The Global Trade -Who Dominates?

The European Union stands as a significant force in geoeconomics, alongside the United States and China. Despite this, it has historically lacked geopolitical sway and now faces a projected structural decline over the next 15 to 20 years. Here, we outline the primary contributors to this decline and propose potential strategies to tackle them:

Demographics present a hurdle, with an ageing population and a considerable portion of GDP directed towards social welfare. Energy scarcity poses a critical challenge, with the continent struggling due to insufficient energy production and the unavailability of affordable energy for citizens and vital industries. The current conflict landscape echoes post-World War II conditions, notably with Russia's aggressive actions towards Ukraine, which disrupt Europe's security architecture.

Escalating tensions in a new Cold War between the United States and China, dubbed "DragonBear," brings forth various challenges for Europe, such as the weaponization of resources, migration concerns, supply chain disruptions, energy transitions, and digitalization. The expected shift of the United States towards the Indo-Pacific region will require Europe to increase spending on security and defence, particularly in support of Ukraine.

Europe must engage in collaboration with leading powers like the U.S. and China in fields such as digitalization, quantum computing, artificial intelligence, and telecommunications to effectively manage the technological transition and maintain competitiveness. Attempts to mitigate risks by aligning more closely with China, similar to past strategies towards Russia, are likely to falter due to China's emergence as a dominant strategic rival shaping the future global order.

Russia's alignment with China in the context of the global power divide underscores the necessity for Europe to reassess its strategic alliances and adjust its position accordingly. Europe cannot maintain neutrality between the U.S. and China in the long term. Instead, it should concentrate on bolstering its European pillar within NATO, expanding free trade agreements, improving infrastructure connectivity, and prioritizing investment in innovation and entrepreneurship.

Streamlining military capabilities among EU members, establishing a professional army, and redefining roles and responsibilities can optimize resources and enhance efficiency. Shortly, Europe will require investments in the war economy and infrastructure, particularly in areas prone to potential conflicts like the Scandinavian and Central and Eastern European regions.

Neglecting these challenges risks pushing Europe towards political extremisms, undermining the European security order, and rendering the continent vulnerable to becoming a geopolitical tool in the 21st century.