«The scene last night with the Ode to Joy and the European flags is quite unique in a national vote of a great European country. Macron has won, and he has won big: it is the first time in twenty years that a French president has been re-elected and it was not taken for granted. And he won by putting Europe at the center of his program ». The European Commissioner for Economic Affairs Paolo Gentiloni thus comments on the Messaggero the victory of Emmanuel Macron in the French presidential elections.
“Macron’s victory can strengthen the European project, but everyone must have in mind that the time horizon to start this relaunch is 2022. Also thanks to the French result, the great opportunity to take important steps forward is now”. Now, «the key words of the opening phase are strategic autonomy of Europe. For the first time, Germany has expressed its willingness. France, Germany, Italy and other EU countries can take advantage of this. Now or never, in fact ».
However, the crisis triggered by the Russian war in Ukraine remains. The major European economies, including Italy and Germany, risk two consecutive quarters of negative growth. The International Monetary Fund has reduced its growth forecasts for the EU to 2.7% for 2022. “I will present our updated economic forecasts on May 16,” says Gentiloni. «There is a slowdown in growth – we expected it at 4% for this year – and we will certainly have to see it down. But whether this slowdown will lead to stagnation is too early to say, because there are some positives inherited from the second half of 2021, which are for example a very low level of unemployment and a very high level of savings. The risk of stagnation will also depend heavily on the duration of the war: the longer it is prolonged, the greater the impact on investor and consumer confidence and inflation will remain high. We will see. It is clear that we all hope that the war will not last long, first of all for humanitarian reasons, but also for economic reasons ».
However, a further tightening of sanctions against Moscow is now expected. The formal proposal of the sixth package of sanctions against Russia could be postponed until next week. A meeting of the ambassadors of the 27 countries will be held on Wednesday, but the oil measures should not be up for discussion.
“There are costs for us too, so we have to think about interventions that increase the damage to the Russian economy without increasing the costs too much for us,” explains Commissioner Gentiloni. “This can translate into hypotheses of various types of energy sanctions”. Like the price ceiling that Italy hopes for, for example. “It would certainly be a way to inflict damage on Russia by reducing the risks for us. These are measures we are discussing these days. The Commission has been tasked in just under a month with formulating a proposal to European governments ”.
But even on this there are differences between Member States and “the scenarios that these decisions entail must also be evaluated very seriously. Setting a maximum price can have the advantage of damaging Russian exports without producing price hikes that would have total embargoes. But it is also necessary to evaluate how, from a legal and economic point of view, any maximum price proposals can be managed. And this is the work that the Commission is doing ”.
On May 23, the EU RePower will likely be a reality. Gentiloni explains that “since the evolution of the various sanctions packages will, as is probable, involve energy, we are working in this direction. First of all, by reducing dependence on Russian oil and gas by two thirds by the end of this year, to bring it to zero by 2027. A second goal is to build a strategy that does not slow down the climate transition, a risk that is run in the face of soaring prices. For this reason, the Commission will try to put on the table proposals that instead confirm the climate transition, since it is obvious that there may be temporary bridges but the way to reduce dependence on Russian energy is that of renewables. And on this we cannot feed misunderstandings or a new coal season to achieve autonomy ».
Gentiloni also talks about the goal of energy autonomy. “Of course the discussion will not be easy, but I think it is not right to exclude this possibility, since once again we are faced with an external shock, not caused by the economic policies of individual countries. There is therefore a basis for reasoning about it, ”he says. “As for the NRP, here in Brussels we are discussing some partial, limited, very targeted changes. Inflation and the consequences of war require them. But my invitation is: do not focus on these limited changes, but on the implementation of the NRP. Before we were talking about the slowdown in the European economy: the antidote to this slowdown is the NRP. We have 200 billion in Italy to spend over the next four years. Having experience with our PA I know how difficult it will be. I also know how hard the Draghi government is working to make it happen. But let us remember that the answer we are looking for to face the risks of stagnation, at least for a country like Italy, we already have it and it is called, I repeat, PNRR ».
Finally, the stability pact. “Before the Russian invasion we were thinking of concluding the suspension of the Pact at the end of the year,” says Gentiloni. «We will reason on the basis of the new economic forecasts on the possibility of extending the suspension. The economic situation is again in serious trouble. We will decide before the summer break. We need common rules: a more ambitious union cannot be à la carte. But these common rules need to be updated. The two objectives must be to make the necessary debt reduction pathways more gradual and to facilitate investments. I feel that the distances of opinion have reduced but are not yet canceled and I am working to build a proposal that has the necessary support. I am an optimist”.
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