The Progressive Post

The spirit of NextGenerationEU and a new geopolitical strategy

08/02/2023

After more than 15 years of crises – from the rejection of the Constitutional Treaty, over the financial crisis, to Brexit – Brussels no longer seems a place of opportunities and solidarity, but it is seen as synonymous with austerity, inequality and growing divergences, in the face of divisive sovereignty. However, the 2019 European elections and the resulting von der Leyen Commission represented a turning point that reversed the prospects. One could say that, after years of deadlocked defence, the EU has gone on the attack. 

The first two acts of the new European Commission were the presentation of an overall growth and transformation strategy called the Green Deal and the proposal of a new strategic partnership with Africa. The failure of the three attempts to agree on the multiannual budget already seemed to undermine these ambitions and the pandemic crisis itself derailed the whole vision. Instead, there were two further turns. After it took almost six years for the European Central Bank to answer with its ‘whatever it takes’ to the 2008 crisis, the colossal response to the pandemic crisis came in less than six weeks. From the massive interventions of the ECB to the suspension of the Stability Pact and the granting of enormous exceptions to the legislation on state aid, from the unprecedented action in the health field with functions never exercised by the European Commission to the SURE fund. These were the premises of the agreement reached in a few months not only on the multi-year budget but also on the most massive additional recovery and resilience plan, NextGenerationEU (NGEU), also resorting to the issuance of common debt and implementing a method of coordination of investment and reforms never dared before. All these are aimed at strengthening the dual green (especially energy) and digital transition and a new strategic autonomy.

This strategy, maintained even in the new situation of ‘war economy’ determined by Russia’s unjustified aggression against Ukraine, is therefore the main course of the EU for the next decade, from which we must not deviate. The best synthesis of this strategic vision, supported today by significant legislative acts (among all the European Climate Law) and by unprecedented financial means, which consolidate Europe as the global hub for investments in green technology and decarbonisation, is well expressed in the last two Communications on the Annual Sustainable Growth Survey. They fix the systemic dynamics of the four pillars of ‘sustainable competitiveness’ (productivity, stability, equity and environmental sustainability) and of the four interactions between them (the resilience of the economy, the opportunities of the double transition, inclusive growth, a just transition) which systematise all EU actions and set the framework for a progressive connection with the budgetary policies of the member states. From the perspective of the reform of the application methods of the Stability and Growth Pact, and the consequent adaptation of the European Semester mechanism, we are faced with a real framework for economic planning and employment and cohesion policies for the whole of Europe. Added to this is the new EU Industrial Strategy, adopted in May 2021, which sets a framework for profound renewal for the 14 industrial clusters identified, with the aim of a new and solid strategic sovereignty, in the field of green energy, the digital and health.

This powerful leadership must also deal with the ever more evident reversal of globalisation, which had been promoted for at least two decades by the US and the EU, and with the decoupling of the West from Russia and China which, as we have already seen with regard to gas supplies, risks to weight on Europe much more heavily than on others. The acceleration of the reduction of external dependencies on fossil fuels, which has been the necessary response to the war initiated by Russia, will be followed by the inevitable attention to the reduction of China’s dominance on raw materials and semi-finished products essential for the clean economy.

Europe must spend a total of $5.3 trillion on clean energy projects by 2050. This requires a six-fold increase in global production of copper, lithium, graphite, nickel and some rare-earth elements by 2040. China dominates the processing, and to a lesser extent the extraction, of many critical industrial ingredients. It refines 58 per cent of the lithium produced globally, 65 per cent of the cobalt and over a third of the nickel and copper. Russia is also big in nickel, palladium and cobalt. Europe, which imports between 75 and 100 per cent of most metals, appears particularly vulnerable. Western companies can strike deals with suppliers in friendly countries, open mines at home or increase recycling. The first approach is the fastest and is ongoing. But already now many companies are working to open new mines. If all European lithium extraction projects were to materialise, they could supply about 40 per cent of the expected demand by 2030. The best action, however, remains recycling. To date, Europe recycles 17 per cent of the world’s battery production. But this share will rise to 48 per cent by 2025, also thanks to the policies already implemented by the EU.

As masterfully summarised by Marco Buti and Marcello Messori, the challenges that Europe is facing need even more than ever, in the ‘revolutionary’ spirit of the NGEU, the use of additional European ‘public goods’, both by designing new centralised financial instruments based on common emissions, and by encouraging a consistent mobilisation of private savings towards common strategic projects, to increase energy resources, accelerate the green and digital transitions, invest in health and also on the new requirements of the common defence.

Contrary to what happened in past crises, the devastating storm caused by the war accelerated this direction and – albeit with greater difficulty in timing and in the convergence of the member states – strengthened European unity. It has also put the urgency of a new geopolitics back at the centre, based on the need to think about war and the resulting role of Europe also as a military power, with the old unresolved issue of the Defence Union. We are now in a phase of more systemic conflicts and therefore many policies need to be rethought, from the need to reduce dependencies and protect ourselves, to stronger partnerships with neighbouring countries and the Global South in general, also considering that the status of candidate granted to Ukraine and Moldova following the war, will lead to an acceleration of the negotiations that have already been open for a long time, with all that follows (particularly concerning EU governance and finances).

If all this has been possible thanks to a long-term strategic vision and to a converging and strong political leadership, at the top of the EU institutions and of the major member states, the reform of the Treaties still remains completely open, the abolition of the power of veto, the strengthening of the role of the European Parliament and a new era of participatory tools and also links with national parliaments and local authorities. Themes that have been the focus of the Conference on the Future of Europe, with good results. Unfortunately, this construction site will not open at the end of this term and the recent scandal that has hit the European Parliament certainly doesn’t help. It is to be hoped that it will happen after the European elections of 2024.


A slightly different version of this article was originally published in Italian on cespi.it within the framework of the Forum ‘Verso una nuova fase dell’Unione europea‘.

Photo credits: Shutterstock.com/PP Photos

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