Mario Draghi’s call for the EU to continue issuing joint bonds to finance key investments has deepened the divisions within Germany’s already fragmented coalition government and received strong criticism from the Netherlands.

In his eagerly awaited report on the future of the EU’s competitiveness, former European Central Bank President Draghi stated on September 9, Monday, that the EU should continue to build on the model of its €806.9 billion pandemic recovery plan, provided that “political and institutional conditions” are met.

The NextGenerationEU (NextGenEU) program provides grants and loans to member countries for critical investments in exchange for targeted reforms, financed by jointly undertaken debts by EU member states.

Historically fiscally “conservative” EU countries, including the Netherlands and Germany, strongly oppose the renewal of NextGenEU beyond its August 2026 deadline.

FDP’s concerns: “Bureaucracy and planned economy”

Christian Lindner, leader of the liberal FDP and German Finance Minister, wrote on X on Monday that “the EU’s joint borrowing will not solve structural problems: companies are not lacking subsidies. They are tied up by bureaucracy and a planned economy. And they struggle to access private capital. We need to work on that.”

Lindner’s assessment stands in sharp contrast to that of Green Party’s Vice Chancellor and Minister of Economic Affairs Robert Habeck, who described Draghi’s report as “a call to action for the new European Commission and the EU as a whole.”

Greens support Draghi

Habeck said, “I am happy to pledge support for the [report’s proposals]. Innovation, better framework conditions, and mobilizing public and private sector investments are the order of the day.”

The differing views among ministers emerged amid ongoing budget disagreements within Chancellor Olaf Scholz’s federal coalition government in Germany.

Known as a “fiscal hawk,” Lindner has repeatedly called for deep cuts in public spending to comply with Germany’s constitutionally mandated debt brake. These calls have been resisted by the Greens and the SDP.

Netherlands: More money is not always the solution

Draghi’s report received a uniformly negative response from members of the Netherlands’ four-party coalition government, which includes far-right factions.

According to Dutch news agency ANP, Eelco Heinen, a well-known “fiscal hawk” and member of the conservative People’s Party for Freedom and Democracy, said, “More money is not always the solution.”

A similar assessment came from Dirk Beljaarts of Geert Wilders’ right-wing Freedom Party (PVV). Beljaarts stated, “Additional public investments are not an end in themselves. They are only necessary in cases of unfair competition or market failure.”

Objections from EU diplomats

Criticisms of Draghi’s call for a significant increase in EU-level investments have also been echoed by some EU diplomats.

An EU diplomat speaking to Euractiv referred to the bloc’s Multiannual Financial Framework (MFF) or “regular” budget, stating, “The discussion on more EU investment will be part of the next MFF debate.”

The bloc’s current seven-year €1.2 trillion MFF will end in 2027.

Southern countries support the report: Support from Spain and France

On the other hand, Draghi’s proposals have received support from some key member states.

Bernard Guetta, a member of French President Emmanuel Macron’s Renaissance party, praised the report’s call for “common defense, industrial policy, and abandoning the taboos of joint debt.”

Speaking to Euractiv, Guetta said, “It is absolutely necessary to urge member states, the European Parliament, and the future Commission to fully embrace the idea of industrial policies and joint investments.”

Guetta also called on member states like Germany and the Netherlands to “open their eyes and end their ideologies” regarding joint borrowing.

The deputy acknowledged that France, which was officially “reprimanded” by the European Commission earlier this year for high public spending, might not be the most reliable country to advocate for EU joint financing due to its own public finances being in the red.

Guetta’s support for Draghi’s key proposals was echoed by Spain’s Finance Minister Carlos Cuerpo, who, like Draghi, believes that some of the necessary financing must come at the EU level. Cuerpo shared the need for urgent work on a permanent EU joint debt program.

Opposition in Italy: Lega and Five Star Movement against Draghi’s proposals

In Italy, while opposition from the Democratic Party and right-wing coalition members Forza Italia and Brothers of Italy generally agree that Draghi’s proposals are a “step in the right direction,” the coalition’s small partner Lega and the opposition populist Five Star Movement disagree.

Lega Senator Claudio Borghi stated on X that every line of the report poses a “deadly threat” to Italy, accusing Draghi of wanting to turn Italy into “the next Greece for revenge.”

Pasquale Tridico, head of the Five Star Movement delegation in the European Parliament, directly targeted Draghi. Tridico argued that Draghi’s report represents a form of self-criticism for “condemning the neoliberal policies that underpin the current European structure” and questioned Draghi’s role in key EU decisions, particularly regarding the Stability Pact reforms which Draghi now supports but which Tridico argues are inconsistent with the large-scale investments in innovation and green transition.

French President Emmanuel Macron has appointed former EU Brexit negotiator Michel Barnier as France’s next prime minister.

The Élysée Palace said in a statement on Thursday that Barnier ‘will be charged with forming a unifying government that will serve the country and the French’.

