• EU unanimity rules and rigid structures hinder rapid crisis response.
• Europe must revive the single market and cut red tape to boost competitiveness.
• The green transition's pace was overly optimistic and economically flawed.
• Rail Baltic is strategically vital, but delays — especially in Latvia — are unacceptable.

The European Commission has now concluded its disciplinary proceedings, so that chapter has been closed — yet you are still in Brussels. Why?

I am indeed currently in Brussels. At the moment, you could say that my home is here and from here I will consider what next steps to take in my life.

Where might those next steps take you? Will they be in Estonia, somewhere else in Europe or perhaps on other continents?

Like most people, when something changes in their lives, the first instinct is to say: I'll take some time off and see what happens. At this point, I have not yet made a clear decision, but I am thinking and weighing different options.

I am still at an age where it is possible to do something interesting and exciting in life and I hope that opportunities that could truly spark my enthusiasm may present themselves.

Have you already received any offers? You have extensive experience with how the European Commission operates — people with that kind of background are not usually left on the sidelines.

People do stay in touch, which in itself is nice — it means you are not forgotten. I am taking things one step at a time. It would be inappropriate at this point to speak about anything specific, but one day you will certainly hear about it.

There is no longer any risk of new investigations, is there? Belgian police or other law enforcement authorities are not going to start going through documents? Is this disciplinary proceeding truly closed or could something else still emerge?

No, it is closed. Let's move on with life.

Let's move from your personal situation to Europe's concerns. You can now speak more freely about the European Union. What is the biggest problem facing the bloc?

Let's first look at the positive side — despite all its shortcomings and mistakes, the European Union and the cooperation between its member states is probably the best thing that has ever happened in Europe.

That said, the EU, with its expanded structure, has reached a point where it is very difficult to operate within the framework of the existing treaties.

Some might respond by saying: well then, let's amend the treaties. I consider that unlikely and more of an academically interesting debate because I do not see a single country or head of government who would be eager to hold new domestic referendums in countries where referendums are mandatory.

Changing the treaties requires the approval of all member states and today I do not see 27 countries enthusiastically ready to do so.

This is a serious challenge: how to move forward within the current structure and treaties and how to increase the European Union's capacity to respond to change.

The EU functions ideally when everything around it is stable and life proceeds along a normal path. We have seen this — countries and people have grown more prosperous and things have improved. But as soon as crises arise, problems also emerge in finding ways to resolve them.

Since the euro crisis, it has been very difficult to find solutions within the framework of the existing treaties and even today solutions are being sought outside them. Take, for example, the debate over providing a loan to Ukraine: the agreement of all 27 countries is required, but since all 27 have not yet agreed, alternative options are being explored.

I believe that in the future there will be more and more issues where solutions are sought outside the treaties because the unanimity requirement has, in a sense, become a set of handcuffs.

Let us not forget that Estonia has long been one of the countries that supported unanimity, even though it was clear long ago that from the perspective of the EU's functioning — particularly in foreign policy — it would become increasingly problematic.

In foreign policy, maintaining a unified line is a major challenge in relations with four countries: Russia, China, more recently the United States and Israel.

Another obstacle that prevents a rapid and effective response is the seven-year budget framework. In good times, it is the best possible system as it allows for long-term planning.

But in times of major crises, the budget also becomes a constraint. Over the course of the budget period, priorities change because the world around us changes rapidly.

Let me give one example: critical raw materials. This is an extremely important issue. We are absolutely dependent on China for 20 of the most important raw materials needed for the digital industry, the defense industry and innovation. China controls the value chain in 19 of them.

Addressing this concern requires funding — and not a small amount. When the current seven-year budget and plans were drawn up, this issue was not considered important and funding allocations were therefore limited. Now it is difficult to find the necessary resources within the existing budget and to respond adequately to what China or the United States are doing in resource-rich countries to protect their interests.

