A key European politician issued a stark warning at the IPE Conference last week that the continent must deepen its integration and cooperation to head off war and defend its values, while the pensions industry tackled barriers to furnishing Europe with much-needed investment capital.
Martin Schulz, former president of the European Parliament and unsuccessful SPD challenger to Angela Merkel’s premiership in 2017, told participants in Seville on Thursday that the European Union had to move towards closer integration through the Capital Markets Union and Energy Union, because the geopolitical stakes are so high.
Schulz called for investment in Europe in order to back the European idea of respect, tolerance and dignity as the basis of democracy, granting welfare to its citizens – which he said was “a better way than the Chinese one, the Russian one and also the American one”.
Domestic concerns
Onno Steenbeek, managing director, strategic portfolio advice, at APG Asset Management, presented conclusions from recent research by the Centre for International Pensions Management, illustrating how governments need to design investment deals to draw much-needed private-sector capital from pension funds.
Steenbeek cited a survey of pension funds showing that factors enabling successful public-private collaboration include attractive risk-return profiles; stable legal and regulatory environments; and a transparent project pipeline.
Judith Arnal, senior research fellow at the Centre for European Policy Studies (CEPS), addressed the need – as emphasised in the 2024 Draghi report – for greater domestic capital investment in Europe to boost productivity and competitiveness, saying incentives would be needed to mobilise private investment.
“Even if we are able to mobilise those funds, are we going to have enough viable and profitable projects? This is not just a matter of gross returns; we should think about the cost of investing in the EU.
“I think broad and far-reaching reforms are needed to bring down the costs,” she said.
Erik Bennike, head of equities and credit at PensionDanmark, outlined investments the Danish labour-market pension fund has made in the national defence sector.
He mentioned a public-private partnership investment to build the new headquarters for the Danish Defence Intelligence Service, the contract that was announced last week to build new barracks for the Danish army, as well as a contract to finance the construction of naval vessels.
“I think there’s a lot that can be done, but of course it requires that both the public and the private side are open to having a dialogue about how the risk can be shared,” he said.
Commenting on the viability of public-private partnerships in general, he said the key to success was projects which could be repeated easily, such as roads, while projects such as hospitals were less straightforward.
Schulz defends trade and nuclear
In his keynote address, Schulz told conference delegates: “We are facing a point now where the international trade order is destroyed, and every day in a more dramatic way.”
“If this pillar, international trade relationships, is not any more binding for the participants of international trade relations, and the political will is already destroyed, this creates a vacuum and the vacuum that is only filled by China,” said Schulz, who is current chair of the Friedrich Ebert Stiftung – the political foundation named after the inter-war Social Democrat president of Germany.
“If we will not deepen the Capital Markets Union, if we will not realise the Energy Market Union, if we allow ourselves on the one hand to have the capital and currency union and on the other to compete as member states of the European Union in the energy markets – one country with such an energy structure and another with a completely different one,” Schulz said, adding that he was speaking as a German looking to France, regarding nuclear energy.
He went on: “If we do not solve the contradiction we have for the time being in the Single Market we will lose and Europe will not rise.”
Calling for politicians in Europe to deepen European integration rather than divide the nations, he said: “Yes, there are forces and countries in the world that have an interest in dividing Europe. The Russian Federation, quite clearly, China, absolutely clear. The active president of the United States, absolutely clear,” said Schulz.
Those forces wanted a weak EU, he said, because the European market was “an interesting target of their political strategy”.
Asked, amid reports that the European fighter jet project could be scrapped, whether European defence cooperation could be faltering before it had started, Schulz said: “That would be a disaster”.
“I hope the Europeans understand that the world is changing […] We are used by being defended by NATO. What is NATO? Let’s be honest, NATO is the US.
“The UK left the European Union, which is a pity. Nevertheless we need the UK and indeed France as nuclear powers in Europe as part of a European defence system,” Schulz said.
Read the digital edition of IPE’s latest magazine
No comments yet