Under the distracted eyes of European politicians, who are busy negotiating appointments, Europe is on a new train, whose path is determined by the end of the so-called "peace dividend" on which it has built its growth model since the post-war period. The data show that globalization is not over, but is being reoriented in relation to a new geopolitics characterized by the conflict between China and the United States, for which Europe is unprepared and vulnerable, both because of its economic model and because of its geographical proximity to the wars in Ukraine and the Middle East, which are proxies for the hostility between China and the United States. Economically, if hostile bilateralism between China and the United States were to prevail, Europe would be the continent most affected for several reasons. EU industry imports most intermediate goods from countries with authoritarian political regimes, and these are goods that are not easily substituted. In addition, its technologies require raw materials whose supply could be vulnerable to economic coercion if geopolitical conflicts escalate. Finally, it is dependent on exports. From the perspective of hostile bilateralism, the problem is not only China, but also the new protectionism of the United States, which is also an important market for the Union's foreign trade. Examples are the tariffs on European steel and aluminum exports introduced by the Trump presidency and motivated by national security concerns, or the commercial dispute between Airbus and Boeing. In response to the new context, in December 2023, Lady Ursula spoke for the first time about the need for a European policy of "de-risking". The EU has put in place various tools to map and monitor the vulnerability of the European economy to the dependence of certain countries that could potentially use it for political purposes. The idea is not to renounce the benefits of international trade, but to diversify geographical exposure by means of preferential agreements between countries or financial instruments such as development aid to certain countries, especially in Africa. But it is not easy and Europe is late. Therefore, it aims above all to strengthen its industrial policy in order to develop its own productive capacity. Recent legislative actions of the Union, such as the Chip Act and the Net Zero Industry Act, go in this direction, following the path already taken by the United States. However, there are two fundamental problems. First, these instruments come at a cost. Both in economic terms - think, for example, of the decarbonization costs of Europe's recent restrictions on imports of Chinese solar panels - but above all in political terms. One consequence is the erosion of the Union's internal cohesion. Member states have different interests, depending on their degree of vulnerability and potential retaliation, the structure of their economic dependence, and the different countries to which they are exposed. It is no coincidence that German car manufacturers have sharply criticized the (preliminary) tariffs recently decided by the EU on Chinese electric cars, arguing that the measure will have negative consequences for German companies in the sector that produce in China. This is just the beginning of a series of a thousand battles. Another potential political cost is that, in the absence of appropriate federal instruments, national industrial policies can undermine the functioning of the single market. Hence the need for a European Institute for Industrial Reconstruction, which would be seen by the European caviar liberals as too heavy-handed an instrument of federal intervention. The second problem is that "de-risking" requires not only diversification and industrial policy, but also instruments to share the costs of possible retaliation leading to shortages of key production inputs or restrictions on export markets. In fact, the first steps in this direction have been taken, such as the recently approved Anti-Countervailing Instrument.
These are measures aimed at making the best use of the Union's size and internal diversification to protect each other from the costs of geopolitics. They call for a strengthening of economic integration and of the coordinating role of the European Commission. Above all, they are not credible without a common foreign policy and thus a leap in integration, including political integration. These considerations are all the more valid if one considers that Europe should be even more ambitious and present itself as a protagonist of a new multilateralism, including the new emerging countries, which can be an alternative to the hostile bilateralism between China and the United States. Without a common political capacity, without common financial instruments that allow the technological innovation necessary to maintain competitiveness, without cross-border industrial aggregations, without leadership and strategic capacity, this project seems as unrealistic as ever. In the most fragile situation of its post-war history, Europe finds itself acephalous, in a situation where democracy and integration wear each other out. Never before has there been such an existential and security risk, underestimated by politicians, entrepreneurs and citizens.
