The Irish Times view on the future of the EU: facing up to fundamental challenges

A major report from Mario Draghi, due to be presented to EU leaders next month, will outline key economic issues as tensions grow with China and the US rolls out big subsidies to business

Changing norms and practices of international politics and economics are having a major impact on how the European Union understands its own world role and plans to bolster it. The European Council and Commission are considering ambitious changes to the single market and industrial and competition policy in response, while political leaders debate how to develop foreign policy, security and defence structures. These issues need more debate during the European Parliament election campaigns, particularly in smaller states such as Ireland which may be most affected.

Former European Central Bank president and Italian prime minister Mario Draghi said China and the United States are no longer playing by the rules, in a speech ahead of delivering his report next month to the European Commission on the EU’s international competitiveness. They are protecting their own markets and interests, he said.

Highlighting the difficult balance in addressing this, the finance ministers of Germany, France and Italy referred to China’s “unfair” trade practices at a G7 meeting over the weekend, but also cautioned about the risks of a trade war.

In an incisive report for EU leaders on the future of the EU’s single market another former Italian prime minister, Enrico Letta says it needs radical development and huge investments to compete at world level. He proposes a new fifth freedom of research, innovation and education in addition to the four freedoms of goods, capital, services and people developed since the 1980s.


Both Draghi and Letta argue that scale really matters for EU competitiveness; this must involve continental-level thinking if Europe is not to fall behind the US and China. The EU should more effectively mobilise private capital where it cannot meet its international competitors’ access to public money. That means applying the single market to new fields like energy, finance, transport, healthcare and digital electronics.

President Emmanuel Macron has added urgency to this debate arguing that the EU is “mortal” and could die if it fails to confront these challenges, alongside the equally pressing security and defence ones it faces. He calls for enhanced capacity in these fields funded by common borrowing.

Political responses to these ideas so far are tentative and uneven between different political currents and member-states in the EU. The proposals come from the centre ground of European politics, which could shift to the right in the parliament elections. Northern liberal member-states are wary of more centralised EU fiscal powers. Smaller ones like Ireland worry that such major new capabilities would be driven by and in the interests of larger states like Germany and France. These are valid concerns, but they should not be used to avoid confronting the genuine global challenges facing the EU.