Dealing with Europe's economic (in‐)security

Abstract

AbstractEconomic security is going to occupy an increasingly important role in global politics. While the EU should aim to avoid a fragmentation of the global economy and support multilateralism, it needs to prepare for protectionism, a global subsidy race and weaponisation of interdependencies. First, the EU must take geopolitical risks seriously and use stress tests and a data‐driven approach to identify vulnerabilities. We propose creating a European Economic Security Committee to advance coordination between national security and European economic policymaking. Second, the EU must increase its resilience to better withstand economic coercion and be less affected by shocks. Resilience cannot be increased by protectionism but by keeping markets open and concluding trade agreements. Industrial policy has some role to play, but the EU should apply the ‘narrow yard’ principle in industrial policy and enhance cooperation to reduce the risks and costs of a global subsidy race. Third, economic security will require investments in European public goods such as R&D for defence, decarbonisation, technology and the reconstruction of Ukraine, which will be cheaper to procure at EU level. Strengthening the international role of the euro would add to Europe's economic security and financial power.