The Middle East crisis can act as a catalyst for further European integration, as it has made clear the need for Europe to develop its strategic autonomy, Enrico Letta, former prime minister of Italy, tells Kathimerini, ahead of his visit to Athens on Tuesday. However, without a stronger, more integrated and more competitive European economy, there can be no real autonomy, he says.
Letta is the author of the 2024 thought-provoking report, “More than a market,” on the deepening of the single market, which is a reference point for the design of European policy. The deadline set by the European Commission for the completion of the single market, 2028, will be a political test of Europe’s ability to act and shape its own future, he says.
The former premier says the adoption of a diversified and innovation-based development model is a challenge for Greece, but also the entire European South.
Letta will participate on Tuesday in a discussion at a closed event organized by Kathimerini, where he will speak about the future of Europe. Later on, he will take part in a conversation with the president of the Eurogroup, Kyriakos Pierrakakis, on EU competitiveness, organized by the Foundation for Economic and Industrial Research (IOBE) and the IE Competitiveness Hub.
Do you believe that the recent developments in the Middle East and Europe’ s stance toward them and the US could serve as a catalyst for further European integration?
Yes, these developments can be a catalyst. And I think we are already seeing it, as they made clear that strategic autonomy has become a necessity. But strategic autonomy cannot be built by 27 countries acting separately. It requires integration. Energy and defense are clear examples. No European country alone can secure its energy supplies, build a credible defense industrial base, or protect its interests in a world increasingly defined by power politics. This is why the Single Market matters so much. It is the backbone of Europe’s strategic capacity. Without a stronger, more integrated and more competitive European economy, there can be no real autonomy.
What is the projected economic cost of the war for Europe and how should the EU proceed regarding energy independence? Is green transition the answer?
According to the IMF, the economic impact of the war in the Middle East is particularly serious for Europe because the shock comes above all through energy. In a severe scenario, the EU could come close to recession, with inflation approaching 5 percent. This shows where Europe’s main vulnerability lies. Our dependence on imported energy and raw materials exposes our economy to external shocks that we do not control. The strategic answer is the green transition. Energy independence cannot mean replacing one external dependency with another. It must mean producing more clean energy at home, completing the energy single market, investing in grids and interconnections, and accelerating renewables. This is the right direction, and it is positive that the European Commission is pointing precisely this way with AccelerateEU. The green transition is an environmental necessity, but today it is also a matter of economic security and strategic autonomy.
Greek industry and households face high energy prices. Given that your report calls for deeper integration in energy, how do you see this project is progressing?
Greek industry and households are paying the price of a structural weakness in the European energy market. This is precisely why deeper energy integration is so important. Without stronger grids, more interconnections and a truly European electricity market, price differences across Member States will remain too high. But there has been real progress. The European Grids Package presented by the Commission in December 2025 is one of the most important attempts in recent years to address this weakness. It simplifies permitting, sets clearer timelines and identifies eight Energy Highways to tackle the most critical cross-border bottlenecks. For Greece, this is particularly relevant. The Great Sea Interconnector, one of these Energy Highways, can improve security of supply, support the integration of renewables and help reduce the isolation that still affects parts of the European energy system. The fact that the three European institutions have included these dossiers in the One Europe, One Market roadmap is a strong political signal. They have committed to approve the file by the end of 2027. The direction is the right one.
Do you believe that the deadline of 2028 the European Commission set for completing the single market is feasible? What will be the cost, if we don’t succeed?
Yes, I think it is feasible. And a certain optimism of the will is necessary if we want to achieve it. The political commitment is there, and the periodic monitoring mechanisms included in the roadmap provide a concrete structure to reach this objective and address possible difficulties along the way. The cost of failure would be immense. And before being economic, it would be strategic. Europe is now facing a clear choice. It can move towards deeper economic integration and establish itself as a true global actor. Or it can remain fragmented and accept economic and strategic irrelevance. In that case, Europe would end up depending on the dominant power of the moment, instead of shaping its own future. That is why 2028 should be seen as a political test for Europe’s capacity to act.
