The metaphor remains painfully true: Europe is an economic giant but a political dwarf.
Mario Draghi stressed how this imbalance has become unbearable in a short but sharp speech delivered at the Catholic University of Leuven on 2 February. The Italian economist and politician did not mince his words in pointing out the only path that, in his view, would enable Europe to grow politically: that of ‘pragmatic federalism.’
With this formula – which he had laid out in an earlier speech on 24 October last year in Oviedo, Spain – Draghi adds an institutional dimension to his much- vaunted 2024 report on European competitiveness.
It is not enough for Europe to catch up with its Chinese and American rivals in terms of productivity and technology, he says. It must also strengthen its institutional framework to be considered a world power.
Where it has stuck to loose, classic intergovernmental cooperation, such as in defence and diplomacy, it hardly impresses Washington or Beijing.
‘This model does not produce power,’ Draghi laments: ‘A group of states that coordinates remains a group of states, each with a veto, each with a separate calculus.’
According to the former Italian prime minister, the power games at play in today’s world require Europe to make a qualitative leap in integration. A federal leap is what it takes.
Would the European bloc be ready for such a bold move? Draghi is right to raise the issue of the EU’s governance and to call for renewed integration to face a more chaotic and brutal world order.
But using the controversial word federalism is always sensitive in European politics. His statement in favour of ‘moving from a confederation to a federation’ risks just nurturing a quasi-theological debate on the very nature of the European Union.
The F word
Many EU member states, such as Italy, Germany, Spain or Belgium, are federal in their own ways. But letting Europe itself become federal is another story. In a centralized state such as France, any federalist terminology is even taboo. The far right rejects it completely. President Emmanuel Macron has always been careful not to refer to federalism when visioning Europe.
It is worth, though, not reducing Draghi’s speech to this F word. Just as the term ‘constitution’ in 2005 diverted attention from the purpose of a treaty that was essentially codifying existing European legal texts, the term ‘federalism’ can unnecessarily inflame, divide, and polarize, when its ‘pragmatic’ nature should draw just as much attention.
As former president of the European Central Bank, the euro is the best example of the kind of ‘pragmatic federalism’ that Draghi aims for. ‘Those who were willing to do so took the lead, set up common institutions with real authority and, thanks to this joint commitment, forged a solidarity deeper than any treaty could have prescribed,’ he said of the single currency in his speech in Leuven. Through its exclusive competence, its unquestioned independence and the respect it commands, the ECB acts de facto as a federal body but without being explicitly designated as such – unlike its American counterpart, the Fed.
The same federal understatement could apply to all areas where the EU has exclusive competence, as on international trade or on fisheries. Europe has always built itself in this constructive ambiguity. Former Commission President Jacques Delors coined the term ‘federation of nation states’ to define the EU, like an oxymoron.
At a time when radical right movements are surging, European leaders are wary about tackling institutional issues head-on and embarking on any deep reform of the EU. Since the Lisbon Treaty of 2009, the task has been deemed too laborious and uncertain to be taken up politically. In the wake of the successive serious crises that have shaken the Union (debt crisis, migration crisis, Brexit, Covid), the bloc has preferred to react with emergency measures rather than come up with an overall plan.
That is not what Mario Draghi is proposing. He suggests no grand institutional overhaul. His plan is no federal Big Bang, as he acknowledged in his speech in Oviedo: ‘A true federation would require political conditions that do not exist today.’
Pragmatic
Instead, he aims pragmatically at some immediate initiatives for true integration in areas such as defence, industrial policy, taxation or foreign affairs, for states willing to do so. If necessary outside the Union, and without other members preventing them from doing so, but leaving them the choice of joining later.
Draghi’s federalistic approach comes down to the kind experienced through the Schengen Agreement on free movement, which started among five countries in 1985 and was first legally established outside the EU. Yet this time, it is about competences as stark as defence.
Besides its federal wording, Draghi’s proposal is welcome for three reasons. First, because in Europe’s attempt to move from a peace project to a power project, it cannot avoid further deepening in strategic areas, let alone defence.