The European Union (EU) is feeling a renewed sense of urgency regarding its competitiveness, particularly in light of Donald Trump’s election victory. According to Mario Draghi, the former head of the European Central Bank, concerns are growing that the EU may struggle to keep pace with major players like the United States and China.
Before his election, Trump made it clear that the EU would face severe consequences for not purchasing enough American goods—specifically, he threatened tariffs as high as 10% on all imports from the US. This warning has stirred the pot, especially among the 27 EU member states.
While presenting his competitiveness report at an EU summit, Mr. Draghi commented, “The sense of urgency today is greater than it was a week ago.” This sentiment reflects the mounting pressures on Europe to bolster its global standing.
The usual driving force behind EU initiatives—the Franco-German alliance—is witnessing strains, particularly with French President Emmanuel Macron grappling with domestic issues. Consequently, the EU’s momentum is faltering as it falls behind its competitors, especially in green technology and digital innovation. Challenges like bureaucracy, soaring energy prices, and a heavy reliance on Chinese raw materials hinder the bloc’s progress.
In response, EU leaders have endorsed the “Budapest Declaration,” which outlines a comprehensive agenda aimed at fostering a truly unified internal market, enhancing access to capital, and unifying the energy sector. Ursula von der Leyen, head of the European Commission, stated that her new executive team would present plans within 100 days to help industries achieve carbon neutrality by 2050 and to expand the EU single market by June.
Draghi has highlighted the pressing need for an annual investment boost of €750-800 billion. However, many fiscally conservative EU nations bristle at the idea of funding through shared EU assets. He emphasized that the immediate focus should not be on joint funding but rather on addressing the fragmentation of both the single market and capital markets.
Nevertheless, the pursuit of a Capital Markets Union (CMU) has languished for a decade, bogged down by entrenched national interests, varied business cultures, and different regulatory frameworks. Current ECB president Christine Lagarde has called for swift action to create a cohesive system that directs private savings to groundbreaking firms on a significant scale. Officials suggested that fresh methodologies might be required to achieve this goal.
This is precisely the type of challenge that would benefit from a Franco-German consensus; however, the two nations are currently at odds over a French initiative allowing a select group of countries to advance independently.
Belgian Prime Minister Alexander De Croo emphasized the necessity for EU unity, especially with Trump considering his return to the White House. “We have to collectively explain to him what a tariff war would entail and evaluate the economic behavior of our shared competitor, China,” he remarked.
At the summit, Taoiseach Simon Harris from Ireland expressed his opposition to the idea of the EU issuing common debt bonds for defense spending. “Ireland has significant concerns regarding common bonds—not just for policy reasons but because there are many pressing projects Europe needs to fund,” he stated.
“Every discussion I have at the European Council revolves around the new financial needs of Europe—urgent topics like digital transition, climate action, competitiveness, and addressing infrastructure deficits,” he noted.
Draghi proposed that some key projects, including defense procurement, might be financed through joint investments and common debt. Sticking to Ireland’s established military neutrality, Harris added, “While we support Ukraine where we can, we do not engage in providing weaponry or military support. The Ukrainian government understands this stance.”
Harris conveyed the underlying message from the summit, emphasizing that while US policies might shift with Trump’s potential return, the EU needs to chart its own course, particularly concerning Ukraine. “What is the vision for Europe? There’s a growing understanding of the importance of strategic autonomy and doing what we can right here on our continent,” he noted passionately.
He reflected, “No one else is responsible for our well-being. As President Macron pointed out, it’s imperative for European leaders to advocate for our own interests.” There was a unified sentiment among participants that the EU must stand alongside Ukraine, providing support for as long as necessary amidst its ongoing crisis.
Mr. Harris pointed out the clarity coming from the US regarding its policy direction, yet stressed that “European values remain steadfast… we uphold the principles of the UN Charter and the integrity of sovereign nations.”
Discussing global tensions, he mentioned the precarious situation in the Middle East, expressing concern about the potential ramifications of Netanyahu’s response during this transitional phase. “I worry about how he will navigate these complex dynamics. Trump has often proclaimed his support for peace, and it is crucial for the world to speak unanimously against humanitarian crises and civilian casualties.”
Harris also examined Trump’s previous tenure and actions such as the Abraham Accords, questioning whether they could pave the way for renewed dialogue and stability in the region. “Recognizing Palestine as a sovereign state must be part of that discourse,” he concluded.
For further insights, additional reporting has been conducted by Tony Connelly.
Edited by: Ali Musa
alimusa@axadletimes.com
Axadle international–Monitoring
