Donald Trump’s victory in the United States has caught the European Union in one of its worst moments. The construction of a common defense is yet to come, while the war in Ukraine shows no signs of ending despite the 200 billion euros ($211.58 billion) allocated to help Kyiv defend itself.
The goal is known but difficult to achieve: each country must allocate 2% of its gross domestic product (GDP) to defense. Italy, for example, did not reach it, but with the arrival of the new U.S. administration, a common defense is a necessity that can no longer be postponed unless Europe wants to condemn itself to irrelevance. One thing is certain: without the commitment of the U.S., Russia would already be exerting its pressure on the Baltic countries or Poland. The risk to European security would increase if Washington reduced its financial contribution to NATO or stopped supporting Ukraine economically.
There is no better news on the growth front either, which is close to zero even and above all in the countries with the most important economies such as Germany. Recently, in Paris, the three largest industrial associations in Europe, Confindustria, the French Medef and the German Bdi, raised the alarm on the risk of deindustrialization and decline of the old continent. In the first hundred days of taking office, the new European Commission shows the markets and European governments that they are ready for a decisive change, or the crisis can only get worse. If we look at GDP per capita, that in the U.S. from 2010 to today has gone from $48,374 to $85,373, that in the EU from $32,966 to $42,443.
In this context, President-elect Donald Trump arrives with his promises: tax cuts for companies, massive deregulation, and duties on European manufactured goods between 10% and 20%. The influx of new capital to the U.S. can make our delay in cutting-edge technologies on large web platforms and Artificial Intelligence even more devastating.
But it is precisely in difficult times that the EU has managed to evolve, such as when, after the fall of the Berlin Wall or during the financial crisis, it managed to strengthen the central bank and the banking union or, again, the 800 billion euro Recovery Plan launched with the arrival of the pandemic. Now is the time for a new leap in quality. EU needs real integration in defense and its industrial systems, a new Eurobond for physical and technological integration of decarbonized energy systems, and a European private capital market to grow large continental companies that can compete on equal terms in the world.
EU needs a new transatlantic pact based on security and mutual convenience. The alternative for European governments would be to rush to Washington in no particular order to gain, each for itself, more attention from the White House, thus weakening European solidarity.
“Europe must change or risk a slow agony” is the warning launched by former Italian Prime Minister and former President of the European Central Bank Mario Draghi in September in his report on competitiveness. “An existential challenge” that becomes even more urgent with Trump’s arrival.