Barnier, 73, is a former member of France’s conservative Les Républicains (LR) party.

The approaching deadline for the start of budget talks for 2025 in parliament next month has increased the urgency to break the deadlock in France, where no new government has been formed for a long time, especially given the poor state of France’s public finances.

Barnier, a former LR statesman, refused to comment on the growing speculation about his candidacy or on his direct talks with the Élysée Palace.

Macron has chosen the prime minister Le Pen wants

But Barnier has emerged as a more suitable candidate than LR regional president Xavier Bertrand, who was close to taking up the post on Wednesday, people familiar with the talks told the Financial Times.

Bernier, who ran for the LR presidency in the 2022 election but lost to rival Valérie Pécresse, had taken a hard line on immigration in that campaign, proposing a three-to-five-year moratorium on non-EU arrivals in France and claiming immigration was ‘out of control’.

According to the FT, Bernier’s stance surprised those who knew him in Brussels, but it could make him more palatable to Marine Le Pen’s National Rally (RN).

National Rally recognises Bernier’s legitimacy

Le Pen issued a statement from X following Bernier’s appointment, saying they recognised the prime minister.

As we announced to the President of the Republic, we will demand that the new head of government respect the 11 million French people who voted for the National Assembly and respect them and their opinions. We will pay close attention to the project he will put forward and we will make sure that the wishes of our voters, who represent a third of the French population, are heard and respected,’ she said.

Jordan Bardella, president of the RN, also said his party was considering the nomination of Michel Barnier as prime minister, adding: “We will evaluate his general policy speech, his budgetary decisions and his actions on the basis of the evidence”.

Mélenchon: ‘This government is the government of Macron and Le Pen’

The parties that make up the New Popular Front (NFP), which came first in the elections, reacted harshly to Macron’s decision.

Jean-Luc Mélenchon, leader of Unbowed France (LFI), reacted to Emmanuel Macron’s decision to appoint Michel Barnier as prime minister by claiming that the election had been ‘stolen’ from the French people.

The LFI leader said: “The prime minister was appointed with the approval and perhaps at the suggestion of the National Rally. This is practically the government of Mr Macron and Mrs Le Pen,” he said.

Olivier Faure of the Socialist Party (PS) also expressed concern about today’s decision.

“In all democracies in the world, the coalition that has to form a government is the first party. It is never the party that lost the election. Setting this precedent would be dramatic and dangerous for the institutions themselves,” Faure wrote.

Greens: Macron finds RN more acceptable than LFI

PS MP Arthur Delaporte said that Emmanuel Macron had ‘made a big mistake’ and that the French leader, elected ‘by the Republican Front’, had ‘succumbed to the blackmail of the RN and the extreme right’.

Marine Tondelier of the French Greens also criticised Macron’s decision.

Barnier’s appointment is possible because Macron finds the RN more acceptable than the LFI,’ said Sandrine Rousseau, another Green MEP.

LFI MEP Rodrigo Arenas went even further, saying that Michel Barnier’s arrival at the Matignon castle was a sign that ‘Marine Le Pen has seized power’.

Elections in the eastern German states of Saxony and Thuringia have once again confirmed the rise of the Alternative for Germany (AfD).

According to exit polls, the AfD won the state elections in the eastern German state of Thuringia on Sunday 1 September with 30.5 per cent of the vote, the party’s first victory in a state election.

Around five million people in the eastern German states of Saxony and Thuringia were eligible to vote for new state parliaments.

In the smaller state of Thuringia, the AfD made German history with 30.5 per cent of the vote, while the main opposition Christian Democratic Union (CDU) came second with 24.5 per cent.

The Sahra Wagenknecht Alliance (BSW), a new left-wing party founded by defectors from Die Linke, made a significant showing, coming in third with 16 per cent of the vote.

Incumbent state premier Bodo Ramelow’s Left Party, which has so far formed a minority government with the Social Democrats and the Greens, lost more than half its share of the vote compared to the previous election in 2019, reaching only 12.5 per cent of the vote this time.

Meanwhile, Chancellor Olaf Scholz’s SPD won 7 per cent of the vote, while the national coalition partners, the Greens and the liberal FDP, did not receive enough votes to be represented in the next state parliament.

In Thuringia, the turnout was over 70 per cent.

Right-wing consolidates in Saxony with AfD and CDU

Compared to previous state elections since the annexation of the GDR, voter turnout in Saxony reached record levels.

With 74.4 per cent of voters in the state, the turnout surpassed the record set in 1990, when 72.8 per cent of voters went to the polls.

According to public broadcaster ARD, the CDU of incumbent state premier Michael Kretschmer won a narrow victory in Saxony with 31.5 per cent of the vote, just ahead of the AfD with 30 per cent.

The BSW also came third in Saxony, with 12 per cent of the vote.

