A Franco-German Manifesto has been issued to reboot Europe’s industrial policy and to invest jointly in innovation, Artificial Intelligence and the development of major European corporations in order to resist the ever-sharper competition of the USA and China. Paris and Berlin, in short, are united as they take another step forward to unveil a way out of the crisis that is holding the EU back. The two countries have thus launched a heady challenge to all the other countries, starting with Italy: a choice between growth under common objectives, falling behind or, even worse, ending up on the sidelines of a ‘two-speed’ Europe whose engine sits squarely on a Franco-German axle.
These are difficult times for the stagnating European economy, caused in part by the sudden slowdown that directly affected the German automobile industry and, consequently, the entire European automotive sector (Italy has been severely affected as it is a major supplier for BMW, Audi, Volkswagen and Daimler). The economy is also hemmed in by Trump’s manoeuvres (claiming the European auto industry is a threat to national security) and USA-China trade conflicts. The picture becomes even darker given the uncertainty surrounding Brexit. In addition, the political tensions that afflict many EU countries expose the risks associated with populism, sovereignism and protectionist nationalism just now as we prepare for the imminent May elections for the new European Parliament. The push is for all countries and governments that still believe in the indispensable nature of Europe, and thus in its reform and reinforcement, must give clear and active political signals to halt the de-growth, political crisis and risks of decline.
“Being outside the EU might lead to more policy independence, but not necessarily to greater sovereignty. The same is true of the single currency,” said Mario Draghi, president of the ECB, to students in Bologna last Friday during the ceremony awarding him a degree honoris causa in Jurisprudence. The only other alternatives would be the Polish, Hungarian or, alas, Italian style of sovereignism. Or else building walls out of fear around ‘little homelands’ and miserable localisms. Europe, Draghi added, naturally needs some reform “to adjust the [EU] institutions to change”, face external challenges that have “become increasingly threatening” and to “respond to the perception that [the European Union] lacks equity between countries and social classes”. The strategy, however, is for ‘more Europe’ and a better Europe. It certainly is not for a dismantling or impoverishment, as desired by Trump’s USA and Putin’s Russia (and nationalists in Italy).
Draghi recalled that true sovereignty is reflected in the ability to control outcomes and respond to the fundamental needs of the people:
“Peace, safety, and public good” as defined by John Locke, the 17th century liberal philosopher, one of the ethical and political inspirations for the concept of Europe. A Europe to be changed, of course. However, we should not forget that the EU “has been a political success” and this includes the financial policies of the ECB in the face of the Global Financial Crisis. Thus, Europe no matter what. It is a lesson to bear in mind.
The decisions taken by Paris and Berlin follow in this direction. After renewing the Treaty of Aachen last January and initiating a draft for common policy on the Eurozone Budget, it is the Manifesto for the industrial policy that outlines concrete strategies and measures to foster the growth of ‘European champions’. How will this come about? We need to invest more in innovation and develop the cutting-edge technologies of Artificial Intelligence (AI), robotics and computer processes for applications in healthcare, transport, the environment and energy. Electric automobiles is one common sector for growth. The same can be said for all that is Industry 4.0 (which the Italian government, opposed to industry, scientific research and innovation has unfortunately placed on the back burner, thus hampering economic growth).
The second pillar of the Manifesto concerns reform of the EU antitrust regulations. Irritated by Brussels’s ‘no’ to the Alstom-Siemens agreement on high speed trains, Paris and Berlin wish to change Europe’s rules on competition, developing ways to better protect the new ‘European champions’ from challenges set into motion by the USA and China, which is busy shopping around for European hi-tech companies. Changes in competition rules and antitrust procedures are not popular in European Commission circles and some European states, especially in the north. Yet, the issue is being addressed quite strongly. It will be discussed, in a dialectic that is certainly not academic, between the ‘free market’ and ‘interventionist’ proponents.
The third pillar regards the need for each country to monitor its own strategic industrial assets to make sure that any transfer of competence, patents or know how in one country does not place the whole European industry in crisis. It is a complex question, naturally, because it is related to freedom of the market and businesses. The question is nevertheless under discussion and aims to solicit commitments of reciprocity for investments in the USA and China by European companies.
And what about Italy? In all these questions, it is substantially absent. The anti-Brussels moves by several components of the green-yellow government, the polemical outbursts by powerful ministers against the EU, the Euro and European ‘bureaucrats’, the ‘filo-Putin’ feelings and the arguments with France and cold shoulder to Germany are definitely not helpful.
“Germany and France are speeding up in the absence of Italy,” commented editorialist Attilio Geroni in Il Sole 24 Ore (20 February). A few days later, Giuseppe Chiellino commented as well: “Italy remains outside the design of European integration.” This came with another ominous notation for our country: “In the so-called G3 Group, which acts as the main impetus for proposals on the most important issues ‒ from the budget to immigration policies to forthcoming EU appointments ‒ the partner to France and Germany is no longer Italy, but Spain.”
Indeed, Brexit should have enabled Italy, second manufacturer in Europe and third EU economy, to be a steady, relevant protagonist in the ‘European triangle’ with the Germans and the French. The short-sighted choices of the Conte government have instead marginalized us. Many, in Brussels and in the capitals of other major European countries, now see Italy, hit by a new recession and lacking political credibility on the state budget and development policies, no longer as a strategic partner but as a dead weight for a Europe on the move.
This is an alarming picture. Italy’s businesses, amidst the government’s distraction and irresponsibility, are attempting to provide a response. One response is a summit between Confindustria and MEDEF, the corresponding French employers’ organisation, in Versailles on 28-29 February 2019. An additional step is preparation of another encounter that will involve the German association BDI. Industry is assuming responsibility, attempting to curb the political damage by the government and the majority party, and reweaving a strategy for European development.