France’s plan for a stronger Europe: No strategic sovereignty without Eurobonds

The diagnosis set out in Mario Draghi’s report on European competitiveness is stark: Europe needs €800bn a year more in investment. Political leaders have a central role to play in delivering this massive injection of capital — without which the continent faces decline. That is the message conveyed by Benjamin Haddad, France’s minister delegate for Europe and a rising star of French politics, in conversation with Jeremy Cliffe for Agenda Pública at the Munich Security Conference.

Against this backdrop, Haddad openly defends joint debt issuance, arguing that "there is no reason for it to be taboo," given that Europe already crossed that line to finance Ukraine with €90bn. The strategy, he says, is to mobilise private savings that currently flow across the Atlantic—some €300bn a year—and retain them through a genuine capital markets union, underpinned by coordinated action among a coalition of the willing centred on "Germany, Spain and Italy."

Money, however, is only part of the equation; the other is speed. Faced with the agility of global competitors, Haddad argues that Europe must streamline its bureaucracy and pursue assertive industrial policies. "There is no reason why we should not help our champions emerge," he insists, pointing to the need to emulate—without hesitation—the subsidy and public-procurement strategies normalised by the Biden administration. The view is pragmatic: free markets do not exist when the playing field is not level.

Haddad also warns of the need to protect critical assets. From quantum technology to payment systems, European sovereignty depends on its capacity to act as a coercive power when necessary. He highlights the use of the EU’s Anti-Coercion Instrument, the tool that allows the EU to tax technology companies, restrict access to public procurement and confiscate intellectual property from predatory actors. The French government’s message is clear: Europe stands ready to strike back to defend its interests — and to deploy economic power where it once relied solely on diplomacy.
 
I want to start with something you commented on recently, which is the French government's argument that Europe needs Euro bonds to finance common investments. There are people who say that it's politically difficult or that it's just a way of doing income transfers within the union. What's your answer to the skeptics? Why should Eurobonds be part of the toolbox?
 
Let's look at what we need to do to become more self-reliant or to become stronger. We need to invest massively into our defense capabilities, into space cooperation, into AI, quantum, green tech. That’s clear in the Draghi report. Europe basically lacks €800 billion a year in investment if we want to catch up with the United States, reduce our dependencies, and be more self-reliant. A lot of this, of course, will come through private money. And what we've done in the last few days—at the EU leaders’ retreat in Belgium, for example—is to lay out a competitiveness agenda: to reduce fragmentation, to do the capital markets union, to make sure that we can fully realise the opportunity of 450 million people, a single market, incredible innovators, and make sure that the €300 billion of savings that cross the Atlantic every year to fund American capital markets stay in Europe to support our companies. But we also need public money, to invest and to create leverage for private funding. And what's a better way to find it than to borrow it on the market?

"The key issue, once again, is how we find the funding to be able to cover the huge investment needs that we need to be more sovereign"

This is what Eurobonds are all about. Let's not have a theological debate about this. It's a financial instrument, just borrowing on the market. When you do it at 27, by the way, you do it at a discount because obviously it's stronger to do at the European level. There's no reason it should be a taboo, because we just did it in December for Ukraine. We agreed at the European Council to support Ukraine with €90 billion for both military and economic needs. That’s Euro bonds. It is a very important instrument to enable Ukrainians to continue to defend themselves against Russian aggression in the next couple of years. The key issue, once again, is how we find the funding to be able to cover the huge investment needs that we need to be more sovereign.
 
Do you see the politics of this changing within the European Union? Obviously, France is making this case. You do have supporters among some governments, but also skeptics. Do you feel like the urgency of the moment is reshaping the realm of the possible?
 
Voices like the governor of the Bundesbank are coming out in support of this. And I do feel a sense of urgency when it comes to all these issues: defense, common procurement, and European AI actors that need more support to scale up. We need to be much more agile and accelerate progress. Both on the funding and something else very important, which is European preference. In the US the Biden administration did the Buy America Act and the Inflation Reduction Act, a massive subsidy program for US industry. There's no reason why we shouldn't help our champions emerge and conquer the world and compete with American and Chinese ones. By the way, that doesn't mean protectionism.
 
I'm not saying we should close ourselves off from trade and other actors. I’m saying, first, that you need a level playing field. And so when you have trading partners like US and China that are doing subsidies, and buy American, and buy Chinese, you need to be able to put yourself on the same level, not be naive. And the second one is when it comes to dependencies that could pose security issues. I'm thinking of tech, defense, and payment systems. Clearly, you need to develop common European solutions on those topics.
   
