Draghi's Report: "Whatever it takes"
Welcome to the 15th edition of Newsletter Basque Macroeconomics 5.0 published by Web 2.0: Basque Economics Worldwide Leadership led by Joseba Madariaga Macroeconomics & Econometrics Professor PhD in Economics
Mario Draghi is a name that evokes moments of great significance in recent European history. In 2012, when the euro was on the brink of collapse, Draghi famously declared, “Whatever it takes” as President of the European Central Bank (ECB). That simple statement, accompanied by extraordinary monetary policy measures, succeeded in preventing the collapse of the common currency and strengthening European cohesion during a time of crisis. Today, more than a decade later, Draghi returns to the stage, this time with a new report offering a critical diagnosis of European competitiveness and proposing a series of reforms to reposition Europe on the global stage.
In my reflection, after reading this report, I find that while many of the issues it addresses are already known, the value of Draghi’s work lies in his ability to bring all these elements together in a thorough and well-structured analysis. However, as we will see throughout this article, the greatest challenge is not so much identifying the problems as it is implementing solutions within a fragmented and diverse European architecture.
A Familiar Diagnosis, But a Necessary One
Draghi’s report spares no detail in highlighting the structural weaknesses that have hindered European competitiveness for years. From high energy prices to the lag in technological adoption, to the fragmentation of industrial policies and the lack of a robust common defense strategy, Draghi paints a picture that, while familiar to many, takes on new urgency when presented so directly and critically.
One of the most worrying aspects he addresses is the innovation gap between Europe and other major powers like the United States and China. While these economies have aggressively invested in emerging technologies, Europe has lagged behind, both in terms of investment and in its capacity to generate disruptive tech companies. According to Draghi, this lag is not simply due to a lack of ideas or talent but to a system that fails to facilitate the scalability of innovations.
Moreover, the report highlights the cost of energy in Europe, which has risen significantly since the Ukraine war and the severing of Russian gas supplies. European industries are paying much higher energy prices than their competitors, and this, combined with a dysfunctional regulatory system, makes it difficult to compete globally.
What’s New: The Need for Immediate Action
While it is true that many of the problems Draghi identifies are already well known, what stands out in the report is the urgency he imparts. Europe is at a critical juncture in its history. Technological changes, the transition to a decarbonized economy, and growing geopolitical tensions are reshaping the global playing field. Draghi’s report argues that if the European Union does not act swiftly and decisively, it risks being left behind.
Draghi doesn’t merely point out problems—he also proposes a series of concrete reforms that, if implemented, could enhance Europe’s competitiveness. Among the most notable are the need to increase investment in technological innovation, close the energy price gap, and develop a common defense strategy. He also advocates for the creation of public-private partnerships to mobilize the necessary capital and stresses the importance of greater coordination at the European level to avoid duplication of efforts.
The Big Obstacle: Europe’s Architecture
Despite the well-founded proposals, implementing these reforms is a Herculean task, mainly due to the structural complexity of the European Union. Unlike other powers like the United States or China, where decisions can be made centrally and quickly, the EU is a conglomerate of 27 member states, each with its own interests and priorities.
This is one of the most sensitive points in Draghi’s report. He repeatedly mentions the lack of unity in Europe as one of the main obstacles to making significant progress. The EU, by its very nature, is not a single state but a union of sovereign countries. This means that decisions must be made consensually, which can slow or even stall progress in key areas like energy, defense, or technological innovation.
Draghi is clear on this point: without greater integration and coordination, Europe will not be able to compete effectively on the global stage. The lack of a common policy in strategic sectors like energy or technology not only hinders competitiveness but also puts the region’s long-term security and stability at risk.
The Historical Context: "Whatever it takes" in 2024
It is impossible to read this report without recalling Draghi’s words in 2012. Back then, "Whatever it takes" was a statement of intent that saved the euro from imminent collapse. Today, Draghi seems to be echoing that message, but with a broader focus: Europe must do "whatever it takes" not to be left behind in an increasingly competitive and fragmented world.
However, the current situation is more complex than in 2012. At that time, the problem was primarily financial, and Draghi, as head of the ECB, could intervene directly in the markets. Today, the challenges are more structural, and while the diagnosis is clear, the solutions require coordination and political will, which are not always easy to achieve in the European context.
Is Draghi’s Plan Enough?
While Draghi’s report presents a set of necessary and well-founded proposals, there remains doubt as to whether they will be enough to solve the problems facing Europe. On the one hand, Draghi advocates for greater state intervention in strategic sectors, something that other powers like the United States and China have already done. On the other hand, he acknowledges the limitations of state intervention in a European context, where the diversity of national interests complicates the adoption of common measures.
Furthermore, some of the proposals, such as the creation of a unified capital market or the development of a common defense strategy, are not new. These ideas have been on the table for years, but a lack of consensus among member states has prevented their effective implementation. Draghi himself admits that the EU has been too slow to react to global changes, allowing other powers to take the lead.
The Paradox of Draghi: Saving the Euro, Saving Europe
One of the great paradoxes of Draghi’s legacy is that while he saved the euro in 2012, the very policies he implemented at that time have contributed, in part, to some of today’s problems. The reliance on expansive monetary policy and fiscal austerity in certain countries helped stabilize the eurozone in the short term but also left Europe vulnerable to external shocks, such as the current energy crisis.
In this sense, Draghi’s plan seems like a continuation of his legacy: a set of measures aimed at saving Europe from an impending crisis. However, as was the case in 2012, these measures could have long-term consequences that we are not yet able to foresee.
Conclusion: A New "Whatever it takes"?
Mario Draghi’s report is, without a doubt, a call to urgent action. Just as in 2012, Draghi has identified a structural problem in Europe and has presented a series of solutions to prevent a larger collapse. However, the question remains whether Europe is willing to do "whatever it takes" to implement these reforms.
The political and economic architecture of the EU makes any reform more complicated to implement than in other parts of the world. Nonetheless, the need for action is clear. If Europe wants to maintain its position on the global stage, it must address its structural weaknesses with determination and unity.
Draghi once saved the euro. Can he now save Europe?