In Summary
Trump launches an attack on the EU as a geopolitical entity. The attack on its rule-making power remains unanswered.
The withdrawal of the US security umbrella is clearly linked to the attack on Europe’s rule-making power.
The EU can strengthen and defend its economic and regulatory influence in the following ways.
Trump has launched an attack on the EU as a geopolitical entity. The American security umbrella over Europe is giving way to a thick, dark Russian cloud cover. It is causing European taboos to crumble at record speed: shared debt, more flexible budgetary rules, an additional investment of €800 billion, the German debt ceiling, and a Franco-British nuclear doctrine. All in the name of getting European deterrence in order. The other attack – that on the EU’s rule-making power – remains, however, unanswered.
Two sentences in Vance’s speech revealed the Trumpian perception of Europe. They have been haunting my mind ever since the Munich Security Conference: ‘For years we have been told that everything we fund and support is in the name of our shared democratic values. Everything from our Ukraine policy to digital censorship’. In other words, the arrogant, finger-wagging Europe is parasitising on American dependence under the pretence of shared values. The sting, however, was in the tail. Vance equated ‘our’ Ukraine policy with digital censorship.
In doing so, he not only disregarded European security interests, but also criticised our ability to set rules, particularly for tech giants. The withdrawal of the American security umbrella bears a clear resemblance to the attack on the EU as a rule-setting power. Indeed, the EU appears to be the only entity capable of standing up to the American high-tech oligarchy.
On the basis of the DMA, the GDPR and competition law, the European Commission has imposed fines running into several billion on Apple, Google and Facebook. In doing so, EU regulation curtails the digital scope and monopoly position of the tech giants. The importance of our regulatory power can scarcely be overestimated, particularly now that the AI era has dawned.
It comes as no surprise that Musk and Zuckerberg are steering the MAGA bandwagon towards a head-on collision with the EU as a geopolitical entity. “If another country were to target a key American industry in this way, the US government would respond,” said Mark Zuckerberg.
From economic giant to the world’s regulator
The EU thus risks becoming a victim of its (only?) geopolitical success. The foundation of this success is vividly illustrated by the cliché: “Europe is an economic giant, a political dwarf and a military worm”. Whilst this is not entirely accurate, it nonetheless aptly describes Europe’s current position. The EU’s economic strength has certainly not done it any harm in geopolitical terms. As our economic strength grew, so did our ability to set rules that are widely emulated elsewhere in the world. The EU owes a large part of its geopolitical influence to this position.
Painfully enough, it is precisely this influence that is under pressure. This pressure had already been mounting as a trend due to the relative decline of European GDP as a proportion of the global economy – from roughly 20 per cent in 2005 to a predicted 15 per cent in 2030. But the chill wind blowing from Washington threatens to erode the EU’s rule-setting capacity at an accelerated pace.
Now that Europe stands on the eve of its much-needed military and (geo)political revolution, this is an alarming development. It cries out for a strong European response. Whilst it is admittedly less urgent than the immediate Russian threat, it is no less important. Every effort must be made to protect and strengthen the EU’s rule-setting power.
By completing the single market and making large-scale investments in our industry, defence, innovation and energy, Europe’s relative share of the global economy can be stabilised. Nevertheless, the EU must seek to leverage its rule-setting power in three ways, by:
1) Intensifying trade relations with other middle powers. In this way, the EU will not only diversify away from dependence on China and the US, but will also be able to shift the centre of gravity in trade and thereby exert an even greater influence on global trade rules and AI regulation. An additional positive development is that the regulation of AI and social media is featuring ever more prominently on the political agenda worldwide.
2) To help smaller countries, particularly in the Global South, stand up to tech giants. There is a clear need for this. Provide comprehensive legal support for the development of domestic regulations and strengthen their position in international organisations during disputes and conflicts.
3) Position the euro more emphatically as a reliable alternative to the dollar, as a trade and reserve currency. The euro’s share of global official foreign exchange reserves stands at around 20 per cent, whilst the dollar accounts for just under 60 per cent. It is time to make up ground decisively.
Finally, take symbolic yet effective action against the tech giants as soon as possible: ban addictive features on social media, increase taxes on their advertising revenue, penalise intellectual property infringements and mandate the disclosure of all algorithms. Or, to quote Trump: ‘The EU was formed to screw the American high-tech oligarchy.’