EU Institutional Diagnosis and the 'Triple Squeeze' Transformation — A Comprehensive, Multi-Dimensional Analysis Based on the Eight-Act Framework (2026)

XI. Policy Recommendations For the EU (mapped onto the Eight-Act Framework, ordered P0–P6) • P2 – Prioritizing Transmission Bottlenecks: Adopt the 'Savings and Investment Union / Capital Markets Union (CMU)' as the overarching organizational lever—facilitating pension fund entry into venture capital, harmonizing clearing and listing rules, and establishing a single digital financial infrastructure (Appia). This directly addresses the η dual-track system and the 3.6-fold gap in venture capital funding. With an implementation rate of only 22.9%, energy policy ranks lowest among all Draghi-report priority areas; it should therefore become the next 'sectoral window' (joint gas procurement + cross-border electricity markets + long-term power purchase agreements). • P1 – Partial Lock-in Release: Expand authority via 'coalitions of the willing' and pilot qualified majority voting (outside foreign policy and taxation) to reduce R. Governance reforms accompanying enlargement (Commission composition, budget, Common Agricultural Policy, voting weights) must be implemented *before* accession; otherwise, an EU-35 would amplify—not dilute—the lock-in effect. • P5 – Managing Transformation: Given Λ ≈ 0.52 under ongoing transformation, proactive management of alternative-policy completeness is essential—concretely mapping out roadmaps for the three pillars of strategic autonomy (defense, energy, technology), while preserving minimum-level S-layer coordination with both the U.S. and China. • P0 – Crisis Prevention (Fiscal): The Excessive Deficit Procedure (EDP) paths for France and Italy require credible enforcement anchors (e.g., independent fiscal councils’ endorsement) to prevent 'rule watering-down' from degenerating into 'discipline erosion'; explore common security asset pools to stabilize yield spreads. • P3 – Trap Prevention (Political): Deliver tangible living-standard outcomes (energy bills, housing, employment) to address the socioeconomic soil nourishing populist mobilization—the root cause of right-wing ascendancy is economic anxiety, not cultural conflict per se; governance performance remains the sole antidote. Implications for China (Objective Dimensions) 1. Managing the Instrumentalization of 'De-risking': EU-China trade and investment policies display increasing 'instrumentalization and politicization' (e.g., nine investigations under the Foreign Subsidies Regulation, EV tariffs ranging from 7.8% to 35.3%, pending PHEV tariffs, steel quotas). Yet objective complementarity persists (EU exports to China account for 7% of its total exports—ranking fourth after the U.S., UK, and Switzerland; China remains the EU’s largest source of imports). The 'price commitment + local investment' dual-track strategy (exemplified by BYD’s Hungarian factory) has already proven effective as a buffer. 2. Seizing Institutional Windows: Leverage upcoming institutional opportunities—the inaugural meeting of the China-EU Trade and Investment Dialogue, the U.S.-EU agreement review deadline at end-2026, and the EU’s capital shortfall in energy and green transition (€80 billion annually)—to proactively offer cooperation interfaces on S-layer standard alignment (green standards, AI governance, CBAM implementation details), thereby offsetting C-layer friction. 3. Reserve Logic Amid European Uncertainty: Fiscal divergence within the euro area, political rightward shifts, and energy-driven reflation reinforce the prudential logic of foreign exchange reserve diversification (echoing earlier arguments for gold purchases amid U.S. Treasury analysis); direct RMB-euro clearing and bilateral currency swap arrangements help insulate bilateral transactions from dollar volatility. 4. Guarding Against the Politicization of 'Overcapacity': The EU frames China’s green industrial capacity as a threat to industrial security; related investigations and tariffs exhibit cross-cycle inertia. China should respond with data and facts (e.g., compliance records regarding EV price commitments to Europe), avoiding escalation into full-scale trade instrumentalization.

Greece Calls for EU Fiscal Flexibility to Address Energy Costs

23 hours ago

Greek PM Mitsotakis urges EU fiscal flexibility to manage soaring energy costs amid rising gas prices linked to Middle East conflicts. Greece plans to extend diesel subsidies and cap heating oil prices to support businesses and households.

bloomberg

2026-09-30

Greece Calls for EU Fiscal Flexibility to Address Energy Costs

Greece Calls for EU Fiscal Flexibility to Address Energy Costs

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