What about this new sense the Italians and the Germans, in particular, are leading an action against this? Do you see some room for compromise there? Some room to persuade them?
 
I don’t see that necessarily. Look at the funding we agreed for Ukraine in December. Italy has actually been a partner that's been supportive of this. There's a lot of things that we agree on, like simplification, cutting red tape and reducing bureaucracy. Deepening the single market, a capital markets union, a 28th regime of corporate law to make sure that you have the same rules for contracts, patents and things like this–at the European level, these are things that all of our companies are asking for, and clearly we're very aligned on those. I think the key issue on which there's still a debate is the question of investment and how we cover the investment needs that Europe is faced with.
 
Leaders including President Macron have said that if we don't get to June with a strong package for deepening the single market at 27 member states, we'll turn to enhance cooperation. Do you think it's likely that that will be necessary? And how do you see the politics of doing that if so?
 
I think this is something we should adopt in general, because we have to be much more agile in how we make decisions and how we can cooperate. The truth is that Europe has always worked this way and look at the Eurozone or Schengen. You have certain countries that are in them, and that creates momentum for others to join. Yes, faced with the United States, China, Russia and so on, we understand we're stronger together and when we cooperate. But that doesn't mean that the EU at 27 has to do everything. Look at what we did for Ukraine. For last year, after the Munich Security Conference, after the meeting between President Trump, Vice President Vance, and President Zelensky in the Oval Office, a lot of people were worried that we were going to give up on Ukraine, that there was going to be a forced capitulation within 24 hours between United States and Russia without the Europeans and the Ukrainians. The Europeans took responsibility. We built a coalition with the UK and with other willing European partners and also like-minded partners that are not in Europe—Canada, Japan, or Australia—that share the same interests and values.
 

"You have more and more convergence on what to do, but we all know that decision-making processes vary. Let's push together with the countries that want to move forward"

We decided to say: OK, we're going to work together on shaping the security guarantees for Ukraine for the day after, but also today on what we can do to increase pressure on Russia, on the shadow fleet, for example, or the sanctions, or to continue the financial support for Ukraine. I think building coalitions of the willing also in other areas we have discussed like defense or AI or common economic instruments is the way to go to create momentum. The key issue now for us is really speed. I think you have more and more convergence on what to do, but we all know that decision-making processes vary. Let's push together with the countries that want to move forward.
 
On all that, which countries do you see as valuable partners on this, particularly on the economic front: in favour of common investment and capital markets integration? Do you look from Paris and see any particular partners which whom you know you can forge the inner core of a coalition of the willing?
 
On capital markets we can work especially well with Germany, Spain and Italy. These countries share the same assessment of the need to deepen the single market. When it comes to investment in areas like AI, you have ecosystems in Great Britain that are very exciting. You could look at countries that are outside the EU.
   
Variable geometry, as they like to say.
 
Yes, absolutely. This should not be seen as something that weakens European institutions. On the contrary, it's a way for Europeans to continue to move forward for concrete projects. When you ask people: what do they think about when they think about Europe? Of course, they think about their institutions and the euro, but they also think about common projects like Airbus that are the result of industrial cooperation. It’s also those concrete projects that will deliver on the security and economic growth and make the European idea prosper.
 
On coalitions of the willing, there has been much talk about the geopolitics of tech at this MSC. President Macron talked about the need for things like algorithmic transparency and "one person, one account", which is clearly the direction in which things are going. Do you see there being room for a coalition on that particular point? Because obviously, we do have a mixture of views within the European Union. There are some that are more in the vanguard of this new push to humanize this technology. I would definitely put France in that box. We've been talking to the Spanish as well. Others are more cautious. How do you see the politics of that?
 
Absolutely. When you talk about building digital sovereignty, you need to support investment in innovation and you also need rules. In the last few years, we in Europe have democratically set up a system of regulation with elements like the Digital Services Act. And there's no reason to dismantle it in response to external pressure. We've seen pressure coming from the United States about our rules, and I think we should be very firm and stick to our principles: what's illegal in the real world has to be illegal in the virtual world; we do not want hate speech, anti-scientism, racism, or algorithmic manipulation; we’re for freedom of speech, but not freedom of speech for Russian bots. I think this is something that has to be very clear. So we need to support these rules and we need to implement them. Because sometimes the European Commission has been a little shy in implementing the DSA. Then, of course—and this is where countries like Spain and others have been also at the vanguard—there's the protection of our youth.
 

