After the American Kladderadatsch, Europe’s self -confidence is growing

To assure? Yes, there are plenty of the whimsical messages from the White House, the future of Europe’s export industry and the chance of a global recession. But among the gray -gray clouds in Warsaw, where finance ministers and central bankers from all over Europe gathered in recent days, something very different could also be seen: regained self -confidence.

« The European financial system has become a system that absorbs shocks and does not produce them, » concluded Andrzej Domanski, the Polish minister who provides the meeting. Pierre Gramegna, who manages the billions in the ESM financial emergency fund, found just as satisfied that the euro did well the last days. « Europe must seize the shifts in the economic order as an opportunity. »

It was not long since European politicians feared that they had finally missed the boat in the competition against the US and China. Mario Draghi, the former director of the European Central Bank, wrote in a bulky report that Europe waited « a long agony » if it didn’t get his economy in order. When the political and economic elite settled in Davos for the World Economic Forum at the beginning of this year, the general expectation was that the US economy would leave the European economy far behind in 2025.

That concerns is by no means disappeared. But the stock market expectations were raised, Greek government bonds were known last week as less risky than American and the euro is stronger towards the dollar. After the confusion and the shock about the tax offensive of the White House, Europe now also sees bright spots. The American economy uses its mark on the global economy, but will not automatically drag the EU along.

Biggest blows

The biggest blows fall in the US itself, the European Commissioner for Economic Affairs, Valdis Dombrovskis, emphasized in Warsaw. According to its calculations, the US economy can get a slap of 0.8 to 1.4 percent of gross domestic product, versus 0.2 percent for the EU countries due to the levies. With an escalation with higher levies, the damage could amount to 3.3 percent in the US and 0.6 percent in the EU.

When world trade really collapses, Europe is getting the hardest of the big trade blocks because of its extensive export, says economist Sander Tordoir of Thinktank Center for European Reform. But in the current situation the biggest pain ends up at the US and China. The export is under pressure, but many of the goods that go from the EU to the US cannot simply be replaced. « Just think of specialized German machines and ASML. »

The European financial system has become a system that absorbs shocks and does not produce them

The first figures also indicate that the American industry does not yet benefit from the trade war. On the contrary: the construction of factories, which in recent years has increased due to generous subsidies that the Biden government has provided, is standing because of the uncertainty that has arisen. When Europe is talking about this, Tordoir says, it can now strengthen its own industry.

Cinzia Alcidi, who works for the Center for European Policy Studies, sees another side effect. As long as the American levies on EU goods are lower than on goods from China, European countries have a competitive advantage-for example, in the export of electric cars. Alcidi: « That is a side effect that can turn out positively. »

On the other hand, there is the risk that Europe may be confronted with large quantities of goods that China will no longer be able to export to the US. Ursula von der Leyen, the chairman of the European Commission, said last week that she is in conversation with the Chinese government to prevent such a shift from trade flows.

Strong euro

In Warsaw, Jörg Kukies, the German Minister of Finance, saw another chance that lies for the taking now that the dollar no longer turns out to be a natural safe haven: « The EU, or actually the eurozone, now has the chance to give the euro a stronger weight in world trade. » The EU must therefore quickly work on trade agreements with the rest of the world, said Kukies.

In recent years the draft seemed to have come in the EU free trade agenda, but that has since turned. Shortly after the election of Donald Trump in November, Von der Leyen signed a trade treaty with the South American Mercosurlanden. The EU has since also had negotiations on concluding or expanding an agreement with India, Malaysia, Mexico, Thailand, the United Arab Emirates and Switzerland. In Warsaw, Switzerland, Norway and the UK also joined the economic consultation as guests.

Perhaps the most profit, said one minister after the other in Warsaw, you can book in -house. The mutual trade between EU countries is still impeded by numerous rules and other barriers. Acpleted suits that are so expensive that for companies they are equal to a levying of 45 percent for goods, the International Monetary Fund, and even 110 percent for services, calculated. « Forget the US: the EU has succeeded in imposing its own taxes, » Draghi recently snarled An opinion piece in the Financial Times.

Just before he traveled to Warsaw, Klaas Knot, the President of De Nederlandsche Bank, made a call at a conference in Amsterdam to finish those barriers quickly. « There could be a bright spot among the dark clouds: that Europe would increase its resilience by strengthening its internal cohesion, » said the central banker.

Negotiating table

It worked out the ministers that the European Commission moved in a trash at the eleventh hour. That happened after Trump had scaled the majority of his taxes on European goods from 20 to 10 percent, although also levies on steel, aluminum and cars were also maintained. The committee is given plenty of room for negotiations from the countries, but the precise course is considered.

Some consternation arose in Warsaw after Kukies, the German minister, expressed himself against a suggestion that Von der Leyen had done in public a day before: the European Union could be burdened as the advertising income of American tech companies to increase the pressure on the White House to arrive at a deal.

Kukies is not the only critic: Ireland, with its large tech sector, also sees nothing in it. But the irritation could be felt among diplomats from other countries: the EU should better keep its unity outside and not open his cards on the negotiating table in advance, they think.

« There is a sense of relief, but now we as Europe also have to show that we are credible, » said one of these diplomats. « As an EU we have to show that we are big boys and that we cannot sing with us. »

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