The value of a European industrial policy for artificial intelligence, security and energy
“It’s time to talk about Europe” is the plea that Lucrezia Reichlin, as a far-sighted and competent economist, addresses to Italian political leaders, looking ahead to the upcoming European Parliament election on 8 June (Corriere della Sera, 28 January). That means talking about changes in global geopolitics and therefore international conflicts and tensions and the so-called “polycrisis” (the wars in Ukraine and the Middle East are its most obvious and dramatic aspects, but certainly not the only ones) and about major environmental and social issues. It means talking about this time of crisis and risks of decline among Western democracies, taking the blows of sovereignism and populists and hostility from the arena of the Global South. And of course of it means talking about economics: how to configure a common economic policy on the issues of competitiveness, innovation and labour, at a time of radical transformations dominated by the unstoppable spread of artificial intelligence and its impact on knowledge, research, production, consumption, and the evolution of economic and social relations.
It’s a challenge that needs to take priority and that can’t only be addressed through the tools of legislative regulation, where the EU is making the first moves, but which requires attention from the perspective of competitiveness, scientific and tech research, investment and support for European industrial policy: up until now, the biggest companies in global markets are US companies, and it’s essential to grow European companies able to rise to the challenge.
Europe is a great economic reality but also a weak political assembly, and it is as fragile as ever in the face of US and Chinese choices, their conflicts but also potential convergence of interests and will to dominate. That’s without mentioning the growing role, economically and therefore also politically, of India, a player that aspires to transition from a position as regional power to global power, but also Russia’s neo-imperial and Turkey’s neo-Ottoman expansionism. In a multipolar world, it is precisely an authoritative European presence that can make a difference and suggest viable ways to define new and better balances of peace and development.
“Europe will have to decide whether it has the strength to make the leap of cohesion necessary to face the new international context, in which it is now exposed on several fronts,” says Reichlin, adding that “economic issues are usually important,” because “it is difficult to imagine a common foreign and security policy without greater sharing of economic instruments,” and “without choices that will not be painless”, both economically and socially.
What are these choices? They concern economic and fiscal policies in order to address the problems of security, economic growth, managing all the complex artificial intelligence challenges we mentioned, and therefore competitiveness and employment with one vision. Nor should the issues of health be overlooked: “Health is wealth,” Mario Draghi often repeats, well aware of the relationship between quality of life and widespread well-being, social wealth, and the possibility of a fairer, more balanced future.
Let’s look at some figures, to understand better.
According to a study by the think tank Bruegel, from 2021 to 2027 the EU has had and will have €1.8 trillion (€257 billion a year) from its budget for investments dedicated to the prioritised topics of the green and digital transition, defence and security, health and the reconstruction of Ukraine (a responsibility that will fall mainly to the EU and other European countries). Lucrezia Reichlin maintains that this is not enough, even considering only that the EU’s Green Deal alone is estimated to require 356 billion per year.
It is also shrinks alongside the economic policies that the US and China have put in place: the 737 billion of the IRA (Inflation Reduction Act) adopted in Washington to support businesses investing in clean-energy technologies (also an extraordinary element of attraction for international companies prepared to go and produce in the US); and Beijing’s huge resources to stimulate Chinese companies in high-tech sectors.
Therefore? The EU budget needs to be expanded, and an instrument which is the subject of increasing discussion must be implemented: eurobonds (the latest voice to urge that they be adopted was Fabio Panetta, Governor of the Bank of Italy, last week). The legacy and lesson of Jacques Delors, a great man in European government, is finally being heard.
The Recovery Fund led the way, gathering EU resources on the financial markets to allocate to the post-Covid recovery and the reforms and investments needed to improve the development condition for the “next generation”. (The new economic policy instrument was actually named after them, and Italy benefits from its most substantial allocations.) The EU can move with success through a common debt to finance a shared destiny of sustainable development.
Now, it is necessary to continue along this path, to build, precisely with eurobonds, a fund to finance investments for a joint army and a more robust security policy. (Manfred Weber of the People’s Party and Italian Minister of Foreign Affairs Antonio Tajani have spoken insistently about this in recent days.) This fund should also be for all investment choices related to the supply of strategic raw materials and products indispensable to European industry, starting with microchips. Italian, German and French business associations are aware of this, and it was precisely Confindustria that insisted the most, for a long time, in calling for common investment and intervention instruments in Brussels. It’s a path that requires insistence.
From this perspective too, the outlook required and according to which the proposals of political forces should be judged is to have “more Europe and a better Europe”, with more cohesion and competition, growth and sustainability policies. Europe should finally be able to be a global player, measuring up to its interests and values, thanks to its ability to sustain a combination of democracy, market and welfare, freedom and well-being, a model of relevance to the rest of the world.
These are recurring themes also in view of the Italian presidency of the G7, which must feel a commitment to making the choices needed to try and heal the evident differences within the West (the US on one hand, and nearby Great Britain and the EU on the other). They are also themes that businesses, gathered together in the B7 led by Emma Marcegaglia on behalf of Confindustria, have already began to discuss.
A further point of reference will be the documents on competitiveness and the market that EU Commission President Ursula von der Leyen entrusted to two Italians who are well acquainted with the conditions of Europe and its prospects, Mario Draghi and Enrico Letta – prospects that must be discussed in depth, beyond localist and provincial quarrels.
