Dr Enrico Letta, former Prime Minister of Italy, author of "Much More Than a Market," and Dean of IE University’s School of Politics, Economics & Global Affairs, made the case for a more integrated Europe at a dialogue hosted by the Lee Kuan Yew School of Public Policy.
In the 1990s, Germany’s economy was roughly the size of China and India combined. Today, those two Asian giants together are twenty times larger.
For Dr Enrico Letta, the statistic explains why Europe’s long-debated and long-deferred project of completing its single market has suddenly become urgent.
Speaking at the dialogue, chaired by Associate Professor Francesco Mancini, the former Italian premier said the world has changed dramatically since Europe’s last major wave of integration.
"Why now?" Letta asked, "Because of the rise of giants: China, India.” The integration achieved in the 1980s and 1990s, he said, was a remarkable success. But the world didn't stand still.
Launched in the early 1990s, the European single market is one of the most ambitious economic integration projects in history. It guarantees four freedoms — the free movement of goods, services, capital and people — across what is now 27 member states, representing 450 million consumers and roughly 17 trillion dollars in GDP, comparable to the United States or China.
But the market was never truly completed. When the euro arrived in 2002, integration stalled. The result, Letta argues, is that Europe operates as 27 separate economies in precisely the domains where scale matters most.
To illustrate this, Letta explained that as someone who divides his time between Italy, France and Spain, he carries three phones with three SIM cards.
"Why?" he asked the audience. "Because we have 27 markets,” he stated, each with its own national telecom regime.
The financial fragmentation runs even deeper. The European Union accounts for 18 per cent of world GDP, yet European financial markets represent only around 12 per cent of global market capitalisation. The United States, with a quarter of world GDP, commands 60 per cent.
The consequence is that everyday credit card transactions across Europe flow through American financial infrastructure. When you buy a pizza in Rome, a fee goes to the United States. “Because the US is the superpower of finance,” Letta said, due to the fragmentation of the rest.
Letta's response to this fragmentation was his report, commissioned by the EU and published in April 2024. The report led directly to the EU's adoption of the ‘One Europe, One Market’ roadmap at the European Council in April 2025.
The plan encompasses 42 measures with hard deadlines running to the end of 2027. One third have already been presented to the European Parliament.
"A public policy without a deadline,” Letta joked, "is an academic debate."
The measures include a Savings and Investments Union to redirect Europe's substantial private savings into productive investment; an Energy Union to integrate 27 separate national grids; and what Letta calls the "28th Regime" — a virtual European corporate law framework that any company can opt into, allowing it to operate across the entire single market under a single set of rules.
The roadmap would also add a fifth freedom - for innovation, skills and research - to the original four that defined the single market.
The unlikely accelerant
During the dialogue session, Mancini noted that the plan contained “some very concrete ideas” and “a quite ambitious timetable.”
In response to what could be driving this sudden acceleration, Letta invoked his “favourite philosopher” to manage expectations. "Mike Tyson used to say ‘everyone has a plan until you get punched in the mouth’. So yes, we need a plan. But we need also determination, flexibility, and the capacity to implement step by step."
A turning point came with Greenland, when the United States signalled that it regarded a piece of sovereign European territory as a potential acquisition. For EU member states, the episode was galvanising. "European member states started saying: we have to change. We have to react."
The transatlantic crisis that followed, with trade tensions, NATO uncertainty, and the withdrawal of US engagement from multilateral institutions, created the political urgency that integration had always lacked in peacetime.
"Trump is a great federator of the European Union. I'm sure that is not his primary mission. But the outcome is that the acceleration he brought to European integration is absolutely unique," said Letta.
The China conundrum
Europe's strategic recalibration does not reduce neatly to a pro-American, anti-Chinese realignment. Its relationship with China is more complicated.
“Europe has committed to decarbonisation,” Letta said. Much of the technology needed to achieve it, such as solar panels, wind components, and related infrastructure, is Chinese-made. At the same time, the EU's Industrial Accelerator Act aims to build domestic supply chains and reduce strategic dependencies.
Letta said, “Exclude Chinese technology and Europe's decarbonisation path suffers. Continue relying on it without protection, and Europe risks deepening its industrial dependency. The challenge is finding a balance.”
Why Southeast Asia should be watching
Bringing the discussion closer to home, Mancini asked what Europe’s recalibration could mean for Singapore and ASEAN.
For Letta, the timing is significant. Next year marks the 50th anniversary of EU-ASEAN relations, with Singapore holding the ASEAN chair. The EU wants to use that moment to upgrade the relationship to a "fundamental strategic partnership."
Both the EU and ASEAN are consequential actors trying to preserve strategic autonomy in a world increasingly dominated by Washington and Beijing. Both have an institutional commitment to multilateralism and the rule of law. Neither can afford to be absorbed into one camp or the other.
A comprehensive EU-ASEAN trade agreement remains a work in progress, complicated by sensitive issues within the bloc, foremost among them Myanmar. But Letta outlined a pragmatic path: an agreement involving willing ASEAN members, with opt-outs or exclusions where necessary, rather than waiting for unanimity. The bilateral agreements already in place with Singapore and Vietnam, and the recently concluded deal with Indonesia, provide a growing foundation.
For ASEAN policymakers, business leaders and academics, the question is not whether Europe's internal reform is interesting. It is whether a more integrated and more strategically coherent Europe could become a different kind of partner for this part of the world.
Letta's answer was an unambiguous yes. The giants woke Europe up. What Europe does next will matter well beyond its borders.