The Savings and Investments Union, a major goal set in your report “Much more than a market,” according to Eurogroup’s President Pierrakakis, “could be the biggest political victory of our generation.” Do you think Europe can win this battle, given the disagreements by certain member states?
Yes, I believe Europe can win this battle. The fact that all three European institutions have included the Savings and Investments Union as a key element of the One Europe, One Market roadmap shows that a broad institutional consensus has now emerged. Of course, difficulties will appear when negotiations move to the individual files. Some national resistance is inevitable, especially on issues that touch financial markets, supervision and the allocation of capital. But this is precisely the strength of the roadmap. By negotiating several dossiers together, it becomes easier to reach a compromise. Concessions and political victories can balance each other across different files. This is why I am optimistic.
Why is the Savings and Investments Union and the Banking Union important for European citizens?
They are important for two main reasons, at two different levels. For households, they can offer new opportunities to make better use of private savings. Many Europeans keep a large share of their savings in current accounts, where they generate little value over time. A deeper and more integrated capital market would give citizens more accessible, diversified and attractive investment opportunities, helping them increase their financial wealth. For Europe as a whole, this is just as important. If mobilized properly, private savings can help finance the EU’s major strategic objectives. The green transition, energy security, innovation and defenze will all require massive investment. Public resources alone will not be enough.
Do you expect Europe to agree on a common debt issuance – a historically controversial issue – and for which specific objectives?
EU institutions already issue different forms of debt today, but these instruments are still not fully integrated. A realistic way forward would be to build on the instruments that already exist, making them more coherent, more visible and more reliable for global investors. This would send a strong signal to international markets and help strengthen the euro as a global currency. The point is better debt, not simply more debt. This would be both an important and achievable result. The global context makes this step increasingly necessary. Europe needs deeper and more liquid financial instruments if it wants to finance its strategic priorities, from defense to the green transition, and reduce its dependence on external actors. I think the time is becoming ripe for this discussion. The world around Europe has changed. That should push us to be more pragmatic and more ambitious at the same time.
As you are visiting Greece, how do you value its recent economic performance? Do you believe it has moved fast enough in terms of growth?
Greece’s recent economic performance is clearly positive, and this is widely recognized at European level. The election of Kyriakos Pierrakakis as President of the Eurogroup also reflects the confidence that Greece has built in Europe. Looking ahead, I would frame the challenge in broader Southern European terms. Southern Europe has enormous strengths, from human capital to entrepreneurship, from energy potential to its strategic position in the Mediterranean. This is true for Greece, for Italy and for other countries in our region. The key question now is how to turn these strengths into a more diversified and innovation-driven growth model, able to create stable and attractive opportunities for young people and highly qualified workers. This is not only a Greek issue. It is a shared European and Mediterranean priority.
The vast majority of Greek businesses are SMEs and this doesn’t seem to change in spite of government incentives. Is further European integration going to help or is there a risk that many SMEs will disappear, since they cannot become European champions?
Further European integration will be a success only if it includes SMEs. In Greece, as in Italy and in most European countries, SMEs are the backbone of the social and economic system. This is why any measure that damages SMEs would be a self-inflicted wound. I was very clear on this point in my report on the future of the Single Market. Completing the Single Market must mean making life easier for SMEs, reducing fragmentation, simplifying rules and giving them better access to finance, skills, digital tools and cross-border opportunities. The development of European champions can also help SMEs, if it is accompanied by strong competition rules updated to reflect the global context. Larger and stronger European companies can create more structured supply chains, in which SMEs can find reliable clients, scale their activities and become part of broader European industrial ecosystems. So I do not see integration as a threat to SMEs. I see it as an opportunity, provided that SMEs are placed at the centre of the project. A stronger Single Market should help them grow, cooperate and compete, without forcing every company to become a giant.