology. In the case of chips, the former president of the European Central Bank (ECB) pointed out that between 75% and 90% of the world’s wafer manufacturing capacity is located in Asia.
Keeping European companies in Europe
Europe must urgently refocus their collective efforts to close the innovation gap with the United States and China, especially in high technology. “The problem is not that Europe lacks ideas or ambition (…) but that innovation is blocked in the next phase: we are not able to translate innovation into commercialization,” Draghi said.
ADVERTISINGIn the last five decades, no EU company worth more than €100 billion has been created from scratch, and 30% of European unicorns (private start-up companies valued at more than $1 billion) They have left the block since 2008 why they couldn’t grow on the continent.
With the world on the brink an artificial intelligence revolution“Europe cannot afford to remain stagnant in the “middle technologies and industries” of the last century. We must unleash our innovative potential,” added the Italian, which includes investing in people’s capabilities so that they are up to par. of these ambitions.
The industry, in the spotlight
Faced with the risk of relocation of many key sectors, Draghi repeatedly refers to the need for Europe has an industrial strategybut regrets Europe’s inability to coordinate around one.
“Today, industrial strategies, as seen in the United States and China, combine multiple policies,” including fiscal, trade and foreign policies, he said. “Due to his slow and disjointed policy-making processthe EU is less capable of giving such a response.”
ADVERTISINGAn important example is that of automobiles, sector in which Europe has difficulties.
Its detractors often cite the EU’s ambitious regulations, which It would mean the progressive withdrawal of conventional gasoline and diesel vehicles in just over a decade, but domestic manufacturers are also struggling to compete with heavily subsidized Chinese electric cars.
According to Draghi, “a global approach is necessary that covers all phases” of automobile production, from research and extraction to data, manufacturing and recycling.
The EU must avoid “protectionism traps“and should not systematically impose tariffs, but state competition costs European jobs, he added.
ADVERTISINGWe must reform the European process
Reduce bureaucracy and become more efficient decision-making rules of the bloc will allow us to act more quickly, according to the report. “Europe does not coordinate where it matters, and European decision-making rules have not evolved substantially As the EU has expanded and the global environment we face has become more hostile and complex,” Draghi said.
The Italian proposes urgent measuresand one of Europe’s pitfalls is its complex and slow policy-making process, which takes an average of 19 months to pass new laws and is subject to multiple vetoes along the way.
In 2019, the EU approved around 13,000 legislative actswhile the United States has approved 3,000 and 2,000 resolutions, Draghi said at the press conference: “That (data) makes you think, can we do a little less and can we be a little more focused?”
Will it happen?
Draghi’s conclusions, drawn up with the help of Commission officials, have garnered widespread attention, but their long-term impact is unclear. There is no doubt that Europe is facing a series of crises such as the continued economic slidethe environmental transition and the war in Ukraine.
ADVERTISINGBut Draghi’s proposals to finance more EU spending, consolidate capital markets and remove national vetoes are old demands from Brussels to which EU members themselves have repeatedly opposed.
That is difficult to change, as many EU governments face the growing threat of the far right; The leaders of France and Germany in particular, traditional drivers of EU integration, have been weakened by the recent election results.
Von der Leyen hopes to be able to change the course by settling this matter at the center of his political mandate.
