The EU’s struggle to reconcile its ambitions with its dependencies

This week, I wanted to assess the recent event hosted in Rimini. In recent years, I have consistently argued that the European Union’s geopolitical posture cannot be sustained without a serious reckoning with its economic foundations. Indeed, long before Mario Draghi’s report on competitiveness was commissioned, I wrote extensively about the EU’s structural inefficiencies, its fragmented market, and its failure to adapt to the shifting global order, especially within the traditional lines of the MFF. My articles in this weekly column have repeatedly warned that unless the EU rethinks its economic model by ditching most of the bureaucracy, it risks becoming a spectator in a world increasingly shaped by assertive powers like Moscow, Beijing, and now, increasingly, New Delhi.

Draghi’s recent remarks at the Rimini meeting confirmed what many of us have been saying. The illusion that Europe’s economic size alone guarantees geopolitical influence has evaporated because of bad strategic decisions. Draghi’s speech was a sobering assessment of Europe’s marginal role in global affairs, from its limited influence in Ukraine’s peace negotiations to its passive stance on the humanitarian crisis in Gaza, although I hasten to add that the latter was their own doing. However, I only partially agree with Draghi’s framing. The problem is not simply that the EU lacks initiative although strategic mistakes were made. The deeper issue is that Europe remains a strategic vassal of the United States. Its foreign policy, defence posture, and even economic decisions are often shaped by transatlantic expectations rather than autonomous European interests. To become truly independent, Europe would need a minimum of 20 years of sustained investment, most of it directed toward military and industrial capacity. This would require a fundamental reallocation of wealth and scarce resources, and a political consensus to accept a decline in living standards. But after decades of enjoying the economic peace dividend, European citizens are unlikely to support such a transformation. The idea of strategic autonomy is therefore not just economically difficult; it is also politically fragile.

In Rimini, Draghi’s warning was clear. Europe is ill-equipped for a world defined by geo-economics, security, and supply chain resilience. The EU must adapt its political organisation to meet existential challenges. Draghi called for common debt issuance to fund large-scale projects in defence, energy, and disruptive technologies. Well, an idea long resisted by the frugal states. But without such bold moves, Europe will continue to fall behind. In one of my preceding articles, I analysed the paradox embedded in the EU’s current strategy. Draghi’s report proposes reducing red tape and allowing defence companies to access EU funds, potentially bypassing competition rules to enable mergers and monopolies. While this may be economically sound under Schumpeterian theory, politically it sends a troubling message, that the EU is willing to sacrifice market integrity and competition for military expediency.

This shift is not just theoretical. The European Commission’s Competitiveness Compass, unveiled earlier this year, builds on Draghi’s recommendations. It focuses on closing the innovation gap, decarbonising the economy, and reducing dependencies. But the implementation remains fragmented. While defence spending has surged – reaching a record €443 billion in 2025 – the EU still lacks a unified industrial strategy. Member states continue to resist harmonisation of tax regimes, pension systems, and market supervision, undermining the very integration needed to compete globally. And rightly so, because this is the only sovereignty left to member states. Looking at what Germany is proposing in pension and social welfare cuts, nobody would want to harmonise taxes or pension systems. The EU was founded as a peace project, not a military alliance. It was always NATO that shaped the EU’s security, rather than the individual member states’ spending. Yet recent developments suggest a dramatic shift. The White Paper for European Defence, Readiness 2030 outlines plans to rearm Europe, simplify defence investment rules, and mobilise €800 billion under the ReArm Europe Plan. A €150 billion loan instrument, SAFE, has been launched to support missile defence, drones, and cybersecurity.

This militarisation of the EU narrative is not without consequence. As I’ve written before, transforming the EU into a security provider risk undermining its founding principles, as well as its raison d’être. Security cannot thrive in an unstable economic environment, and we need to assess the impact of defence spending to be able to come to this conclusion. Economic instability breeds conflict, and Putin understands this quite well. Well, not just Putin, even Xi Jinping. That is why I’ve consistently advocated for keeping diplomatic channels open and resisting the impulse to militarise Europe’s identity. While the EU struggles to define its role, Moscow and Beijing are fostering closer ties, with India increasingly drawn into their orbit. Ironically, this realignment has been accelerated by Western policies. Sanctions, trade barriers, and selective diplomacy have pushed these powers to seek alternatives. The BRICS expansion, the rise of non-dollar trade, and the emergence of parallel financial systems are all symptoms of a world moving beyond Western dominance.

Europe’s response has been tepid. Trade deals with Mexico, Mercosur, and Indonesia are welcome, but they do not compensate for the strategic vacuum left by the EU’s absence in key geopolitical theatres. If the EU continues to rely on outdated assumptions about its economic clout, it will find itself sidelined in a multipolar world. As we approach Ursula von der Leyen’s State of the Union speech, the contrast between rhetoric and reality is stark. Von der Leyen’s previous addresses have leaned heavily on the fragmented language of unity, resilience, and progress, while in tandem using divisive language in reference to other countries. Beneath the surface lies a troubling pattern, of selective outrage, performative diplomacy, and an overreliance on symbolic gestures.

Von der Leyen has defended the EU-US tariff deal as a “conscious decision” to avoid a trade war. Well, to me it was a complete failure to negotiate. Draghi rightly pointed out that Europe was pressured into accepting tariffs and increasing military spending; moves that do not necessarily serve its interests. And this is why I said that the EU will always be a vassal of the United States, whatever they do. It’s the biggest superpower and we share the same values. There is no way to replace the US. We must be allies. Indeed, von der Leyen’s vision of a “strong and independent Europe” is undermined by the very compromises she celebrates. This year’s speech will likely accentuate the Competitiveness Compass, the Clean Industrial Deal, and the EU’s expanding defence strategy. But unless these initiatives are matched by structural reforms, such as common debt issuance, deeper market integration, and a coherent foreign policy, they will remain just illusions.

The EU is currently at a crossroads. On one path lies von der Leyen’s incrementalism, which includes trade deals, regulatory tweaks, and symbolic unity. On the other lies Draghi’s radical realism, which specifically calls for the tearing down of internal barriers, pooling resources, and confronting the geopolitical realities of our time. My own writings have long anticipated this moment. I have argued that Europe’s competitiveness cannot be restored without addressing its internal fragmentation. I have warned that militarising the EU’s identity risks alienating its citizens and undermining its legitimacy. And I have called for a return to diplomacy, economic coherence, and strategic foresight. True, the world has changed. If the EU does not change with it strategically, we risk losing our standards of living. The rise of Moscow, Beijing and New Delhi is not just a challenge; it is a mirror reflecting the West’s own contradictions. Europe must look into that mirror and decide what kind of Union it wants to be. However, being on its own is not easily achievable, at least not in my generation, and the US will always be part of the equation, at least for now.