(The opinions expressed here are those of the author, the

former head of communications at the Bank of England and a

former senior editor at Reuters)

By Mike Peacock

LONDON, Jan 20 (Reuters) - European Union leaders

meeting in Davos this week can be forgiven for fixating on the

multiplying threats to the world order - such as U.S. President

Donald Trump's bid to acquire Greenland - but they cannot afford

to do so at the expense of their long overdue economic reform.

It's been more than a year since former European Central Bank

President Mario Draghi produced an ambitious roadmap for euro

zone reform, yet little progress has been made. That's a big

problem because without rapid acceleration soon, reform may

simply never happen, ‌leaving the EU lagging ever further behind

the U.S. and China.

Draghi's blueprint calls for 800 billion euros ($930

billion) of investment annually for several years to boost

regional innovation, competitiveness and security. He cited IMF

calculations that reducing internal barriers to U.S. levels

could cause sluggish EU productivity to leap ​about 7% in seven

years.

CHART - https://www.datawrapper.de/_/le1Kn/

But even the prospect of a productivity burst hasn't been

enough to jumpstart the slow-moving, consensus-driven EU

machine.

Only 10% of Draghi's proposed measures have been implemented

thus far, according ‍to a report by the Brussels-based European

Policy Innovation Council last September.

The European Commission is trying. Its president, Ursula von der

Leyen, launched a multi-pronged ⁠strategy last year aimed at

pursuing many of Draghi's ⁠recommendations. But EU heads of

government ultimately set the pace of change, and several have

been less eager to move quickly.

For instance, some newer eastern EU members oppose extending

majority voting while Germany and the Netherlands have pushed

back against expanding mutual borrowing.

The opposition of a ‌single leader can scupper the best-laid

plans, and that's precisely why now is the time to act. France's

presidential ​election in 2027 may deliver a far-right leader who

would likely oppose any further EU integration and who might

even seek to reverse it.

If that occurs, all bets would be off.

UKRAINE FUNDING DEAL POINTS THE WAY

To determine how best to move forward, the bloc's leaders

need look no further than last month's EU deal to ⁠fund Ukraine's

war effort against Russia for the next two years. It could point

the way for Europe's ‍wider reform drive.

While EU ​leaders failed last month to deploy some 200

billion euros of frozen Russian assets to keep Ukraine afloat,

all but three of the 27 agreed on a 90 billion-euro loan.

That outcome underscores a key Draghi observation: the EU's

frequent requirement for unanimity paralyses progress.

To counter this, qualified majority voting could be extended

to more policy areas. As a last resort, ‍like-minded nations

could even go it alone on some projects, Draghi said.

Von der Leyen made a similar plea in her State of the Union

speech last year, saying: "It is time to break free from the

shackles of unanimity."

Unfortunately, a sweeping change would mean altering the EU

Treaty, and that would require - you guessed it - unanimous

backing by EU leaders.

But addressing the unanimity conundrum may be necessary

regardless of the challenge if any other meaningful reforms are

to be passed.

The Ukraine deal hits on another previously touchy subject:

joint EU borrowing. The loan - which Kyiv will likely not be

required to repay -- was mutually underwritten by 24 nations.

That's after all 27 EU members agreed in 2020 to jointly

borrow 800 billion euros for the bloc's pandemic recovery plan.

That was sold as a one-off crisis measure to placate states like

Germany and ​the Netherlands. But the ‍Ukraine bailout shows there

may be more appetite for mutual financing than previously

thought.

NOBODY'S PERFECT

December's Ukraine deal offers another lesson: don't let the

perfect be the enemy of the good.

The bloc certainly won't be able to address all of Draghi's

prescriptions, but leaders can tackle the parts of the report

that don't challenge the bloc's biggest taboos.

For starters, the EU could ​complete the long-discussed

capital markets union and simplify a regulatory system that is

fragmented across 27 states.

The European Commission has made progress on establishing a

single rulebook for the bloc, covering corporate law,

insolvency, labour, and tax law. But businesses complain the

progress here is too slow.

The EU's proposed savings and investment union would create

a single capital market that could attract more of the 35

trillion euros of EU household savings that are dispersed across

member states and often invested outside the bloc.

Experts warn that, even with political backing, this plan

would take years to implement, but that's no reason not to get

the clock running as soon as possible.

CHART - https://www.datawrapper.de/_/lhv8D/

The bloc's next long-term budget, which will cover

2028-2034, represents another opportunity for making progress.

The proposed 2 trillion-euro package is intended to boost

competitiveness, but it risks being diluted by key member states

such as Germany.

Europe has a history of acting just in time. But given

everything EU ​leaders face today - the bloc's productivity,

investment and innovation deficits as well as a crumbling world

trade order, an aggressive Russia, and an increasingly

unreliable U.S. - they are behaving with remarkably little

urgency. Time is short.

The views expressed here are those of Mike Peacock, the former

head of communications at the Bank of England and a former

senior editor at Reuters.

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($1 = 0.8625 euros)

(Writing by Mike Peacock

Editing by Marguerita Choy and David Gregorio)