The Future of European Competitiveness is stark reading for anyone invested in the European project. Without a doubt, we are falling behind our main ally, the US, and our strategic adversary, China, on many fronts where it counts.

In general, slowing economic growth in the EU is an ill omen for its inhabitants and a harbinger of a future where we are less well-off than the countries we compare ourselves to. It’s also a reminder that a poorer Europe is a less secure Europe.

In Draghi’s telling, the inverse is also true. It is striking how many of his proposed measures to facilitate EU growth are inherently aimed at making the bloc more economically secure. As such, economic security is at the heart of the report.
 

Security as a precondition for sustainable growth

Of immediate concern to Draghi are the significant dependencies of the bloc on inputs from outside the EU. We are unable to generate power ourselves, relying heavily on imported gas and LNG, leaving the EU exposed amid the Ukraine conflict.

Neither are we anywhere close to being secure in our supply of critical raw materials, relying heavily on China. On key technologies like chips, Europe is equally far behind, writes Draghi, and EU ownership of large manufacturing facilities may be “unrealistic at this stage”.

To counter these vulnerabilities, the bloc will need to develop a “foreign economic policy,” writes Draghi. The EU carries real weight as a collective unit and can use its bargaining power to negotiate favourable deals on energy and raw materials with friendly and less friendly third countries.

This will mean making some unsavoury choices. Draghi proposes that the EU explore seabed mining – an untapped source of potentially large amounts of raw materials. In January, the European Parliament sent a stinging rebuke to Norway for looking into that exact type of mining.

In Serbia, the EU is deeply engaged in a plan to mine lithium, a key input in battery production, which is just the type of third-country mining deal the bloc needs to secure its supply of raw materials. However, significant local resistance to a planned lithium mine exemplifies the difficulty in bringing new supply online, even in an investment starved and ostensibly friendly third countries.
 

Retooling the rulebook

Apart from the proposals on securing commodities supplies, Draghi envisions a retooling of the EU rulebook to put a greater emphasis on economic security.

His proposals for an updated merger policy are a case in point. Here Draghi proposes “security and resilience criteria” to be considered when evaluating mergers and breaches of competition law. Competition law is mostly backwards looking but this is likely to be contentious in a field not welcome to legal uncertainty.

Draghi also calls for a more nuanced use of tools countering foreign subsidies distorting the internal market, such as the Foreign Subsidies Regulation. In some cases, it may be too important to facilitate the flow of critical technology into the bloc to make the process more difficult due to the existence of subsidies. This will call for contentious debates over when and where to look the other way.

Procurement policy will also play an important role. Draghi wants to use conditionalities in public tendering to ensure security concerns are top of mind. For instance, on cloud computing, Draghi proposes that any public procurement requires “key elements for security and encryption” to stay in public hands.   

These are significant changes to EU policy and will not go down easily. Tough choices will have to be made but Draghi’s intervention has made the risks we run if we do not dare to rethink how the EU operates abundantly clear.