EU will have to think about upping natl contributions to be competitive – Nauseda

VILNIUS – EU member states will need to think about increasing their national contributions in order to increase EU competitiveness and strengthen the defense industry, Lithuanian President Gitanas Nauseda says.

Speaking to journalists at the European Political Community summit in Budapest on Friday, he also did not rule out the possibility of borrowing.

"We will have to talk in the next financial perspective about whether that percentage of gross national income that is now our financial base in the EU is sufficient, taking into account all the challenges that are around us," the Lithuanian leader said.

"My answer today is no, it is not sufficient, and we will have to think about increasing our contributions and changing the formula for calculating own resources. There's no other way," he noted.

His comments came in response to a report published in September by former European Central Bank chief Mario Draghi, highlighting the growing divide between the US and Europe in terms of economic productivity, innovation and other areas.

In Budapest, Draghi stressed that the need to reform the European economy has become even more urgent since Donald Trump's victory in the US presidential election.

Draghi, a former Italian prime minister, called for a new industrial strategy and for up to 800 billion euros of additional investment each year, calling it an antidote to Europe's "slow agony".

"I think there's no agony, or death. Of course, we have to answer the question of where we can get this kind of money from," Nauseda said.

"Mr Draghi also mentioned in his report the possibility of borrowing on behalf of the EU and issuing bonds. I think that for purposes like competitiveness and the defense industry, this is a justifiable reason for borrowing", the Lithuanian president said, noting that he is not fan of such borrowing, saying, however, "it can be considered", if the end justifies the means.

The ex-ECB chief's report also identifies the challenges facing the EU including sluggish growth, declining productivity, low levels of innovation and increasing dependence on critical resources from other countries, including China.

European Council President Charles Michel has called Draghi's report "an excellent basis" for economic reforms.

Budapest is hosting a European Council summit on Thursday and Friday, focusing on the EU's competitiveness strategy and the Draghi report on competitiveness, as well as on the recent elections in the US, Moldova and Georgia.

European leaders are also attended a European Political Community summit in the Hungarian capital and discussed security challenges, migration and economic security.