Mario Draghi is a veteran of European politics, and his report tries to point to a new direction for the European Union.
Former Italian Prime Minister Mario Draghi released a report on how the European Union could regain its productivity, technological and economic edge. The report was commissioned last year by the President of the European Commission Ursula Von Der Leyen, who was re-elected in the same position this year. Von Der Leyen’s new term will expire in 2029.
Mario Draghi is regarded as one of the best economists in the European Union and the world. He led the European Central Bank during the euro and Greek crises, pushing for unity and eventually saving the Eurozone from trouble.
In the report, Draghi flatly states Europe needs to reform if it wants to survive. Failing to act will result in the EU giving up either its welfare, its environment, or its freedom.
“The EU will need to develop a genuine “foreign economic policy that coordinates preferential trade agreements and direct investment with resource-rich nations, the building up of stockpiles in selected critical areas, and the creation of industrial partnerships to secure the supply chain of key technologies,” the report states.
Eventually, the report says, Europe will need to unify its fiscal policy and finance massive investment plans to close the technological gap with the United States. Overall, Draghi forecasts investments of up to €800 billion annually to finance his plan.
leggi anche
Is the ECB jeopardizing Europe’s recovery?
Getting cold feet
The scale and ambition of the report, though agreed upon by most analysts, received flak from European policymakers.
Germany, in particular, feels particularly anxious about sharing debt policies with its European peers. Germany is the largest economy in the EU and follows a constitutionally bound debt limit.
Draghi’s report also includes common asset-issuing measures to finance Europe-wide investments. This also received backlash from German politicians, with Finance Minister Christian Lindner saying “The communalization of risks and liability creates democratic and fiscal issues. Germany will not agree to that.”
Critics point out that, while Draghi’s report is full of good intentions, the excessive bureaucracy and division within the EU will make its implementation impossible. “The gap between US and EU productivity could be bridged by [Draghi’s] proposals to integrate nationally based supply-side sectors and markets and boost public and private investment massively. But it won’t happen,” David Roche, founder of Independent Strategy, said.
Roche said today’s Europe is paralyzed by populism and political instability, as well as external threats posing security risks.
Mario Draghi, as experienced as he is, probably knew this already. Like Cassandra, his words may be listened to when the city is already burning to the ground.
