What von der Leyen Did Not Say, But Should Have, About Europe and Croatia

Poland was awakened this morning by Russian drones. Attacks on Ukraine have not been absent either, becoming increasingly ruthless, as if Alaska never happened. And what about Gaza? The brutality of that war is so heavy and painful that no one can pretend to be blind in the face of clear evidence. It is logical, considering that all this is happening at Europe’s doorstep, Ursula von der Leyen, President of the European Commission, began her speech on the state of the nation this week with these very topics.

However, the tone in which she spoke about Ukraine and Gaza only confirmed what we all know: European institutions do not have answers to today’s geopolitical challenges and will not have them anytime soon. And that is not the only problem of European institutions, but of the entire continent.

New Mantra

Not only does Europe lack leaders for today’s problems, but it also lacks solutions for the faltering European economy and industry. We have only some kind of strategic vision that includes commonplaces: economic resilience, technological development, and simplification of the business environment, which should presumably ensure the foundations for future economic growth and the positioning of the EU on the global stage. And we have a new mantra, competitiveness. And that is about it.

What does this actually mean for the economy and industry of the EU, especially for Croatia? The answer is: not much! It is already known that negotiations are underway regarding the new European financial framework, about the new budget for the next multiannual period. Negotiations are ongoing about who will be the winner of the budget and who the loser, but the cards are being shuffled a bit differently this time, and in this story, political compromises are key.

Budget by Muscle

If so many billions are already on the table, the leading EU countries, those that contribute the most to the budget, the so-called leading net contributors, who have also found themselves in the crossfire of missed opportunities and their own bad policies, from industrial to fiscal, like Germany and France, will not sit idly by and watch as billions of euros flow into the GDP growth of some tiny EU countries whose contribution to the budget is negligible. In other words: the design and allocation of the new EU budget will not be driven by economic or strategic goals, but by muscle. Those with the biggest muscles will get the nice pieces of the pie, while the others will get the scraps.

What will it look like when the funds from the new mega-fund for competitiveness, worth 409 billion euros, are distributed? Well, von der Leyen has already hinted at this in her speech. It is very likely that the largest portion of funds will go to the industries of countries with the greatest muscles, which are now sickly watching from their beds as Croatia, a country on the eastern border of the EU, sees its GDP grow consecutively, driven by investments financed with money they allocated to the EU budget.

Never More Lobbyists

Or if you want a plastic example explained, if the Commission truly wants to implement the announcement of a small, household-accessible European e-car, ask yourself who will receive funds for development, Rimac, which develops luxury e-cars, or the faltering German and French automotive industries?

Some answers present themselves on their own… And agreements are already being made, the real game of power is unfolding before our eyes, never before has such a large number of lobbyists walked the Brussels corridors, lobbying for companies, for entire industries, and even for states to become new centers of this or that power.

That is why there is such a cacophony in the speech of the Commission President, trying to satisfy all appetites, both of states, political factions, allies, and angry opponents, all with the goal of fighting for billions of euros in the shadow of which some wars are happening that only actually disturb and which we must see, because they are right in front of us, but we would rather pretend they do not exist.

Single Market

In this context, the announcement of a deadline for the ‘real’ introduction of a single market for the financial sector, insurers, energy sector, and telecommunications should also be viewed. All these industries will be able to offer their services and products in all member states without additional licenses or local regulatory barriers starting in 2028. HEP can enter the Latvian market, just as Latvenergo can enter our market. It is more likely that this will not play out as such and that we will see a new phase of consolidation in Europe, which will not end well for small, unprotected players from small countries.

For banks, insurers, telecommunications, and even the energy sector, the market will be more competitive, that is what is being aimed for. Shareholders will dictate the game, not interests, and certainly not the interests of small and medium-sized enterprises from small countries, those without muscles, who may be a bit leaner (but that is from Ozempic anyway). The same rules will apply to tourism, manufacturing, and all sectors where large multinationals can easily exploit economies of scale.

Both Good and Bad News

For Croatia, there are no major unknowns here, which is bad news, as much as it is good. We do not have such large domestic companies that can pull and confidently enter the markets of other countries and carry out a massive consolidation. We might have, if we had implemented reforms, so that we now have not one but several Končars, who have their own innovation centers, a resilient industrial niche, but also digital capacities.

Perhaps then we, the small, would be at the big table, because we would be training for Ironman, but as it stands, we are merely spectators of a chess game, in which muscles serve for deception, while the real game is strategic and is played from the first pawn move.