Europe’s global crossroads (Part I): from outsourced sovereignty to strategic agency

Europe is out of runway, so now it’s building its own.

Perhaps a simplistic take on the situation, but since the post–Cold War arrangement that let the European Union outsource its hard security needs to Washington, lean on Beijing for manufacturing at scale, and treat energy as a commodity (yes, to a large extent from Russia) rather than a lever of statecraft, has broken, the question is no longer whether Europe matters; it’s whether Europe can convert its size and values into strategic agency fast enough to chart its own path and avoid being shaped by others. What does that mean? It’s rebuilding sovereignty where it has been most eroded: in defense, energy, technology, and industrial depth. And it means doing this while holding the line on the regulatory enforcement that gives Europe its distinctive political and cultural power.

This will be a two-part GYST. Part I will trace how that rebuild began and where it must go next; Part II will turn to the China balance, transatlantic bargaining, internal fractures, and the endgame in Ukraine.

(For broader context on how global power is reorganizing around regions rather than a single center, see: Fracture, not collapse: the return of geopolitics)

The insurance policy is conditional now

For 75 years, NATO ensured Europe’s security. This isn’t quite the case anymore. U.S. attention has tilted toward the Indo-Pacific, and with the current administration in Washington at least, the price of support is increasingly transactional, including alignment on technology, export controls, and industrial policy. While this behavior may seem a little flippant or, at times even malicious; it’s a strategy.

The United States currently views China, and China only, as a peer competitor, and it wants its allies synchronized. Europe, however, can’t afford to be only on the receiving end, a policy taker on issues that define its industrial base and social contract. The only credible path, therefore, is to narrow the gap between the Europe that talks about “strategic autonomy” and the Europe that can actually act alone when the situation demands it, and can act with the U.S. as a capable equal when it should.

One system, not four silos

Europe’s weaknesses in defense, energy, tech, and manufacturing are all connected, and seeking to address one without fixing the rest just moves the problem around. The goal, therefore, is comprehensive resilience: rely on fewer single suppliers, keep enough capacity to handle shocks, and use Europe’s significant economic weight to set fair rules that others follow.

There are three primary domains that anchor this shift:

Digital and AI governance: rulemaker, not rule taker.

Firstly, Europe has already proven that implementing regulation can become real power. The Digital Services Act and Digital Markets Act are now in force, and they create binding duties for platforms and “gatekeepers” to reset competitive baselines across the Single Market. The GDPR’s global spread, ubiquitous in our experience of using the web, helped to spread the “Brussels Effect”. Now, with AI, the EU has moved from preview to playbook. The AI Act entered into force in 2024 and began phasing in obligations through 2025–2026, setting the world’s first comprehensive, risk-based framework for AI systems and general-purpose models. So, whether you build in San Francisco or Shenzhen, it doesn’t matter, since if you sell into Europe, it’s EU rules that shape your product. That, in of itself, is a strategic asset, and a negotiation chip when others seek market access while attempting to ignore European safety, privacy, or competition standards.

That being said, rulemaking only matters if Europe can also build and use the hardware. That’s why the European Chips Act matters beyond symbolism: it links rulemaking to real production, research, and an emergency backstop so the EU isn’t stuck relying on others for essential chips. Public funding for new plants, like Infineon’s expansion in Dresden, is one example. Without steady access to advanced chips, the processors, power-control chips, and memory chips that Europe’s carmakers, power grids, and defense industry needs, then supply shocks will become a destabilizing feature.

(This logic, the ability of democratic systems to write fuels faster than tech moves, is explored further in AI and the capacity to govern: Can democracy keep up?)

Energy security: de-risking at grid scale.

Second, the hard lesson of 2022 was simple: energy is a weapon if you let it be. In response to the overt specter of significant reliance on Russian energy exports, the EU’s REPowerEU program compressed a decade of diversification into a few brutal years. By 2024, Russia’s share of EU gas imports (pipeline + LNG) fell from ~45% in 2021 to ~19%, with projections pointing even lower into 2025 as Ukrainian transit ends and alternative supply locks in (EC). This wasn’t, however, a frictionless story of decoupling, Europe paid a premium for LNG and saw significant industrial strain. In the end, though, it did work, and security of supply improved, pipeline leverage diminished, and the pragmatic adoption of renewables accelerated.

