Europe wants to emerge from the identity crisis that afflicts it and be more competitive in the near future. To understand how to achieve this objective, she did not rely on a fortune teller but on the skills of two former Italian prime ministers, fucked by a quarrelsome and inconclusive Italian political class. The first step of this path was entrusted to Enrico Letta and his report on the future of the Single Market, the second to another former Italian prime minister, Mario Draghi, and his report on the future of European competitiveness. In this article we focus on the second report.
Draghi’s is a formal document that summarizes the vision and policies promoted by the well-known banker during his mandate as President of the Italian Council (2021-2022) and as President of the European Central Bank (2011-2019). The starting point is a slap given with the good purpose of waking up the sleeping EU: for a long time competitiveness was a controversial topic in Europe, addressed with the wrong focus as European countries saw themselves as mutual competitorsavoiding even looking out the window at home every now and then. To be more explicit, the United States and China “are actively developing policies to strengthen their competitive position and direct investments to their advantage and at our expense”. Thrilling stuff: even our major allies are directing their investments to acquire new competitiveness at “our expenses”. While in Casa Europa everyone peeks into each other’s plates to see if they have had a more abundant ration, and no one thinks about what to do to guarantee their meal in the days to come, Beijing “aims to capture and internalize the entire supply chain in green and advanced technologies” e Washington “uses large-scale industrial policies to attract high-level manufacturing capabilities within their borders”. In this range, already alarming in itself, Italy stands out because it sells family jewels and Exor outsources production.
The plan focuses on ten macro-sectors of the economy, linked by three red threads: a major economic and political integrationwith particular attention to the challenges of the ecological and digital transition; there strategic sovereignty; the institutional reform Europeans to make them more effective and resilient in the face of global crises.
One of the pillars of Draghi’s thinking is the need for greater economic and fiscal integration between EU member countries. According to him, the creation of instruments such as Next Generation EU, which led to a common economic recovery plan financed with European debt, represents a decisive step towards greater integration. The plan also highlights the need to accelerate the green and digital transition in Europe, starting from a more sustainable economy and the need to invest in digital infrastructure and the decarbonisation of the economy. There ecological transition it is essential to overcome a situation in which European companies suffer much higher energy costs than their US competitors, with negative influences on competitiveness. The plan also highlights the need to balance fiscal discipline with growth policies, warning against the risks of excessive austerity and underlining the importance of expansionary fiscal policies to stimulate the economy. Last but not least, Europe must find a balance between controlling public debt and supporting investments in strategic sectors such as innovation, energy and education. Through this Plan, Draghi promotes a vision of Europe based on solidarity and social cohesion. His idea is that the EU should strengthen its social policies to reduce economic inequalities among its members, promoting the well-being of all European citizens.
The second common thread concerns the need for Europe to strengthen its own strategic sovereignty. This concept implies a reduction of the EU’s dependence on other global players in crucial sectors, such as technology, energy and defence. Draghi argues that Europe must be more independent in its economic and strategic decisions, ensuring greater autonomy compared to major global powers, particularly China and the United States. “An integrated energy market would ensure low energy costs for our businesses and more resilience in future crises, but we will not succeed in creating a true Energy Union unless we agree on a common approach.”
The third red thread concerns the institutional reforms: To ensure the success of European integration and address global challenges, the EU must reform its institutions and create more efficient mechanisms for making rapid and impactful decisions, particularly in the areas of foreign policy and security. A common foreign policy and a European army they are tools that would strengthen Europe’s position as an autonomous global player vis-à-vis powers such as the United States, China and Russia. As geopolitical instability requires increased defense spending, more efficient institutional mechanisms would make decisions quicker and less conflictual.
Not only are there many things to do – the plan contains 170 actionable actions to keep economic and social Europe in step with the times – but they must be done with “urgency and concreteness“, where concreteness means that “if Europe does not become more productive we will be forced to choose” Why “we will not be able to be a leader in new technologies, a beacon of climate responsibility and an independent actor on the world stage at the same time”. And there is no shortage of threats either: if Europe does not become more productive, “we will not be able to finance our social model” and, even more drastically, if coordination of economic policy at Twenty-Seven is not feasible “we must consider the possibility of moving forward with a subgroup of Member States”. On the one hand this means overcoming the right of veto, which is healthy and right, but on the other it means putting, even more than today, the power of the EU in the hands of the usual strong countries, weakening the principle of the Community. An evil perhaps necessary to guarantee the “existence” of the EU, a priority objective, but which clashes with another objective of the plan: the enlargement of the EU perimeter.