The European Union is not capable of finding ways to financially support entrepreneurs' investments to secure access to critical raw materials. And yet these are often countries that are friendly toward us — but the money simply is not there.

At the same time, under strong pressure the EU is prepared to act — take, for example, efforts to find the necessary funding to build up the defense industry.

If it were up to you and you could design a new model for the European Union, what would you do differently?

As an economist, one of the most important components of the EU for me is the single market. Thanks to its creation in 1993, Europe has become much more prosperous, companies have gained major opportunities and we now have the most attractive market in the world: purchasing power is high and consumers are demanding. If you can sell here, you can sell anywhere. But that success story was left unfinished — or rather, it was pushed into the background.

Former Italian Prime Minister Enrico Letta was recently asked to write a report on the functioning of the single market. Letta said in an interview last week that the most effective response to the United States and Donald Trump is a well-functioning single market. He is largely right about that.

Another important document is the report by Mario Draghi. Everyone praised the Draghi report and said it needed to be implemented, but let's be honest — much of it restated previously known problems in a new way. These are issues that should have been addressed long ago and that has long been understood. In reality, however, they have been left hanging and the focus has shifted away from the single market.

The biggest concern is related to the capital market, which is also the reason why innovative companies are leaving Europe. We have plenty of money, but what is lacking is the political will to create a genuine capital markets union that would allow that money to move more freely within the bloc. We need to return to resolving the issue of the free movement of capital, even though I understand that it is not as popular as launching new initiatives.

Second, there is a great deal of talk about competitiveness, but it has become an empty buzzword — a mandatory part of speeches. Competitiveness means that we must reduce regulations and barriers.

It is regrettable that the European Union's most competitive industry — the automotive sector — is no longer number one in the world, as it was five or 10 years ago. We have surrendered our leading position through our own policies, which in practice means lost jobs and lost innovation.

I would like to see a truly pan-European approach at least in the defense industry. If everyone tinkers away in their own corner, there will be no economies of scale. The problem is that issues are still viewed too much through a national lens and that is a hurdle we have not been able to overcome.

Let me give an example from my former field: the EU's single European air traffic management system is in a completely hopeless state and it is hard to understand why we have not been able to finally complete it. The obstacles involved come with enormous costs. The same applies to a unified rail system — the artificial restrictions are absurd. Yet getting rid of them has proven almost impossible.

You mentioned the automotive industry. But isn't the European Union itself largely to blame here for trying to push the green transition too quickly? Car manufacturers were confused for years, the uptake of electric vehicles has not matched expectations and now decisions are being reversed.

I agree with that. I have always believed that processes should be as market-based as possible and that the market should ultimately determine outcomes. The regulator's role is to ensure a level playing field and to nudge policies forward, but this must happen gradually.

In some areas, it was clear that we went too far, assuming that once regulation set a target, technology would quickly catch up. I remember discussions where it was pointed out that the necessary technologies simply did not yet exist and the response was: they will surely come. But you cannot base major changes on hope alone.

I have always been skeptical about electric vehicles and I have to admit that my skepticism has proven justified.

I have nothing against electric cars, but I predicted that their adoption would not be as rapid as forecast because of price, convenience and the lack of charging infrastructure.

The consolidated losses of the U.S. automotive industry were reportedly around €68 billion due to excessive optimism, with too much money poured into electric vehicles. Listening more closely to the market would have a genuinely positive effect on Europe's competitiveness.

There has also been a certain negative attitude toward entrepreneurship, business and especially industry, which is often viewed as outdated. That is a major mistake.

The European Union's economy can only be built on a strong industrial base in the future as well. Looking back at the previous decade and the coronavirus period, for many it was — cynically speaking — even positive because it triggered uncontrolled money printing.

This created a dangerous mindset among politicians that it no longer really mattered where money came from. We all know that money comes from business activity and the taxes that can then be redistributed. But the perception emerged that business was no longer so important — after all, there was money printing. We know how badly that ended: it led to a major wave of inflation and had a harmful impact on the economy.

