Europe’s Moment

As the old global order unravels, the European Union has entered a new chapter of history. Long seen as a regulatory powerhouse but a geopolitical lightweight, the EU now has a rare opportunity to assert itself on the global stage. The key question is whether it can find the political will and unity required to seize this moment before it slips away.

The international order is shifting rapidly. The United States, once the anchor of the liberal international system, is retreating inward, driven by a blend of nationalism and isolationism that is eroding its hegemony through sweeping tariffs, cuts to public R&D, and a retreat from multilateral institutions. Moreover, China, once heralded as the unstoppable economic engine of the 21st century, is now facing a slowing economy, a deflating property bubble, demographic decline, and a costly trade war.

In contrast, the EU’s commitment to democratic norms, free trade, and a multilateral rule-based order positions it as a beacon of stability. This divergence from the instability elsewhere offers Europe an unprecedented opportunity to redefine its role. Timing is critical: this year’s cascade of consequential events has jolted the EU out of complacency and sparked a long-dormant sense of political urgency. The window of opportunity is open, but it will not remain so indefinitely.

To seize this moment, the EU must demonstrate that its political awakening can be translated into concrete economic and strategic action. Encouragingly, there is cause for optimism as signs of this shift are already emerging.

Germany, the EU’s economic engine grappling with prolonged stagnation, has taken a bold step to overhaul long-standing fiscal conservatism by reforming its constitutional ‘debt brake.’ The reform exempts defence spending above 1% of GDP from borrowing limits and establishes a €500 billion fund for public capital investment over the next decade. This is not only expected to boost economic growth but also to strengthen Germany’s, and Europe’s, strategic weight at a time of rising geopolitical threats.

Meanwhile, the EU’s economy is becoming increasingly attractive to global investors, with companies benefitting from lower refinancing costs thanks to the ECB’s accommodative monetary policy. The fallout from America’s trade war, primarily targeting China, has accelerated this trend. The turmoil in global markets reflected growing confidence in the EU’s economic stability: the euro appreciated against the dollar and demand for European bonds rose sharply.

At the same time, the EU is smartly capitalizing on a wave of renewed global interest in trade cooperation amid the unreliability of the US as a trading partner. In recent months, the European Commission has accelerated negotiations on free trade agreements with partners including the UK, India, Australia, and Latin America. While these deals alone will not propel the EU to superpower status, they represent a crucial piece of the broader puzzle for economic revitalization and global influence.

This strengthening economic foundation coincides with the EU’s push for greater strategic autonomy. Initiatives like ReArm Europe plan up to €800 billion in defence investments to reduce dependency on foreign powers. These moves have reignited debates over deeper integration, including the possibility of EU-wide debt backed by common taxation - a major step towards a more unified and influential bloc.

However, opportunity alone is not destiny. The EU remains a mosaic of nation-states, where internal divisions, bureaucratic inertia, and divergent national interests are almost guaranteed to slow any coordinated action. Without meaningful reforms toward deeper integration, any effort to project Europe’s power will depend on its leading members aligning their uneven strategic goals.

The path ahead is complex and fraught with challenges, but it offers the EU an extraordinary opportunity: to emerge from the sidelines and begin to shape the international system, rather than merely adapt to it.