MILANO – Mario Draghi speaks at the European conference on social rights but already puts the competitiveness issues that the von der Leyen Commission asked him to explore back at center stage. “There is a need for radical change in the EU – says the former Italian prime minister – Our investment rules are built on a world that no longer exists, the pre-Covid world, pre-war in Ukraine, pre-crisis in the Middle East. And we find ourselves in a world where rivalry between the great powers has returned.”
The China danger
A world in which “we were taken by surprise” and in which “other countries do not follow the rules”, explains Draghi precisely in the days in which the German leader Scholz is in China with the heavy tug-of-war over Beijing’s aggressive commercial practices in serve as the backdrop to the journey. A tug of war from which Draghi does not hold back: Beijing “aims to capture and internalize all parts of the value chain in advanced and clean technologies and to ensure access to the necessary resources. This rapid expansion of supply is leading to a significant production overcapacity in multiple sectors and threatens to undermine our industries”, says the former ECB.
A multi-level integration
Draghi therefore speaks of the need to accelerate integration, as promptly underlined in several of his public speeches in his new guise, going so far as to lash out: “If not at 27, among those who want to do it”, a reference to the path of strengthened cooperation between a small number of countries to conclude the Capital Market Union. “We do not have the luxury of being able to postpone decisions, to ensure coherence between the different tools to relaunch the competitiveness of the EU we need a new strategic tool to coordinate economic policies”.
The former governor of the European Central Bank moves in and around Brussels with Enrico Lettawho will participate in the meeting of Heads of State and Government on Thursday to present his report on the internal market. Draghi was entrusted with the complementary work on EU competitiveness, which will instead be finalized by June. “What I will propose in my report is a radical change: this is what we need”, his anticipation. The agenda of the extraordinary European Council on Wednesday and Thursday focuses precisely on the “new Competitiveness Pact”, which will indicate the political agenda to be delivered to the next legislature which will arise from the European vote at the beginning of June. “We must achieve a transformation of the European economy, we must be able to rely on a decarbonised energy system, a European integrated defence, domestic production in the most innovative sectors and a leading position in technology production”, adds Draghi.
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Europe’s delays, from tech to capital
The former governor brings some clear examples of the process of failed integration and its consequences. Among the tech companies that dominate the world, we list “only four out of the top 50”. Or again, in Telecommunications we have “34 national mobile companies, while the USA has 3 and China 4”. And the result is that “we are behind on 5G”.
“I believe that the political cohesion of our Union requires that we act together, if possible always. We must be aware that political cohesion is threatened by changes in the rest of the world“, argues Draghi in La Hulpe, where the Belgian presidency organized the conference. “The majority of investment will have to be covered by private investment. Private savings are very high and are mostly channeled into bank deposits and do not end up financing growth as much as they could in a broader capital market. This is why why moving forward in the Capital Markets Union is an indispensable part of the overall competitiveness strategy“.
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The example of the USA
Draghi still looks to what is happening outside the Old Continent to give a sense of urgency to act: “The United States is using a large-scale industrial policy to attract high-value national manufacturing capabilities within the borders, including that of European companies, while the use of protection means excluding competitors and exploiting one’s geopolitical power to reorient and protect supply chains. We – he adds – have never had the possibility of stipulating an equivalent industrial pact at European Union level. although the Commission has done everything in its power to fill this gap as such. Despite the number of positive initiatives underway, we still lack a global strategy on how to respond in multiple areas. We lack a strategy for how to keep pace with rising costs to achieve leadership in new technologies.”