Preserving strategic industries is essential for Europe – Draghi

Preserving industries such as steel industry and chemicals, which provide inputs to the entire economy and are critical to defense, is strategic for Europe. This opinion was expressed by Mario Draghi, former Prime Minister of Italy and former President of the European Central Bank, in his speech to the European Parliament.

“Supporting traditional industries is often portrayed as a binary choice. We can either let them go and allow resources to move to new sectors, or we can sacrifice the development of new technologies and eventually accept persistent low growth. But the choice does not have to be so categorical. If we implement reforms to make Europe more innovative, it will mitigate many of the trade-offs between these goals,” Draghi emphasized.

For example, the former ECB president noted, if we use the economies of scale of the EU market and integrate the European energy market, it will reduce production costs in general. Therefore, we will be in a better position to deal with potential spillovers, such as providing cheap energy for energy-intensive industries.

Among the many challenges that Draghi also highlighted were the accelerating development of artificial intelligence, rising energy costs, US tariffs, etc.

Draghi explained that the changes that have taken place since the publication of his report for the EU are generally in line with the trends that were outlined there. However, there is a growing sense of urgency to implement the changes that were highlighted in the document.

He also recalled that natural gas prices remain highly volatile, as do energy prices in general.

“When the report was written, the main geopolitical theme was the rise of China. Now, the EU will face tariffs from the new US administration in the coming months, which will impede access to our largest export market. In addition, higher US tariffs on China will redirect excess Chinese capacity to Europe, which will further hurt European companies,” Draghi said.

The former ECB president emphasized that Europe may also face policies aimed at attracting European companies to increase production in the United States through lower taxes, cheaper energy, and deregulation.

According to Draghi, in order to cope with the challenges, it is necessary to act in unity. In his opinion, the response should be quick, as time is not on Europe’s side. The European economy is stagnating, while much of the world is growing. He also emphasized the need for new financial resources.

In late January, the European Commission presented the EU’s competitiveness strategy. It is based on innovation, decarbonization and security.