Editorial|Mario Draghi proposes massive annual investments of 800 billion euros for the European Union. Their need is recognized and acknowledged, but funding is a different matter.
Khousing and competitiveness will receive a lot of attention from the next EU Commission. It has to, because the European Union is involved in a tough strategic competition under the pressure of China and the United States.
The EU cannot act like the US or China, whose toolbox includes massive subsidies, protectionism, tariffs and wars. A different selection of means must be used.
The mantra of improving the EU’s competitiveness was given substance by the former president of the European Central Bank Mario Draghi’s report published on Monday. In his report, Draghi makes a correct diagnosis of Europe’s difficulties. Key challenges include the innovation and technology gap in relation to the United States and China. Competitors are plunging into the future, where they are already fighting head-on for the dominance of artificial intelligence and other new technologies and space. At the same time, the EU threatens to remain stagnant.
In order to strengthen the relative position of the EU, Draghi proposes massive annual investments of 800 billion euros in the economy, defense and climate protection. Ultimately, Draghi would finance investments and new public spending with the EU’s common debt.
The main line in EU countries will certainly be clamoring for it. A new European industrial policy and the completion of the capital market union are needed so that the EU is able to build growth and keep up with the competition. Access to financing is especially difficult for Finnish companies, because there are no large investors in Finland. However, the report does not reveal what part of the investments would be public money and whether it would be loans or subsidies.
EIt is no surprise that Draghi, a central banker who has experienced the euro crisis, proposes a collective debt for the EU. Joint debt has obvious advantages in terms of the financial system. At the same time, it is a politically difficult solution for the member states. The president of the EU Commission, Ursula von der Leyen, is well aware of the political realities, such as Germany, France, and the smoky countries of Northern Europe’s stubborn positions on the collective debt.
Von der Leyen immediately said that the EU countries must first agree on common goals and objectives and only then on their financing. To determine the goals, von der Leyen now has a ready list from Draghi. The report has a lot to do with the tasks of the new commissioners.
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The EU threatens to remain stagnant.
In the global geopolitical and geoeconomic competition, the EU is not the early favorite. EU countries would have to do many things in a new way either alone or together. Of course, not everything will be in their own hands if and when the US escalates the trade war with China.
A new kind of speed is required from the new EU Commission and the member states. Supporting Ukraine and also Europe’s own arming are acute problems. Although defense is the national responsibility of the EU countries, it is worth using common funds to develop defense technology. Climate measures should have been taken already.
Sthe tough world of strategic competition requires admitting one’s mistakes and quickly correcting them. Europe cannot continue to curl up in itself. However, it is doing so. At the same time that the EU should be strengthened, forces seeking to weaken it are coming to power. It is realistic to assume that the EU will not become stronger. Many in Finland would gladly hide Draghi’s proposals in their hearts and study them.
But let’s face the truth. The EU cannot survive supporting Ukraine, strengthening its own security and strengthening its competitiveness without an increase in the EU budget, an increase in member countries’ contributions, a new allocation of aid money, new ways of acquiring funds and huge new investments in critical technology and the green transition. The challenges of the Finnish economy and the structure of the industry are such that joint financing mechanisms would be of great benefit to us.
You can’t put your head in the bush: a new joint debt may still be needed.
The editorials are HS’s positions on a current topic. The articles are prepared by HS editorial staff, and they reflect the journal principle line.
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