A conversation on economics and geopolitics with Paolo Gentiloni

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The Hutchins Center on Fiscal and Monetary Policy and the Center on the United States and Europe welcomed Paolo Gentiloni, European Union Commissioner for Economics, to “New generation Atlanticism? A conversation about economics and geopolitics ” October 14. Brookings researchers Gian Maria Milesi-Ferretti and Thomas Wright led the conversation. David Wessel moderated. This article summarizes the conversation, which focused on the key economic challenges Europe faces as it recovers from the COVID-19 pandemic (including the impact and potential uses of the European News Fund generation) as well as on transatlantic and other foreign policy issues. * The transcript of the event can be viewed here »

Mr. Gentiloni underlined both the speed and the scale of the political response to the COVID crisis at the level of the European Union: the actions of the European Central Bank, the suspension of the restrictions imposed by the Stability Pact and growth, which enabled national governments to undertake a strong fiscal response to the crisis, as well as the joint issuance of European debt to finance short-term work plans and subsequently the stimulus program. The common response to vaccine supply, after a difficult start, has now ensured that more than 75 percent of EU citizens are vaccinated. This allowed the reopening of activity and supported a strong economic recovery. EU real growth this year is forecast at around 5% by the IMF.

While risks and uncertainties remain – linked to the evolution of the pandemic, supply-side bottlenecks, soaring energy prices and sharply rising public debt – the The challenge for the European Union is to find ways not only to make up the ground lost due to the pandemic, but to generate more sustainable and sustainable growth, he said. Public investment spending to support the greening of the economy and its digitalization are important tools, as are the reforms to which national governments have committed in their stimulus plans.

Mr. Gentiloni also underlined the importance of the recent agreement on international taxation, and the fact that the 27 Member States of the Union have signed the agreement, including some, such as Ireland, for which the decision to accept a minimum corporate tax rate of 15 percent has been difficult. With the other pillar of the international tax agreement – the reallocation of taxing rights, depending on where the profits are generated – this was a turning point. The European Union pledged to achieve its implementation by 2023. He said the long-discussed deal reflects the change in administration in the United States, and singled out Treasury Secretary Janet Yellen for his role in building consensus.

On the geopolitical level, Mr. Gentiloni underlined the welcome turn of the new Biden administration towards multilateralism. The difficulties with the developments of the UKUS and especially with the withdrawal of troops from Afghanistan have heightened awareness within the European Union of the need to try to play a more important geopolitical role, he said. he declares. This is particularly important in areas crucial for Europe such as the Mediterranean, North Africa, the Balkans, and can be beneficial for NATO and for the US-EU partnership. The EU faces a challenge in achieving these goals – for example, progress in European defense has been very limited. At the same time, she is on the same wavelength as the United States on the need to meet the Chinese challenge, and strongly attached to NATO, which plays a crucial role vis-à-vis Russia.

As for China, said Gentiloni, the EU is fully aware of the challenge posed by an authoritarian model where economic success is not associated with democracy as we know it. Europe also faces this challenge in certain aspects of its own political landscape. It tries to support an open economy, open trade, and avoid the negative economic consequences of decoupling or closing these international economic relations. This dual path is difficult, not easy of course, as evidenced by the difficulties encountered by supply chains during the crisis and the need to ensure European autonomy in certain strategic supply chains without severing international trade relations. The EU realizes that it must strengthen its political position vis-à-vis China and Russia if it is to keep the doors to trade and investment open.

Regarding Brexit, Mr Gentiloni mentioned that the problems should not be exaggerated. It was very difficult to reach the so-called Northern Ireland Protocol, which came on the basis of a British proposal which the Commission accepted. Of course, things can be relaxed, but this protocol cannot be attacked or overturned without leading to dangerous political consequences, even more in Ireland than in the EU – and it is not the right thing to do.

Regarding the availability of COVID vaccines for less developed countries, Gentiloni said the problem with allowing EU exports of 800 million doses is that these doses do not reach particularly low-income countries. , and here more efforts are needed. The next G-20 in Rome at the end of October could mark a turning point and increase the commitments of the various advanced economies. Rich countries need to be more ambitious, and it is possible. The problem is very important – no one is safe until everyone is safe, and the costs are not that high. It is not only a question of solidarity, but also of the well-being of advanced economies. On the COVID front, it’s also important to relax travel rules. The so-called green certificate in the EU has been a great success, allowing travel and access to indoor activities all over Europe with the same QR code. It is a good way to increase and facilitate trade and travel, and could be extended to developing countries.


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