Europe before the abyss
The President of the European Commission, Ursula von der Leyen, began her recent speech on the State of the Union with a quote from Charles Dickens' A Tale of Two Cities from 1859: "It was the best of times, it was the worst of times". Dickens wanted to describe the situation of Europe, London and Paris in particular, in the time of the French Revolution. It is an appropriate quote because the speed of change then and now was and is formidable. The best of times for the opportunities it represents, the worst for the turbulence and dangers.
The acceleration of change is very great, from digitalization to the emergence of artificial intelligence (AI), passing through the misgovernance of globalization, a partial protectionist reversal and an emphasis on resilience, the predominance of networks and disinformation, demographic decline and immigration, as well as the consequences of climate change. The result is great geopolitical tension and an increase in populism in a world where the law of the strongest prevails – President Trump made it clear at the United Nations: "To the victor go the spoils" [the winner takes the spoils]. This is the world of before 1914 and the constitution of the United Nations after the Second World War. It is the world described by Christopher Clark in the book The sleepwalkers, which explains how the First World War was reached based on the conflict in the Balkans, when European powers declared areas of influence according to their interests and the correlation of forces. In the National Defense Strategy, the US has made clear its territorial claims over Canada, Mexico, Greenland and all the Americas.
The acceleration of change catches Europe off guard. Weak in defense, as we were taking advantage of the US umbrella; fragile in the economy, because we missed the train of the digitalization of large platforms and concentrated our effort on medium technology (such as the internal combustion engine vehicle without anticipating the electric vehicle and as a software platform); weak and fragile in energy, due to dependence on Russian gas and fossil fuels (despite the effort made in developing renewable energies), and fragile in foreign trade, because we depend too much on the Chinese market. The paradigmatic case of all these problems is precisely Germany, the engine of the European economy. The president of the European Central Bank already warned that growth in Europe was linked to a world that is disappearing. For the moment, we have already lost the first wave of development of foundational AI models, and the French company Mistral has already thrown in the towel.
The consequences of European weaknesses are evident. The weakness in defense means that the aggression in Ukraine needs the crucial help of the US and that we are victims of hybrid warfare and the Kremlin's nuclear threats. The European Union (EU) negotiates a trade agreement with Washington under conditions of inferiority (with President Von der Leyen going to Scotland to negotiate with President Trump at one of his golf courses) and Germany is subject to a secondChina shock that has already contributed to the rise of the far-right in the last regional elections. The first China shock in the US destroyed industrial jobs in the Rust Belt and helped the Republican victory in the 2016 elections.
The EU's priorities must be economic prosperity, strengthening autonomous defense capacity, and maintaining leadership in multilateralism, the rule of law, and the defense of liberal democracy. We need, in particular, to strengthen disruptive innovation and the science that accompanies it, and to establish alliances with liberal democracies (the United Kingdom, Canada, Japan, South Korea, Australia). The Canadian Prime Minister, Mark Carney, present at Von der Leyen's speech, wants to associate with the EU. We have the recipes (the Draghi, Letta, and Niinistö reports), but the EU needs a more centralized structure to make decisions that are more agile and less bureaucratic, overcoming divisions, divergences, and populist impulses. It has assets such as its economic weight, the development of the welfare state, respect for the rule of law, and regulatory stability, which can translate into advantages for attracting investment, and the potential to consolidate the euro with an ECB independent of political pressures, but with a meager budget. Furthermore, it holds the card of the company ASML, a crucial piece in the value chain for the production of the world's most advanced microprocessors with its extreme ultraviolet lithography machines. The EU tends to act when it finds itself at the edge of a precipice (Mario Draghi did this with the "whatever it takes"). Now we are facing a precipice with several sides. It will not be easy, but the EU must act.