Keynote Address by Executive Dombrovskis at Harvard Law School Event on “Power and Alliances: The Transatlantic Partnership in a Changing World”

Ladies and gentlemen,

It is truly an honour to be here in Harvard Law School. I am coming directly from Washington, where I represented the European Union at meetings of the IMF and World Bank.

I had the chance to meet my American counterparts and ministers from around the world.

At these global gatherings, and others I have attended recently, notably the G20 in Indonesia, there is a sense of upheaval in the air.

The world is clearly changing.

Today I want to share some thoughts with you on why these changes are happening, and how they may play out.

Above all, I want to explain why I believe strong transatlantic leadership is required at this moment. Because without it, the world may change in ways that are contrary to our shared values.

As Harvard students, you are the leaders of tomorrow.

My hope for you is that you may enter the world of work with the same optimism I did when I graduated.

When I was your age, the changes happening in the world seemed overwhelmingly positive.

My generation of Latvians grew up under the rigid restrictions of the Soviet Union.

But as graduates in the early 1990s, we were entering a new reality of freedom and choice. We felt hopeful and confident that our talents and ambitions could achieve their maximal expression in the world.

I hope you will get to experience the same.

But to make sure this happens – to make sure your leadership can achieve its full potential – the leaders of today must fight for our cherished western values of democracy, rule of law, human rights, economic freedom, and tackling climate change.

We must strive for a world order where Harvard Law School’s Motto – “truth, law and justice” – continues to be the guiding light.

If the EU and U.S. fail to lead the way at this crucial moment, truth, law and justice may be overtaken by something far darker.

I am speaking, of course, of Russia’s brutal and illegal invasion of Ukraine, and its profound impact on today’s world.

This is not a regional conflict on the fringes of the European Union. We have entered an existential battle.

Innocent men, women and children are dying because of Putin’s war of choice. In this despot, Europe faces an enemy with nuclear bombs at his fingertips.

The war is causing turmoil across many parts of the globe, with families and businesses facing a global spike in food and energy prices.

There are deep financial and monetary implications.

Russia, and Russia alone, bears the responsibility for these problems.

As the war’s shockwaves ripple across continents, they are causing a profound realignment of international relations, economically and geopolitically.

So far, the democratic world has rallied together in a huge show of solidarity. This unity caught Putin and other autocrats around the world by surprise.

But this war is a test case of our democratic values, and our ability to convince others to stand up against a brutal attack on a sovereign nation.

We are profoundly grateful to the U.S. and our like-minded allies for their support to Ukraine, and coordination on sanctions against Russia.

We now have to focus on reaching beyond our like-minded partners.

First, we need to fight back in the global information war. And we need to invest real resources in this work, both at home and abroad.

At home, we have for many years seen anti-democratic forces, including Russia, meddling in the internal politics of the EU.

By supporting extremist and anti-EU parties. Using lobbyists. Paid thinktanks. Online disinformation and hacking. And we know that this meddling is not limited to Europe. We should take stronger action against this interference.

The European Commission will soon propose a Defence of Democracy Package to protection our democratic sphere from covert foreign influence.

At the global level, we need to dramatically improve our outreach.

Only by working together, across regions and across platforms, can we get the message out that the current food and energy crisis was not caused by Western sanctions, but by Russia’s readiness to game on hunger and starvation.

In a wider sense, we need to invest heavily in alliance-building, particularly with the developing world.

There are many “potentially like-minded” allies out there. To reach them, and get them on board, we need to get out of our comfort zone. In practice, that means doing more to understand and address their needs.

The EU and U.S. share the same view: namely, that the war in Ukraine is a brutal attack on a sovereign democratic nation by an autocratic regime.

But a number of emerging economies and developing countries see this war differently.

Some are taking geopolitical advantage of it, including by increasing trade and cooperation with the aggressor state. Some justify their neutrality by recalling historic injustices.

Take the UN vote in March: Five non-democratic regimes blocked the resolution condemning Russia’s war. But another 35 abstained. This is the middle ground I am talking about. These are the countries we need to persuade.

And we are in a race against the clock. Because non-democratic powers are rushing to form their own alliances against the so-called “declining West”.

Indeed, the most powerful among them already have strong economic and political bonds with the developing world.

The developing world needs to feel that we are there for them and will help them to weather this crisis.

Our action towards them will count more than words.

So what can we do?

We need to be visible on the ground, and engage both at local and global levels.

The EU has for example ramped up its engagement in Africa, both on a bilateral and region-to-region basis.

We need to reform our global institutions so that decision-making works equally well for developed, emerging, and less-developed economies.

The same goes for international financial institutions.

They can deliver more development finance – while in return, developing countries need to ensure they have the correct governance framework in place.

Emerging markets fear the spillovers from our interest rate adjustments, and we are mindful of that.

Good progress is being made on Special Drawing Rights to help vulnerable countries. Voluntary contributions of 80 billion dollars have been pledged towards the global goal of 100 billion dollars.

