Between the Eagle and the Dragon
Faced with intense global competition, waning economic output and armed conflicts in the neighborhood, European leaders closed a new deal on increasing the continents competitiveness to face industrial decline vis-á-vis the United States and China.
The new European competitiveness deal intends to increase strategic sovereignty through supporting the innovation sectors, moving forward with digitalization and boosting energy independence as stated in the Council conclusions. The EU fears that agriculture protests will erode the Green Deal, as being expensive and putting burden sharing costs on farmers, nevertheless the European food sector will need to undergo innovation if it wants to become sustainable and of high-quality. This is why the Commission put forward four areas of action to strengthen the Single Market:
- Improving access to capital for EU companies, which needs to provide funding to the most innovative small- and medium enterprises and help create more startup unicorns to increase technology transfer.
- Reduction of energy cost, which in the transition period will face challenges and difficulties, however the EU needs to create as much energy as possible on its own, through nuclear fission/fusion, solar, wind and geothermal, this way citizens can benefit from low utility costs.
- Boosting the workforce through skills-based training and the possibility of re-training in other sectors need to be financially accessible and of high-quality for all. Only through this can the EU meet the necessary labor-market requirements for future jobs.
- Creating a better level-playing-field in trade with the rest of the world through open-market trade agreements and finding new export markets can create new opportunities for innovative enterprises in Europe as well as attracting necessary capital from abroad for joint projects in the health, energy and digital sectors.
+1 Furthermore, strengthening the EU’s defense industrial base by creating a joint defense single market would provide economies of scale, efficiency and increase interoperability with a higher level of readiness of national armed forces. While in the last decades the EU’s defense industry was dormant, current challenges such as increased terrorist threats, Russia’s war in Ukraine and daily cyberattacks have shed light on the underdevelopment of the defense industry. Decades of lost opportunities have to bear fruit in a short time to keep up with ever revolving threats for the EU.
As member of the European Parliament and former Italian prime minister Enrico Letta stated in his analysis European companies face a size-deficit compared to the USA and China, meaning economies of scale is important, meaning many important industries in Europe need to “Europeanize” to become fair competition in the global market. What is even more important is that the EU needs the full potential to mobilize funding from the private sector in the area of info communication, energy and capital markets. Competition rules need to drastically change to allow the merging of companies and sectors, since the current legislation prohibits the EU from becoming globally competitive (such was the case the Siemens acquisition of Alstom).
While difficult to see what comes after the European (and US) elections regarding the trade war between the two transatlantic blocs, even though the World Trade Organization ruled the aluminum and steel tariffs imposed on Europe was discriminatory in nature. To become less vulnerable from external partners, the EU will need to become more resilient along the supply chains when it comes to raw materials, as well as being self-sufficient in energy production paired with a stable defense industry base. Geopolitics also plays an important role when it comes to the EU’s global perception, which is why accelerating the admission of accession countries in the Western Balkans must be a key priority. This will not only be able to introduce new markets and room for capital investments, but also strengthen supply chains for energy as well as the possibility for researching raw materials in the region.
In the past decades the EU has done a lot thinking and talking when it comes to what an ideal world would look like, and in this process, it forgot that the world itself is full of competition, innovation and partnerships. The EU’s idealism will not be weakened by taking account of current geopolitical and social realities, it would rather serve as a catalyst to shape the world in a way it wants to see fit, to the benefit of Europe and EU member states. The EU will need to focus on areas which it knows and masters the best, such as attraction of global talent around the world, excellent and affordable higher-education system which needs to keep up with other regions in the world, a fair social-benefits system, which needs to be adjusted to current realities and discourage free-riders and last but not least a sustainable and affordable transport system (public transport and trains) to be able to travel across the continent with ease. While the diagnosis has been made by many analysts, it is high time to start the therapy.
Image: techzine.eu
