It is not Europe that is irrelevant, but its member states
Europe’s true problem is not irrelevance, but its difficulty in managing its relevance. A commentary by Lorenzo Bini Smaghi
The notion that Europe has become irrelevant seems to be widely shared. Mario Draghi made the case at the recent Rimini meeting of Comunione e Liberazione. Italian Prime Minister Giorgia Meloni echoed him, as did other Italian political leaders, and former prime ministers Mario Monti, Romano Prodi, and Giuseppe Conte in recent interviews.
Such a broad political consensus is rare, at least in Italy.
Yet the international press tells a different story. On August 28, the Financial Times ran the headline: “Top sovereign wealth funds bet on Europe over America.” The previous day, the Wall Street Journal reported Donald Trump’s threat to raise tariffs further unless Europe reduced its taxes on US technology companies — a warning promptly and firmly rejected by the European Commission.
If Europe were truly irrelevant, the world’s major public and private actors would not care. International investors would not be increasing their exposure to the euro, as they have done: the currency has appreciated more than 15 per cent against the dollar since the start of the year. Leaders from the UK to Canada and beyond would not be seeking new bilateral ties with Europe in order to build a new global rules-based system. Bulgaria would not be joining the euro in January, becoming the 21st member out of 27. Ukrainians would not be fighting every day to be part of Europe, the strongest protection against Russian expansionism.
Europe’s problem is not irrelevance, but its inability to manage its relevance. In other words, what Europe lacks in today’s context is the capacity to take clear positions and act decisively upon them.
This is not always the case. On some issues, Europe is able to decide quickly. Monetary policy, for instance: at every Governing Council meeting, decisions on interest rates or other policy tools are taken by simple majority. The same decisiveness applies in areas where the Union has delegated powers, such as the single market, competition policy, and state aid.
Complaints about excessive EU regulation, which is said to stifle innovation, are common. Yet EU regulation is approved by member states’ representatives in the Council and by the Parliament — both of which tend to be more restrictive than the European Commission’s initial proposals, often with a view to shield particular interests. One example is financial securitisation: the Commission has repeatedly proposed reforms to develop the market, only for Council and Parliament to reject them as overly permissive.
In areas beyond the EU’s remit — foreign policy, defence, security — paralysis stems not only from the unanimity requirement but also from history. Member states are unaccustomed to making common decisions in these domains. Europe’s traumatic past has fostered an aversion to geopolitical prominence.
This explains the viral images of European leaders seated around the American president’s table to discuss Ukraine’s security. No one was willing to delegate their role to anybody else. The result was to diminish each of them.
The uncomfortable truth is that it is not Europe that is irrelevant, but its 27 member states — unless they decide to act as one.
If Europe is to overcome its inertia, it is not enough to repeat that it needs a common foreign, defence, or industrial policy, or a more integrated financial market with a single regulator. That has long been understood.
What is needed now is a concrete plan to achieve what has not yet been done: to design a path toward faster and more efficient decision-making in areas still controlled by member states.
It is not enough to insist that the veto must go, since abolishing it requires unanimity. The question is how to achieve it, politically. Otherwise, Europe will remain trapped in what the English rightly call wishful thinking.
A first version of this article was published in the Italian daily Il Foglio
IEP@BU does not express opinions of its own. The opinions expressed in this publication are those of the authors. Any errors or omissions are the responsibility of the authors.
