Mario Draghi ha received the European Charles V Prize by King Felipe VI of Spain during a ceremony at the monastery of San Jeronimo de Yuste. The award, named after the last great European emperor Charles V, recognizes theinfluence and contribution significant of Draghi at theintegration and European prosperity.
In his acceptance speech, the former prime minister outlined the next steps for the future of the European Union, focusing on the need for faster and more sustainable growth, the crucial importance of the green transition and the need to strengthen Europe's defense capacity. A thought then on duties, “useful against unfair competition” while calling for the creation of a “true European energy market” to improve the continent's competitiveness in the energy sector.
A single market for sustainable growth
Draghi began his speech by highlighting the successes achieved by Europe in create a single market of 445 million of consumers which has led to an increase in economic prosperity and social cohesion between Member States.
“But today we face fundamental questions about our future. As our societies age, the demands on our social model increase, and maintaining high levels of social protection is essential for Europeans. We also have to adapt to rapid technological changes, achieve the green transition, strengthen defense, and in the meantime the era of gas imported at low prices from Russia is over, and free world trade risks declining. If we want to face all these challenges we will have to grow faster and better. And the main way to do this is to increase the productivity of our economies."
Draghi highlighted the technological gap between Europe and the United States, particularly in the field ofartificial intelligence. “About 70% of AI models are developed in the United States, with three American companies accounting for 65% of the global cloud computing market.” To bridge this gap, Draghi has proposed a series of targeted political actions.
ENERGY COSTS REDUCTION
One of the priorities highlighted by Draghi is the reduction in energy prices in Europe. European industrial users face significantly higher energy costs than their US counterparts. Draghi attributed this disadvantage to Europe's delay “in installing new clean energy capacities and the lack of natural resources. We suffer from slow and sub-optimal infrastructure investments, both for renewables and networks. Inadequate networks mean we cannot meet energy demand even when there are surpluses in some parts of the EU.”
To increase productivity, he suggested the construction of a true European energy market that allows industries and families to fully benefit from clean energy.
Strengthen defense capacity
Draghi also addressed the need to strengthen Europe's defense capacity. He underlined the importance of a robust innovation environment, highlighting the investment gap in research and innovation (R&I) between Europe and the United States. European businesses invest about half as much as their American counterparts, creating a “gap of around 270 billion euros every year”. The former prime minister proposed a increase in public funding and more effective coordination between Member States to address these challenges.
Draghi's recipe for EU economic policy
Draghi's recipe for the European Union's success includes "a common assessment of the geopolitical risks we face, shared among member states." It will then be necessary to develop a "foreign economic policy that coordinates preferential trade agreements and direct investments with resource-rich nations, creates stocks in critical areas and establishes industrial partnerships to guarantee the supply chain of key technologies".
Draghi then addressed the question of duties and while remaining faithful to the principle of free trade, he recognized that Europe cannot remain passive if its prosperity is threatened.
" first answer to the changed rules of world trade should be to try to repair the damage to the multilateral trading order". There second answer “It should be encouraging foreign direct investment to keep manufacturing jobs in Europe.” There third answer instead it should include “the use of subsidies and tariffs to offset unfair advantages created by industrial policies and real exchange rate devaluations abroad, but if we go down this path, it must be as part of a general approach that is pragmatic, cautious and coherent".
Draghi specified that “the use of duties and subsidies should be principled and consistent with the maximization of ours productivity growth. This means distinguishing between genuine innovation and productivity improvements abroad and unfair competition and demand suppression. It is crucial “to avoid encouraging dynamics that undermine European industry and to ensure that i duties are applied consistently along all phases of production, without encouraging the relocation of industries" explained the former head of the ECB. Furthermore, tariffs must be "balanced" considering "consumer interests", "because if there are industries in which domestic producers have fallen too far behind foreign competitors, making imports more expensive through tariffs would only impose dead weights on the economy".
Urgent decisions that require cooperation between EU member states
The political decisions needed to address technological and climate challenges “are urgent”, concluded the former head of the ECB “and require a level of cooperation and coordination between European Union member states never seen before”. Despite the difficulties, Draghi said he was "confident in Europe's determination, responsibility and solidarity to defend work, the climate, the values of social equity and inclusion, and the independence of the continent".
