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Draghi revives the idea of common loans to strengthen a Europe in danger
Europe is suffering an economic disconnect with the United States and is increasing its dependence on China, Mario Draghi warned on Monday, recommending in particular the issuance of new common debts to better finance innovation, the green transition and defense. “The investment needs are enormous,” the former president of the European Central Bank (ECB) insisted at a press conference in Brussels, citing the figure of 750 to 800 billion euros per year, more than the United States’ Marshall Plan that supported Europe after the Second World War. On the occasion of the submission of a highly anticipated report to the President of the European Commission, Ursula von der Leyen, the former Italian Prime Minister called for a “radical change” towards more European integration but also less bureaucratic complexity. “For the first time since the Cold War, (the European Union) must really fear for its survival and the need for a unified response has never been more pressing,” he said. After the success of the historic post-Covid recovery plan of 800 billion euros, the EU should “continue to issue common debt instruments to finance common investment projects aimed at increasing competitiveness and the security of the EU,” Mario Draghi said, stressing the economic “gap” that has opened up with the United States and the need to partly free itself from China in order to develop renewable energies. Europe will have to “accelerate innovation”, particularly in digital technology, launch a “joint plan for decarbonisation and competitiveness”, but also reduce its dependencies on certain raw materials and key technologies dominated by the Chinese. – Red line for Berlin – The idea of a new joint loan, supported by France, remains a red line for many northern European countries such as Germany and the Netherlands, which fear being asked to contribute more heavily to make up for the delays of southern countries. Mario Draghi acknowledges that such a project will only be possible “if the political and institutional conditions are met”. He firstly emphasises the need to mobilise private capital to finance innovation through the creation of a genuine “Capital Markets Union”. The joint loan “is one instrument among others, it is not an objective in itself,” he explained. He also criticized the increased recourse to national public aid which has favored companies in large countries to the detriment of smaller ones in recent years. “This has only increased the fragmentation of the single market,” he lamented. “Real disposable income per capita has increased almost twice as much in the United States as in Europe since 2000,” warns the former president of the European Central Bank (ECB), in this 400-page document commissioned by Ursula von der Leyen. She affirmed that Mr Draghi’s proposals “will be found” in the orientations of the new Commission for the next five years while she is due to present her new team this week. But she did not take up the idea of common debt, instead evoking “national contributions” or new “own resources” to feed the EU budget. – Economic stagnation – The European Union has been mired in economic stagnation for a year and a half. It has weathered the crisis caused by the pandemic in 2020 less well than the United States, as was already the case for the financial crisis of 2008. This drop is explained “mainly by the more marked slowdown in productivity in Europe” and represents a threat to its social model, underlines Mario Draghi. “If Europe fails to become more productive, we will be forced to make choices. We will not be able to become a leader in new technologies, a model of climate responsibility and an independent player on the world stage. We will not be able to finance our social model. We will have to scale back some, if not all, of our ambitions. This is an existential challenge,” he stressed. Among many measures, Mario Draghi recommends the development of a “common research strategy”, the development of European stock markets to facilitate the IPOs of innovative companies, the creation of an “Energy Union”, targeted support for the manufacture of certain clean technologies, an action plan for the automobile industry, or even increased cooperation in innovation in the field of armaments.aro/jca/ib
