Mujtaba Rahman is the head of Eurasia Group’s Europe practice and the author of POLITICO‘s Beyond the Bubble column.
Over the past few years, the European Union’s major political fault lines have primarily arisen from internal challenges: Brexit; fears over Italy’s eurozone membership; rule of law problems across Central and Eastern Europe.
In 2020 that seems likely to change. With European Commission President Ursula von der Leyen’s ambition to lead a “geopolitical Commission,” the EU opens a new external front that could exacerbate internal splits — especially between Berlin and Paris — while simultaneously risking the bloc’s relations with the rest of the world.
French President Emmanuel Macron is the most important driving force behind this change. He laid out the building blocks of his approach in an interview with the Economist last year. Key to his vision is the idea that the EU must become a political and strategic player with one voice and one purpose, first in its own neighborhood and then in the world.
It will do this by establishing and acting upon a new form of common “European sovereignty” — at once economic, military and strategic. Doing so will allow the EU to be the guardian of multilateralism, actively defending itself against the vagaries of U.S. President Donald Trump and competing economic and political models wherever they may be found.
The EU should be careful not to make promises it can’t keep.
This now forms the basis of von der Leyen’s approach to trade, technology and defense. But it risks serious confrontation with world powers that the EU is neither prepared nor capable to handle.
Take trade. The EU intends to become more assertive in this area, for example, by making compliance with the Paris climate agreement a precondition for new deals and by retaliating in kind against punitive tariffs.
National governments and the Commission also want to more effectively tackle the problem of “Chinese dumping” — competing with Chinese firms that have received state subsidies — and for China and the U.S. to open their public procurement markets to European firms, closing off EU markets to their firms if they don’t. Macron wants to push for more binding EU-wide screening of Chinese investment into infrastructure projects via Beijing’s mega-Belt and Road project.
On tech, there is growing concern in the U.S. that the EU’s competition chief, Margrethe Vestager, is becoming too aggressive in pushing her regulatory lead. The World Economic Forum in Davos saw real friction between the U.K., France and the U.S. on the issue of “tech taxes.” Von der Leyen wants the EU to act alone if there is no global solution by the end of the year.
Has Margrethe Vestager become too aggressive in her approach? | Patricia De Melo Moreira/AFP via Getty Images
A few days after the global gathering, U.S. Commerce Secretary Wilbur Ross suggested the U.S. could also retaliate against carbon taxes, which the Trump administration views as essentially protectionist.
EU action on trade, tech and climate therefore risks provoking punitive tariffs on some of Europe’s more export-driven sectors such as autos and consumer goods, at a time when senior policymakers remain concerned, and have no immediate answers, over how to kickstart growth.
These tensions will be exacerbated by what the EU wants to do on defense. Sure, the EU is not about to stand up its own continental army. However, it will take steps toward using its large internal market to break down cross-border barriers to military trade and technological development.
It is no coincidence that Macron believes that a proper EU defense policy is the key to his “sovereign Europe,” and that Thierry Breton, the French commissioner, now straddles a joint internal market and defense portfolio in Brussels. But seen from the U.S., this will be an affront, especially since few EU capitals have fulfilled and are likely to fulfil their NATO promises on defense spending.
It is of course good news that the EU seems ready to accept some cold hard realities. But the danger for Europe is that the process of U.S.-China decoupling — which predates Trump but has been accelerated by his arrival — risks hustling it into poor decisions.
Rather than stepping into the growing space left by U.S. and Chinese unilateralism, the EU could overreach, advertising and brutally exposing its strategic shortcomings. Like the tortoise who ultimately outpaces the hare, Europe’s reputation for slow, accretive but reliable policymaking may yet contrast favorably with the growing volatility of relations between the world’s two uncontested great powers. The EU should be careful not to make promises it can’t keep.