"We have very exciting companies like Mistral and others. But at the same time, we have to look at the risks and the challenges and protect our democratic space and our youth"

And that's something that President Macron has been very concerned with, looking at the effect it's having on mental health, especially for young kids. And this is why we've decided to pass a bill in France banning social media for children under 15. We see other countries joining ranks with that. And let's be honest: we will be much stronger if we do it at the European level and we have harmonized European regulation on this. But that should not get in the way of countries that want to move forward on it and create momentum. These are questions that are being asked everywhere in our democracy. Parents are seeing the impact it's having on their kids. Teachers and educators are wondering how to apprehend screens. And so we should be at the same time very in support of our startups and our innovators and very optimistic about what tech and AI can do for our societies and our prosperity. We had the AI summit in France a few months ago, which led to massive investment in data centers in France. We have very exciting companies like Mistral and others. But at the same time, we have to look at the risks and the challenges and protect our democratic space and our youth.
 
Why do you think the Commission has been timid on this? Because on the one hand, you've got this idea of the "Brussels Effect" and this great EU competence where the union at 27 has really led. But there is also frustration in some capitals that's not going further and faster. Is that just because there is a range of views among the member states? Or is it that the Commission needs to feel more empowered? What do you think could help unlock that new ambition?
 
I don't know. We've developed these instruments. And at the end of the day, it's not even a political issue. It's a question of rule of law.
 
Enforcement.
 
Enforcement, exactly. Where actors like X are not respecting algorithmic transparency and not pushing back against hate speech, we need investigations–and swift ones. Of course, these investigations need to be robust and need to stand up in court. But at the same time, they should be swift and—if needs be—lead to fines and sanctions. Once again, I think that does not contradict a very ambitious agenda of supporting innovation, startups, cutting red tape when it's needed, and investing.
 
Do you think bans need to be on the table as an option?
 
It's one of the tools of the DSA. Of course, there's a spectrum of escalatory responses when a platform acts irresponsibly, but it's one of the tools that we have at our disposal. I will also say, by the way, that we have other instruments like the Anti-Coercion Instrument, not something that we had a few years ago, but that we established to be able to protect ourselves against predatory behavior. It enables us to tax tech companies, ban access to public markets and public procurement, and seize intellectual property. And it was useful in the recent crisis over Greenland to say: we're ready to put this instrument on the table. It’s also a question of mindset. Are you ready to act and think like a power? Which also means using the instruments that you have at your disposal, pushing back to defend your interests, and using force when needed. And I think that's also the change that is progressively taking place in Europe.
   
Let's turn to transatlantic relations. You're an expert on this subject. There are lots of different interpretations of the state of the relationship at the moment. And watching Secretary of State Rubio's speech yesterday, people have come out with very different interpretations. Some are saying it's reassuring. Some are saying it was a challenge to Europe's cultural standards or civilisational view of itself. How do you see that landscape?

I think European should not spend their time commenting and debating and discussing the speeches and trying to interpret the different speeches of American leaders at conferences in Europe. They should focus on what they can do themselves and the levers they have to do everything that we've been discussing. The truth is Americans are our partners and allies, and we work with them where we have common interest, as we’ve done in the last year to realign and reconverge on Ukraine. I think it was really critical to bring them into the coalition of the willing to monitor any ceasefire and provide reassurance on the security guarantees. And, of course, we have a constant dialog with the American authorities. But let's be clear: there's been a very explicit US trend in the last decade towards Asia and towards protectionism, a strong demand on Europeans to take more ownership and responsibility for our own security and defense, and an international environment that's more and more dangerous; from the Russian war of aggression, and the more general Russian threat to European democracies, to the changing trade posture coming from China, putting much more pressure on our economies.
 

"Americans are our partners and allies, and we work with them where we have common interest, as we’ve done in the last year to realign and reconverge on Ukraine"

And we have to draw the conclusions from this. I always say: let’s be more stoical, focus on ourselves and what we control—and the only thing that we control is ourselves—and rise as a power. So it will be challenging and rocky at times, but I'm convinced that this is what will lead to a much more mature and balanced transatlantic relationship.
 
Healthier.
 
A healthier relationship for both sides. Because right now you have an asymmetry that's unhealthy for both sides, and that's creating resentment, frustration, and tension. And so when you have a European partner that will have its own interests, will have its own views, but at the same time will also bring value added to the alliance — I think that that's what will reshape and salvage the relationship.
 
More honesty, right?
 
Yeah, more honesty. But you have to back the honesty with force and power. Otherwise, it's just commentary.

Thank you very much.