Draghi Urges EU to Embrace ‘Pragmatic Federalism’ Amid Shifting Global Order
Former Italian Prime Minister and European Central Bank President Mario Draghi has issued a stark warning: the European Union risks subordination, division and deindustrialization if it fails to evolve into a “genuine federation.” Speaking at the Belgian KU Leuven University on Monday, Draghi argued that a more unified Europe is essential to navigate a global landscape he described as “now defunct.”
Draghi traced the decline of the existing global order to China’s entry into the World Trade Organization and the subsequent increase in trade with a nation possessing “ambitions to become a separate pole itself.” This, he contends, has created a world characterized by less trade and weaker rules, a situation that, while not inherently threatening, is overshadowed by what replaces it.
The growing assertiveness of the United States is a key concern. Draghi pointed to the imposition of tariffs on Europe, threats to European territorial interests, and a clear indication that the US views European political fragmentation as advantageous. Simultaneously, China continues to exert control over critical global supply chains, leveraging this position to flood markets and impose costs on others.
The call for a “genuine federation” echoes a sentiment Draghi previously expressed in 2012 with his famous pledge to do “whatever it takes” to save the Euro. However, the current challenge differs significantly. Then, he wielded the power of the European Central Bank to quell market speculation. Now, the threats are geopolitical, emanating from ongoing conflicts – particularly in Ukraine – and a shifting power dynamic in the Oval Office.
Draghi’s vision of a federated Europe mirrors the strength demonstrated when the EU has successfully integrated in areas like trade, competition, the single market, and monetary policy. In these domains, the EU is respected as a powerful entity, capable of negotiating with a unified voice. However, in areas where federation has lagged – defense, industrial policy, and foreign affairs – the EU is perceived as a collection of mid-sized states, vulnerable to division and manipulation.
The current international landscape is defined by figures like Donald Trump, Xi Jinping, and Vladimir Putin, leaders who project strength and possess significant leverage – whether through nuclear weapons, energy resources, or technological prowess. Draghi argues that Europe lacks comparable assets, trailing behind in industrial and technological development and struggling to project unified leadership.
Criticism has been leveled at the current leadership within the EU. Ursula von der Leyen, President of the European Commission, has been described as a center-right politician hampered by internal taboos and a strong pro-US stance. The EU’s High Representative for Foreign Affairs and Security Policy, Kaja Kallas, is seen as overly focused on Russia, neglecting other critical areas. Even the Secretary General of NATO, Mark Rutte, has been accused of excessive deference to Trump.
National leadership within Europe also faces scrutiny. Germany’s Chancellor Friedrich Merz is preoccupied with domestic structural issues, while France’s Emmanuel Macron is facing political headwinds. Italy’s Giorgia Meloni represents a shift towards the far-right, and even Spain’s Pedro Sánchez, despite achieving a stronger international voice, is hampered by internal political noise.
Draghi’s call for a more assertive Europe builds on similar arguments made by former Canadian Prime Minister Mark Carney, who warned against a tendency towards appeasement. Draghi himself, having previously rescued the Euro, is now attempting to address the broader challenges facing the European project. He concluded his speech with a message of hope, stating, “What began with fear must continue with hope.”
