Analysis
Draghi’s moment: Europe will be saved by arms, AI and capital
In a politically tattered Europe, torn apart by the clash between mercantilism and nationalism, the possibility of fully realizing Draghi’s Marshall Plan 2.0 is remote. But his ambition gives political form to a securitarian project already underway.
On Monday, Mario Draghi, surrounded by a near-mystical aura, stepped back into the role of prophet of the future of Europe, proposing boosts to the arms industry, microchips, artificial intelligence and “green energy” to safeguard social rights, but without any focus on undoing the damage of 40 years of neoliberalism.
His “Future of Competitiveness” report requested by European Commission President Ursula von der Leyen says that Europe is facing “an existential risk,” that of being relegated to a bit part in the industrial and trade war between the United States and China. In order for the “European social model” (or what is left of it) not to come to an end, the European Union must radically rethink itself and launch a “common debt” financial instrument of €800 billion per year. In short, an eight-times-larger Next Generation EU (in Italy called the National Recovery and Resilience Plan - NRRP), every year.
In Draghi’s view, that giant pile of cash should mainly fund the missile and tank industry, digital technology and infrastructure. The goal is to be a player in a special contest, that of capital warfare, in which we can train “European champions” which – at some point in the future, at least – would be able to compete with the U.S. and Chinese oligopolies. Peace, rights, and politics can only be pursued when armed to the teeth.
Draghi’s project was given the official seal of approval two days earlier by the new European Commission. According to von der Leyen, who joined Draghi at the report’s presentation on Monday, the ambitious text is “at the top of our agenda” in the Council made up of the governments of the member states. Designated commissioners will have to work on implementing the 170 proposals, summarized in dry language over the report’s 62 pages. In Italy, the report has been dubbed the “Draghi Agenda” by the enthusiastic Democratic Party and allies – not the most auspicious term, given what happened with the previous one. The Green Left Alliance and Five Stars have expressed sharp criticism.
In a politically tattered Europe, torn apart by the clash between mercantilism and nationalism, the possibility of fully realizing Draghi’s Marshall Plan 2.0 (requiring more than double the investment as a share of GDP: 5 percent annually versus 1-2 percent for the Marshall Plan in the 1940s) is quite remote. The truth is, there have been other such attempts in the history of the EU, not as ambitious but still as significant as Draghi's own. In 2019, Jean-Claude Juncker put forward his own plan, which went by completely unnoticed. One might point out that Juncker was a different kind of man, less adept than Draghi at the linguistic wizardry and projection of authority status. But the many real difficulties are still there. And it’s entirely possible that Draghi will remain an unheeded prophet while Europe goes in a completely different direction than the one he hoped for over the next five years.
The former Council president is skilled at walking the tighrope of capitalist realism. He is a pragmatist. This is why he didn’t put forward a road map, but only brought up recommendations. He is aware that he could easily raise the ire of major governments. For example, German Finance Minister Christian Lindner is hardly willing to entertain talk about common European debt.
There are rough seas ahead for the plan, and von der Leyen may soon find herself in difficulty. It will be up to her to reach the compromises needed to realize Draghi's vision. On Monday, she didn’t want to spoil the magic of the moment by being too specific: “There is a need for joint funding for some common EU projects. Our task is to define which ones,” she said. “We have to look at the political will to implement the projects and determine how to finance them through new national contributions or new resources of our own.”
Another major political point of the Draghi report is the need to reform the unanimous vote system without resorting to revisions of the European treaties (a difficult task). This would lead to a Europe of “enhanced cooperation.” Draghi suggests adopting a new “competitiveness coordination framework”: if the EU gets stuck due to individual member vetoes, a “coalition of the willing” needs to be created. The former banker did acknowledge that he was bringing back the ill-omened formula of George W. Bush, although he stressed it was in a “different context.” It remains to be seen whether such a “coalition” could work nowadays, with Marine Le Pen directing the Macronist government in France from the sidelines and with the AfD breathing down the neck of the teetering Olaf Scholz. The creation of a common debt facility would require greater political and economic consolidation than ever before. At this point, it’s difficult to imagine.
Draghi’s report gives political form to another transformation we have seen during the years of Russia's war in Ukraine and the EU's alignment with NATO. His idea is to change the paradigm of continental foreign policy to one of “economic security.” In a world where war is being waged both with weapons and economic protectionism, foreign policy must coordinate with industrial policy, competition and trade.
The goal is for Europe to achieve independence in terms of its “defense industrial capacity.” This means that instead of producing “12 different types of tanks,” it should produce “only one,” as the United States does. Draghi's recommendation for this to happen is to change the competition rules. This alludes to exempting investments in arms from the calculations of the “stability pact” – a request made by the Italian government in the interest of the domestic war industry.
At its core, Draghi’s project preserves the same authoritarian and technocratic approach to politics. In this regard, it is interesting to look back at a letter sent to Draghi and von der Leyen on May 8, authored by 13 civil society organizations across Europe which denounced the “lack of transparency” and the risk of “capture by big business” that loomed over the project. Draghi's “overall philosophy,” the letter says, would ”allow market concentration to rise even further in Europe, harming European consumers, workers and small businesses, while actually undermining our competitiveness.” This could lead “to a situation where large so-called ‘European Champions’ are subsidized unproductively with public money, while important social, economic and environmental objectives are sacrificed to benefit the shareholders of these dominant firms.”
The same philosophy lies behind Next Generation EU and the NRRP in Italy, shorthands for a funding scheme rather than involvement of the local citizenry, which has been absent. In this view, if a welfare state is to exist at all, it can only be as the consequence of the “growth” of the capital market and the ability to produce microchips, wind turbines and artillery.
Originally published at https://ilmanifesto.it/momento-draghi-leuropa-si-salva-con-le-armi-e-i-capitali on 2024-09-10