And so it seems that the EU also needs to develop a culture of ‘Europe First’. Today, European heads of government met for the last time this year and, according to European journalist Stefan de Vries, only Europe was on the agenda. “It’s all connected, obviously,” he says. ‘Obviously it’s a lot about war, because it has a big impact on the economy. So is the energy crisis, and probably the corruption scandal is still on the agenda».
Europe’s strategic autonomy was also discussed in detail today, de Vries believes. “That means we should actually be able to take care of ourselves,” he continues. ‘That we are no longer dependent on China, Russia or the United States. An ambitious programme, but given the geopolitical developments of recent years, it is something we must do.’
Europe first
Greater attention to such strategic autonomy could therefore mean adopting a Europe First mentality, although according to De Vries this is rather short-sighted. ‘One of the things French President Macron (the founder of the term strategic autonomy, ed) wants is for European companies to have priority in European tenders’, continues De Vries. “It would be Europe First. This can actually contribute to that strategic autonomy.’
And this is necessary, because Europe’s competitive position has been significantly weakened since the outbreak of the energy crisis. That’s the view of Rabobank’s senior Eurozone economist Maartje Wijffelaars. “What you are seeing is energy prices are going up all over the world,” he adds to De Vries. “Gas prices in the US are also higher than they were a year and a half ago, but if you look at the difference in energy prices between what we have to pay in Europe and, for example, in the US, you see that the gap has widened enormously.’
Expectation
While the gap is expected to narrow in the future, the gap remains wider than it once was. ‘From this point of view, we are not temporarily in an energy crisis and a problem for economic growth,’ continues Wijffelaars. “Even further ahead, the competitive position of European industry is really under pressure.”
Not even the fact that the United States has introduced the so-called Inflation Reduction Act helps to reduce the gap. This is actually driving the US economy further. Wijffelaars: ‘There are some things that need to be distinguished. This is partly about investments in greening and energy transition, but we also do it in Europe. We have made large sums of money available through the EU budget and the pandemic recovery fund. We also freed up a lot of money to invest there.’
Pain tolerance level
But, he underlines, the sore point on the part of the US in recent weeks is precisely the fact that Americans can ask for subsidies to buy an electric car that was also made there. “With parts sourced from the USA and assembled in the USA,” continues Wijffelaars. “And this is discriminatory against the import of cars from Europe. Why should consumers buy a European car if they don’t receive a subsidy? This puts European industry at a significant disadvantage.’