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The EU is in a limbo period at present between administrations with a new European Commission due to take over before the end of the year subject to ratification by the EU Parliament.
It is a bit like after a national election to the Dail, the TD’s may be in place but the negotiation of a coalition and programme of Government can take weeks if not months. In the meantime, the outgoing administration continues in caretaker mode, dealing with the issues that need immediate attention but not undertaking any new policy initiatives.
The incoming Commission should start with an advantage in that the president Ursula von der Leyen will be starting her second term and familiar with the issues of which there are plenty.
The incoming Commission will start work informed by a report produced by the respected former head of the European Central Bank (ECB) Mario Draghi. He is well known in Ireland as part of the Troika that controlled Ireland's financial affairs in the aftermath of the financial crash.
Draghi report
His analysis of where the EU sits in the modern world is sobering. In his Future of European Competitiveness report released last month, he lamented the failure to be more productive, particularly relative to the US and China.
He said that without being more productive the EU would not be able to lead in new technology, climate responsibility and be a leading player on the world stage. It would also not be able to finance the social model and his bottom line was that “we would have to scale back on some, if not all of our ambitions.”
Europe’s problem is that it has tried to be a global leader on climate, free trade and a range of human and society rights. Individually and collectively these may all be worthy but are resource hungry and the EU problem is that it isn’t generating the necessary wealth to fund its ambitions for society.
The Draghi report notes that per capita disposable income has risen twice as fast in the US since 2000 and Europe has fallen behind the US and even China in the digital revolution.
Dependence on Russia
Energy has been a particular problem for the EU whose dependence on Russia for oil and gas was exposed by the Russian invasion of Ukraine. That has left the EU with expensive energy relative to the US and China.
A Green Deal was a central plank in the last EU Commission but this had a negative perception particularly among farmers as it curbed output without adequate resources to compensate. It also draws attention to another feature of the EU, a heavier regulatory burden that in the US or China or indeed any major trading partner.
The reality is that both the US and China are investing heavily in green energy and have the ambition to grow output from agriculture as opposed to reduce it.
Even on trade where at the start of the last Commission five years ago, the EU was the global leader in advocating international free trade.
Now the EU has unilaterally imposed tariffs on Chinese electric vehicles which in turn leads to retaliatory action by China with EU dairy and pig meat products receiving particular attention by China.
Comment
Irish farmers have long been frustrated by EU policy in relation to agriculture which was focused on everything but production and productivity. Meanwhile everywhere else is investing to reduce emissions but with the ambition of sustaining and indeed growing output from agriculture.
The lesson from dependence on Russian oil and gas should be remembered when the next CAP is being put together during the incoming Commission.
The EU may no longer be preoccupied with Brexit like it was for the early part of the last Commission but the reality is that as the Draghi report shows, the EU is a threat to itself without recognising the need to do what is necessary to generate the resources to fund its wider society ambitions.
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