On May 10th Enrico Letta, President of Jacques Delors and Former Prime Minister of Italy, presented at IE University his new report “Much More than a Market“, a deep dive into the challenges presented to the EU and its most influential tool, the single market.
On the conversation with Director of IE GPC Dr Ilke Toygür, Mr Letta mentioned the need to enhance security, to commit to a fair, green and digital transition, and to rethink the single market with a specific toolbox to tackle the strikingly different new global order of the 21st century.
Mr Letta reflected on the single market as an ongoing project that needs to be reformed to keep up with the challenges of the evolving European and global context, as well as the nature of economy itself. His conceptual framework considers elements such as the fifth freedom, a mechanism to enhance innovation, education and research, to which universities such as IE are deemed a central component:
IT – You state in the report that the rules-based international order faces serious challenges, and the world re-enters a phase of power politics. Weaponizing trade relations is an essential part of this great power competition. The Single Market has always been the source of European power. How should the EU rethink the single market as the center of its geoeconomics?
EL– The Single Market is indeed the cornerstone of Europe’s economic strength. To rethink it as the center of geoeconomics, the EU must integrate economic security and strategic autonomy into its framework. This means not only fostering internal cohesion and market efficiency but also ensuring resilience against external shocks and dependencies. By aligning the Single Market with geoeconomic strategies, such as enhancing supply chain security and reducing dependencies on non-EU countries, the EU can leverage its economic power more effectively. This involves a coordinated approach to trade policies, investment in critical technologies, and a robust framework for protecting key industries.
I really like the concept of the fifth freedom: Single Market was established on January 1st 1993, more than 30 years ago, with four freedoms: goods, services, capital and people. You say that these freedoms are designed for an economy in the 20th century. Now you introduce a fifth freedom to enhance research, innovation, and education. I think this is extremely important since Europe’s capacity to innovate, adapt and open new job opportunities to its citizens without leaving anyone behind would define its competitiveness. What would be the first steps for this? What could the universities – like this one – do?
The first steps to implement the fifth freedom would involve increasing investment in research and development, fostering cross-border collaborations, and creating a more integrated education system across the EU. Universities can play a crucial role by developing joint programs, facilitating student and faculty exchanges, and partnering with industries to drive innovation. Additionally, enhancing digital infrastructure and ensuring that educational resources are accessible to all regions will be vital. Universities can lead by example, promoting interdisciplinary research and creating platforms for collaboration with other EU institutions.
IT – There are many challenges ahead of Europe when it comes to the new institutional cycle – 2024/2029. You mention three of them for the next legislation, which I share very much: Commitment to a fair green and digital transition, How to pursue enlargement, The need to enhance security. The problem is how to finance all this and what to sacrifice when needed. You already state that this will be a heated debate. If you were still a member of the European Council, what would be your starting point? What are the almost 27-wide common priorities? Where should we start?
EL– If I were still a member of the European Council, my starting point would be to establish a clear prioritization framework that balances immediate needs with long-term goals. The three common priorities should be:
- Financing the Green and Digital Transition: Establishing a European Green and Digital Fund that pools resources from public and private sectors to finance sustainable projects and technological advancements.
- Enhancing Security: Developing a cohesive EU security policy that includes both traditional defense and cyber security, supported by a dedicated budget.
- Facilitating Enlargement: Creating a structured pathway for candidate countries that includes access to the Single Market under specific conditions to ensure stability and adherence to EU values.
To finance these priorities, the EU must explore innovative funding mechanisms such as green bonds, digital taxation, and reallocating existing funds to high-impact areas.
IT – Enlargement: I cannot end this conversation without asking you about it. Do you think giving Single Market access to candidate countries – once they fulfill certain conditions (even if we should ask what are those conditions) is a good idea? If so, why?
EL – Yes, providing Single Market access to candidate countries under specific conditions is a good idea. It allows these countries to integrate economically with the EU, fostering stability and growth while they work towards full membership. This conditional access can help ensure that candidate countries adhere to the necessary economic and political standards, promoting reforms and alignment with EU policies. It also provides a tangible incentive for these countries to continue their progress, ensuring that the enlargement process is both rigorous and beneficial for all parties involved.
Stay tuned for more insights on the EU single market and the Future of the EU in our Publications page.