(photo Getty Images)
“It’s time to talk about Europe” is the plea that Lucrezia Reichlin, as a far-sighted and competent economist, addresses to Italian political leaders, looking ahead to the upcoming European Parliament election on 8 June (Corriere della Sera, 28 January). That means talking about changes in global geopolitics and therefore international conflicts and tensions and the so-called “polycrisis” (the wars in Ukraine and the Middle East are its most obvious and dramatic aspects, but certainly not the only ones) and about major environmental and social issues. It means talking about this time of crisis and risks of decline among Western democracies, taking the blows of sovereignism and populists and hostility from the arena of the Global South. And of course of it means talking about economics: how to configure a common economic policy on the issues of competitiveness, innovation and labour, at a time of radical transformations dominated by the unstoppable spread of artificial intelligence and its impact on knowledge, research, production, consumption, and the evolution of economic and social relations.
It’s a challenge that needs to take priority and that can’t only be addressed through the tools of legislative regulation, where the EU is making the first moves, but which requires attention from the perspective of competitiveness, scientific and tech research, investment and support for European industrial policy: up until now, the biggest companies in global markets are US companies, and it’s essential to grow European companies able to rise to the challenge.
Europe is a great economic reality but also a weak political assembly, and it is as fragile as ever in the face of US and Chinese choices, their conflicts but also potential convergence of interests and will to dominate. That’s without mentioning the growing role, economically and therefore also politically, of India, a player that aspires to transition from a position as regional power to global power, but also Russia’s neo-imperial and Turkey’s neo-Ottoman expansionism. In a multipolar world, it is precisely an authoritative European presence that can make a difference and suggest viable ways to define new and better balances of peace and development.
“Europe will have to decide whether it has the strength to make the leap of cohesion necessary to face the new international context, in which it is now exposed on several fronts,” says Reichlin, adding that “economic issues are usually important,” because “it is difficult to imagine a common foreign and security policy without greater sharing of economic instruments,” and “without choices that will not be painless”, both economically and socially.
What are these choices? They concern economic and fiscal policies in order to address the problems of security, economic growth, managing all the complex artificial intelligence challenges we mentioned, and therefore competitiveness and employment with one vision. Nor should the issues of health be overlooked: “Health is wealth,” Mario Draghi often repeats, well aware of the relationship between quality of life and widespread well-being, social wealth, and the possibility of a fairer, more balanced future.
Let’s look at some figures, to understand better.
According to a study by the think tank Bruegel, from 2021 to 2027 the EU has had and will have €1.8 trillion (€257 billion a year) from its budget for investments dedicated to the prioritised topics of the green and digital transition, defence and security, health and the reconstruction of Ukraine (a responsibility that will fall mainly to the EU and other European countries). Lucrezia Reichlin maintains that this is not enough, even considering only that the EU’s Green Deal alone is estimated to require 356 billion per year.
It is also shrinks alongside the economic policies that the US and China have put in place: the 737 billion of the IRA (Inflation Reduction Act) adopted in Washington to support businesses investing in clean-energy technologies (also an extraordinary element of attraction for international companies prepared to go and produce in the US); and Beijing’s huge resources to stimulate Chinese companies in high-tech sectors.
Therefore? The EU budget needs to be expanded, and an instrument which is the subject of increasing discussion must be implemented: eurobonds (the latest voice to urge that they be adopted was Fabio Panetta, Governor of the Bank of Italy, last week). The legacy and lesson of Jacques Delors, a great man in European government, is finally being heard.
The Recovery Fund led the way, gathering EU resources on the financial markets to allocate to the post-Covid recovery and the reforms and investments needed to improve the development condition for the “next generation”. (The new economic policy instrument was actually named after them, and Italy benefits from its most substantial allocations.) The EU can move with success through a common debt to finance a shared destiny of sustainable development.
Now, it is necessary to continue along this path, to build, precisely with eurobonds, a fund to finance investments for a joint army and a more robust security policy. (Manfred Weber of the People’s Party and Italian Minister of Foreign Affairs Antonio Tajani have spoken insistently about this in recent days.) This fund should also be for all investment choices related to the supply of strategic raw materials and products indispensable to European industry, starting with microchips. Italian, German and French business associations are aware of this, and it was precisely Confindustria that insisted the most, for a long time, in calling for common investment and intervention instruments in Brussels. It’s a path that requires insistence.
From this perspective too, the outlook required and according to which the proposals of political forces should be judged is to have “more Europe and a better Europe”, with more cohesion and competition, growth and sustainability policies. Europe should finally be able to be a global player, measuring up to its interests and values, thanks to its ability to sustain a combination of democracy, market and welfare, freedom and well-being, a model of relevance to the rest of the world.
These are recurring themes also in view of the Italian presidency of the G7, which must feel a commitment to making the choices needed to try and heal the evident differences within the West (the US on one hand, and nearby Great Britain and the EU on the other). They are also themes that businesses, gathered together in the B7 led by Emma Marcegaglia on behalf of Confindustria, have already began to discuss.
A further point of reference will be the documents on competitiveness and the market that EU Commission President Ursula von der Leyen entrusted to two Italians who are well acquainted with the conditions of Europe and its prospects, Mario Draghi and Enrico Letta – prospects that must be discussed in depth, beyond localist and provincial quarrels.
(photo Getty Images)