Issue #28, September 10, 2026
Why Draghi has decided to step in again?
Sébastien Louradour
9/10/20263 min read
Why Draghi has decided to step in again?
Much has been said about Mario Draghi's 2024 report on EU's competitiveness, and two Think Tanks have been tracking its implementation by Brussels. As reminded by the FT, French Think Tank Institut Montaigne and the European Policy Innovation Council have come up with two different numbers to give a sense of how much the report has been implemented. In addition to whether it's 15.7% or closer to 30% completed, the bigger issue is whether the main aspects of the report have been in the process of being discussed, those that will require more than the European Commission to move forward but the Member States themselves to agree upon first.
The ongoing CADA (Cloud and AI Development Act) provides clues already. Presented by the Commission in June, the objective of this EU regulation is to categorise cloud providers to help public sector entities and organisations engaged on sensitive data select their cloud provider, with member states themselves determining how critical an activity is and therefore which sovereignty tier applies. Criteria for the highest risk tier imply cloud providers have to be European, but the Commission itself estimates only around 1% of public services would need to meet that bar. Still, the FT has recently reported that pushback has come from an unexpected corner: that defence officials and contractors, who argue Europe's cloud and AI defence capabilities lag the US by eight to ten years, and warn the rules could force militaries off American hyperscalers before European alternatives are ready. Airbus has already begun shifting some critical applications from AWS to French provider Scaleway, while NATO officials point to a separate risk — allied militaries need to exchange battlefield data seamlessly, and diverging sovereignty rules across the bloc could complicate that. This is a reminder of the historic split among European countries between those historically pro-Atlanticist (Nordics, Eastern Europe), where opposition to the strictest tier is reportedly concentrated, and some Western countries led by France, which favour a more drastic approach towards US cloud providers, and it confirms that despite a drastic change in US foreign policy and over its historic allies, sovereignty remains a debated issue in Europe. The paradox is that member states may use a European regulation to pursue their own national agenda. The idea of a European tech sovereignty would in this case remain a French idea that only a handful of European countries would in practice pursue.
While it was already understood from the start that Member States will be heavily reluctant to revise and give up on their grip over industrial and innovation policy, after two years into the VDL 2 mandate, it seems that no significant progress has been made on building a shared approach to innovation, even on the question of tech sovereignty that could have represented the easiest path forward.
There is still room for being optimistic. The Savings and Investments Union — as the EU's capital markets push is now formally known — is entering a decisive phase, with the European Council pressing co-legislators to agree its core measures, including market integration, supervision and securitisation, by the end of this year. It remains a flagship proposition of both Draghi and Letta, and sits alongside the upcoming MFF debate as one of the EU's few remaining windows to move toward Draghi's call for an additional €750-800bn in annual investment by 2030 — capital large enough to attract foreign investors and domestic savers who still overwhelmingly favour US ETFs. Given the importance for our national champions to keep raising money to sustain their massive growth, real progress here alone could be enough to create a new dynamic across member states.
Mario Draghi on his side has decided to own the conversation rather than commenting on the progress of his report. He co-launched over the summer the Rhine Group with Stripe co-founder and CEO Patrick Collison, a think tank also bringing together prominent tech, VC and academia voices prominently coming from Europe. That might also act as a floating boat to salvage the course of direction of Europe on the matter. A first gathering of the Rhine Group is scheduled to happen in the fall.