From Draghi’s Recommendations, Only a Memory Remains That the EU Has a Problem

More than 380 of Draghi’s recommendations on about four hundred pages a year later are not particularly alive. Or, more precisely, according to the mathematics of the European Innovation Council in policies, exactly 11.2 percent of them are alive.

Last year’s report on competitiveness commissioned by Mario Draghi was ordered due to the necessary filling of the innovation (and any other) gap compared to China and the USA, between which the EU is visibly shrinking.

For instance, there is no company in the EU with a market capitalization greater than one hundred billion euros (and this has not been the case in the last ten years, but in half a century). As the EU lags behind during a time of productivity slowdown, demographic decline, rising energy costs, and accelerating global competitiveness, the report recommended massive investments in infrastructure, modernization of the energy grid (the vast green megawatts produced across the EU cannot be ‘hooked’ to a crumbling grid, at least not one that is under-capacitated), and coordinated military procurement to wean off NATO’s needle.

Of the 11 percent of the energy plan implemented, exactly – zero! To be fair, the result is not shocking. The recommendations, in fact, call for massive investments at the member state level, for which few have the capital.

Draghi has therefore recently shouted again that states ‘must decide to invest, and not when circumstances become unsustainable, but now, while we still have the power to shape the future.’ Easier said than done. Although Europe is clearly and visibly preparing for war (when the economy does not function and the game is lost, wars come), it is not ready for it either because common war production does not function. Moreover, individual countries/producers are in competition with each other. The only result of the entire year-long story is the ‘Omnibus’ package, a loosening of the hasty green agenda.

Europe is not stagnating, but regressing

However, economist Velimir Šonje says that one year is too short a time to give assessments.

– Productivity growth is a long-term phenomenon, and Draghi’s attempt to return productivity growth to the center of discussions on economic policy arose precisely because the EU has had significantly slower productivity growth than the USA from the end of the last century until 2024. This data was a crucial impetus for the creation of Draghi’s report, whose recommendations were translated into the European Commission’s Competitiveness Compass. Therefore, one year from the report and nine months from the Competitiveness Compass is a short time, especially considering the limited powers of the European Commission in managing policies that are primarily in the national domain. A much greater burden of productivity recovery lies on the governments of member states, where we mostly encounter the usual barriers to faster productivity growth such as administrative inefficiency, high tax and non-tax burdens, and weaknesses in promoting competition. Tax systems and administration are a good example as they remind us of the primary responsibility of national governments. Let’s look at things from the Croatian perspective: why should we (and how) expect the European Commission to solve our problem of slow productivity growth? This question applies to every member state – Šonje clearly and succinctly conveys.

His understanding is not shared by other interlocutors. Geopolitical expert Jadranka Polović from Libertas University says that the EU, instead of responding decisively to the decline in productivity and deindustrialization, has remained trapped in the vortex of war in Ukraine and the Middle East, trade tensions with China, tariff wars, and internal political upheavals that have pushed economic recovery to the background.

– In a recent State of the EU speech, Ursula von der Leyen, faced with a political crisis and challenges from within and outside, did not offer solutions. And the data is relentless. From 2008 to 2025, the EU’s share of the global economy has decreased by seven percentage points, while the USA’s has strengthened by four. Europe is not stagnating; it is regressing. In the industrial sector, which was supposed to be at the center of competitiveness recovery, a kind of exodus is occurring. In the first eight months of 2025 alone, 72 industrial companies closed, almost as many as in the recession of 2009. The industrial collapse is particularly serious in the energy sector. At the same time, the rise in energy consumption and high LNG prices after the abandonment of Russian gas further burden company balances. Energy companies are recording revenue growth, while the real sector is sinking. For comparison, electricity in Europe is three times more expensive, and gas is even five times more expensive than in the USA. Once an industrial leader, Germany is now facing more than three million unemployed, the highest in the last ten years. France and Spain are recording a decline in business activity, and savings are being made at the expense of workers and retirees. The EU is simultaneously facing inflation, stagnation, and unemployment, thus it is a systemic crisis – Polović specifies.

Established Pattern

Financial analyst and investor Neven Vidaković thinks the same.

– What remains of the recommendations? A memory of a warning that the EU has a problem. But like any serious warning, it has only been used for a short-term media appearance. The EU has nothing more to offer. Even the ‘clones’ in Croatia have started saying that the EU is in trouble. Then you know that the leading people no longer have ideas about what to do. The EU did not recognize in time that it is in structural inflation. The lack of competitiveness and the inability to resist China are economic problems, but the economy is no longer the main focus of the problem. Economic instability has spilled over into political instability, so it is necessary to politically stabilize the situation. This can only be achieved by reconciling national and federal authority. I do not want to talk about specific steps because that is part of politics, and I do not deal with it. But everything continues according to the established pattern of structural inflation. There will be increasing political instability, and this will spill back into the economy, which will again amplify political instability. Nothing special. An established pattern – Vidaković conveys resignedly, adding that the EU is no longer geopolitically relevant. That is why it needs the war in Ukraine because it is trying to maintain relevance through it. Relations have shifted to the triangle of the USA – China – Russia. Polović conveys just that: the EU is increasingly losing autonomy geopolitically, while trade tensions with the USA and China further complicate matters.

– The introduction of tariffs, the closure of vital logistics points, most recently like the Polish-Belarusian border, as well as possible secondary sanctions against China, do not seem like well-thought-out economic measures, but rather decisions driven by external pressures, primarily from the USA and the Trump administration. Namely, the closure of the Małaszewicze railway crossing, crucial for the China-Europe Railway Express, jeopardizes billions of euros worth of trade. Electronics, machinery, and lithium batteries, which are categories in which the EU is already losing the race, are now further affected by logistical blockades. Such a direction for the EU leads to economic self-destruction, while the USA profits by redirecting logistics and capital. In European cities, the streets are full of angry citizens. Cuts in social benefits, all this combined with military budget growth, sends a message about the priorities of those in power. Instead of social cohesion and industrial policy, weapons and external confrontation are chosen. A year after Draghi’s wake-up call, the EU is even deeper in a state of strategic confusion. The key question is no longer how Europe positions itself in the world, but whether it can still decide independently. The conflict with Russia, the trade war with China, energy dependence on the USA, and industrial decline leave little room for optimism. If something does not urgently change, and not at the level of speeches, but through concrete measures in industrial, energy, and trade policy, Europe risks becoming a semi-periphery of American geostrategy – concludes Polović.

‘A Very Important Moment’ in October

Depressing or not, the fact is that the politically and economically fragmented EU can hardly respond to the federally unified USA and the ‘committee-decree’ China that implements decisions with a stroke of a pen. However, the 27 member states, with their own history and culture, do not want to relinquish independence. Therefore, they do not allow the free flow of capital and do not agree to joint debt (frugal Germany does not want to finance any non-frugal member). Instead of ‘let’s work’, competitiveness will again be discussed in October. This will, the EU elite is convinced, be ‘a very important moment’ for promoting the union of capital markets, the digital euro, and strengthening its international role. Mašala!