Now comes the harder part: avoiding a straight swap to outright green dependency, since the batteries, magnets, solar supply chains, and grid metals that power the green transition are concentrated in a handful of countries, notably with China as the dominant processor. The IEA’s Global Critical Minerals Outlook 2024 puts precise numbers around that concentration and warns that demand will surge through 2030–2040 across EVs, storage, and grids absent rapid recycling and diversification. To address this, Europe can’t just look for new suppliers, it needs to do several things at once: form stable deals with resource-rich countries, build its own ‘domestic’ refining capacity, set product rules that prioritize cleaner inputs, and cut demand through greater circularity thinking, to adopt reuse and repair as standard. Without that, it risks swapping the dependency on Russian gas for another, in critical minerals and components.

(Europe’s rapid shift away from Russian gas and what “energy independence” really means are examined in The paradox of energy independence: why every nation still relies on others)

Defense and industry: a credible base, not just messaging.

Finally, Ukraine forced a reckoning: Europe can no longer assume unlimited U.S. munitions and strategic patience. European governments have raised defense budgets and begun joint procurement, certainly, but credibility will be measured in reload speed, stock depths, and production curves, not in the political communiqués. The logic is the same as energy and chips: pursue resilience by the reduction of single points of failure.

So what does this translate into? It means predictable multi-year orders (so factories invest), synchronized standards (so inventories are interchangeable), and integration with non-EU allies, particularly with the UK and Norway, where capabilities are already proven. “European defense” isn’t code for “EU only”, it’s a network with the EU at its industrial and regulatory core, plugged into NATO for planning and operations and into partners for scale, that reflects the combined geography of the greater European area, one that is under tacit threat from an aggressive neighbor.

Rule power still travels, but it needs consistency

The EU’s superpower remains its capacity to set norms that others adopt by necessity. GDPR forced a global shift in privacy practices; the DSA/DMA are now rewiring platform conduct; and the AI Act will force risk controls, documentation, and oversight for developers and deployers who want EU market access. Beyond tech, Europe can also display leadership in climate and the evolution of business practice: the Carbon Border Adjustment Mechanism (CBAM) is already nudging exporters to lower embedded emissions or face a tariff to enter Europe. In a disorderly world, this kind of rule power substitutes for the previous power projection in colonial hegemony: Europe can’t force outcomes everywhere, but through the necessity of access to its own market, it can make access contingent on standards that reflect its democratic priorities.

Sounds simple enough, perhaps, but the catch is credibility. Rule power decays when Europe blinks under pressure, as in the face of a capriciously transactional Washington, one that requires a certain appeasement; or when such pressures split the Union internally. For example, If climate policies are watered down in an election cycle, CBAM loses moral authority. If AI guardrails are diluted in last-minute policy text “simplifications,” the Brussels Effect looks like a negotiating tactic for commercial leverage, rather than a guiding principle of a united Union. Europe doesn’t need perfection, but it does need a semblance of consistency: steady targets, predictable enforcement, and the political stamina to defend decisions when large external actors, for example Washington and Big Tech, push back.

De-risking, not decoupling: Europe’s practical approach with bite

On China, the EU has rewritten its approach around one phrase: de-risking without decoupling. That line sounds like rhetorical flourish, but it’s not. What it is, is operating guidance that aims to maintain a healthy level of bilateral trade: preserving commerce when it’s benign and restricting it when it’s strategically compromising. President von der Leyen set out the framework in 2023 and has repeated it since: reduce unhealthy dependencies in critical areas, guard against coercion, and cooperate where interests do genuinely align (MERICS). The distinction matters: decoupling would impose system-wide costs Europe neither wants nor needs, a nasty shock to the short- to mid-term system. De-risking, on the other hand, is targeted: outbound investment screening in a few technologies, export controls where the military end-use risk is very possible, and anti-coercion mechanisms that respond to targeted pressure.

(See: Tariff truce or tactical reset? What the fragile U.S.-China thaw signals for global governance)

For that approach to work, Europe needs three enablers. First, measurement, a shared risk map that identifies where single suppliers, single countries, or single firms dominate and how quickly alternatives can scale to dilute that dominance. Second, muscle memory, the legal tools that trigger quickly (screening, subsidies, anti-coercion) so that responses do not depend on ad-hoc negotiations. Third, coalitions, that’s to say with the U.S., Japan, South Korea, Australia, Canada, and crucially with producer states in Latin America and Africa, so that risk doesn’t just migrate to the next weakest link. None of this is glamorous policy: de-risking succeeds when it becomes institutionally boring, a standing, embedded habit of design, not a reactionary move against sudden crisis.

Energy, yes, again: Europe’s spear and shield

Europe’s energy transition is often framed as climate policy. However, it’s also industrial and security policy, because electrons are the new logistics, and adopting ‘climate-forward’ business practices has to be the only ‘new norm’ in a world that recognizes how interwoven ‘climate’ is in every layer of governmental, private sector, and civic operations. Energy is, potentially, the greatest form of sovereign independence, of sovereignty itself, and a grid that can absorb abundant renewables, electrify heat and mobility, and flex around demand spikes to provide consistency of supply is the foundation for re-industrialization and strategic autonomy.