23 billion comes from the EU . The U.S. has pledged 20 billion dollars, though this still needs to be approved by Congress. It is important that the EU and U.S. continue to show leadership, encouraging more countries to pledge.

We should also keep pushing for the implementation of the Common Framework for Debt Treatment. Almost all G20 members would support the publication of indicative guidelines to provide additional clarity and predictability to eligible countries.

However, opposition from China has so far prevented the guidelines’ adoption.

In parallel, it will be important to continue the international work to strengthen debt transparency, and to address the challenges stemming from collateralised debt transactions.

We also need to help the most vulnerable countries to deal with the war’s spillover effects.

So we welcome the new IMF Food Shock Window to support Ukraine – and other countries. Since it requires more resources, the European Commission will contribute €100 million to the Poverty Reduction and Growth Trust Subsidy Accounts.

Fixing the World Trade Organization is a crucial piece of the puzzle. It needs to be revitalized, updated and reimagined.

The 12th WTO Ministerial took place in June. Against expectations, it succeeded in delivering a number of very significant outcomes.

During this intense week of negotiations in Geneva, we sat down with countries from around the world. There were huge differences of opinion.

But we also saw that results are achievable, because, broadly speaking, most countries still want a functioning rules base for global trade.

They recognize that this remains their best bet for achieving their economic potential.

A reformed WTO must treat everyone the same, which brings me to my next point:

I would like to say a brief word on China.

Its failure to condemn Russia’s barbaric war, and in some cases, outright support for Russia, is influencing the views of EU countries and companies.

But it is also true that, despite the worsening political context, EU-China trade remain robust, and our economies are much more interlinked than is the case with the U.S. and China.

Accordingly, the EU should continue engaging with China with pragmatism and without naivety. We recognise that our trading relationship needs more balance and reciprocity. And working with the U.S., we must place a greater focus on diversification and better risk management.

But we also need to work together on shaping joint responses to global trade and economic challenges, such as disruptions in supply chains, WTO reform, and issues related to food security and the global level playing field.

In a general sense, trade has a crucial role to play to help the EU and U.S. advance our shared geopolitical goals.

By developing rules-based relationships with countries around the world, by incentivizing our companies and investors to make a positive economic impact in these countries, we increase our wider attractiveness and trustworthiness as partners.

The EU and U.S. are committed to the green and digital transformations of our economies.

By supporting and incentivizing similar transformations in partner countries, we can build a greener economy as well as a democratic and trustworthy digital infrastructure.

This can also help to create resilient supply chains, notably for critical raw materials and inputs.

This is why the EU is determined to ramp up its trade outreach, notably to Latin America and the Indo-Pacific.

Last, let me turn to the Transatlantic relationship itself.

The EU-U.S. relationship is the central artery of the world economy. Last year we traded almost one trillion euro’s worth of goods and services. Our supply chains are deeply intertwined.

But our relationship goes far beyond economics. We have aligned views on most global challenges.

We have opened positive new chapters over the past two years. We have put several disputes to bed, and found new, dynamic avenues of cooperation.

The Transatlantic Trade and Technology Council is living proof of this renewal.

This new forum is designed to shape the rules, tools and standards of the future. It is a laboratory of 21st century ideas.

The TTC’s structure is agile enough to address emerging challenges.

We notably achieved rapid cooperation on sanctions against Russia via export controls, and aligning measures on import bans.

We expanded its remit to address global food insecurity and supply chain issues, as well as meeting the challenge of Russia’s information manipulation and interference.

This is necessary. Because technologies will have an increasingly dominant role in future conflicts, in a classical military but also hybrid warfare sense.

The TTC can be the vehicle to address this and other challenges.

Of course, some difficulties remain.

The EU would notably like to see the U.S. fully take our needs on board whenever it is framing policies that impact us. And vice-versa.

For example, while we fully support the aim of the U.S. Inflation Reduction Act to help businesses and society reach climate goals, some of its provisions are very worrying.

Many of the green subsidies provided for in the Act discriminate against EU automotive, renewables, battery and energy-intensive industries.

The IRA privileges U.S. companies over others by offering generous financial incentives. This risks weakening competition and raising prices. I add that EU green subsidies are not designed in such a discriminatory manner.

We cannot afford to waste time and resources on trade disputes and other distractions. There is too much at stake in the wider world.

Ladies and gentlemen, I want to conclude on a more hopeful note.

All the positive changes I have described are achievable.

A better world is possible. A world where you can emerge from this great house of learning and apply your talents to their fullest extent.

But to achieve this better world, we must first stay the course and help Ukraine win the war. And such a victory is within reach.

We must, therefore, not allow division or fatigue to derail us.

It is essential that full bipartisan support from the U.S. continues, for further sanctions against Russia, and funding and military support for Ukraine.

And in Europe, likewise, now is the time to show real resolve.

It will take time, but if we stay united, working together, the EU and U.S. can help to deliver justice for Ukraine.

I view this as our shared duty, because Ukraine made a clear democratic choice to become a modern European state, anchored in Western values.

We must not fail them.

Thank you.

Compliments of the European Commission.