Progressive step? The Draghi file and Europe's political future in the global arena

The European Union (EU) is grappling with a series of significant issues, as highlighted in the recent Draghi report. The report underscores three major challenges for Europe: the need to accelerate innovation, lower energy prices while decarbonizing the economy, and respond to a more unstable world where Europe can no longer rely on others to guarantee its security.

One of the pressing concerns is the excessive debt problems in sub-Saharan Africa, which are mainly affecting countries due to Covid-19 and the war in Ukraine. Europe is urged to help resolve this issue, as it could have far-reaching implications for the continent's stability and the EU's geopolitical position.

Another challenge is Europe's technological deficit. The report estimates that Europe would need to invest around 800 billion euros more each year in private and public money to catch up technologically, equivalent to 5% of European GDP. The remedy lies in a massive and sustained increase in investment.

The defense industry is another area of concern. Europe's investments in defense remain insufficient, inefficient, and fragmented. The defense industry is not able to keep up with the increase in military spending, as 78% of the equipment used by Europe's armed forces has been purchased outside the Union. The establishment of a European Defence Agency could increase its role in developing more military research projects, encouraging companies to join forces, and better coordinating the procurement of equipment for European armies.

Europe also needs to reduce its excessive dependence on certain trading partners and develop economic ties with other regions of the world to access critical raw materials. The report recommends going further in terms of industrial policy, support for European innovation, and protection of European producers.

The report stresses that this investment will only be possible if sufficient public money is made available to trigger momentum in private investment. However, the proposal to issue joint debt for the Union's member states to finance the increase in investment has been met with strong resistance.

The report also emphasizes the need for balanced partnerships with partners, helping them build real industrial sectors to add domestic value to raw materials. Europe has been overly naive in the past, placing too much faith in free trade and opening up the Union to goods and capital. The report suggests going further in terms of industrial policy, support for European innovation, and protection of European producers.

The Global Gateway Initiative was launched by Europe in response to China's expansion. The initiative aims to coordinate preferential trade agreements, direct investments, build up stocks in critical areas, and create industrial partnerships to secure the supply chain for key resources.

Josep Borrell serves as the EU High Representative for Foreign Affairs and Security Policy, responsible for the geo-economic dimension of the Union's foreign policy, institutional coordination of the Common Security and Defence Policy, and support of the defense industry. The report calls for the development of a true "foreign economic policy" for the Union, under Borrell's leadership.

However, Europe cooperates far too little in the defense industry, with only 18% of orders for armed forces placed in a coordinated fashion in Europe. The report recommends greater integration in key areas such as taxation, foreign policy, and defense, which may require amending the Treaties.

The report warns that if no agreement is reached on increasing national contributions or the Union's own resources, or issuing joint debt, there is a risk that this major internal investment effort will be to the detriment of European public and private investment outside the Union, undermining its geopolitical position.

In conclusion, the Draghi report presents a comprehensive analysis of the challenges facing Europe and offers recommendations for addressing them. The report emphasizes the need for increased investment, greater integration, and a more balanced approach to trade and partnerships. The success of these recommendations will be crucial in ensuring Europe's economic and geopolitical future.

Progressive step? The Draghi file and Europe's political future in the global arena