Draghi’s Report: A Blueprint for a Schachtian Green Economy

Former investment banker, central banker and Italian PM Mario Draghi has delivered the report on The Future of European Competitiveness, which the failed but re-appointed head of the European Commission Ursula von der Leyen had commissioned. The most remarkable thing about the report is that both Draghi and von der Leyen have been wrong in every forecast made, and are responsible for plunging Europe into both a war with Russia and accelerating economic collapse, and yet, she and he are handling such a crucial issue. This is the same Mario Draghi who forecast that sanctions would bring Russia to its knees, and his new report is based on the same studies he used then.

As for the content, which is supposed to become the policy of the von der Leyen 2 Commission, it is a blueprint for a Schachtian war economy scheme in green, to be financed with a minimum of €750-800 billion per year, through common EU debt issuances. In order to streamline the governance of such a scheme, Draghi proposes to abolish the current voting system, dropping unanimity and introducing a majority vote.

Hypocritically, Draghi complains of a loss of productivity due to high energy costs, as “Europe has abruptly lost its most important supplier of energy, Russia”, when he himself pushed the decoupling from Russian gas. As a result, EU member countries import LNG from the U.S., at prices four times higher than gas piped in from Russia.

Whereas he correctly states that “If the EU were to maintain its average productivity growth rate since 2015, it would only be enough to keep GDP constant until 2050”, the solution proposed, i.e., decarbonisation and rearmament, will collapse productivity further.

A key aspect of the plan is the elimination of traditional banking altogether. “The EU relies excessively on bank financing, which is less well-suited to fund innovative projects and faces several constraints”, the report says, calling for a massive issue of EU debt assets to be marketed in the Capital Market Union (CMU). “It is unquestionable that the issuance of a common safe asset would make the CMU much easier to achieve and more complete… the EU should move towards regular issuance of common safe assets to enable joint investment projects among Member States and to help integrate capital markets.”

Unfortunately, “the private sector will not be able to bear the lion’s share of financing investment without public sector support.” That implies more budget cuts and taxes at the national level.

The good news is that the Commission might implode before the Schachtian-green scheme is implemented. The composition of the new Commission has been delayed because liberal-green governments have vetoed the Italian candidate as one of the executive vice-presidents, and on Sept. 16, Thierry Breton resigned as Commissioner for the Internal market, digital and defense, accusing von der Leyen of misgovernance. Perhaps Breton, who had explicitly argued for a “war economy” in the previous commission, was hoping to be named EU “Defense Minister”. He is also the author of the anti-free speech legislation called the “digital services act”, but overdid it when he threatened to ban X on the eve of Elon Musk’s interview with Donald Trump.