Thinking about the future of Europe in Paris. Reflections on the Confindustria/Medef economic forum

The sixth Franco-Italian Economic Forum involving Confindustria and Medef, the French Confindustria, was held in Paris on June 3 and 4.

It was two intense half-days that saw many industry players from the two countries meet and talk, first at the magnificent venue of the Italian Embassy in Paris and then at the Medef headquarters.

I attended the meeting in my capacity of advisor to the Confindustria President on the issues of competitiveness, European strategic autonomy, and the Mattei Plan and chaired one of the two thematic tables, the energy table (the other was on the defense industry).

Enrico Letta, author of the report on the European Single Market commissioned by the European Union, attended the meeting and gave a welcome speech.

The atmosphere was very positive, confirming the excellent state of relations between the two countries after the Quirinal Treaty, and what struck me was that many of the French people present spoke excellent Italian and that many Italians spoke excellent French. I watched in amusement and admiration as numerous exchanges between the French would address their Italian colleagues in Italian, and the latter would respond with a good French. Also this is a small miracle of Europe. We are still behind on English…

The mood was good and supportive, as Italian and French industrialists feel they are in the same boat and look to the future with the optimism that is typical of entrepreneurs but also with great concern for the major global economic and geopolitical changes that put Europe in a predicament from which we cannot hide.

Italy and France, along with Germany,  are the largest industrial countries in Europe and feel the gradual displacement of European manufacturing compared to the faster and more aggressive growth of the United States of America, China, and India.

As we have argued repeatedly on these pages, the gap in the growth and size of the economy in recent years between the U.S. and Europe is striking. As recently as 2010, the GDP of the U.S. and the EU was more or less equivalent. Today, Europe’s GDP is about 65 percent of the U.S.: as if in 15 years, the GDPs of France, Italy, and Germany combined disappeared from the EU.

This displacement and the current crisis come from a series of serious mistakes made by Europe, mistakes about which the ruling classes speak unwillingly and which have their cultural root in an attitude by Brussels politics and technocracy that is presumptuous, over-regulatory, fundamentally anti-industrial, and all about consumer protection.

I have written many times, and I repeat, that no country in the world has ever become great because of its consumption. All the great economies of the globe have become great because of their capacity to produce and create value.

As we have said, the European cultural flaw is conceit: ‘We are the first in the world and we will teach everyone what has to be done…’ (here full-force jeering from the rest of the world); ‘Industry, especially basic industry, is of no use; in fact annoying, so much so that we can buy everything everywhere without any protection for European manufacturing even when it is exposed to unfair competition’; ‘We have to push without ifs and buts on a green deal with unattainable goals, very expensive, and for which no one knows who will foot the bill.’

These are serious cognitive distortions, misunderstanding of what is happening around us, and difficulty in coming out of a “mainstream” consisting of the deadly intertwining of three extremisms. One is environmental, another globalist and related to markets, and the third is the financialization of everything, trusting in a post-industrial Europe that, according to many, can do without the drudgery of industry and its imperatives.

The results are there for all to see, and finally, it turns out that there is a serious risk of the death of Europe (Macron says so, and so does Scholz) and that there is a pressing problem with the competitiveness of European industry burdened with weights and burdens that nowhere in the world industry sees. So Von der Leyen calls Draghi, Saint Mario, to explain how Europe and its industry can become competitive again.

Here, too, one must be lucid and rational. Miracles are from another world, and the task entrusted to Draghi seems a mission impossible. How can one expect to make European industry competitive again when we are:

• In a frightening demographic decline,
• With a green deal with very expensive goals, including in terms of economic and social sustainability, and that no one knows how to achieve and with whose money,
• With the most expensive welfare system in the world.

Today, there is no answer to this question except the realization, at last, that we are experiencing a dangerous decline that will bring much suffering. But awareness does not yet mean radical decisions and consequent actions to reverse, if possible, the course.

We will see the Draghi report and trust in a message of “radical” change that he recently spoke of.

 Meanwhile, French and Italian industrialists, very pragmatically, addressed issues of possible cooperation in the two-day event in Paris, starting from the affinity of views and strengthening cooperation, which is already there.

The topic of energy, in particular, energy for industry, has been approached in a spirit of partnership. One of the areas of sure collaboration is safe and next-generation nuclear power and, in particular, SMRs (small and medium reactors). EDF holds a world record on this technology, and many Italian companies, starting from Genoa-based Ansaldo Energia, are working on the project and in the supply chain. A hypothetical agreement to support Italian industry in this technology and long-term nuclear power supply contracts from France for Italian energy-intensive industries has been evoked and will be worked on in the coming weeks.

We need always need to remind everyone that nuclear electricity is fully decarbonized and therefore can help energy-intensive industries in their transition paths.

It is an important assumption that takes into account the major changes taking place and the need to free oneself from the risk of new addictions.

As Professor Orsina, who spoke at the forum with a speech that was brave for a true liberal like him, explained well, the era of boosted globalization, of the market solving all the world’s problems and bringing democracy and freedom everywhere as universal values, of a turbo-capitalism that has reduced politics to a secondary and ancillary role of producing norms that protect the market and consumers, is over.

We are living in a new historical period in which external contingencies, turbulence, and serious instability in the geopolitical framework are forcing politics with a capital P back into the field. Unfortunately, we need to return to thinking in terms of conflict and power, and productive activities and industry will have to be increasingly defended as essential elements of economic and strategic security.

 In accompanying this cultural and narrative change, industry —  the productive world  — can do a great deal, helping decision-makers get out of abstract rhetoric, forcing them to measure themselves against the everyday problems that are the ones that really affect European citizens.

For the record, from 2014 to 2020, Europe spent over  400 billion on agricultural policies, affecting 8.7 million European citizens, more than 50 billion euros a year. There are 31.6 million people employed in industry in Europe, but a European industrial policy does not exist….

Homework for Confindustria, Medef, and the BDI (the German Confindustria). It is up to the big European industrial states and their business classes that have the task of changing the narrative. There is little time, however.

*Antonio Gozzi is Special Advisor to the President of Confindustria in charge of European Strategic Autonomy, Mattei Plan and Competitiveness.

English version by the Translation Service of Withub