Common European Defense: Draghi Explains the Need for Union and Shared Debt

Mario Draghi held an important hearing in the Koch Hall of Palazzo Madama before the joint Committees of the Chamber and Senate to discuss his Report on European Competitiveness. Already presented to the European Parliament on 17 September, The document offers a detailed analysis of the economic challenges of the European Union, focusing on three key pillars: reducing energy costs, innovation and common defenseThe international context, marked by the new course of US foreign policy and trade protectionism, requires Europe to act with greater unity and cohesion.

The need for a common European defence

One of the central points of Draghi's speech concerns the EU security, which, according to the former prime minister, is threatened by the changed attitude of the United States towards Russia and international relations.The European Union has guaranteed peace, prosperity and security to its citizens for decades thanks to its alliance with the United States“, Draghi declared.

Draghi stressed that the current fragmentation of European military spending is counterproductive. The EU invests around €110 billion a year in defence, but this sum is spread across numerous national programmes, resulting in many member states ending up buying equipment from the US instead of developing a common military industry. “Investments should be concentrated on a few advanced platforms rather than dispersed across numerous national projects”, It reaffirmed.

The common debt

Financing a common defense requires an innovative approach. According to Draghi, resorting to common debt represents the only viable solution. "The narrow budget spaces will not allow some countries to significantly expand their deficits. Common debt is the only way“, he said. He also warned that trying to fund defense at the expense of social and health spending would be a “denial of European identity.”

The urgency of reducing energy costs

Draghi has He also emphasized the issue of energy costs, defining it as one of the main obstacles to European competitiveness.. "A serious policy to relaunch competitiveness must set as its first objective the reduction of bills for businesses and families“, he said. Energy prices in Europe are still too high compared to those in the United States, with differences that penalize industrial production and hinder the development of new technologies.

In the first half of 2024, Italy confirmed its position as one of the countries with the highest taxation in Europe for non-domestic electricity consumers. Draghi suggested that the EU use its position as the world's largest consumer of natural gas to negotiate better prices, improve coordination of demand among member countries and make the energy market more transparent.

Regulatory fragmentation: a brake on competitiveness

Another critical aspect highlighted in the Report concerns the regulatory fragmentation within the EU, which creates significant barriers to trade and innovation. Draghi cited an International Monetary Fund study that found domestic regulatory barriers were equivalent to a 45% tariff on manufactured goods and a 110% tariff on services.. “We have a single market for toothpaste and we don't have one for artificial intelligence“, Draghi exemplified, underlining how theexcessive regulation discourages European businesses and pushes talent and capital towards the United States.

Deregulation, he specified, must not be “wild,” but aimed at eliminating the “regulatory confusion” that hinders economic growth.

Draghi closed his speech by reiterating that the European Union must move decisively to address global challenges.”Europe must act as one state”, he has declared, highlighting the urgency of more effective coordination in energy, defence and innovation policies. At stake, according to the former prime minister, is the continent's competitiveness and its ability to ensure prosperity and security for its citizens in an increasingly unstable international context.