Wanted: A Modern Day Hjalmar Schacht for the EU

European elites have plunged headlong into a Schachtian economic mode, but have not decided yet who their “Hjalmar Schacht” will be, Ursula von der Leyen or Mario Draghi. At its congress in Bucharest on March 7, the European People’s Party made Ursula von der Leyen its candidate for a second mandate as chairman of the European Commission. However, nearly one out of five delegates did not vote for her. Soon after, opposition to von der Leyen’s candidacy emerged from national sections of the EPP, as well as its allies in the European Parliament.

EU Internal Market Commissioner Thierry Breton from France, as well as German Finance Minister Christian Lindner both criticized the choice. From Italy, the more conservative wing of Forza Italia, a member of the EPP, also voiced its opposition.

Thierry Breton, who is considered to be very close to French President Emmanuel Macron, stated: “Despite her qualities, Ursula von der Leyen has been put in minority by her own party. The real question now is whether it is possible to entrust again the management of Europe to the EPP for 5 more years, that makes 25 consecutive years. The EPP itself seem not to believe in her candidacy.”

On March 6, Lindner told Handelsblatt: “It is Ursula von der Leyen’s legacy, that we have regulation instead of innovation. We need to do a U-turn. Von der Leyen’s policy jeopardizes our competitiveness and our economic prosperity.”

In Italy, Senate Vice President Licia Ronzulli, from the Forza Italia Party, said: “The EPP chose to confirm the name of Ursula von der Leyen. Maybe they could dare more and make a more courageous step.”

From the standpoint of the European elites there are not many alternative figures to UdvL, or rather, for the moment there is only one, who has already entered the race: former ECB chairman Mario Draghi. In fact, over the past few months, there has been a concerted effort from the top to build for Draghi an image that would best fit the role of a new Hjalmar Schacht. Last September, he was appointed head of a task force to investigate and present solutions to the EU loss of “competitiveness”, which put him in a unique position to dictate future economic policies.

As we reported two weeks ago, Draghi presented his prescriptions to the EU Council and the European Parliament. The EU, according to him, needs to invest €500 billion yearly in the “green transition”, in addition to increasing defense spending and “productive investments” (see SAS 9/24). In order to leave a semblance of democratic choice, he said that EU leaders must decide how to finance it, either with fiscal measures or with Eurobonds.

However, it is no secret that Draghi’s preference is Eurobonds, i.e., the emission of European common debt. His masters have made it explicit. In early January, Thierry Breton – the same one who has rejected a second mandate for von der Leyen – proposed a €100 billion fund for defense spending, financed through Eurobonds. On March 4, presenting his proposal to the media, he said “We need to change the paradigm and move into war economy mode”. He stressed that “a number of heads of state are starting to talk about it very clearly: it is an idea proposed by French President Emmanuel Macron and Estonian Prime Minister Kaja Kallas, also supported by Belgian Prime Minister Alexander De Croo.”