Economy

Smart Recipe For A European Industrial Policy Reset

The EU desperately needs a new industrial doctrine — and a healthy dose of R&D spending — to revive its economy and fend off outside competition.

'Germany is filling the authoritarian role the French once held'
"Germany is filling the authoritarian role the French once held"
Eric Le Boucher

-Analysis-

PARIS — The EU's refusal of the Siemens-Alstom train merger deal (a fusion between French and German companies), the Huawei conundrum, taxing U.S. tech giants, the electric car, cybersecurity… With all these issues in play, it's high time Europe put an industrial policy in place.

Indeed, it's even more urgent than the macroeconomic revival plan (via a European budget) that French leader Emmanuel Macron described in a recent speech at the Sorbonne, a proposition that has been bogged down by opposing forces — German reticence in particular. Microeconomics, then, is a focal point once again.

Who recalls that, in the early 1980s, industry was the motor behind Europe's revival? A "round table" of industrialists that included the CEOs of Philips, Fiat, Volvo and high officials who backed the European cause (and there were many) came together around the Belgian commissioner Etienne Davignon with the goal of "stimulating European competitiveness." They wielded considerable influence. Although not directly related to industry itself, the programs Esprit (computing) and Eurêka (supporting R&D) were established in 1985, but were rapidly lost in the Brussels fog.

In the meantime, this need for more Europe was hijacked by François Mitterrand, Helmut Kohl and then Jacques Delors. It led to the Single European Act, which established a single European market, then continued with the creation of the euro. Macroeconomics was the way forward and, conforming to the liberal atmosphere, the public sector was "favorably" secured (in terms of market regulation and currency). Industry, in contrast, was left to fend for itself with a competition policy as its only limit.

europe_industry_macron_france_germany

Industrial opportunity may be in the hands of the Germans — Photo: Monika Skolimowska/DPA/ZUMA

Today, we need to go back to the beginning — to the round table, to the conviction that Europe is coming up short on the technological front. At the beginning of the 1980s, it was the computing revolution (ruled by IBM); today it's all the rest: 5G telecom providers, biotech, the "new space," autonomous cars… the list is long. Yesterday, Japan and America were competing. Today, America and China are at war.

The paradox is that Germany is filling the authoritarian role the French once held while France no longer has an industrial doctrine. The opportunity is thus in the hands of the Germans. The more they turn their backs on the idea of a common budget, the more they frown at the idea of a European army, the more their politicians and their CEOs risk, as Kohl and Mitterrand did 35 years ago, industrial decline.

Peter Altmaier, the minister of economic affairs who is very close to the chancellor, held a speech on Feb. 5 calling for the "creation of national and European champions' and for the eventual nationalization of firms attacked by Chinese predators. At the same time, European industries mobilized by banding together to invest billions in manufacturing battery cells for electric cars. The German's intervening shift is total in its scope.

For France, the opportunity is historic. Emmanuel Macron should shift course and firmly state that French industry doesn't always take off. He should worry that the champions of the CAC 40 stock market index, created in the 1990s, are subject to never-before-seen threats. He should stop harping on about potential projects and create a ministry of industry.

Emmanuel Macron should shift course and firmly state that French industry doesn't always take off.

The paradox is the inversion of positions: Germany is in the position of authority the French once held, while France, under both budgetary and consumer restraints, no longer has a strong or clear industrial doctrine.

Defining a European industrial policy isn't simple. Trump's primal protectionism is an example of what to avoid. Yet it's also necessary to find solutions to the refusal of countries without big leaders (like Ireland) that open their arms to non-European investors or, for example, telephone operators who choose the Chinese company Huawei because it's cutting-edge and because their prices are "reasonable." But we're no longer in 1980. Regulation economists know how to manage monopolies and find the happy medium between the interests of the consumer and producer.

The most important obstacle is monetary — nothing is more important, be it national or communal sums. Europe only spent 100 billion euros on R&D in every sector combined between 2014 and 2020. We need to be spending five or 10 times more, and the debates around the future 2014-2020 budget are the occasion to make it happen.

Technological disruption is the mark of our century. The United States and China plan on taking advantage of it, in their Schumpeterian or governmental way. Europe can't remain a spectator.

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Geopolitics

In Sudan, A Surprise About-Face Marks Death Of The Revolution

Ousted Prime Minister Abdalla Hamdok was the face of the "stolen revolution". The fact that he accepted, out of the blue, to return at the same position, albeit on different footing, opens the door to the final legitimization of the coup.

Sudanese protesters demonstrating against the military regime in London on Nov. 20, 2021

Nesrine Malik

A little over a month ago, a military coup in Sudan ended a military-civilian partnership established after the 2019 revolution that removed President Omar al-Bashir after almost 30 years in power. The army arrested the Prime Minister Abdalla Hamdok and, along with several of his cabinet and other civil government officials, threw him in detention. In the weeks that followed, the Sudanese military and their partners in power, the Rapid Support Forces, moved quickly.

They reappointed a new government of “technocrats” (read “loyalists”), shut down internet services, and violently suppressed peaceful protests against the coup and its sabotaging of the 2019 revolution. During those weeks, Hamdok remained the symbol of the stolen revolution, betrayed by the military, detained illegally, unable to communicate with the people who demanded his return. In his figure, the moral authority of the counter-coup resided.

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