(Europe’s grid and clean-energy build-out, part of a wider story explored in Wired planet: can a global power grid survive national politics?)

The State of the Energy Union 2024 summarized the pivot: renewables share rising; gas demand falling; dependence on single suppliers down; and structural reforms to energy markets locked in. The Commission’s REPowerEU pages track the firm milestones of progress: solar doubling since 2019; wind out-producing gas in 2023; Russian share of imports cut sharply. Pair that with grid-scale storage, interconnectors, and permitting reform, and Europe’s cost curve for electricity starts to bend down in a way that improves competitiveness without the need to sacrifice climate goals.

The geopolitical dividend is self-evident, too: a Europe that runs on its own energy flows now has leverage it lacked back in 2021, when it rather blindly took Russian gas for granted. That leverage shows up at the border (CBAM), in trade deals (where green standards become the minimum operating criteria), and in diplomacy (where finance for clean infrastructure in the Global South becomes a viable counterweight to state-directed offers from elsewhere). The term ‘autarky’ has become fashionable recently where domestic self-reliance in terms of energy and industrial power is the national goal. China is seeking this, to an extent. Well, for Europe, this independence is not specifically autarky; it’s negotiating power.

Industrial depth: move fast, break old habits

Let’s be clear on one point: de-risking is not cheap. It demands a level of self-conviction that Europe currently doesn’t possess, for it will require the Union to spend like it intends to win, not merely to get through the week. In this respect, three shifts will help:

Shift from single projects to shared systems. Rather than announcing one plant or deal at a time, create common standards, think shared chip designs, battery formats, and demand for low-carbon steel and cement, so that investors see lasting markets and public spending benefits a greater share of players.

From annual budgets to multi-year plans. Factories plan over decades, not fiscal years. If subsidies and permits change every year, Europe loses to other countries or blocs that offer longer-term certainty. Lasting commitments are what make big investments possible.

From duplication to teamwork. Not every country needs to make everything, so the EU should set common rules and funding tools, while each member focuses on its own specific strengths. Shared standards keep production compatible across borders.

The good news is that this more pragmatic approach is evident in the Chips Act, the Net-Zero Industry Act, and the tighter link between EU instruments and national development banks. The same logic should now be carried into the areas that need it most: critical minerals midstream processing, defense munitions, grid hardware, and computing capacity for AI.

Europe's unique brand: standard-setting as power projection

Europe should not hope to emulate U.S. expeditionary power or Chinese state-directed industrial might. This would be folly. Its comparative advantage is different, and one that should be communicated throughout the EU from school curricula to the policy level: it makes markets, sets rules, and forges coalitions. And, when this approach is paired with enough hard capacity to matter, in the form of credible defense contributions, a resilient grid, a functioning industrial base, then that rule power becomes a form of projection. The DSA/DMA/AI Act trio shows how to translate values into enforceable obligations for global firms; CBAM shows how to extend climate policy beyond borders without waiting for a universal treaty; and the energy pivot shows how to neutralize a geopolitical weapon by, somewhat simply, removing the target.

None of this makes Europe a hegemon. Which, given its composite nations’ recent centuries of shared histories is, perhaps, refreshing. It does, however, make Europe a system-shaper: a pole of influence, of pressure, that stabilizes a fractured multipolar order by insisting that access must come with responsibilities.

The hinge to Part II

In Part II we will put this premise to the test. Can Europe sustain de-risking with China while protecting its export engine? Can it keep the U.S. close enough without importing Washington’s ever-wilder policy swings? Can it, in the face of dwindling U.S. financial support for Ukraine, anchor a just security settlement that doesn’t reward Russian aggression? And, can Europe hold it together at home, navigating emergent populism, migration disputes, and rule-of-law strains, long enough to stay united abroad?

Those answers will decide whether Europe graduates from agenda-setter to strategic actor. Part II picks up there.

Read this. Notice that. Do something.

Here are three important sources to consider if you’re interested in learning more…

Read this: EU AI Act primer and timeline (European Commission)

Notice that: The EU’s energy dependence reversal, “REPowerEU — 3 years on”

Do something: Ground your supply-chain planning in real mineral risks (IEA, 2024).

Previously on GYST: The battle to govern AI: How Europe regulates, America resists, and China advances

Next up: Europe’s global crossroads, part II: unity, allies, and the quiet power of rules