The report argues that this comprehensive approach is necessary for the EU to maintain its prosperity, values and global influence in a more challenging geopolitical environment. He underlines that Europe must act decisively and unified to reform itself and increase competitiveness. While some proposals would require treaty changes, the report argues that much can be achieved through targeted adjustments to existing frameworks.
Beyond the democratic legitimacy of Mario Draghi to write a report on behalf of the EU, the first sensation one has when reading the mammoth 328-page report, or even just the 70-page summary, is that we are faced with a contradictory text: you want to do so many things that you step on each other’s toes.
Politics is the art of using resources, especially when they are scarce, and building consensus around the priorities that are chosen, but Draghi seems to escape this constraint and as a solution proposes using almost unlimited resources: investments of at least 800 billion euros per year year, specifying that the figure could even be underestimated. The clarification that this mountain of money is not used to aspire to be top of the class, but to guarantee the simple “existence of the EU”. While avoiding the joke that even former senator Antonio Razzi, Crozza’s character, would be able to get by with unlimited resources, it remains necessary to ask ourselves where to find the resources to finance the project.
As we know, there are three possible paths: increase in taxes, public debt, increase in tax revenues, deliberately placed in third place because since the birth of the EU nothing has been done on this level. There would also be a lot to object to about public debt, given that it financed the Next Generation EU, causing the stomach ache of several “countries that matter”.
A passage of the report leads us to believe that the resources should be European public investments financed by common European debt, but in another passage it is specified that the common debt is only one of the many ways to reach the goal of doubling investments in Union. The classic one shot at the rim and one at the barrel!
As anticipated at the beginning, the plan is contradictory because it seems to want everything and the opposite of everything: to attract foreign investments and build alliances, but also to implement selective protectionism to protect strategic sectors (exactly what the EU has contested in recent years with the United); integrate more but also less, reducing the regulatory burden where it is redundant; defend the single market and competition but also encourage mergers and acquisitions where larger companies are needed. On this last contradiction, we can only agree on the need for European companies of the caliber of Google, Microsoft, OpenAI, because innovation in the automotive sector is not enough. But how we can hope to make a European Silicon Valley germinate in a more protectionist Union with economic prospects conditioned by politics is unclear. Not to mention that our Foreign Minister, Antonio Tajani, preaches the need to train carpenters to spread Made in Italy furniture to new markets!
Should the Draghi plan therefore be scrapped? Certainly not, because it has at least the advantage of clearly underlining the need for an effort vision totally foreign to the national politics of many member states, supporting the need for the countries of the European Union to face this crisis in a cohesive manner, something that has so far been anything but taken for granted in practice, as demonstrated by the Italian idea of differentiated autonomy.
The raw nerve of the Draghi plan is that it seems to be grafted onto an economic model that has already failed, because it talks about competition while completely ignoring the issue of dialogue and cooperation with emerging powers. Furthermore, in some passages the accelerator is pushed in the direction of the green transition, but in the overall vision it seems that sustainability, social inclusion, the reduction of inequalities are considered first of all as costs.
The plan focuses heavily on the healthcare sector defensegoing so far as to propose a privileged financing channel for the arms industry. Meanwhile, it is not true that the military industry is the place of innovation, just as it is not true that the wealth it produces benefits society, when in reality it enriches only some, whose capital ends up in the circuit of finance and speculation, not the economy.
As we know, omissions often cause more damage than lies. Fight seriouslytax evasion it would already be of great help, especially in Italy. Yet the Draghi plan does not mention tax havens, even though Europe is full of them.
How to conclude? Finally a far-reaching vision, not very European… but also not very realistic. Without one European Constitution that establishes a reference framework for the choices and actions of each individual country, it is useless to hypothesize common policies for defense, taxation and more.
Mario Grasso
