I did not fully realize what was happening as the months of this terrible war in Ukraine progressed. Rationally I knew it, but I had not drawn all the sums. Maybe I wasn’t the only one, in Italy and in Europe. But now the facts are there, in front of us: we Europeans have been in the hands of the United States for decades on a military, industrial and strategic level. And this European weakness – if it continues – is capable of overturning the narratives of the last twenty years. It may no longer be the Far East that erodes the industrial base of Italy and Europe. That role could go to the Far West: America.
I try to explain myself and sorry (or thank me) if I will be less verbose and detailed than usual, but the advent of the new government has invaded many spaces recently. What you see above, of course, is Joe Biden, portrayed on September 9 when the US president visited Licking County, Ohio, where Intel will build a semiconductor factory. An acquaintance from Taiwan, which produces 90% of the most advanced semiconductors in the world with Tsmc, says they are in the 21st century what slaves were in antiquity: they do most of the work and the greatest power is the one that controls the most. .
Chip and more: industries and subsidies in America
Biden knows: his Chips and Science Act
last August makes $ 50 billion in direct subsidies available to American private companies – Intel, Qualcomm, Micron, GlobalFoundries – to develop semiconductors on US soil. One of the goals it is to free the US economy from its dependence on Taiwan, if or when Beijing launches its attack on the island. But this is not the only industry that Biden is heavily subsidizing. From quantum computing, to biotechnology, to hydrogen, to the production of solar panels and other technologies for renewable energythe White House is already committed to grants its frontier industry $ 100 billion a year for the next five years.
The business of war
Added to this are 40 billion allocated to Ukraine, which largely goes to pass orders to the American defense industry so that the Pentagon can continue to support Kiev. A European (non-Italian) minister recently estimated that the average level of industrial subsidies in the United States is so much higher than that prevailing in Europe, that for a company the accounts are quickly made: if it invests in America, rather than on this side of the country. ‘Oceano receives four times more support from the government. I have no idea if this estimate is correct. But I know that the price of gas in the United States was eight times lower than in Europe at the end of last August and is six times lower today (according to the calculations of Simone Tagliapietra of the Bruegel study center). This once again puts European industry in a position of weakness in all the most energy-intensive sectors most important to an economy: steel, cement, chemicals, defense industry among others.
Because Europe pays for America’s most expensive gas
That we Europeans pay gas more than Americans, to a large extent, this is normal. They produce it and transport it to their industrial sites via pipeline. We don’t want to produce it. To be precise, we don’t want new prospecting in Italy, we don’t want extractions from the vast Groningen field in the Netherlands, we don’t want to extract shale gas (or shale gas) nowhere in Europe, for environmental reasons, but we want to buy the one produced in the same way in the United States. So the raw material of heavy industry arrives and will increasingly arrive in Europe – frozen, to be regasified – after 18 days of navigation from the Gulf of Mexico. It is therefore natural that it costs us more, all the more so because we have not even equipped ourselves with the suitable infrastructures to circulate this American gas in Europe.
The line of tankers in front of the ports of Europe
For example, only on 17 October last there were around the European coasts (Portugal, Spain, France, Italy) at least 35 tankers loaded with liquefied gas of American origin stopped: in the midst of the greatest methane shortage crisis in our history, they did not know where to download. Some of these will have changed destination and ended up in Asia. Spain would have the infrastructure for regasification, but France has denied it connections via pipeline to supply the rest of Europe. Italy has connections, but does not have enough regasifiers. What can produce such an unbalanced situation?
The role of Europe and Biden’s power
In the past, when I was a reporter in Brussels, such heavy subsidies from Americans to their most advanced industry would have triggered a Brussels action against Washington at the World Trade Organization. We can’t afford it today, because we depend on America’s benevolence. Without the US defense today the Russian army would perhaps already threaten Warsaw or at least Vilnius, Riga and Tallinn. It is Biden who is guaranteeing the geopolitical integrity of Europe, so we cannot protest.
US military aid to Ukraine is worth € 28 billion (or 0.13% of US GDP). Italian military aid is worth 150 million: 180 times less in absolute value and 16 times less as a share of our country’s GDP. For the other European “powers” the proportions are similar.
Therefore we must remain silent, because we do not want to equip ourselves with our credible defense capacity. All the more reason we must remain silent because we have and will increasingly need American liquid gas, at a high price, produced with technologies that we refuse to use in our territories. All this puts Europe in a state of strategic, competitive and industrial inferiority with few recent precedents. We risk de-industrialization in favor of the Atlantic ally, due to our own mistakes. Yet we are not talking about it.
(Do not hesitate to write to me: comments or questions, disputes and proposals)
This article was originally published in Federico Fubini’s newsletters on Corriere.it. To receive it, subscribe directly from the website, from the newsletter page: just open the «Whatever it Tak € s» window and click on subscribe.
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