During the coronavirus crisis, this approach was legitimized, but today we need to move away from that mindset. A better environment for business, along with a well-functioning single market and capital market, is what will generate real revenue for national and EU budgets.

Speaking of Ursula von der Leyen and the previous European Commission — was the green transition made a priority simply to leave an ambitious mark in history? The Commission came into office, the public sentiment seemed favorable and things just started rolling from there?

The goal itself was noble — who would not want to live in a better natural environment and breathe cleaner air? At the time, climate was a very important issue for people, as reflected in opinion polls presented to us, and the Commission had to act. The green transition was therefore made a priority.

The problem has not been the principles, but rather the methods and the speed of the process. The green transition could have functioned much better if it had been more business-centered and taken greater account of the economy and jobs. In addition, the pace of the transition was defined incorrectly, driven in part by excessive optimism.

Going forward, the Commission must ensure that its decisions do not generate additional bureaucracy and reporting obligations. Large companies can manage, but for small and medium-sized enterprises this is burdensome. The principle itself was not wrong, but the methods would have benefited from a stronger dose of economic realism.

We have certainly become more prosperous, but when we compare Europe with the United States or China, others have moved ahead. Doesn't responsibility lie partly with European Union decisions — or does a comfortable life simply reduce ambition? We debate how effective a four-day workweek might be, while in the United States that idea is often laughed at.

It is true that Europe is a very good place to live. Access to healthcare, education and social support is different from much of the rest of the world. That is part of Europe's DNA and I do not believe any European wants to fundamentally change it.

The challenge is to find a way to preserve these privileges so that quality of life does not decline, while at the same time ensuring economic growth. Europe is capable of growing faster where, once again, I return to the single market. I hope that national capitals that are blocking the removal of barriers will relent and allow Europe to develop.

In recent years, hasn't the single market increasingly been distorted by wealthier countries? Germany and France are making major investments because they have greater resources. Doesn't that create unfair competition?

I absolutely agree. Wealthier countries have more resources to support their companies. In real life, competitive conditions should be more equal. At the same time, without the single market, it would be extremely difficult for Estonia to succeed in exports.

During times of crisis, concessions have been made and I hope this does not become the norm. It is the European Commission's responsibility to ensure equal treatment — there is no alternative.

Hungarian Prime Minister Viktor Orbán's behavior has been particularly brazen in recent weeks, though that is understandable — he faces decisive elections and politicians tend to shift into overdrive during campaigns. But Hungary is small and relatively poor, a peripheral member state. The real concern is if similar egoism deepens in large countries — and there are signs of that. If it happens in Germany, is the European Union, as the Germans say, kaputt?

The Hungarian example is a good illustration of the unanimity problem. It is also brazen when two completely unrelated issues are tied together — "If you don't do this, then I won't do that." That moves far away from the principle of a united Europe. Slovakia's behavior today is similarly problematic, especially on the issue of Ukraine.

But we live in democracies. Voters in each country pass judgment and express their wishes. For some, the choices voters make cause concern and confusion. But you cannot lump everyone together.

Ten years ago, the party of Belgium's current prime minister was considered far-right; today, it is regarded as a fairly typical center-right party.

For example, when Giorgia Meloni became Italy's prime minister, there was great concern that a far-right figure was coming to power. In practice, she has proven effective and has strongly supported Ukraine on matters of principle. Signals can be misread and labeling has gone too far.

In Germany's case, under Chancellor Friedrich Merz I see a kind of "new beginning" — with a focus on developing the defense industry and reducing regulation in the economy. Germany will certainly restore its role as an economic engine and that gives me optimism.

Another country that inspires optimism is Poland. What has happened there economically over the past 10 years is remarkable, yet we speak of it too little. Poles who left 15 to 20 years ago in search of better opportunities abroad are now returning home to more lucrative jobs. So it can be done, if there is the will to act.

In Germany, populist parties are present, but the country has historically been governed by coalitions and I do not see anyone eager to cooperate with them.

