A message from the IMF on how to fix the EU’s ‘limping’ single market

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Good morning. You’re getting the newsletter from me this week while Henry is away for the next 10 days.

But first, he left a dispatch from the chief of the IMF, who has a primer on how to boost the EU’s economic confidence. And our man in Warsaw looks into the embattled former head of Poland’s national oil company’s pursuit of a seat in the European parliament.

Cool, calm, collected

As European leaders grapple with how to reverse the continent’s sense of economic malaise, the head of the IMF has a piece of advice to start: stop being so critical, writes Henry Foy.

Context: How to improve EU competitiveness is a key focus for Brussels, as member states fret that the bloc is rapidly falling behind the US and China.

“Europe is rich. [The] question is how you . . . get Europe to regain self-confidence. I’ve never seen anybody succeeding with a lack of confidence,” said Kristalina Georgieva, the fund’s managing director. “So maybe if the European leaders talk more about what Europe can do rather than what it cannot, we’ll be in a better place.”

She said that while “Europe has strengths”, the issue was that “the single market is still limping”. According to Georgieva, Europe’s main disadvantages against the US are a lack of domestic energy supplies, a fractured capital market and a failure to leverage migration.

But she’s got a fix at least for the latter two.

“The capital markets union is absolutely essential for European competitiveness, because in the absence of it, the financial assets of Europe do not work hard enough,” Georgieva said about Brussels’ eternal project to harmonise financial markets.

“If you compare the United States and Europe in terms of size of financial assets, they’re pretty much the same . . . But in the United States, the functioning of the capital markets is what makes a huge difference in how these financial assets deliver for the economy.”

“These are 27 countries, of course. They are not one country as the United States is,” she added. “But even so, there is much more that you can do. And it doesn’t cost money. The only thing it requires is political will.”

Georgieva also said that migration could provide a solution to Europe’s ageing population.

“We have an ageing population in Europe. And immigration is not an easy topic,” the Bulgarian said. “But despite all the agitations [over migration] in the United States, the inflow of immigrants makes a huge difference to the US economy. Whereas in Europe, that is not so much the case.”

Chart du jour: Convergence

The spectacular economic growth of 10 countries that joined the EU two decades ago is one of the continent’s clearest success stories. But as the early gains start to fade and living standards catch up, a new impetus is needed.

Plan B

The former boss of Poland’s national oil and gas company Orlen is hoping to spend the coming years in the European parliament rather than addressing allegations of mismanagement in his former job, writes Raphael Minder.

Context: Orlen CEO Daniel Obajtek was ousted in February as part of incoming Prime Minister Donald Tusk’s “iron broom” clean-out of the previous government’s appointees. Obajtek, a former small-town mayor elevated by the ruling Law and Justice (PiS) party to run Poland’s largest company, was accused by Tusk of misusing Orlen to help PiS stay in power.

Poland’s public prosecutors have already opened several investigations into Orlen’s activities under Obajtek’s management. Obajtek himself has not been charged for any offence, but his home was recently raided by police as part of the probe into the company.

On Tuesday, prosecutors added a new probe into alleged ties between Orlen’s Swiss trading subsidiary and the Lebanese militant group Hizbollah.

Almost simultaneously, PiS announced that Obajtek would be one of its candidates for the European parliament elections in June.

Obajtek denies any wrongdoing and claims to be the victim of a political witch hunt. “The prime minister and others have already publicly condemned me . . . this is nothing more than fighting the man they fear,” Obajtek wrote on the social media platform X.

Should Obajtek join the European parliament, the fight could take on a different dimension, as MEPs usually enjoy immunity.

But Tusk’s government is already warning it would try to block Obajtek from using this as a shield in the event of charges.

What to watch today

1. European Commission president Ursula von der Leyen and Cypriot President Nikos Christodoulides travel to Beirut to discuss additional support for Lebanon.

2. French President Emmanuel Macron hosts Japan’s Prime Minister Fumio Kishida in Paris.

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