The price of irrelevance

In a world increasingly defined by the ruthless logic of great-power competition, Mario Draghi’s address at the Rimini conference on 20 August, served as a stark, uncompromising wake-up call for Europe. His message was not one of hope, but of cold, hard realism. Draghi declared that 2025 will be remembered as the year Europe’s illusion of its own power, derived merely from its economic size has indeed “evaporated”. He exposed the reality that, despite its good intentions and generous aid, Europe has been rendered a mere spectator in the global crises from Gaza to Ukraine, and has been forced to bend to the will of its supposed allies on issues like tariffs and military spending. The core of his argument, one that echoes his comprehensive competitiveness report issued last year, is simple and brutal: Europe is too weak, too slow, and too divided to shape global events. Its political structures, he insisted, are no longer fit for purpose in a world where economic and military power are intertwined, and where competition is no longer bound by a rulebook. The path to relevance, Draghi argued, lies not in clinging to past emergency measures, but in a radical and permanent transformation of its economic and political organisation, a transformation that can only be financed by a new form of common debt.

The consequences of inaction on Draghi’s recommendations are not merely a slow economic decline; they are a descent into geopolitical irrelevance. If Europe fails to implement the ambitious reforms Draghi has outlined – from a true Capital Markets Union to a coordinated industrial policy and targeted investment in critical technologies – it will face a future as a fragmented, consumer market whose fate is decided by others. Its industries will continue to be outpaced by the technological leaps of the United States and more so the state-backed industrial power of China. Europe will not only lose its economic edge but will also become a pawn in a larger game, perpetually vulnerable to external pressures and supply chain dependencies.

The failure to adapt means a continent that gives up its sovereignty on issues of trade, security and technology, becoming an economic vassal to the very powers it seeks to rival. The “slow agony” Draghi frequently warned off, will become a reality, marked by a continued brain drain, declining living standards, and a populace increasingly disillusioned with the European project itself. Without the bold, collective action he advocates, the EU risks becoming a museum of historical cooperation, a relic of a more peaceful era unable to meet the existential challenges of the present.

For Malta, a small island nation nestled in the heart of the Mediterranean, the implementation of Draghi’s vision presents a dual-edged sword. On one hand, the pros are substantial. A more competitive, unified, and technologically-advanced Europe would create a more stable and prosperous economic environment. For Malta, which has long positioned itself as a hub for financial services, gaming and pharmaceuticals, a deepened Capital Markets Union would unlock new avenues for funding and investment, making it easier for local companies to scale up and compete. A renewed focus on R&D and digital infrastructure, as advocated by Draghi, would directly benefit Malta’s burgeoning tech and innovation sectors, attracting talent and investment. A European Union that can truly act as a single bloc on the world stage would be a powerful buffer against external pressures, providing a level of protection and influence that Malta could never achieve alone.

Conversely, the cons cannot be ignored. Draghi’s call for a more coordinated and centralised industrial policy could sideline the specific economic needs of smaller member states. Malta’s distinct economic sectors might struggle to find a place in a pan-European strategy focused on large-scale industrial champions. Moreover, the push for common debt to finance grand projects could strain national budgets and raise concerns about fiscal autonomy hence dealing with the sensitive topic of sovereignty. There is also the risk that a radical realignment of EU priorities away from traditional cohesion and agricultural subsidies – something Draghi hinted at – could reduce the funding streams that have been so beneficial to Malta’s development over the years. The transition to a “super-state” model, as some critics might describe it, could see Malta’s influence on the European decision-making process diminish, as power becomes more concentrated in the hands of the larger, more economically dominant members.

Having said so, to me the choice is clear. The European project was born from the ashes of conflict, a testament to the idea that unity could overcome division. But that project, like any great enterprise, cannot stand still. It must evolve or perish. Draghi’s message is not a mere policy prescription; it is a profound ultimatum. He exposed the reality that, despite its good intentions and generous aid,. To pretend that the old rules still apply is not only naive, it is to court irrelevance. The time for deliberation is over. The EU must either embrace the future Draghi has outlined, or it will find itself a footnote in history, a project that failed to adapt and, in doing so, simply ceased to matter.