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The author is co-chief govt of the Itinera Institute, a Brussels-based think-tank, and the creator of ‘Superpower Europe: The European Union’s Silent Revolution’
“Everyone knows what we’ve got to do, however we don’t know the best way to get re-elected as soon as we’ve got achieved it.” So mentioned Jean-Claude Juncker again in 2007 when he was president of the Eurogroup. Quick ahead to 2025, Europe’s new “Juncker curse” is that its politicians know what they must do however don’t know the best way to pay for it. Name it, with regards to the present European fee president, “Von der Leyen’s curse”.
No fewer than three main experiences printed final 12 months — by Enrico Letta, Mario Draghi and Sauli Niinistö — urge European leaders to push forward with deepening market integration, boosting innovation and funding in essential sectors and applied sciences, and with constructing self-reliance to face disaster and battle.
This quest for prosperity, energy and safety comes with an unprecedented price ticket. Draghi alone advocates an extra €800bn in annual spending. The place is the EU supposed to seek out this sort of cash and the way can spending on such a scale be mobilised to assist widespread priorities somewhat than slim nationwide preferences?
Probably the most elegant answer could be large public-private partnership schemes. In a perfect state of affairs the EU, along with the European Funding Financial institution, would make institutional buyers and enterprise capitalists presents they can’t refuse: the flexibility to assert a stake within the financial and technological way forward for the continent with assured authorities spending and/or protected market potential as a income mannequin. However co-ordinating this from Brussels throughout 27 member states could be a Herculean process. Simply contemplate how the a lot easier widespread European defence bond has didn’t materialise, regardless of the horrors in Ukraine.
Then there are taxes. An EU that raises import tariffs, emission levies and different taxes to make the taking part in area truthful and sustainable within the European market can probably make investments tens of billions yearly. Nevertheless, taxes could also be counterproductive in the event that they harm the very European business we search to maintain and defend. And so they could also be downright damaging in the event that they find yourself hurting firms from nations with which Europe doesn’t desire a commerce struggle.
What’s left are debt mechanisms. However the stability of Europe’s unfinished financial union imposes preventive budgetary self-discipline on member states. Deficits for strategic investments stay doable, however require country-by-country negotiations with the fee. Mutualised European debt invested straight from Brussels is a political Rubicon member states nonetheless must cross.
The EU not solely has too few assets, it additionally doesn’t know the best way to spend what it does have rapidly and effectively. Processes are sluggish, bureaucratic and customarily not very clear for collaborating firms or nations. The bloc should compete with China, Russia and the US in what has develop into a world arms race of state capitalism and mercantilism. However Brussels has neither the political nor monetary heft to compete with Beijing, Moscow or Washington.
If the EU actually needs to stay as much as its ambitions, the prevailing platform for necessary tasks of widespread European curiosity is usually a stepping stone, offered it may well scale up and velocity up. Extra seemingly is an ecosystem of funding initiatives and automobiles exterior formal EU programmes, by coalitions of buyers and/or member states.
First-mover benefit will play a job as nations with a stake in strategic sectors can declare future market share by contributing to collective EU ambitions. Poland, for example, has been main the pack in mobilising public spending for defence and safety capabilities alongside Europe’s japanese border and within the Baltic.
This, then, is the way in which to elevate Von der Leyen’s curse. Permit coalitions of states to mix in respective self-interest and in strategic partnership with their industries, taking state assist to a co-ordinated multinational stage.
Neglect the outdated separation of the European market and home state assist — the latter serves the mixing of the previous for geopolitical functions. Neglect the decision-making machineries that usually stymie EU motion and as a substitute create room for advert hoc preparations inside the bloc’s general technique. And neglect even the excellence between member states and third nations — what issues is the best geopolitical coalition in assist of EU insurance policies, and that features a nation such because the UK in issues of safety and defence. Lifting Von der Leyen’s curse, it seems, would possibly even elevate the Brexit curse as effectively.