The crucial challenge comes from a “very brutal wake-up call from Trump.”
“We had to resign ourselves to tariffs imposed by our largest trading partner and long-standing ally, the United States,” he said of the shift in policy under the U.S. president. “We have been pushed by the same ally to increase military spending, a decision we might have had to make anyway — but in ways that probably do not reflect Europe’s interests.”
Despite its economic power, the EU plays only a “marginal” role in Trump’s peace efforts in Ukraine, was “an observer” of the massacre in Gaza and “China has made it clear that it does not consider Europe an equal partner.”
“Europe is ill-equipped in a world where geo-economics, security, and stability of supply sources, rather than efficiency, inspire international trade relations,” Draghi, also a former Italian prime minister, warned. “Our political organization must adapt to the demands of its time when they are existential.”
Returning to his familiar call to boost Europe’s competitiveness, Draghi noted that the International Monetary Fund estimates that if EU internal barriers were reduced to the level prevailing in the U.S., the bloc’s labor productivity could be about 7 percent higher after seven years.
Those internal trade barriers are also making Europe’s defense buildup less efficient. Although EU countries intend to increase their military investment by €2 trillion by 2031, “We have internal barriers that impose a 64 percent tariff on equipment and 95 percent on metals,” Draghi said.