THE STATE OF THE EUROPEAN UNION. Reforming Europe in a time of war

THE STATE OF THE EUROPEAN UNION 8 and the end of the Warsaw Pact. The impact of these changes was so significant that it gave rise to a vision of a Europe that would be a powerful political player, and from this arose the need to undertake another set of far-reaching reforms, which would be designed and implemented during the opening decades of the 21st century. However, this didn’t happen. It was prevented by a series of crises – the Great Recession of 2010–12; Brexit, from 2017 onwards; the Covid-19 pandemic, with its implications both for health and for the economy; and, in 2022, Russia’s war against Ukraine, which caused massive disruption for the whole European continent. The EU’s economic policy response to the first of these challenges, was misguided while it failed to meet the other challenges with determination and unity. And this challenge was also faced by the rest of the world, which suffered from the resulting impact on growth and consumption. The EU reacted to the financial crisis with a policy of budgetary rigidity, which only succeeded in lowering the living standards of millions of people, and closing thousands of businesses. Fortunately, the response both to Covid-19 and to the economic impact of the pandemic was the exact opposite. In other words, Keynesian investment policies, implemented by the European Central Bank through the large-scale purchase of public debt, and coordinated action to develop and secure vaccinations, driven by the Com- mission with the agreement of the European Council.With Next GenerationEU (NGEU), the EU has implemented the largest economic stimulus package (700 billion euros) in its history, an initiative that involves a level of solidarity beyond anything seen before. And, in response to Russian aggression, the EU unanimously adopted an unprecedented package of sanctions. Russia’s war against Ukraine has prompted the EU to take further steps towards autonomy through its reaction to the energy, food and inflation crises. Not only has the EU launched proposals designed to secure European energy sovereignty; even more importantly, it has done so with a degree of unity hitherto unknown in its history. This will undoubtedly result in something that would have been unthinkable just a few years ago: the attribution to the EU of competencies in systemic policies on energy supplies and consumption for households and businesses. This reform has been essential for decades, as much of the EU depends on Russian gas. But it is the impact of the war that has driven moves to create a European energy strategy, with Brussels leading joint measures to prevent dramatic rises in the prices of patrol, gas and electricity, and the profound damage this would inflict on Europe’s economies and its citizens. This is one of the reforms studied in this Report. Linked to the above is Europe’s ecological transition to neutral atmospheric CO 2 emissions by 2050. The best way to address the energy crisis that has been exacerbat- ed by war in Ukraine is to make a firm commitment to renewables and to support the circular economy.At the same time, reform designed to delivery sustainability in the face of climate change has not happened, due to the war. This still needs to be consolidated as a key reform of Europe in the 21st century.