Draghi’s Rhine Group, with allies, is seeking to encircle EU governments

Mario Draghi and his friends in the Rhine Group are not alone. Their project is, in many respects, not entirely clear; it contains elements that may raise eyebrows — such as its headquarters in Switzerland — but it was not born in a closed circle of economists (all from Western Europe). It is clearly an initiative supported within the European Commission – where Draghi enjoyed strong backing in drafting his report – as well as by many businesses and economists. Not everyone is on his side – otherwise there would be no need for a Rhine Group to deliberate on what needs to be done – but, in short, there is a clear majority in favour of producing the Report. 

What may not have been clear was why this “think tank” was set up, comprising numerous former ministers and prime ministers. It is not a monitoring body for the implementation of the Report – there are already enough of those – nor is it a think tank; so what is it, and what exactly is its objective? A prominent Brussels-based think-tank expert explained to me that the Rhine Group’s work is aimed at governments, because that is where the bottleneck lies in implementing the Report.

 While the Commission periodically provides updates on what is being done – or attempted – to implement Draghi’s proposals, there is virtually complete silence from governments. And that is precisely where the work needs to be done.

And the network is beginning to reveal its power. The Financial Times reports today that the most important reforms – such as the integration of capital markets – are at a standstill. In general, everything to do with market integration has ground to a halt, the paper explains, due to resistance from governments.

On the other hand, according to the authoritative newspaper, some progress is being made in areas where the Commission (and let us remember that the Report was, in fact, drafted within the Commission) can act independently, such as certain measures to cut red tape.

 The problem is that everything grinds to a halt as soon as states are asked to relinquish some powers, some control – in essence, some forms of authority that are sometimes useful only to fuel internal favouritism.

 So the picture is becoming clear: what the Rhine Group aims to do is exert strong pressure on the chancelleries, cornering them with a process that exposes from within the contradictions of governments which realise that the Union is losing ground, yet refuse to acknowledge that it is the Member States that are no longer able to bolster it. “A self‑defeating stance rooted in the pious — at best — but more often misguided desire to claim that one can make it alone, shaking off fellow travellers who would only get in the way. Something everyone ends up doing to everyone else when they retreat into foolish and harmful nationalisms.