00:08My guest today on 12 Minutes With is Enrico Letta, the former Italian Prime Minister,
00:13who is now the Dean of the IE University and President of the Jacques Delors Institute.
00:19Enrico Letta, thank you so much for being with us.
00:22Thank you very much.
00:23So you're in Brussels to discuss with ministers your One Europe, One Market Roadmap,
00:29which stems from a landmark 2024 report you wrote on how to further integrate the EU single market.
00:37Two years on, how do you rate the pace of the EU in implementing those important recommendations that you made?
00:44It is clear that we had a near 25 that was a very complicated one for many reasons.
00:50First reason was that Trump 2 was not a copy of Trump 1.
00:55So I think at the European level, 25 was a complicated year and transition year in terms of implementing the
01:03two reports and Draghi's report too.
01:05So I see today an acceleration and the acceleration started in February with the European Council,
01:13the European Council retreat in Aldenbysen.
01:15But I have to say that the political reason of the acceleration, for me, is linked to the Greenland crisis.
01:24The Greenland crisis was a sort of big push for the European leaders to say,
01:28now we have to be serious in applying the two reports, in implementing the two reports,
01:33and in trying to strengthen the European single market.
01:36How would you overall describe how the EU's responded to a more aggressive Donald Trump, a more erratic, some would
01:43say, Donald Trump?
01:44I think some responses were absolutely, I would say, more than I expected.
01:50Trade, for instance.
01:52In five months, we closed India, Indonesia, Australia, Mexico, Mercosur.
01:57I have to say more than in the last 10 years.
02:00And it is because of this very complicated geopolitical scenario and the need to react.
02:07So on some of them, the reaction was absolutely at the level of the threat.
02:12On others, and I mentioned, first of all, this topic of strengthening the single market is crucial.
02:19We are junior partners of the US.
02:21We are not at the same level.
02:23They are bigger than us.
02:25On real economy, we play the same championship with the US.
02:29We are 17% of world GDP.
02:32They are 25%.
02:33It's the same championship.
02:35But when it comes to finance, our 17% becomes 11% of market cap.
02:43Their 25% becomes 60%, 60%, and 60% and 11% is not the same championship.
02:51That brings me to the savings and investment union, which is one of the things that this feels like there's
02:56a real political push behind it.
02:58And one of the things you advocated for as well in your report.
03:02How urgent is this now, given the situation of imbalance that you've just described?
03:07The key point is related to the fact that we need to integrate and to have one financial market in
03:17Europe.
03:18It's the only way to scale.
03:19The key point is scaling on finance because we are too small compared to the US, and that has consequence
03:25on the investments.
03:26They are bigger than us in terms of investments.
03:29So it's clear that for emerging companies and strategic sectors, this is very important.
03:34But when it comes to European citizens, how would you describe to a normal citizen why this savings and investment
03:42union,
03:43which means integrating the US financial market, would be beneficial for them as well?
03:47First, because we are the continent of savings and the savers.
03:52We are top in that, but we use very badly our savings.
03:57Our savings are not giving us the good returns that they could do and should do.
04:03If, in the case of savings and investments, putting savings in the savings and investments account,
04:08so this European label of savings, will give them better return than what they have today.
04:15And the second one is this bridge between savings and investment in real economy.
04:21We are so bad in creating this bridge today.
04:25The reference of where the US won the race today, AI, clearly.
04:30Why? With public money? No.
04:32With private money, private investments, because of their financial market.
04:36So we need to recuperate in that, and we have to use the possibility to raise our investments with the
04:45needs we have.
04:46We used to sell our mobile phone to American consumers.
04:51It seems today something very, very, I would say, old.
04:57But we have to come back to this period in terms of being, as Europeans, good in innovation and tech.
05:04But we need this capacity of having investments and private investments.
05:08And for this capacity, money is needed, the possibility, the liquidity to invest.
05:14And there is a new proposal on the table made by the Spanish government in order to really boost joint
05:22borrowing.
05:24That the EU now needs to realise that it needs to turn to common debt in order to finance these
05:29priorities.
05:30We had Christine Lagarde, the ECB president, in that seat last week saying that this is a serious proposal that
05:35needs to be debated.
05:37Would you agree with her?
05:38I like very much Carlos Cuerpo's proposal.
05:41I think it goes in the direction that is absolutely needed.
