Europe needs to go geopolitical, fast
If anyone in Europe still harbours any illusions about state of the world, a group photo from the last week’s BRICS summit in Kazan should suffice. At the start of the 21st century, BRIC(S)-countries – first Brazil, Russia, India, China, joined in 2010 by South-Africa – were considered the next big thing in the globalizing economy, grouped and coined as the destiny for new growth and investment by Goldman Sachs. Now, these foundational countries are busily transforming their club into a geopolitical force. Iran, Egypt, Ethiopia and the UAE formally joined the BRICS last year and this year’s summit saw 24 countries attending, including Turkey, Armenia, Azerbaijan and Saudi-Arabia, all symbolically hosted by none other than Vladimir Putin himself.
The summit in Kazan focused on reforming global economic and political governance, a BRICS payment system, energy cooperation, and safeguarding supply chains, all tools in the armoury to make participants less dependent on existing institutions and networks. This serves the shared strategy of countries such as China and Russia that – as the Chinese president Xi publicly declared in Moscow during his first international trip after the pandemic – ‘are driving changes together, the likes of which we have not seen for 100 years’. BRICS countries have become the building bricks of an alternative to the established order that they now consider a western straightjacket for their respective national aspirations. To see countries like Brazil, India and Turkey partake in such endeavour hosted by the invaders of Ukraine, is to see enmity for the free world joined by opportunism to play both sides at once, each exposing the collective weakness of the West.
For the European Union, such geopolitical upheaval represents both a transformative and existential challenge. The EU is institutionalized hyper-globalization built upon the preexisting global order. A paragon of free trade, open borders, peace, human rights, and market economics, the EU must transform to learn the art of strategic trade, secure borders, conflict management, realpolitik, and industrial policy. Only by adapting to a global reality in which it is no longer a role model but an outlier can the EU continue to serve the individual interests of its member states. Failing to do so, will turn the already existing economic and demographic decline of Europe into geopolitical demise that risks undermining the very fabric of the EU itself.
To be fair, the Ukraine shock has spurred Europe’s political leaders into adopting a series of measures elevating the EU as the cradle of geopolitics in and for Europe. The sanctions regime against Moscow, energy deals with third countries, the screening of imports, the controlling of exports, anti-dumping measures, European autonomy in critical economic and technological sectors, a European Defence Fund, strategic foreign investment in third countries: all of these are symbolic developments. In time, provided they stand the test of reality and scale, they may gradually transform the European unification project itself. But compared to evolutions outside Europe – in Russia, China and the US – they are too little and too late. Russia keeps growing its war economy and increasing its war effort, China is still flooding our markets, and a protectionist US is still Europe’s indispensable saviour.
Collectively, the member states of the European Union face three fundamental geopolitical challenges. First, how to end the war in Ukraine in a way that honours the sacrifices of the Ukrainian people while checking the Russian threat along Europe’s long Eastern border – just look at the recent election shamble in Moldova and Georgia? Second, how to reset our economic relationship with China on a post-globalist geopolitical footing? Third, how to reengage and partner with a USA that is politically less reliable and is overstretched on multiple fronts outside Europe – think Asia, the Middle-East, and South-America? Beyond short-term opportunism, none of these challenges can be successfully addressed by anyone European country on its own, while any failure in addressing any of these challenges collectively equals defeat for all.
This is what a geopolitical EU could mean. Mobilize enough support for Ukraine to achieve a combination of territorial integrity with stability in occupied areas, while taking the lead in rebuilding the infrastructure, economy, and institutions for a robust European Ukraine. Reinvent EU-membership to enable proactive security and defence integration with third countries across the entire Eastern EU-flank. Together with the US and other allies where possible, fast-track autonomy in technologies and sectors considered of strategic importance. Reset the trading relationship with China accordingly while ensuring fair trade and investment reciprocity across the board.
Can Europe pull any of this off? In a previous age, the former European Commission president Jean-Claude Juncker quipped that Europe’s leaders “all know what to do, but we don’t know how to get re-elected once we have done it.” Today, many of our leaders appear not to know what to do in the first place. For a long time, geopolitics was mostly absent from the European stage, a policy vacuum filled by peace and American munificence. An indispensable country such as Germany still needs to turn the page on the 20th century if it is to become geopolitical in this century. Some European leaders, the French president Macron most prominently, do have a clear geopolitical vision for Europe. However, none know how to pursue it by consensus at the European level. Macron’s warnings and exhortations for a geopolitical Europe mostly fall on deaf ears while he continues to pursue a very pro-France investment agenda at home. Finally, even if a degree of common geopolitical strategy could be achieved, we lack resources at the European level to implement it. The European Union’s budget is little more than one percent of the EU GDP.
So what are we to do? I suggest three concrete initiatives to build on existing EU policies and rise to the geopolitical challenge. First, enable Europe’s fragmented capital market to pool a common ‘war and peace bond’ for Ukraine through an ad hoc financial instrument, aiming for a war and reconstruction chest of at least 500 billion euros. Second, prioritize at five critical technologies or industries where Europe needs strategic autonomy, and fast-track an Airbus-style model for each. This means clustering capacity and investment transnationally and enabling coalitions of the willing among member states, facilitated by appropriately flexible rules for market access, market funding, state aid and fiscal discipline. The EU itself can focus and leverage its funding capacity in tandem, generating in Europe the mixture of funding and support that has turned the US Inflation Reduction Act into a flywheel for industrial investment. Third, build on existing partnerships to offer a first-stage EU-membership level focused on security and defense, to all current and potential candidate countries and to be achieved within a period of three to five years, supported by targeted access to the common market in the relevant industries.
Through pandemic and war, the European Union is adjusting to a new geopolitical reality with many sensible priorities and plans – just think of the recent Letta and Draghi reports and the many white papers prepared by the Brussels machinery. We need to move from planning to action quickly, from reports to visible initiatives that can win the hearts and minds of citizens and businesses. The overall sense of direction is now clear. Setting concrete targets with deadlines and enabling groupings of member states and businesses to move ahead, faster and deeper than the rest, can help inject a welcome dose of ‘can do’ urgency. Only by delivering such tangible results will a geopolitical Europe really take shape.