Kretschmer has so far governed in coalition with the Greens and the SPD, which won 5.5 per cent and 8.5 per cent of the vote respectively, and both will be represented in the next state parliament.

AfD leader Weidel: Voters want AfD-CDU coalition

Speaking to ZDF after the election results were announced, AfD co-leader Alice Weidel argued that voters had voted for an AfD-CDU coalition.

Pointing out that without the AfD there would be no stable government in the state governments, Weidel said that the parties forming the traffic light coalition in the federal government had been punished.

Tino Chrupalla, the party’s other co-leader, told ZDF that in Thuringia, as in Saxony, the will of the voters had been formed, that there should be a political change and that there was a clear mandate to govern in Thuringia.

“The AfD is ready to talk to all parties, and others should consider whether the so-called firewall against the AfD is still valid,” Chrupalla said.

AfD’s Höcke wants talks with other parties

“We are the number one people’s party,” Björn Höcke, leader of the AfD in Thuringia, told ARD television. Speaking of a historic result, Höcke added that he would start talks with other parties about joining the government.

We are ready to take on the responsibility of government,” Höcke said, adding that it was a good parliamentary tradition for the strongest party to invite people to talks after the election.

Höcke failed to win his own constituency in Thuringia. According to the state election officer in the Greiz II constituency, Höcke was defeated by CDU candidate Christian Tischner in the direct election to the state parliament. Höcke received 38.9 per cent of the vote, compared to 43 per cent for Tischner.

Höcke had long been looking for a promising constituency after losing the state election to the CDU in the predominantly Catholic Eichsfeld district of Thuringia five years ago.

CDU refused to cooperate with AfD, Greens and Left Party in Thuringia

CDU candidate Mario Voigt, who came second in Thuringia with 23.7 per cent of the vote, presented himself as a clear alternative to the minority coalition of left-wing state premier Bodo Ramelow, but found it difficult to capitalise on the discontent in the state.

Voigt organised his campaign as a “duel” between himself and Höcke, presenting himself as a Thuringia politician as opposed to a West German politician like Höcke or Ramelow.

Voigt categorically rejected cooperation with the AfD, as well as with the Left Party and the Greens.

Voigt told his supporters earlier in the evening that the CDU had returned as ‘the strongest force in the political centre’.

Voigt also believes that his party has the mandate to govern. “We in the CDU also see this as an opportunity for political change in the CDU leadership,” he said in Erfurt.

Left-wing premier wants CDU to form government

“I am fighting against the normalisation of fascism,” Thuringia’s Prime Minister Ramelow told ARD television about the AfD.

In the election campaign, Ramelow had not fought against the CDU or the BSW, but against the AfD. Now he believes that Voigt, the CDU’s top candidate, has taken on the task of governing.

“Whoever gets the most votes from across the democratic spectrum should initiate talks and invite them,” Ramelow said.

“I have no problem with a political office being given for a limited period of time,” the Left Party politician said of the prospect of losing his position as prime minister.

Green light from Wagenknecht for CDU and SPD

Alongside the AfD, the Sahra Wagenknecht Alliance (BSW) was one of the big winners of the election.

With Katja Wolf, a former left-wing politician, as its top candidate in Thuringia, the BSW won 15.6 per cent of the vote and entered the state parliament in Erfurt.

During the election campaign, the BSW scored points on national issues, such as criticising arms supplies to Ukraine and calling for negotiations with Russia.

But its positions on limiting immigration and social security also attracted the attention of many voters.

“We hope to form a good government [in Saxony] together with the CDU, possibly also with the SPD,” party leader Sahra Wagenknecht told ARD television. “I hope it will work,” she said.

“A similar coalition could also be considered in Thuringia,” the BSW leader said.

Wagenknecht, on the other hand, explicitly ruled out a coalition with the AfD in Thuringia, stressing that they ‘cannot work together’ with AfD state leader Björn Höcke.

However, a statement on the BSW’s official X account said: “In addition to concrete improvements for the people, a commitment to diplomacy in the Ukraine war and a rejection of the deployment of US medium-range missiles are essential for possible coalitions. We do not exist only as a majority supplier. That remains the case,” the statement said.

The CDU is open to establishing contact with the BSW

CDU General Secretary Carsten Linnemann regards his party’s election results in Thuringia and Saxony as a success. Speaking to ARD, Linnemann said that the CDU is a ‘real people’s party’ and argued that the traffic light parties had been punished and that the AfD result was deceptive.

Linnemann emphasised that the CDU would not form a coalition with the AfD. As for possible alliances between the CDU and the BSW, he said that this would be decided in the federal states by the two CDU leadership candidates Kretschmer and Voigt.

Jens Spahn, deputy chairman of the CDU parliamentary group, believes that it is possible for the CDU to work together with the BSW at the state level. Spahn is convinced that the BSW in Thuringia primarily wants to focus on state politics.