Europe’s strategy changed rapidly during the summer.
The Draghi report had generated enthusiasm about Europe’s ability to become more self-sufficient in generating new revenues. Insufficient innovation was the key to understanding Europe’s backwardness and the remedy for reversing it. Investment, to the tune of 5 percentage points of GDP, was the way. Mobilizing new resources was the key to generating new revenues, greater autonomy, and the ability to cope with a changing world.
Yet, this world has partly changed this summer.
Europeans have decided to increase their military spending within the framework of NATO. They will have to purchase more equipment from the United States. At the heart of innovation in the 1960s, the military-industrial complex is reforming across the Atlantic. Military subsidies enabled innovations that were then used in industry. This dynamic will be much more limited in Europe.
As a result, the potential for generating additional income through innovation will be lower than hoped. The weak growth in overall income will have to be shared between the working population, who generate this income, and the growing number of inactive people. This will be a source of tension.
The second element is the trade negotiations with the USA. In addition to customs duties, Europe has committed to purchasing 750 billion euros of liquefied natural gas over the next three years. Europe’s commitment to rapid decarbonization no longer appears to be a major objective, even though Europe, with its very strong growth in renewable energy, was in a very good position to gain energy autonomy. This essential objective is no longer one.
The investment of 600 billion in an American sovereign fund is also a terrible brake on the autonomy of capital markets and on European autonomy.
The third element is the meeting on Ukraine in the Oval Office after the one in Anchorage. The United States and Russia now enjoy good neighborly relations. The absence of a ceasefire as a prerequisite for the talks indicates that peace will only come through geographical division. This is Vladimir Putin’s position.
Europe is marginalized; it will not participate in the upcoming meetings, but will be responsible for Ukraine’s security and reconstruction. Europe will therefore have to mobilize significant resources for this. Will the European taxpayer agree to this effort when income growth will be limited?
Europe is weakened in a world that is rebuilding without it. Strong political will is needed to innovate, decarbonize, and restore a robust internal dynamic that is less dependent on the rest of the world.
This is a new framework that needs to be defined very quickly to avoid the marginalization of Europe being enacted at the risk of a dramatic dismantling of the continent.