05:46The main point is to be good in having the two tracks together, public money and private money.
05:54Because what we didn't do, we focused only on public money and focusing only on public money.
06:02We were always in this derby between frugals on the one hand and southerners on the...
06:09We have to stop this totally crazy war.
06:13And I think Carlos Cuerpo's proposal goes exactly in that direction.
06:17You mentioned this derby, you said, between the frugals, the typically northern states that don't want to embrace joint borrowing
06:25in the same way as countries like Spain and France.
06:27Do you think this inevitably means that the European Union will essentially change the way it works and will have
06:34groups of countries that are willing to take these bold steps, doing so together without the 27 moving as one?
06:42Well, there's a problem of inertia.
06:44I like very much the E6.
06:46So this group of six member states, the biggest economists, trying to push on these topics at financial level.
06:54I like it because it's the way to break the inertia.
07:00In these two years, in the presentation of the report, in the implementation of the report, I saw many, I
07:08would say, big consensus, applauses and so on.
07:12But inertia is the big enemy.
07:14But when you say break the inertia, does that mean that in your view we are moving towards an European
07:20Union, which will work in blocks, so we will have groups that move together to implement certain policies?
07:28Europe is at 27.
07:30Today, tomorrow, it will be at 35, 36.
07:33The enlargement is a great perspective.
07:36I'm a great fan of the enlargement.
07:38So I consider that we have to move together.
07:41The point is the avant-garde as necessary.
07:45And I think the entire story of the European Union is a story of avant-garde.
07:52Take the euro.
07:52I remember in my country, Italy, or in France, or in Germany, half of the population was with a political
07:59environment, very skeptical, because they were afraid to lose identity, losing the national currency.
08:08Then today we have the euro.
08:10The euro is an enormous success.
08:13And we, thanks to the euro, we are stronger in the world.
08:16And 80% of European citizens, they are happy because of the euro.
08:22And the most important point, we didn't lose our identities.
08:27We are still Italians, French, Spanish, German, with the euro.
08:32So we can do the same on energy, on connectivity, on financial markets, being more competitive without losing our identities.
08:41You mentioned that skepticism towards the euro, particularly in France and Italy, which are two of the countries facing crucial
08:48elections next year, among others as well.
08:52Do you fear that this narrative of a return to national sovereignty and a sentiment of anti-European sentiment, if
09:01you like, is about to return to the political mainstream?
09:06National sovereignty today against European sovereignty is a fake.
09:11It's a fake.
09:12It doesn't exist.
09:13National sovereignty means sending gifts to the Americans and the Chinese.
09:18We have to be very clear on that, because national sovereignty doesn't address the right scale.
09:25The right scale to be competitive with American and Chinese is the European one.
09:30We can do it preserving national identities.
09:34So this is why the true battle is for European sovereignty.
09:40Of course, as everyone following the next year elections in Europe, not only France and Italy, we have Poland, we
09:52have Greece, we have Spain.
09:55So it will be a very important year.
09:57But I am confident that at the end of the day, this idea of doing things together because of our
10:06competitors, our competitors are giants.
10:08Finally, I want to come back to the enlargement question.
10:12You said you support it.
10:14But we do know that several big European countries previously considered economic powerhouses are facing stagnation.
10:22Do you fear that this could perhaps dampen the political will to accept countries like Ukraine, like Moldova, like Albania,
10:32whose GDP is inevitably much lower than European states, and that the question of the economic consequences of enlargement could
10:40come back to bite?
10:42I think that we have to separate.
10:47There are some countries that are, for me, absolutely ready to be in the Western Balkans.
10:53I don't see, frankly speaking, any problem.
10:55They are not big economies, so it's not complicated for Europe to accept them very fast.
11:01The key point is to consider that, of course, we need to have some institutional changes to have the enlargement.
11:08What we didn't do 20 years ago, that was the mistake, eliminating the veto right in foreign affairs and in
11:19defense.
11:19But I see, frankly speaking, what the Hungarians did was a great signal.
11:27They did it with democratic rules, but they clearly said we need each country protagonist in Europe, not against Europe,
11:36because the destiny of all our citizens is a destiny of, we say, prosperity only with a strong Europe.
11:44The US and China are not a joke, they are competitors, and they are competitors against us, and we have
11:51to know it.
11:53Okay, Enrico Letta, thank you so much for your time.
11:55Thank you.
Kommentare