We speak to an influential voice on European reform, the former Italian prime minister Enrico Letta, author of a landmark report on the future of the Single Market, presented in April 2024. Two years on, he says many of its recommendations remain unimplemented, warning that continued fragmentation of the Single Market – and by extension the energy market – is contributing to higher costs for the EU amid the war in the Middle East. We also ask him about the EU’s plans for a digital single currency, alongside a report on the issue from our correspondent Alix Le Bourdon.
On the US-Israeli attack on Iran, Letta says, « The war is a big mistake. It was a big mistake from the beginning. It was a mistake also in the way in which Trump decided to run this war without running scenarios; without knowing how to deal with the different consequences. It will be very complicated to find stability again. And, at the same time, this is a big problem for the competitiveness of the European Union. We are today paying a price in terms of the rise in energy prices and in terms of a total lack of predictability on what will happen. »
Letta notes that the EU is also paying a price « because we are divided. We have 27 energy markets and not one European energy single market. The next European Council on 22nd and 23rd of April will take important decisions and will discuss the plan to integrate the single market with the One Europe, One Market plan. This is fundamental because I don't think that we can have only short-term solutions. The problem of Europe on these topics is the fragmentation of our market. This fragmentation creates more weakness and more anxiety for us. »
We ask Letta why this fragmentation persists.
He responds; « Because member states in all these 35 years after the creation of the single market, decided to apply the four freedoms - freedom of movement of goods, services, capitals and people - in a totally asymmetric way; very good for goods and people and very bad for services. But today's economy is based on services. So we have one currency and 27 financial markets. The consequence of that is the fragmentation. »
We allude to the crucial election coming up in Hungary, and discuss Prime Minister Viktor Orban’s decision to go back on his word and no longer allow the EU’s 90-billion-euro loan to Ukraine to go ahead.
« I think we have to be tougher than than we were in the past, for the very simple reason that President Trump’s approach to Ukraine is totally unpredictable, » Letta says. « Orban allowed the EU leaders to decide (to help Ukraine) with enhanced cooperation. And then he changed his mind completely. I think the union has tools to oblige one country to be reliable. There are, I would say, minimum rules of solidarity and fairness among the leaders And I think Orban broke these rules. »
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Alix's PKG
Can the digital euro free Europe from its banking dependence?
Behind nearly all card payments in Europe stand two American giants, Visa and Mastercard. This dependence was recently brought to light by the case of the judges of the International Criminal Court: after issuing an arrest warrant against Israeli Prime Minister Benjamin Netanyahu, several of them were sanctioned by Washington and now find themselves unable to use their bank cards — on their own European soil.
It is precisely to address this dependence that the European Union is working on the digital euro — a currency issued directly by the European Central Bank, beyond the reach of American sanctions. But the project is divisive: private banks fear losing their customers' deposits to this public currency… and the banking fees they collect. With nearly one in ten Europeans already holding cryptocurrencies independent of states, will the digital euro be enough to convince — and to restore Europe's banking sovereignty?
Programme prepared by Oihana Almandoz, Perrine Desplats, Aline Bottin and Isabelle Romero
Our guests
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Enrico Letta Former Italian Prime Minister and President of the Jacques Delors Institute
English (US) · 