Economist Impact: What Draghi – Mytilineos said about the EU’s internal “tariffs”

And he explained: “We have over 100% tariffs on digital services. There are intra-European barriers on goods as well, although fewer. But, as I always say, we have a single market for gnats but we do not have a single market for artificial intelligence.

Mr. Draghi recalled that he had made these points in a recent article of his… This is an opinion article published in the Financial Times, in which he wrote that internal barriers to trade within the European Union are equivalent to 45% tariffs on manufacturing and 110% on services, i.e. much higher than what the US is threatening to impose on European products.

Fragmentation and outdated models
The fragmentation and outdated and anachronistic structure of Europe were highlighted in several points in the statements of both Mr. Draghi and Mr. Mytilineos.

The president and CEO of Metlen explained that Europe has flourished in the last 80 years, after the war, and has evolved into the largest representative of soft power in the world, along with the US and emerging China. In the last 2-3 years, the “soft power” in the world has declined and now it is the “hard power” that counts. Europe was never prepared to play a hard role, explained Mr. Mytilineos. “And so now the front line is not Europe, with the US and China, but the US, China and Russia.”

“We are facing dilemmas that my generation had never faced before, we had only read about them in books. We have wars. Serious economic problems and challenges lie ahead. And we have a structure in the EU that was good in 1950, but is now anachronistic,” said Mr. Mytilineos, expressing his opposition to the way decisions are made in Brussels.

“We see the phenomenon of the Councils of Ministers having a portfolio that is mainly political and thus they do not focus on a specific problem, as a result they have difficulty in providing solutions and making decisions. And then the members of the Commission come to shape the policies. It is the Commission now that shapes European policy,” criticizing the President of the Commission: “If you see how Ursula von der Leyen operates, it is as if she is the president of the United States of Europe. And that is not the case.”

The EU must reinvent itself
Europe must “reinvent” itself, Mario Draghi stressed, underlining that it should have a stronger role in defense and foreign policy.

“Many people think that tariffs are a technical issue, I do not believe that, tariffs are a deeply political issue. For me, they are like sanctions,” said Mr. Mytilinaios

He also stressed that the problems the EU is facing today did not arise from the new US administration, recalling that his report on strengthening competitiveness was made public before Donald Trump took office.

“The problems existed before,” he said, but what changes with the change of leadership in the US is that it limits the EU’s reaction. “We need to face them with greater cooperation, work together and learn to make big decisions together. The big challenge we have today is cooperation,” he stressed.

And he referred to the need for the EU to adapt to the new reality. “When the European Union was created, the main purpose was not to become a global power, but to ensure peace between states that had been fighting each other for centuries. The EU is a project of peace, not of power. This explains why today convergence in decisions is a priority. But also why the member states agreed to delegate powers to an unelected, bureaucratic body: the Commission.”

“We suddenly realize today that this is insufficient. In the last 20 years, the areas in which the EU needs a single strong response have come to the fore: foreign policy, defense, energy, etc. For example, in defense, you first have to decide who the enemy is,” he stressed.

The result of all this, according to Draghi, is an outflow of capital 

people to the US. “We don’t lack money. We have money. We lack the ability to develop big ideas and make them investable.”

Wasted time
The president and CEO of Metlen, proceeded to compare the European and American reality, saying that in the US a lot of money was spent on innovation, research and technology in recent years, which created budget deficits, but they have “the dollar and are moving forward.”

In Europe we had the Stability Programs and the problems and not much money was spent in the areas that Draghi also describes in his report, so we lost a lot of time, he said.

And he continued by saying that the main problem in all of this is the energy issue: let’s not forget that more wars were related to energy and still are related to energy. “And in this game, Europe is the big loser,” he said, explaining that while we do not have resources, we are trying to move forward with a rapid energy transition.

“We have high prices, we do not yet have efficient networks and we are trying to compete with China, which still uses coal without penalty, and the US.”

Mr. Mytilineos said that energy is a political issue and asked: “Who will solve this problem? Do we have leaders in Europe, like Draghi who saved Europe in the past decades?”

Trump’s tariffs
“Many people think that tariffs are a technical issue, I do not believe that, tariffs are a deeply political issue. For me, they are like sanctions,” said Mr. Mytilineos.

He stressed that for years Europe enjoyed free security from the US, cheap energy from Russia and cheap imports from China, but all of that has now changed.

On decarbonization
Regarding the issue of decarbonization, Mr. Mytilineos said that industries have paid a very high price for the green transition in Europe, as many units have closed: “And when we talk about defense, what defense are we talking about? With what? With Chinese metals?” he wondered. He admitted that the planet is in danger, but “there must be a plan for how quickly and how we will make the energy transition”…. “We paid dearly for our mistakes”

Mario Draghi, for his part, believes that decarbonization is important both for addressing climate change and for the future of Europe: “The EU is not a producer of fossil fuels, so in order to have energy autonomy it must turn to RES.”

He stressed, however, that we should take care of energy prices and meet the needs of industry, while investing in networks, interconnections and storage.

On Greece
The discussion closed with a question from the panel moderator Daniel Franklin, Executive Editor at the Economist, regarding Greece, which he said is a case study

“We have six years of stable policy and that is a credit to the Prime Minister. The economy has stabilized and is moving forward,” said Mr. Mytilineos. In closing, Mr. Draghi reminded that 10 years have passed since the referendum and added “One thing I can say, congratulations to the Greek people.”