The peace dividend is spent. Russia’s escalating military aggression against Ukraine, the potential return of a protectionist U.S. administration, and China’s rapid technological advancement and export dependency have fundamentally altered the rules-based international system into which the EU was born. While Europe’s necessary rearmament poses hard economic trade-offs for already debt-burdened member states, the near-term macroeconomic effects of weaponized uncertainty and China’s mercantilism have remained modest. However, this is no reason for complacency.
The EU faces significant medium-term challenges, with US-China rivalry and increased multipolarity promising to dominate geopolitics into the mid-2030s. In all plausible scenarios, the EU must strive towards a far higher degree of strategic autonomy by enacting an ambitious domestic reform and foreign policy agenda.
To achieve military autonomy within a NATO alliance still characterized by transatlantic military interoperability but not defined by the US Article 5 security guarantee, the EU must institute a genuine single market for the defense industry. This involves promoting the adoption of artificial intelligence (AI) and creating a European equivalent to the US Department of Defense’s Defense Advanced Research Projects Agency (DARPA) to foster innovation in dual-use technologies. Dual-use technologies, which have both military and civilian applications, are crucial for maintaining a competitive edge in both defense and economic sectors.
To secure its economic welfare, the EU should introduce a digital euro and well-regulated euro-based stablecoins. These financial innovations can enhance the EU’s economic resilience and ensure financial stability in the face of global economic uncertainties. Additionally, integrating Europe’s electricity network can lower costs and emissions, promoting sustainability and energy efficiency. The EU should also focus on promoting critical raw materials recycling, practicing selective stockpiling, and innovative substitution to reduce dependency on external suppliers. Reforming fiscal rules is essential to enable low-debt member states to pursue European policy goals effectively.
Global Trade and Cooperation
Globally, the EU can reject protectionism by pursuing an assertive rules-based trade liberalization agenda with like-minded countries, particularly non-OECD nations. This approach not only fosters economic growth but also strengthens international cooperation and promotes a more equitable global trading system. Beyond trade, the EU must form and lead coalitions of the willing to protect global public goods. The most pressing global public good is the climate, and the EU should take a leading role in mitigating climate change through international cooperation and policy initiatives.
Technological Advancements
The EU’s strategic autonomy also involves enhancing its technological capabilities. By investing in research and development, the EU can become a global leader in emerging technologies such as AI, quantum computing, and biotechnology. These technologies have the potential to revolutionize various sectors, from healthcare to transportation, and can provide a competitive advantage in the global market. The EU should also focus on building a robust digital infrastructure to support the digital transformation of its economy and society.
Defense and Security
In the realm of defense, the EU must develop a comprehensive and integrated defense strategy. This includes increasing defense spending, enhancing military capabilities, and fostering greater cooperation among member states. The EU should also invest in cybersecurity to protect against cyber threats and ensure the security of its digital infrastructure. By strengthening its defense and security capabilities, the EU can better protect its citizens and interests in an increasingly uncertain world.
Foreign Policy Agenda
The EU’s foreign policy agenda should be guided by the principles of multilateralism, human rights, and the rule of law. The EU should work closely with international organizations, such as the United Nations and the World Trade Organization, to promote global peace, security, and prosperity. The EU should also engage in diplomatic efforts to resolve conflicts and promote stability in regions affected by instability and violence.
In conclusion, the EU must take bold steps to achieve strategic autonomy and address the challenges posed by US-China rivalry and increased multipolarity. By enacting an ambitious domestic reform and foreign policy agenda, the EU can secure its economic welfare, enhance its defense capabilities, and promote global public goods. The EU’s success in achieving strategic autonomy will depend on its ability to foster greater cooperation among member states, invest in emerging technologies, and promote multilateralism and the rule of law. The EU must be proactive in addressing these challenges to ensure its continued relevance and influence in the global arena.
