In a scathing assessment, former European Central Bank president Mario Draghi has declared that the "current world order is dead" - and the European Union must undergo "radical change" to remain competitive against the rising threats posed by China and the United States.
Draghi, who is leading a high-profile review of the EU's competitiveness ordered by the European Commission, warned that Europe is falling behind its global rivals and faces an "existential challenge" if it does not dramatically increase investment and reform its industrial policies.
Urgent Need for EU Transformation
Speaking at a conference in Belgium, Draghi minced no words in his critique of the EU's current trajectory. "Others are no longer playing by the rules, and are actively pursuing policies to enhance their competitive positions," he said, in a clear reference to the protectionist economic agendas of the US and China.
Draghi's damning assessment aligns with a recent report he authored, which warned that the EU faces an "existential challenge" unless it radically boosts investment by €800 billion ($884 billion) per year - the equivalent of 5% of the bloc's GDP. The report called for a major expansion of joint EU borrowing to fund this spending surge.
Competing with Superpowers
The former ECB chief argued that Europe's "pre-COVID, pre-Ukraine, pre-conflagration" policies and decision-making structures are no longer fit for purpose in the face of the US and China's economic and geopolitical assertiveness.
As French President Emmanuel Macron has also warned, the EU has only "2 or 3 years" to stave off total dominance by the superpowers on the world stage.
The bigger picture here is that the liberal, rules-based international order that has underpinned global affairs since World War II is crumbling. With the US retreating from multilateralism under Trump and China increasingly flexing its economic and military muscle, the EU is being forced to confront the reality that it must radically reshape itself to remain relevant and prosperous.