Europe's geopolitical trajectory in the wake of the Draghi report
The European Union (EU) is facing significant challenges in various sectors, according to a recent report. The report, spearheaded by former European Central Bank president, Mario Draghi, highlights three major challenges: accelerating innovation, reducing energy prices while continuing to decarbonize the economy, and responding to a more unstable world where Europe can no longer rely on others for its security.
To address these challenges, the report recommends a substantial and sustained increase in investments. Europe is currently experiencing a technological lag, particularly in comparison to the United States and China. Catching up on this deficit is crucial, as it is linked to strengthening Europe's autonomy in digital and renewable energy domains, and sustaining its social model.
The report also emphasizes the need for Europe to engage more abroad to limit climate change and prevent China and Russia from dominating the "Global South". This engagement is essential for securing the supply chain of key resources through coordinated trade agreements, investments, and industrial partnerships.
The EU's defense sector is also in need of reform. The report reveals that 78% of the equipment used by European armies since the beginning of the war against Ukraine has been acquired outside the Union. To rectify this, the report suggests greater integration in key areas such as defense, supported by the European Defence Technological and Industrial Base (EDTIB) and EU-level funding programs. National governments like Germany and France, which emphasize strong bilateral cooperation and increased defense spending, will play a crucial role within the framework of EU initiatives and NATO commitments.
The report also addresses climate change as a major geopolitical threat to Europe, causing instability at its borders. To combat this, Europe would need to invest an additional 800 billion euros each year from both private and public funds, equivalent to 5% of European GDP, to catch up on its technological lag.
However, financing this investment effort is a contentious issue. The debate surrounding the report has focused on the question of creating a common debt of EU member states to finance the massive increase in investment recommended by the report. Modifying the Treaties to integrate these areas into the Union's competences will be complex, as they constitute the heart of national sovereignty.
The report also underscores the importance of Europe developing a powerful defense industry to overcome current fragmentation. Emerging and developing countries will only fully engage in the green transition and climate change adaptation if developed countries provide sufficient assistance. Europe cannot refuse to contribute to solving the debt problems of these countries.
In conclusion, the report calls for greater integration in key areas such as taxation, foreign policy, and defense to meet the challenges facing the Union. This investment effort will only be possible if sufficient public funds trigger a private investment dynamic, but finding the corresponding public funds at the European level requires increasing member states' contributions or the Union's own resources, and/or issuing joint debt. The future of Europe hinges on its ability to act as a global power, and these recommendations provide a roadmap for achieving that goal.
