EU wants less dependence on imported chips, food, raw materials, as Ukraine war rages

VERSAILLES, France (Reuters) – European Union leaders will say on Friday they want to cut their dependence on global suppliers of food, microprocessors, drugs, raw materials and digital technologies, as Russia’s invasion of Ukraine added a new argument for the EU to be more self-reliant.

FILE PHOTO: European Union flags fly outside the European Commission headquarters in Brussels, Belgium, April 10, 2019. REUTERS/Yves Herman

The 27-nation bloc has been considering how to become more independent in several strategic areas ever since the COVID-19 pandemic showed that a breakdown of global supply chains could leave the EU without access to pharmaceuticals or microchips.

The war in Ukraine only made that more clear, EU officials said, as Europe will now struggle to wean itself off Russian gas, oil, coal and raw materials and possibly find alternative suppliers of wheat.

“Confronted with growing instability, strategic competition and security threats, we decided to … take further decisive steps towards building our European sovereignty, reducing our dependencies,” a draft joint declaration of the leaders meeting in Versailles outside Paris, showed.

The declaration said the EU would reduce its dependence on imported critical raw materials through strategic partnerships, stockpiling, recycling and resource efficiency.

In semi-conductors the EU wants build its own factories and double its share of the global market to 20% by 2030, the draft said. Semi-conductors are now mainly bought from Taiwan and the United States.

The EU will also make more pharmaceuticals in the bloc rather than importing them from China, invest in research and development in the health sector and in digital technologies like artificial intelligence, Cloud and 5G mobile telephony deployment, the document said.

To become more independent in food, the EU will boost production of plant-based proteins, it said.

It said the leaders want to finance such policies through the European and national budgets, using public money to attract much bigger private investment. They also want to use the European Investment Bank, which is owned by EU governments, “to catalyse investments, including higher risk-financing for entrepreneurship and innovation.”

France and Italy have been pushing for the EU to agree to new joint debt issuance for the expected increased outlays, modelled on the EU’s 800 billion euros recovery fund, of which only 74 billion euros have been disbursed so far.

But others like Germany, Austria, the Netherlands and the Nordic countries oppose that, arguing the EU should first use the cash already agreed before borrowing more.

The leaders will also declare that their fiscal policy will have to give them leeway for more spending on defence, investment and dealing with the negative economic effects of the war in Ukraine, the draft said.

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