Four years…

It has been exactly four years since the first Russian missiles tore through the Ukrainian dawn on 24 February 2022. What many initially believed would be a “special operation” of days or weeks has now ground into a grim milestone: the war has reached a duration comparable to the First World War.

The human cost of this endurance has been staggering. As of this month, conservative estimates indicate that combined military casualties have reached a haunting two million, with Russia alone believed to have suffered more than 1.25 million killed and wounded. On the ground, the state of play is one of brutal, high-tech attrition. The 1,200-kilometre front line remains a scene of various assaults and relentless drone warfare; while Russia has recently claimed marginal gains in the north, Ukraine has successfully pushed back in the south, recently liberating hundreds of square kilometres. Yet, neither side has found the decisive blow.

This is no longer a localised dispute. It is a systemic rupture. It has evolved into a total war on information, where algorithms are as lethal as artillery and mind manipulation has become a tool of statecraft. We have lived through four years of unprecedented geopolitical tension, where the very architecture of global stability has been set ablaze.

If these four years have taught us anything, it is that the European Union had been living in a fool’s paradise. For decades, the EU treated security as a given rather than a responsibility. Europe outsourced its warmth to Russian gas and its safety to the United States. By relying on the NATO umbrella, while simultaneously underfunding its own sovereign capabilities, Europe became a continent of consumers in a world of predators.

The reality of 2026 is uncompromising. The prolonged agony of the Ukraine-Russia war, coupled with the return of a Trump’s presidency, with its scepticism toward traditional alliances, has left the EU with its back against the wall.

The argument against increased defence-spending is well-known: the opportunity cost. Every euro spent on a tank is a euro taken from a classroom, a hospital, or a green innovation lab. Yet, as the Draghi Competitiveness Report starkly highlighted, without security, there is no prosperity. To remain competitive and sovereign, the EU has no real alternative but to integrate further.

The path forward is no longer a matter of “if”, but “how”. To remain relevant in the new geopolitical situation the EU must inevitably look at the birth of a Federalised Europe, moving forward. This would likely mean the removal of unanimity with a shift of Qualified Majority Voting (QMV) to prevent single member vetoes from paralysing the continent and common defence funding, with joint debt issuance to fund a European military industrial base, among others.

This shift toward “Pragmatic Federalism” was the centrepiece of the recent European Industry Summit in Antwerp and the subsequent leaders’ retreat this month. Heads of state from the EU’s core, led by Germany and France, met to negotiate an ambitious Competitiveness Agenda that effectively seeks to transform the EU from a confederation into a federal power. Under this new vision, the Single Market would undergo its most radical evolution since 1992. This includes the creation of a “28th Regime”, a unified legal framework allowing innovative companies to operate across all member states without navigating 27 different sets of national rules. Furthermore, it envisions a fully integrated Energy Union and a Savings and Investment Union, centralising the supervision of financial markets to ensure that European capital stays in Europe to fund European defence.

This drive toward integration is increasingly carving out the possibility of a two-tiered European Union. The recent “E6” summit comprising Germany, France, Italy, Spain, Poland, and the Netherlands, signals the formalisation of a “core” Europe that is willing to bypass the slow-moving consensus of the 27. This first tier would operate as a federal state in all but name, sharing a common defence budget and harmonised fiscal rules. The second tier, consisting of states that cannot or will not follow this pace, would essentially remain in some sort of glorified free-trade area. While this “multi-speed” model prevents the entire bloc from being held hostage by a single veto, it risks turning the EU into an “onion” of varying layers of influence, where those in the outer rings have little to no say in the strategic direction of the continent.

For Malta, the EU’s smallest member state, this federalist shift introduces a radical new dynamic. From an economic perspective, a federalised Europe offers Malta a high-stakes trade-off between stability and competitive edge. On the advantage side, the “28th Regime” and a unified Capital Markets Union would be transformative for Malta’s thriving startup and fintech sectors, allowing local firms to scale across the entire continent without the prohibitive legal costs of navigating 27 different regulatory systems. However, the disadvantages are existential. The shift toward Qualified Majority Voting (QMV) in tax matters – a cornerstone of federalisation – threatens Malta’s sovereign right to set its own corporate tax rates.

For a small, peripheral island that uses fiscal flexibility to compensate for its lack of natural resources and high transport costs, the loss of this “tax tool” could jeopardise the financial services and iGaming industries that underpin a great chunk of its current prosperity. In essence while federalisation may save the European project, for Malta, it risks trading a unique competitive niche for a more stable, yet potentially less lucrative, role as a small cog in a massive federal machine.

As we approach our own General Election, the focus remains a race of who offers the greatest immediate electoral benefits.

Meanwhile, the tectonic plates of the world are shifting beneath our feet. This developing reality leading to the birth of a Federal Europe, will surely affect us all. Yet, our political class continues to “ignore” these existential questions, preferring the safety of local squabbles over the hard truths developing around us.