Declining competitiveness, expanding uncertainty add to EU’s geo-economic anxiety
Published: Jul 07, 2024 05:09 PM
Illustration: Liu Rui/GT

Illustration: Liu Rui/GT

At the beginning of 2024, the Eurasia Group, a US-based political risk consultancy, predicted that it would be a "year of anxiety" for the EU. Now, halfway through 2024, with the continent's new political ecology still in the making, the bloc's anxiety seems to have increased, overshadowing China-Europe relations. Among the EU's multiple anxieties, geo-economic anxiety is becoming increasingly prominent.

The main manifestation of the EU's geo-economic anxiety is its concern about the decline of its own competitiveness. Europe's competitiveness in the international technological and economic arena continues to deteriorate. Since 2022, a series of geopolitical changes, such as the Russia-Ukraine and Israel-Palestine conflicts, as well as the Red Sea crisis, have aggravated the situation in Europe, which has not only been plunged into the quagmire of energy crisis and economic stagnation, but is also facing signs of the hollowing-out of its manufacturing sector.

With the upcoming change of EU leadership, facing decline and difficulties, some of Europe's political decision-makers have become increasingly anxious about competitiveness, and have therefore launched a new campaign intending to influence the future political ecology and policy agenda of the bloc. They usually highlight three prominent intentions: "pan-securitizing" economic issues, "de-risking" the external supply chain and "building resilience" into the economic system.

At present, "resilience" has gradually become the focus of the EU's geo-economic concerns, frequently appearing in EU policy documents and European think tank reports. For European policymakers, the key to increasing the "resilience" of the supply chain, and even the entire economic system, is policy goals. The EU has issued several policy documents highlighting the role of strengthening "resilience" as a starting point for improving Europe's external competitiveness.

According to the European political elite, strengthening "resilience" is the core objective of "de-risking." To enhance "resilience," European policymakers are focusing on industrial sectors where the latest cutting-edge technologies are applied on a large scale, such as transportation, energy, digital platforms, banking and securities, and the space industry, and optimizing and strengthening the mechanisms for managing European integration in these sectors.

Externally, the bloc is pursuing "supplier diversity," using its Global Gateway Strategy, the US-led Partnership for Global Infrastructure and Investment and the Minerals Security Partnership and other clique-like multilateral partnerships. These mechanisms are designed to provide development assistance to the "strategic pivot" regions in the Global South in Asia-Pacific, the Middle East, Africa and Latin America to ensure Europe's continued access to "strategic" and "critical" resources and energy.

The EU's concern with "resilience" remains unabated, despite the constant renewal of internal and external policies. The geostrategic environment around the EU continues to fragment. Faced with the most serious strategic dilemma since the end of the Cold War, Europe's political elites can't seem to find a way out. The Joe Biden administration has seized the opportunity to form all sorts of alliances in technology and industrial development, putting pressure on the EU to take sides between China and the US. The intention is to drag the EU into the US-led strategic alliance system in a "salami-slicing" manner.

As the international geo-economic competition intensifies, both the US and the EU want to dominate the direction of technological research and development as well as industrial upgrading. The US is pursuing a beggar-thy-neighbor approach through the Inflation Reduction Act and other measures, which will also undermine Europe's industrial policy. Economic competition between the two sides has intensified, and the US is also seen by the EU as an important source of "economic risk."

Still, the US presidential election is underway and the political power transition in the US is still unclear, while the EU is having difficulties in determining the pattern of its new round of power sharing. As a result, the development of European politics will continue to show a treacherous trend. Under the current situation, the EU's geo-economic anxiety will only increase.

The author is the director of the Center for European Union Studies at Shanghai International Studies University. opinion@globaltimes.com.cn