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Is the European Union ready for a war economy?

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Economy | Why talk about a war economy when neither France nor its partners in the European Union are explicit parties to the Ukrainian conflict? Because this long-term confrontation disturbs the fundamental aspects of the European economy.

Admittedly inflationary rise Which hits the eurozone like the rest of the world started at the end of 2021. But an outbreak The war in Ukraine Increased inflationary pressures, whether through a slowdown in Ukrainian agricultural exports or through a scarcity of hydrocarbon resources. These trends lead to a slowing growth in the euro area. This has held up well in 2022, as the 3.5% increase, more than China (3%), the United States (2.1%) and, of course, Russia (-2.3%). But in 2023, GDP growth should not exceed 0.9% in the eurozone.

If you come to France 2.6% growth In 2022 and managing to experience limited inflation (5.9% compared to 9.2% for the Eurozone and 10.3% for the European Union as a whole), our country recorded foreign trade deficit register 164 billion eurosthus doubling the number 85 billion In 2021. Rising energy prices and the depreciation of the euro are obvious factors, but they also affected our partners. The weakness of French industry explains this result, which is far worse than that of our neighbours.

in front of this situation, work of the European Union It should be evaluated in the light of four observations.

The first relates to penalties. Since the invasion of Ukraine, ten packages have been adopted by European Union (And by all Western countries): individual decisions such as asset freezes or travel bans, but above all now an almost complete ban on trade with Russia and a ban on using the system Swift in this country.

We know that it takes time to measure the impact of such decisions. But Russia obviously resisted well. If subjected in 2022 a 2.3% decrease of gross national product, and forecasts 2023 promise a 0.5% growth (Almost the same as in Western countries). Why ? First, because these sanctions, which are not the result of a Security Council resolution, are not universal. Moscow was able to find new outlets for its hydrocarbon exports. China Especially in India. Then, because Russia had long been preparing for a war economy, in particular by greatly developing its agricultural production.

The second note is about energy. at the top of the Versailles In March 2022, A.J twenty seven They eventually decided not to rely on energy in Russia. Good progress has been made in achieving this goal. However, the necessary support decisions are slow to be made. Two measures would be necessary: ​​the more emphatic recognition of the place of nuclear energy in the energy mix, while the European classification recognizes that this energy source has at most a transitional role; and the most obvious separation of the price of electricity from the price of gas, which Germany is still hesitant about.

The third note: The union must support its productive apparatus in the face of renewed protectionism. We naturally think of Irish Republican Army (Inflation Reduction Act), a $314 billion energy transition aid plan adopted by the United States and intended for American businesses. At this point, reaction European Union in the European Council February 9-10Especially referring to the relaxation of government aid, she looks very shy.

Finally, let’s not forget that the industrial side of Defense Europe is still very much under construction. There are 17 tank models in Europe, compared to only one in the United States. Consolidation required by NATO Prefer American materials. That is why, in my book The European Union and War, I have tried to prove that true European defense is both necessary and possible.

This article was written by: Pierre Menat, diplomat, author of The European Union and War (For Harmattan, 2023)

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