Published in Bruegel’s collection of essays Fragmented Power: Europe and the Global Economy, Benoît Coeuré and Jean Pisani-Ferry’s contribution assesses the problems faced by the EU in its attempts to play a leading role on the world stage.
The EU is having such difficulties despite being the world’s largest economic entity with half a billion people and a gross domestic product slightly larger than that of the US, add the authors.
Citing European Central Bank board member Lorenzo Bini-Smaghi’s controversial paper entitled Powerless Europe: Why is the Euro Area Still a Political Dwarf?, the authors agree with Bini-Smaghi’s assertion that the EU still has much less influence over international policy issues than should be expected on the basis of its relative economic weight.
This, say Coeuré and Pisani-Ferry, is particularly the case in international institutions such as the International Monetary Fund (IMF) where, as compared with the World Trade Organization (WTO), Europe is much less influential than the United States.
As a remedy to this situation, the authors assert that the EU could have more to gain in developing an external economic policy in certain fields than in others. Also, they argue, the desirability of a common policy depends on the degree to which member states agree. It is by no means obvious that more centralisation will systematically result in improving the welfare of European citizens.
The writers also question whether it is correct to consistently take the US as a benchmark. While they concede that it is apparent that the EU is very similar to the US in terms of economic size and weight in world trade, it has a somewhat lower share of global energy consumption and is in fact a more significant player than the US in official development assistance (ODA), with its share in the total ODA of OECD countries being twice as large as that of the Americans.