We live in an age in which trade and business are no longer separable from questions of war and peace, national security and power. Like an angry God, the United States has obliterated the system of rules-based trade it created some 80 years ago.
Washington is cutting off China from vital Western microchip supply chains while Beijing uses its monopoly in rare earths and other critical minerals to inflict pain on the US in return. As the fate of chip manufacturer Nexperia – Netherlands-based, Chinese-owned, and now on the US “entity list” – demonstrates, in this lawless world, life for European businesses can be nasty, brutish and short.
How to avoid getting pulverised in the stand-off between these mastodons is arguably the defining question of our times. The truth is, Europeans are yet to fully realise they can only find economic security by pooling resources at EU level. They will also need to develop the courage to shake up the EU’s technocratic and siloed governance structures, designed for calmer seas.
The EU has always organised itself in separate institutional spheres, with a cluster for trade, regulation and economic policymaking on the one hand, and a cluster for foreign policy, diplomacy and security on the other. The former is dominated by the Commission, the latter largely remains the domain of member states.
Sadly, geoeconomics is less neat and ordered. Many of Europe’s most serious headaches today are neither issues of regulation nor diplomacy; they are both at once. EU-US trade discussions are as much about security as trade, leaving it unclear who in Europe ought to lead those talks, take decisions and how.
It leads to decision-making that is improvised, opaque and prone to bureaucratic tunnel vision. Massive geopolitical dilemmas end up on the plates of officials in the EU’s regulatory sphere, who are obviously not equipped to deal with them.
Take the proposed introduction of the digital euro, which with the Union’s dependence on US financial infrastructure, has clear geopolitical and strategic undertones. Or the enforcement of the EU’s Foreign Subsidy Regulation, aka Brussels’ anti-China instrument, which can easily detonate the Union’s broader relationship with Beijing.
These are not decisions we can delegate to regulators in DG Comp or DG Ecfin, as currently happens, or leave in the hands of the ECB. Nor should matters of this magnitude be decided by an unelected Commission chief, consulting a handful of European capitals via informal calls or WhatsApp messages. Yet often this is precisely how the EU makes vital strategic decisions.
A better approach is possible. In the United States, security-sensitive decisions are systematically screened by the National Security Council, a body directed by a National Security Advisor (NSA) who functions as the President’s right hand. Others in Europe have, or are building, similar mechanisms. The EU should follow this example, at least in the arena of economic security.
If recent reports in Euractiv are to be believed, President Von der Leyen and HRVP Kallas, leading the EU’s diplomatic service, are equally keen to centralise EU geoeconomic coordination in their respective institutions, including by making a senior NSA-style appointment. “We need a strong person”, Kallas says about the coordinating role she has in mind.
Given the Union’s governance vacuum, she is spot on. To be strong, however, an EU Economic Security Council should be built around the highest level of executive power in the Union, the European Council. No one is better placed to act strategically and across policy siloes and clusters than EU leaders themselves. No one, moreover, brings as much democratic legitimacy to the table.
Reporting to the European Council President, a European Economic Security Advisor should be able to pull security-sensitive issues out of the soup of Brussels policymaking, hold them up to the light, and if necessary prepare them for European Council decisions. He or she would lead a small expert task force, responsible for foresight, risk analysis and contingency planning, and regularly preside over meetings with senior Commission officials, EU ambassadors and national economic security coordinators to identify and assess strategic trade-offs.
Vested interests in Brussels will assuredly resist such innovations, or indeed any form of institutional change. Don’t fix what is not broken, they will say. But who today still believes Europe is not broken?
Hans Kribbe is senior fellow for geostrategy at the Brussels Institute of Geopolitics and a founding partner of Shearwater Global. He is the co-author of a recent BIG report on economic security.
