The rest of the EU leaders, gathered in Budapest for the informal summit of the European Council, on the subject of the bloc’s problematic competitiveness, was warned by Georgia Meloni, stressing that the “mission” of the “27” becomes even more urgent, due to the threat of the protectionist “America First” trade policies promised by US President-elect Donald Trump.
“Don’t ask what the US can do for you, ask what Europe should do for itself,” the Italian Prime Minister pointed out, underlining that “Europe must find a balance” and expressing the conviction, “we know what we have to do.”
Moreover, the Greek Prime Minister, Kyriakos Mitsotakis, also appeared modestly optimistic, who stated that “there are issues that will concern Euro-Atlantic relations as a whole, if we enter, for example, into a new trade war – I hope not”.
And he added that “there is a margin for us to be able to see a de-escalation in terms of the rhetoric about the imposition of tariffs here and there, because obviously when such a war starts it does not stop only at the actions of one party”.
EU concerned about Trump’s return to the White House
European officials are alarmed by Trump’s imminent return, not only because of his hostility to NATO and his ambivalence about Ukraine, but also because of the economic consequences of his threat to make the EU “pay a big price” for not buys quite a few American products.
The President of the European Parliament, Roberta Metzola, underlined that competitiveness “is not just a slogan. If we had the same growth as the US since the turn of the century, Europe would have 11 million more jobs. We can’t just react to the US election, we have to act.”
Leaders focused on debating a raft of radical reforms proposed in a major report published in September by former Italian prime minister and European Central Bank chief Mario Draghi, which warned the bloc was facing a “slow and excruciating decline”. , unless he acts quickly and decisively to end years of stagnation.
Danger from political instability in the Franco-German axis
The EU’s response to its economic woes – and Trump’s re-election – is hampered, however, by the fact that its two biggest powers are being weakened by political crises at home. Germany’s coalition government collapsed on Wednesday, while French President Emmanuel Macron lacks a parliamentary majority.
Noting that the pandemic and the war in Ukraine have changed the rules of international trade to the detriment of the EU, Draghi’s report called for massive additional investment of €800 billion. euros annually in the bloc’s economy, an amount corresponding to approximately 5% of the Union’s annual economic output.
But its 170 main recommendations, outlining how the EU could boost growth while moving towards a greener and digital economy that will be competitive in an era of rising global trade tensions and conflict, contained some tough choices .
Draghi’s proposals to fund urgently needed additional investment include more joint borrowing – a prospect that is anathema to the bloc’s traditionally more “austere” nations, such as Germany and the Netherlands.
Draghi: The bloc can no longer postpone vital decisions
Draghi, who detailed his report to the 27 EU heads of state and government attending the summit, said on Friday that the bloc could no longer delay vital decisions, adding that “the sense of urgency today is greater”. than a week ago.
“We have postponed too many important decisions in order to find a consensus” among EU member states, he told reporters, stressing that “this consensus did not come, and as a result we have suffered lower economic growth and now stagnation.”
He also noted that joint borrowing, which the bloc undertook for the first time to finance its funds for the recovery from the pandemic, will be necessary. “But it’s not the priority – this has to be a real single capital market,” he stressed, for investment and savings to flow across member states.
Some see the collapse of the German coalition positively, but…
At the same time, paradoxically, diplomats and analysts saw both a positive and a negative element in Germany’s ongoing government crisis, which was triggered when Chancellor Olaf Scholz fired his liberal finance minister, Christian Lindner, collapsing the three-party coalition.
Many were encouraged by the departure of the strictly austere Lindner. “With Lindner there, there was no way to discuss a more ambitious long-term budget or boosting defense funding at EU level,” said one diplomat.
Others expressed hope that a new German government could prove more constructive on the European stage than the current coalition, whose constant infighting and bickering often led Berlin to abstain from crucial votes.
However, with Europe’s largest economy mired in political gridlock likely for several more months, there is little hope that concrete measures will be adopted to stimulate the European economy in the near future.
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