European Union leaders united behind “Buy European” plans aimed at building economic resilience during their summit addressing Europe’s industrial challenges. The gathering of all 27 member states focused on protecting strategic capabilities while pursuing broader reforms to boost European competitiveness.
Former Prime Minister Mario Draghi’s influence on summit discussions was substantial, with his comprehensive report providing intellectual foundation for many policy debates. Draghi’s declaration that the current economic world order is “dead” captured the sense that fundamental assumptions underlying European economic policy need rethinking. The post-Cold War order assumed that economic interdependence would promote peace and prosperity, that free markets would generally produce efficient outcomes, and that international institutions like the World Trade Organization would enforce rules-based trade. Russia’s invasion of Ukraine, China’s industrial policies, and America’s transactional approach to alliances have shattered these assumptions.
Draghi’s warning that Europe risks becoming “subordinated, divided and deindustrialised at once” identified the multiple dimensions of Europe’s challenges. Subordination means losing the ability to make independent decisions because of dependencies on foreign powers for critical technologies, products, or security guarantees. Division means European countries pursuing competing national interests rather than coordinating on shared European interests, allowing external powers to exploit divisions through divide-and-conquer strategies. Deindustrialization means losing manufacturing capabilities that provide not just jobs but also technological know-how, supply chain control, and the ability to rapidly scale production of critical goods when needed.
Draghi’s call for Europe to move from “confederation to federation” represents perhaps his most ambitious proposal. He argues that consensus decision-making where individual member states can veto major policies leaves Europe unable to act decisively. In areas like fiscal policy, defense, and industrial policy, Draghi believes Europe needs to be able to make decisions by qualified majority voting rather than requiring unanimity. This would allow Europe to act even when some member states object, preventing single countries from blocking policies that serve broader European interests. However, this proposal faces enormous political obstacles because member states jealously guard their sovereignty and resist transferring additional powers to EU institutions.
Von der Leyen’s openness to moving ahead with capital market integration in smaller formations if full agreement proves impossible reflects pragmatic willingness to proceed without unanimous consent. Enhanced cooperation procedures allow subsets of member states to move ahead with deeper integration in specific policy areas while others opt out. The euro itself originated through this approach, with Britain, Denmark, and Sweden choosing not to adopt the common currency. Similar approaches might enable groups of member states to integrate capital markets, defense procurement, or industrial policies even if others prefer to maintain current arrangements. This multi-speed Europe could enable progress on contentious issues while respecting different national preferences, but also risks creating new divisions between integrated core and peripheral outsiders.
