2024-09-14 04:43:34
Joint loans, the end of the right of veto or the bet on windmills. The team around Italian economist Mario Draghi presented their vision of how Europe will catch up with China and the United States. But the governments of European countries have the last word.
Europe must mobilize investment, harness the power of the common market, simplify rules for SMEs and increase its independence in strategic areas. Only then can it compete with the world in the future, Draghi’s report states.
Photo: EU
“Super Mario”, as the economist and former head of the European Central Bank has been nicknamed since the Eurozone crisis, estimates that the European Union must invest an additional 750 to 800 billion euros (about 17.5 to 18.7 trillion crowns) annually in order to she “kept in the game”, her standard of living did not drop and she did not have to abandon her climate ambitions. Draghi proposes to get this money in a way that the more frugal states will not like.
“I consider it logical that there are also more controversial proposals on the table, such as for Europe to finance some programs with joint loans. I agree with Draghi that we need real European money that will support European competitiveness,” TOP 09 MEP and economist Luděk Niedermayer responded to the report .
“The fact that the EU budget does not have money for truly European projects is a reality, and this is one – but not the only – way. My preference would be to first look for these funds in a fundamental reform of the budget. The alternative is that we do not find them and for some investments we are resigning, but of course it is wrong,” Niedermayer added.
According to Draghi, Europe has a problem with low labor productivity. Some proposals are therefore aimed at developing workers’ skills and innovation, thanks to which European companies start producing goods with added value. According to him, such products will bring much higher margins and ultimately more funds for investments.
The private money of Europeans, which often “lies idle” in accounts and is not invested, should also play its role. The connection of capital markets, which the EU states are still resisting, is supposed to help with this.
A textbook example from China
The report highlights the fundamental dilemma that Europe has when it comes to decarbonisation on the one hand, competitiveness on the other and security of supply of critical raw materials on the third.
Chinese solar panels and electric cars serve as a textbook example. Although they help Europe with decarbonization, they also bring problems for its competitiveness (less profits for European companies) and security (dependence on one supplier).
“Draghi recommends avoiding black-and-white solutions. Above all, his report strongly rejects the temptation to imitate the approach of the United States, which systematically rejects Chinese clean technologies, which would make the European ecological transformation more difficult and expensive,” wrote Simone Tagliapietra in his commentary for the respected Brussels think tank Bruegel.
“Instead, it rightly suggests that Europe implements smart and specific green industrial policies tailored to each sector,” added the researcher, who focuses on EU climate and energy policy.
In practice, it may look like the Union “gives up” its attempts to match China in the development and production of solar panels, and instead directs its efforts and money to something it is really good at, such as wind power technologies. At the same time, this sector will protect itself well against other global players within the framework of its trade policy.
“That’s the principle of industrial policy – I see technologies or innovations that I think will be disruptive and I want to build a strong position in them. The question, of course, is what those ‘technologies of tomorrow’ are, that’s often very difficult to determine.” David Navrátil, Chief Economist of Česká spořitelna, pointed out in the Europe Up Close podcast. According to him, from the Czech point of view, it would be, for example, the core.
Draghi proposes that this principle should work at the pan-European level and that European “champions” would be created thanks to this, not just national ones. This is the only way to build such large companies as to be able to compete on a global scale. The path to them should also be the easing of competition rules or other regulations, for example the simplification of international company mergers.
As for decarbonization itself and its pace, Draghi recognizes that fossil fuels will still play an important role – for gas, for example, he proposes more joint purchases. He then wants to channel more money from emission allowances into the energy-intensive industry, which faces stricter rules in Europe than elsewhere in the world.
Chances of success
However, the fate of Draghi’s report remains unclear, as it contains several proposals that have long faced opposition from some countries. Whether it is joint loans, the connection of capital markets or the end of unanimity (the right of veto) in decision-making, which Draghi is also promoting with the vision of greater EU action.
There is little indication that this is likely to change any time soon. However, as MEP Niedermayer reminded, it was the member states themselves who requested the preparation of the report.
“However the question of economic policy is dominantly in the hands of the governments of the member countries, stable, sustainable, and not low growth of each of them is in the interest of all. The inability to proceed together and in a coordinated manner in many cases worsens the problem with competitiveness. And Europe cannot afford that, Niedermayer is convinced.
According to economist Navrátil, the report describes very well where European problems lie. “There is nothing surprising in it, but I hope it can raise the concerns of politicians so that they can find a consensus that it is time to do something. If the trend remains the same, by 2050 the European economy will stagnate, which means death,” warned the economist.
The chance of success could also be given to the report by the decision of the former head of the European Commission, Ursula von der Leyen, that the program or even the structure of her new cabinet will be based on the report. It will be clear on Tuesday, September 17, when the new commission will be presented to the public.
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Spotlight Aktuálně.cz – Kateřina Šafaříková, Ondřej Houska | Video: Team Spotlight