The European Union is “struggling” to respond to the changing world order, former Italian Prime Minister Mario Draghi said late Friday, promoting “pragmatic federalism” as a way to overcome the bloc’s difficulties.

“Almost all the principles on which the Union was founded are under strain,” Draghi said in a speech in Oviedo, Spain, after receiving the Princess of Asturias Award for International Cooperation.

“We built our prosperity on openness and multilateralism, but now we are faced with protectionism and unilateral action” and the “return of hard military power,” he continued, arguing that the EU as it currently works is not equipped to address these challenges.

The problem, Draghi said, is that “our governance has not changed for many years” and the European structure that exists today “simply cannot meet such demands.”

To overcome the economic, social and security challenges facing the bloc, the EU urgently needs to reform itself and change its treaties, argued the former president of the European Central Bank and author of a landmark report on the EU’s competitiveness in 2024.

“A new pragmatic federalism is the only viable path,” Draghi stressed.

Such federalism would be “built through coalitions of willing people around shared strategic interests, recognizing that the diverse strengths that exist in Europe do not require all countries to advance at the same pace,” Draghi explained. “All those who wanted to join could do so, while those trying to block progress could no longer hold others back.”

Concretely, that would mean a multi-speed Europe.

Such coalitions could support the emergence of European champions in industrial sectors such as semiconductors or network infrastructure, cutting energy costs and pulling innovation efforts across the bloc, according to Draghi.

But this federalist leap would require national governments to give up their veto power, something that has historically drawn resistance from smaller EU member countries which fear being sidelined by their larger counterparts.

It’s not the first time Draghi has advocated for a more federal Europe. He made a similar push in 2022 while prime minister of Italy, calling on his EU colleagues to embrace “pragmatic federalism” and to put an end to national vetoes in order to speed up the bloc’s decision-making process.