Mario Draghi delivered last week his long-awaited report on the major challenges facing Europe, on the already visible competitiveness and productivity deficit against the USA and China, which, if not covered in time, will plunge the Old Continent into conditions of withering and permanent retreat.
The former head of the European Central Bank and decisive manager of the great financial crisis of 2008 – considered by many to be the savior of the European banking system and the euro – a highly respected person who had been preparing his momentous report for a whole year, sent a resounding warning message to the European authorities and governments, starting from the basic finding that Europe has fallen behind and its productivity and competitiveness have fallen dramatically due to a lack of investment, both public and private.
Brave decisions
For “super Mario”, the investment deficit and gap can be traced in time to the post-financial crisis period of 2008. In the last fifteen years, the politically and economically fragmented Europe has run out of ideas and forces, has been unable to keep up with the leaps of progress in the fields of new technologies and innovation made by its major global competitors, and has now reached a tipping point, overcoming which requires brave policies and big decisions, the only ones that according to him can change the course of things.
Essentially, he estimates that Europe for the first time since the Cold War era is facing a survival challenge, growth rates are limited, the disposable income of its citizens falls dramatically short of that of the Americans, which is now twice that of the Europeans.
Angles
He locates the problem in innovation zones, high energy prices, especially after the Russian invasion of Ukraine, which imposed energy transition policies, in rudimentary defense and direct dependence on the US, but also in the bureaucracy of Brussels, which is distinguished by overproduction of binding rules and regulations which hinder investment and make the European environment almost counterproductive.
In other words, the Italian banker and politician does not limit himself to findings of a purely economic content, but penetrates the anchors of the European system, calls for the abolition of unanimity and essentially raises with intensity the issue of deepening European integration, which is characteristically delayed. This is how he prequalifies a monstrous package of investments, amounting to 800 billion euros a year, a new Marshall Plan, capable of putting Europe back on a path of rapid development and recovery of lost ground.
For their financing, he recommends the assumption of a common European debt through the issuance of European bonds, which must be accompanied by a rapid development of the European capital markets and the even more dynamic development of the single European banking market.
Wide acceptance
The governor of the Bank of Greece Giannis Stournaras he characterizes the Draghi report as an important document for the future of Europe, which he says is widely accepted, despite initial reservations and negative reactions from Germans and Dutch, who are fortified behind their conservative perceptions of credit risks. Mr. Stournaras responds to these first objections of the rich of the North by noting that there is excess liquidity in Europe and the world at large, capable of financing this brave turn of regeneration of the Old Continent.
And he recalls that during the pandemic, the first step was taken, Europe borrowed for common purposes, which allowed easier management of the health crisis and the digital leaps that accompanied it. The Greek central banker also underlines the need to strengthen European integration against the current European fragmentation, highlighting at the same time the demands created in the field of defense and energy by the geopolitical conditions that have developed after the Russian invasion of Ukraine and threaten Europe.
In addition, he attaches great importance to Draghi’s proposals for investing in people, mainly through strengthening and redirecting national education systems. “We need persons with developed skills and special specializations in new technologies, in the applications of artificial intelligence, in all those qualifications that enhance the productivity and competitiveness of the European economies” he emphasizes, hoping that the European authorities and governments will coordinate in this direction.
The businessmen
It is interesting, however, that the Draghi report was well received by the domestic business community. The Association of Businesses and Industries applauds the report of the Italian banker and politician, noting that the European competitive lag is a difficult reality experienced by European and Greek businesses in recent years, sharing the need for a large investment mobilization in order to reverse this downward trend. BSE officials hope that the report will form the basis for a visionary industrial strategy and bold policies that will enable Europe to remain competitive against its large and ever-evolving global competitors.
In support of the findings of the Draghi report, the BSE notes that the European economy corresponds to 50% of that of the USA, while only fifteen years ago they were almost equal. He even underlines that the investments preferred by Draghi are equivalent to 4.5% of the European GDP, much higher even than the Marshall Plan for the reconstruction of Europe after the Second World War.
Positive response
THE Evangelos Mytileneos also with his post on social networks he notes that “Unlike many proposals by theoretical economists in Brussels that are far removed from reality, many of the proposals in the Draghi report will have a positive impact on the struggling industry.” He calls it an “urgent appeal”adding that Europe cannot afford to treat it “as an ephemeral flare”. It stands in particular on the decisive measures for energy-intensive industries, as well as on the reports on critical raw materials, markets, electricity networks and defence, most importantly that “the report’s proposals call for a rethinking of the long-standing anti-growth and anti-industrial mentality that has led us to where we are today.”
Be that as it may, Mario Draghi put the problem of European backwardness on the carpet. It is now up to governments and European authorities to take action. If they don’t do it in time and the Northern Europeans remain trapped in their conservative doctrines, Europe will decline into slow death conditions…
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