EU Pushes for Common Debt Mechanism as Geoeconomic Shift Reshapes Global Power Dynamics

The European Union is accelerating efforts to establish a common debt mechanism, positioning it as a critical step in adapting to a new era of geoeconomic competition, according to Benjamin Haddad. This move comes as the bloc grapples with the need to counterbalance the technological and economic strategies of the United States and China, which have prioritized strategic investments in innovation and industrial policy.

Why is the EU Reevaluating Its Economic Strategy?

The EU’s economic landscape is undergoing a shift, as Haddad described during an interview with *La Tribune Dimanche*. This transformation is driven by the convergence of geopolitical, economic, and technological competition, a concept termed “geo-economics” by Haddad. “When we talk about competitiveness, innovation, or artificial intelligence, these are first and foremost levers of power,” Haddad stated. “The U.S. and China have mastered this pivot, and Europe must catch up.”

The shift is exemplified by the U.S. “Buy American” policies and China’s long-term technological planning.

What Are the Challenges in Implementing a Common Debt Mechanism?

Haddad argued that a “common debt” mechanism should not be taboo and is essential to reduce reliance on external powers and finance the EU’s strategic priorities. “It is necessary to have European solutions to not depend on others,” he said. This approach echoes the EU’s response to the COVID-19 crisis.

Friction over the 2028-2034 Multiannual Financial Framework (MFF) highlights these tensions. Haddad called for “new own resources” to fund the bloc’s goals.

How Is the EU Balancing Sovereignty and Integration?

Haddad suggested that the EU could adopt a “multi-speed” approach, as seen in its support for Ukraine, where voluntary coalitions have supplemented institutional efforts. “Being pro-European doesn’t mean everything must be done at 27,” he said.

This strategy aligns with the EU’s focus on deepening the Single Market.

What Lies Ahead for the EU’s Economic Future?

The coming months will test the EU’s ability to reconcile these competing imperatives. Haddad emphasized the urgency of finalizing the next MFF by year’s end, stating, “We are at an existential turning point.”

As the bloc navigates this complex landscape, its success will depend on balancing innovation, fiscal discipline, and solidarity. “The world has changed, we must take act,” Haddad concluded.