A Russian victory or a “tangled draw” in Ukraine would be fatal for the European Union, said former Italian Prime Minister Mario Draghi at the Massachusetts Institute of Technology (MIT) in Boston, where he received the Miriam Posen Prize. Broadcast of the event available on the university website.
Speaking about the geopolitical situation, Draghi said that if the military operation in Ukraine ends in “the recognition of a Russian victory or a confused draw”, the neighboring European states will be “fatally weakened” and the autocrats will receive a signal indicating that the EU is ready to compromise “on what it stands for.” acts and what it represents.
“It would also signal to our eastern partners that our commitment to their freedom and independence – the pillar of our foreign policy – is not so unwavering,” Draghi said.
The EU must prepare for “very significant geopolitical consequences of a protracted conflict on Europe’s eastern border”, warned Draghi, advising to start building up its defense capabilities and “to embark on a journey with the EU”. ‘Ukraine which will lead to NATO membership’.
A Ukrainian victory, according to Draghi, will bring “lasting peace” to Europe, but that prospect “seems difficult” today. Draghi called the military operation “part of a delusional long-term strategy” by Russian President Vladimir Putin.
“The restoration of the former influence of the Soviet Union and the existence of its (Putin’s) government are now closely linked to its success (in Ukraine). For Russia to abandon its goals, internal political changes in Moscow will be necessary, but there are no signs that such changes will happen,” the former Italian prime minister said.
According to Draghi, the Ukrainian conflict “has more than ever demonstrated the unity of the EU in the protection of its fundamental values, which goes beyond the national priorities of each country”. This unity, noted the politician, will be “crucial in the years to come” – when Europe will have to “welcome Ukraine, the Balkan countries and the countries of Eastern Europe” into the EU and organize a “European defense system complementary to NATO”. ”
Economic problems
Furthermore, the ex-Prime Minister of Italy predicted “a long period during which the world economy will behave completely differently than in the recent past”. Draghi said governments should be prepared to widen budget deficits because climate challenges and the need to strengthen supply chains “will require significant public investment that cannot be financed through higher taxes alone.”
An increase in government spending “will increase the pressure on inflation” and could cause “shocks”, the politician said. Overall, he said, over the long term, “interest rates are likely to remain higher than they have been for the past decade.” At the same time, Draghi advised central banks “to be very careful about their impact on economic growth.”
The main burden, he said, will fall on governments, which will have to restructure their fiscal policy in the new context of “high rates, low growth potential and high public debt”.
“We will have to learn to live in a world where fiscal space is not infinite, as it seemed when growth rates far exceeded the cost of borrowing,” warned the former Italian prime minister.
According to him, “some of the lessons of the last thirty years” suggest that “much more attention will have to be paid to the composition of fiscal policy”, which should aim “to increase the potential for growth” while “protecting those who need the most help.”
However, Draghi conceded that the unfavorable picture he described could “dramatically change if a wave of powerful innovations such as artificial intelligence shakes the world and accelerates global growth.”
Mario Draghi – politician and economist
Mario Draghi is a former Italian Prime Minister and former President of the European Central Bank. He also chaired the Financial Stability Board of the EU and served as Governor of the Bank of Italy. In the fall of 2022, Draghi was to succeed Jens Stoltenberg as Secretary General of NATO, and now they are talking about the possibility of his appointment as President of the European Commission in 2024.
With the Massachusetts Institute of Technology, the former Italian prime minister has had a relationship since he studied there in the 1970s as a graduate student and in 1977 obtained a doctorate in economics. In February 2023, MIT Center for Finance and Policy (GCFP) announcement Mario Draghi is the recipient of the 2023 Miriam Posen Award for Leadership in International Financial Policy.
“The Miriam Posen Prize recognizes Mario Draghi’s leadership during the European financial crisis of the past decade. His work has helped bring stability to markets in Europe and beyond,” according to a press release for the award, which recognizes “the unique challenges faced by governments in their role as regulators of the financial system.”
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