The Path to Global Leadership: How COMPETITIVENESS Became the New "Trending" Term in the EU

At the latest European Council summit, held on 20 March 2025, alongside discussions on Ukraine and the Middle East, a particular emphasis was placed on competitiveness. This has become the new "trending" term now appearing in almost every major EU document, including those related to enlargement policy and the Western Balkans.

At the transition between the old and new institutional cycles in 2024, the foundation for this policy was laid by former Italian prime ministers Enrico Letta and Mario Draghi.

Today, the EU increasingly feels like an isolated island - caught between the growing Russia-China alliance in the east and American neo-transactionalism in the west. Highlighting that the single market was "born in a smaller world" when China and India together accounted for less than 5% of the global economy, Letta argues that in the new global circumstances, there is a "need to develop a new single market" capable of responding to the challenges of a "bigger world."

Similarly, Draghi stresses that boosting the EU's competitiveness is essential to revitalise productivity and sustain growth in this rapidly changing world. In their view, the new agenda must focus on increasing productivity growth, which should depend less on labour costs and more on knowledge and workforce skills - implying a multi-faceted transformation of the Union itself.

This push is driven by the fact that sectors in which China directly competes with eurozone exporters now account for nearly 40% of total exports, up from 25% in 2002.

In an effort to ensure the EU remains a formidable competitor to global powers, security is seen as a prerequisite for sustainable growth. Rising geopolitical risks can increase uncertainty and reduce investment, while major geopolitical shocks or sudden trade disruptions can be highly destabilising. This concern is particularly relevant as the United States, under Donald Trump, continues to distance itself from Europe.

The competitiveness compass

At the start of 2025, the EU adopted, for the first time, a document directly based on the aforementioned reports - The Competitiveness Compass. When presenting this document, European Commission President Ursula von der Leyen stated:

"Europe has everything it needs to succeed in the race to the top. But, at the same time, we must fix our weaknesses to regain competitiveness. … So now we have a plan. We have the political will. What matters now is speed and unity. The world is not waiting for us."

This ambitious document outlines the European Commission’s key objectives:

• Closing the innovation gap: Recognising the need to restart the EU's innovation engine by creating a more favourable environment for young technology-based startups and fostering industrial leadership in high-growth sectors. Initiatives such as "AI Gigafactories" and "Apply Artificial Intelligence," along with action plans for quantum technologies, biotechnology, and space technologies, are designed to drive innovation. At the same time, efforts are being made to reduce bureaucracy and streamline administrative procedures to accelerate the establishment of new businesses.
• Towards decarbonisation: On the road to innovation, high and volatile energy prices are seen as a key challenge. Therefore, the upcoming Clean Industry Deal will direct decarbonisation efforts in a way that preserves competitiveness and enables a transition to low-carbon business models. Additionally, legislative and policy measures will be introduced to facilitate faster permitting processes and provide targeted support for energy-intensive industries such as steel, metals, and chemicals.
• Eliminating strategic dependencies: In an increasingly complex world, reducing reliance on third parties and enhancing security will require diversifying energy sources and imports of critical raw materials, as well as developing new free trade agreements with credible and reliable partners. Internally, a revision of public procurement rules will introduce European preferences for critical sectors and technologies, strengthening the Union's resilience and strategic autonomy.

As stated in the document itself, the Competitiveness Compass will guide the European Commission's work throughout its entire mandate.

Where is the Western Balkans in all of this?

If anyone had doubts before, it is now clearer than ever that enlargement policy is one of the key tools the European Union is using to achieve its competitiveness goals - both from an economic standpoint and in terms of geostrategic interests.

Officially adopted in 2022, the concept of "gradual integration" was designed to allow candidate countries to benefit from certain aspects of EU membership even before they formally join. The logic behind gradual integration, explicitly supported by Enrico Letta in his report and Ursula von der Leyen through the Competitiveness Compass, is based on the idea that greater investment (conditional on reforms) and deeper integration into specific parts of the EU single market - including expanded labour mobility before full membership - could help bridge the socio-economic gap between the EU and the Western Balkans. This approach is also seen as a way to strengthen democratic institutions, the rule of law, and even align foreign policy more closely with that of the EU.

On the one hand, this concept aims to foster closer economic cooperation between the EU and the region, further linking and strengthening industrial ecosystems across Europe. This is particularly important given that both the EU and the Western Balkans face similar socio-demographic challenges - labour shortages are increasing across all skill levels, while birth rates remain low. As a result, the EU is expected to continue "investing" in the region, relying on measures to strengthen supply chain partnerships, regulatory integration, and business community connectivity. The goal of such measures is to provide stronger incentives for industrial collaboration, encourage investment in strategically selected sectors, enhance business cooperation, and ultimately accelerate the accession process of Western Balkan states.

On the other hand, this form of integration also aims to reduce the influence of external actors. This is particularly relevant given that the region is still seen as a potential hotspot for future crises. The situation in Bosnia and Herzegovina has become increasingly tense following recent developments in the Dodik case, while tensions in Kosovo remain high due to increased pressure from Kurti’s administration on the Serbian population - making this interpretation even more justified. With Russia maintaining a relatively strong influence and China expanding its presence through infrastructure and other projects, it is crucial for the EU to strengthen political, economic, and social cooperation with the region. In addition to enhancing economic competitiveness, this would also establish a form of geopolitical competitiveness for the EU in the Western Balkans.

In short, as competitiveness becomes a central concept shaping the EU’s response to global challenges, the model of gradual integration for the Western Balkans is expected to gain increasing importance as a means of strengthening both the economic and geopolitical position of the Union.