The key question instead is why voters are disappointed and how to address that disappointment. That is the central issue in many countries.

France will hold presidential elections next year, which will also be tense, but I believe that once in power, leaders tend to act more responsibly than they do during election campaigns.

In Estonia, there has been debate about whether our foreign policy should be based on firmly fixed positions or whether we should consider alternative scenarios. For example, could the European Union fragment into more regionally focused groups of cooperation? Countries around the Baltic Sea face different concerns than those on the Iberian Peninsula.

Debate is always useful, even if it does not immediately lead to policy change. Ideas that do not align with the mainstream can still be valuable and may later provide good solutions that can be implemented. Discussion is necessary.

Substantive cooperation with neighbors has always been a priority for Estonia and due to Russia's aggression, cooperation with the Nordic and Baltic countries has intensified significantly. At the same time, for others to understand us, we must also understand them. Southern Europe's challenges, such as migration, must be as close to our hearts as our own concerns are to them.

Could the European Union become more regionalized? It is not impossible, but it would happen within the broader framework of the EU. There is already a mechanism within the bloc known as "enhanced cooperation" — such as the Schengen area — which could be used more in the future if the full union does not move forward at the desired pace. This deserves closer examination and consideration of different options. I know that I have previously said that this could further fragment the EU.

But perhaps the European Union as we knew it 10 to 15 years ago no longer fully exists. The world around us has also changed. We cannot expect everything to revert to the way it once was. It will not and that means principles that once seemed firmly established may need to be reassessed.

That is why discussion is necessary, because things will not continue as before. We need foresight, both for the coming years and for the next decade.

I would draw a parallel with the United States: a major mistake was made after Donald Trump's first term when many in Europe assumed he would never return. Instead of maintaining ties with his close circle and preparing for a possible second term, there was a sense that the chapter had closed.

Had more development scenarios been considered, the steps taken in Trump's first weeks would not have come as a surprise. Instead, we are now learning through difficult experience.

Transatlantic cooperation is indispensable, but when dealing with the current administration, old methods no longer work. We need courage and a willingness to demonstrate strength, rather than allowing ourselves to be squeezed between a rock and a hard place. If we stand up for ourselves and demonstrate our power, the other side will also tone things down. We have the economic capacity to do so.

You were responsible for transport for a long time. What has gone wrong in the decades-long saga of Rail Baltic that now, in 2026, the Estonian government is passively watching as Latvia fails to build the railway toward Estonia?

I have not been directly involved in recent years, but I have no doubt about the value of this railway. By now, the project has gained an additional defense dimension, which is critically important for the Baltic region. The war in Ukraine has shown how quickly railways can be restored even after destruction.

In the early years, Lithuania was the most problematic partner, as it had its own vision that did not align with its neighbors or the European Commission. But solutions were found. Today, Lithuania is in fact the most efficient of the three and Estonia is also making major strides. Latvia, which at first seemed the strongest partner, has clearly become stuck.

The first major mistake was that too much time was spent on organizational matters instead of moving forward with actual construction. I myself repeatedly called for work to finally begin. Planning is complex, but it certainly could have been done faster and more efficiently. And as time passed, construction and material costs only increased.

I see no alternative but a "carrot and stick" approach. At one point, for example, we made it clear to Lithuania that if European Commission requirements were not met, funding would not follow.

With Latvia, a firmer stance should have been taken, insisting on progress in the northern direction. Already three years ago, when I left office, it was clear that Latvia was not ready to build northward. They invested too heavily in the airport and the Riga central station, rather than focusing on the main line.

Hopefully political pressure will ultimately compel Latvia to find solutions. Poland, for example, has largely completed its part of the work, so the current delays are no longer acceptable.

Henrik Hololei was dismissed by the European Commission in January 2026 over his accepting of luxury perks from the Qatari government while he was leading negotiations for a major aviation deal that benefited Qatar Airways.

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