Insight
Delors, Schäuble and Europe’s misdiagnosed competitiveness problem by Sander Tordoir, 30 January 2024 European Commission President Jacques Delors and German finance minister Wolfgang Schäuble left their mark on the European project. Their thinking can still help Europe out of its current geoeconomic predicament. At the end of last year, Europe bade farewell to two influential statesmen who left an indelible mark on the European project. Jacques Delors, who served as Commission president from 1985 to 1995, was the mastermind behind the EU’s single market and the introduction of the euro. Wolfgang Schäuble played a pivotal role in shaping German reunification and championed austerity measures during his long tenure as German finance minister in the 2010s. These two figures represented opposing visions of Europe’s economic and monetary union. Delors envisaged an expansive construction involving a common market and currency, reinforced by shared policies managed by EU institutions. Schäuble defended a minimalist vision, where member-states share a currency but otherwise largely keep their own houses in order through tight budgets and structural reforms. Today’s EU should draw on Delors’ thinking to build common institutions that can wield cash to counter industrial competition from United States and China; and on Schäuble’s for strict rules to prevent member-states from doing the same things on a national basis, to prevent the EU internal market – which accounts for 56 million European jobs – from unraveling. European policy-makers find themselves entangled in a profound debate over how to improve the EU’s ‘competitiveness’. The differences between them reflect the way that the visions of these towering figures of economic statecraft have influenced the thinking of their successors – President Biden has emulated China in giving generous subsidies to green tech and semiconductor companies. This has sparked concerns in EU capitals about a potential exodus of their firms as they chase more favourable conditions elsewhere. The woes of the EU’s energy-intensive industries, whose production has declined by 10 per cent following Russia’s war against Ukraine, add to the concern. So do persistent worries about the continent’s lack of home-grown Big Tech. Comparisons highlighting how the EU’s GDP lags behind America’s (often misleadingly measured in dollar terms even as the greenback’s exchange rate to the CER INSIGHT: DELORS, SCHÄUBLE AND EUROPE’S MISDIAGNOSED COMPETITIVENESS PROBLEM 30 January 2024
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