Two years after the EU Commission President announced a “geopolitical EU Commission”, Ursula von der Leyen has now made it clearer in her State of the Union address: Europe’s infrastructure policy must be based on strategic interests. The EU Commission calls the new initiative “Global Gateway”.
The redefinition is overdue and is greeted with applause in large parts of the economy. Ports, for example, are strategic assets. It was a historic mistake during the euro crisis to allow, even to push for Greece’s most important port, Piraeus, to be sold to Chinese investors. Mediterranean ports are central for freight traffic to and from Europe. It is therefore also in the European interest to support the port of Beirut in rebuilding after the devastating explosion.
Because 70 percent of all goods that are traded across Europe’s external borders are transported by sea, ocean ports are a cornerstone of the competitiveness of the European economy. And we shouldn’t leave investments in our energy infrastructure to others either. Experts agree that Europe will need five times the renewable energy it produces today to achieve its climate neutrality goal.
Some of this renewable energy – for example green hydrogen – will have to come from locations outside the EU where production is particularly cheap. This is the only way to bring climate and competitiveness into harmony over the long term.
Top jobs of the day
Find the best jobs now and
be notified by email.
The current discussion about high energy prices in Europe shows how important this is. In addition, for reasons of energy security, the European energy supply urgently needs to be diversified. To do this, however, Europe must act strategically – and significantly increase its commitment outside the EU.
For example, we shouldn’t leave the infrastructure expansion on our neighboring continent Africa to others, such as China. Even if the project “New Silk Road” (Belt and Road Initiative) has given many developing countries urgently needed infrastructure and Europe is working with China on important global issues, such as the fight against climate change, we must not be naive: Often we were and these infrastructure projects are associated with unsustainable borrowing costs that create unexpected dependencies; Dependencies that we in Europe could ultimately feel.
The EU must also find its way back to internal strength
But as important as Europe’s view beyond its external borders is, it will be crucial that the EU also finds its way back to internal strength – and this includes, above all, a stronger focus on its own economic competitiveness. A crisis-ridden, economically weak Europe will find it difficult to make its strategic interests heard in the world. When it takes decades to build an airport in Berlin and months to do the same in Beijing, the glory of historical achievements fades too.
Europe’s prosperity and global influence are based on the fact that we have been more innovative and technologically advanced than many other regions of the world for many decades. To this day, we live on the fact that Europe led the industrial revolution of the 19th century, for example inventing railways, electrical machines, cars and important medicines and developing global businesses from them. Industrial history shows how crucial it is to be the first.
We cannot accept that the USA and China are leading in digital technologies. In the field of green and green-digital technologies, Europe still has a lead: 50 percent more patents for green technologies than in the USA are registered in Europe, 76 percent more patents combine green and digital technologies than in the USA – and four times more than in China. There is also hope that Europe will be the fastest growing region for start-up venture capital this year, according to data from the “Dealroom” report.
However, the following still applies: Many innovators from the EU tend to be small companies, while the big tech companies of the 21st century are US or Chinese. A major reason for this is that, according to the OECD, the EU countries have invested an average of less than two percent of their gross domestic product in research and development over the past 20 years, China around 2.5 percent and the USA just under three percent. Only a few EU countries, including Germany, meet the EU’s three percent target.
There is no uniform capital market
Another reason for falling behind in technology competition is the still fragmented EU internal market: Start-ups are growing very quickly in their national homeland. But then you are still confronted with different legal systems across the national border.
There is also a lack of a uniform capital market. This is why shareholders and buyers of corporate bonds often shy away from offers beyond national borders. As a result, too little risk capital flows into innovative start-ups and investors lose returns.
It is therefore worth all of the effort that the EU finally completes its internal market with 450 million people at all levels.
If this succeeds, it will quickly become apparent how much a multilateral system that embodies openness and freedom, for which the EU is exemplary, can create a head start in innovation through cooperation and the free flow of ideas. This has only just been shown by the development and rapid spread of Biontech’s Covid vaccine. Progress in vaccine distribution, pandemic management and prevention on the neighboring continent are also in our European self-interest.
Europe must secure its strategic autonomy
In any case, it must be clear that Europe must think in new dimensions if it is to maintain its values and prosperity in the long term. To achieve the ambitious climate targets alone, Europe would have to invest an additional 350 billion euros – every year up to 2030. Money that cannot be provided from public budgets alone, but must also be made available through the greater use of modern financial instruments and the capital markets.
Only if it is possible to combine public and private financing in the best possible way can Europe regain its technological and economic level with North America and Asia and effectively secure its strategic autonomy.
According to the criteria of the non-governmental organization Freedom House, the member states of the EU make up one third of the free countries in the world. And Europe is by far the continent with the most freedoms. In an international comparison, Europe is right at the top of the rankings for freedom of the press.
We should not gamble away this good by carelessly becoming dependent on others. It is time that we no longer reduce European policy to crisis policy and finally think again strategically about our joint project.
The author: Werner Hoyer is President of the European Investment Bank in Luxembourg.
More: Harvard economist Dani Rodrik: “We need a new economic policy”