Last week Mario Draghi, former Italian prime minister and European Central Bank president, came before the European Parliament to discuss his report on the future of the EU. It was a striking appearance. The normally quietly-spoken Draghi, frustrated by Europe’s inaction following the presentation of his report last Autumn, told the MEPs and representatives of EU member state parliaments who were also present: " You ask me what’s best to do…I don’t know, but do something."
He had a point. In responding to reports such as that put forward by Draghi, the EU tends to revert to endless process and little action. It can move faster in a crisis – such as during the financial crash and the Covid-19 pandemic.
However, key recommendations from the Draghi agenda remain stuck. The EU cannot agree to issue commonly guaranteed debt, though there are fresh suggestions to do so for defence spending, and also to allow member states to breach borrowing guidelines for this purpose. Key parts of the Single Market remain unfinished. Progress on creating a genuine Capital Markets Union is stuck.
These are not theoretical concepts. They are measures to reduce the burden of regulation on EU firms, to boost trade within the Union and to make it easier for companies to access investment and develop technology. Regulation needs to be cut in many areas. And, as Draghi noted, time is not now on Europe’s side, with a crisis in relations with the US, an uncertain situation in Ukraine and sluggish growth in the EU economy.
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In a recent article in the Financial Times, Draghi argued that the costs and barriers which the EU had put in its own way were far larger than any tariffs likely to come from the US. Rules designed to protect citizens, such as GDPR, have ended up hampering innovation and piling costs on technology companies .
Leadership is needed to address these issues, but with Germany stuck in pre-election mode ahead of yesterday’s poll - and now facing lengthy discussions to form a new administration - and President Emmanuel Macron weakened politically in France this has been missing. The EU, in Draghi’s view, needs to act more like one nation if it is to adequately address its problems. But with a complex decision-making process and some recalcitrant member states with divergent views, progress on many issues has appeared to be ever more difficult.
There are some signs of change, particularly in the area of defence as it becomes clear that Europe may have to take a much larger role, with fundamental policy change from Washington.
But it remains to be seen if EU leaders can pursue the wider reform agenda needed to strengthen the European economy and increase trade within its borders. There is no shortage of analysis – from Draghi and others – on what to do. But action is what is needed.
