Dealing with Europe's economic (in-)security
Economic security is going to occupy an increasingly important role in global politics. While the EU should aim to avoid a fragmentation of the global economy and support multilateralism, it needs to prepare for protectionism, a global subsidy race and weaponisation of interdependencies.
First, the EU must take geopolitical risks seriously and use stress tests and a data-driven approach to identify vulnerabilities. We propose creating a European Economic Security Committee to advance coordination between national security and European economic policymaking. Second, the EU must increase its resilience to better withstand economic coercion and be less affected by shocks. Resilience cannot be increased by protectionism but by keeping markets open and concluding trade agreements. Industrial policy has some role to play, but the EU should apply the ‘narrow yard’ principle in industrial policy and enhance cooperation to reduce the risks and costs of a global subsidy race. Third, economic security will require investments in European public goods such as R&D for defence, decarbonisation, technology and the reconstruction of Ukraine, which will be cheaper to procure at EU level. Strengthening the international role of the euro would add to Europe's economic security and financial power.
In today's global politics, if you are not sitting at the table, you are probably part of the menu’.
1 EUROPE'S PROBLEM WITH THE RISE OF GEOECONOMICS
‘In today's global politics, if you are not sitting at the table, you are probably part of the menu’. This phrase is increasingly common around the corridors of the European Commission in Brussels. It corresponds with the idea that the European Union (EU), sometimes characterised as an herbivorous power that performs well in a cooperative, rules-based world, needs to adapt to an international reality characterised by great power competition. Otherwise, it risks being devoured by carnivorous powers willing to use hard power and economic coercion, break multilateral rules and weaponise interdependence.
Increasing economic security and acquiring strategic autonomy are two crucial components of the EU's new Economic Statecraft. Both terms are broad and elusive, and the latter has received more attention than the former in recent years. In fact, the concepts of geopolitical Europe and strategic autonomy have been ubiquitous in both statements by European leaders and EU official documents. Ursula Von Der Leyen, the President of the European Commission, highlighted in 2019 the need for a ‘Geopolitical Commission’ to respond to the challenges of a more unstable international environment; Charles Michel, the President of the European Council, made the case for European Strategic Autonomy in 2020 (Michel, 2020), and the 2021 EU Trade Policy Strategy (European Commission, 2021a, 2021b) coined the term ‘Open Strategic Autonomy’ to emphasise the need to make trade openness compatible with autonomy.
While the term has remained vague and has allowed actors to project their hopes and fears into it (Tamma, 2020), there is an emerging consensus around the idea that strategic autonomy refers to the ability of Europeans to live as much as possible by their own laws and defend their interests without foreign interference. But since the EU's DNA is cooperative in nature and law, it needs to promote and defend its interests with partners when it can and act alone only if it is strictly necessary, in keeping with the principle: ‘Multilateral if you can, unilateral if you must’.1
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This article was first published on November 13, 2023 in Global Policy and can be found in the Wiley Online Library.