The leaders of the 27 countries gathered at a summit in Budapest are launching a long-term reform plan inspired by a proposal by former Italian Prime Minister Mario Draghi on Friday, in an attempt to pull the European economy out of its crisis.
The project is the core of Ursula von der Leyen's second term as president of the European Commission, who was reappointed this summer. But amid divergent interests and ideological differences between member states, its success is not guaranteed.
Europe is supposed to relaunch its growth thanks to massive investments in digital innovation, the transition to clean energy and the defense industry, according to Mario Draghi's estimates in a 400-page report he presented in early September in Brussels.
But his report is bleak, showing that Europe is economically moving away from the United States and dangerously increasing its dependence on China for certain raw materials and strategic technologies.
It also notes that per capita income "has risen in the United States to almost double that of Europe since 2000."
He warned that without radical changes, the EU would suffer "slowly".
But that warning took on a new dimension this week after Donald Trump was elected US president. The American billionaire promised to tackle the EU's trade surpluses by imposing tariffs on imports.
The former head of the European Central Bank estimated the investment needed in Europe at between 750 and 800 billion euros a year, more than the US Marshall Plan that supported the reconstruction of Europe after World War II.
That poses a major challenge for EU countries seeking to reduce their debts and budget deficits.
A European diplomat said he expected discussions among EU heads of state and government on Friday to focus on "financing, financing, financing".
EU leaders acknowledged the "urgent need for decisive action" in a draft joint declaration that addresses key areas of action outlined by Mario Draghi, including strengthening the single market and capital markets union and implementing a trade policy that defends European interests.
On the financial side, European leaders are aware that it will be necessary to mobilize "both public and private financing" and stress that they want to "explore all instruments and means", a controversial phrase that alone has sparked long discussions.
Germany and other "frugal" countries in northern Europe rule out any recourse to new joint debt, despite the success of the 800 billion euro post-Covid recovery plan that was implemented in 2020. These countries consider the proposal championed by Mario Draghi and supported by France to remain a red line.
However, they could consider public financing operations via the EU budget or increased recourse to the European Investment Bank.
More emphasis will be placed on private financing by channeling European savings to meet the needs of companies and breaking down national barriers that prevent the creation of a real internal financial market.
"The Draghi report provides a solid basis for the preparation of proposals" by the European Commission, an EU official explained, while the first concrete proposals are not expected to appear for months.
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