Make Europe Great Again: a strategic challenge for the European Union
In a world undergoing geopolitical reconfiguration, Europe is facing a pivotal moment in its history. While recent crises have brutally exposed its vulnerabilities, they have also catalyzed an unprecedented awareness. Faced with the rise of China and American protectionism, the European Union is compelled to redefine its industrial and energy strategy, mobilizing massive investments to regain its strategic autonomy.
Published on 6 February 2025
Europe, long considered a model of stability and prosperity, seems to be faltering under the weight of global transformations. The successive crises - economic, health, energy, and geopolitical - have highlighted the structural vulnerabilities of the "Old Continent". The Covid-19 pandemic has notably revealed the critical dependence of the European Union (EU) on global supply chains, particularly in a strategic sector such as healthcare. At the same time, the war in Ukraine has brutally reminded of the importance of energy independence and common defense against external threats.
These challenges, far from condemning Europe to inexorable decline, offer it the historic opportunity to redefine its role on the international stage. With its technological assets, single market, and leadership in environmental standards, the EU has all the necessary tools to reinvent itself and assert its sovereignty.
How can Europe rise to this major challenge? This transformation will require bold choices: rebuilding a robust industrial base, accelerating the energy transition, and turning its vulnerabilities into competitive advantages. The stakes are twofold: meeting the expectations of the citizens of its member states while influencing the major trends of the world of tomorrow.
European weaknesses as a driver of transformation
The economic position of Europe has gradually eroded over the past decades: its share in global GDP has decreased from over 30% in 20041 to approximately 14.8% in 20212. This trend is accompanied by significant critical dependencies:
- in rare earths, 98% of which come from China3;
- in semiconductors, of which the majority of global production capacity is held by Taiwan and China, and to a lesser extent by South Korea, the United States, and Japan4;
- while an increasing share of active pharmaceutical ingredients (APIs) is imported from neighboring Switzerland, the United States, Singapore, or once again, China...5
- The war in Ukraine has also highlighted the energy vulnerability of the EU, which imported 40% of its gas from Russia before the conflict, as well as 30% of its crude oil and coal6.
The reconfiguration of global supply chains, however, opens up new prospects for a territory strategically positioned between Asia and the Americas. The need to reduce these dependencies, to capitalize on its strengths, and to modernize its economy offers the Union a unique opportunity to redefine its role on the global stage.
By reshoring its territory, by investing heavily in cutting-edge technologies, and by diversifying its supply chains, Europe can build a strategic sovereignty adapted to the challenges of our century. This renewal is based on three essential pillars: strengthened industrial resilience, an ambitious energy transition, and a strategic mobilization of its technological assets.
Green innovation: Europe asserts its global leadership
The European continent is consolidating its dominant position in green technologies, demonstrating its ability to transform environmental challenges into economic opportunities. 40% of global patents in renewable energies are held by European companies7. Between 2017 and 2021, 27% of global "high-value" inventions in clean technologies were filed by the 39 member states of the European Patent Office (EPO)8.
The European Taxonomy is emerging as a true compass for sustainable finance that could strengthen Europe's position in this field in the future. By defining rigorous criteria for green investments, it directs financial flows towards ecological transition9.
Financial integration serving competitiveness
The Capital Markets Union (CMU) represents a major step towards deeper financial integration. This initiative aims to facilitate cross-border investments, diversify sources of financing for companies through capital markets, and strengthen the resilience of the European financial system. Within this framework, the EU focuses on SMEs, improving their access to financing through measures such as simplifying rules for raising funds in the markets10. These initiatives aim to mobilize more private investments to support these companies in their growth and their ecological and digital transition.
At the same time, tax harmonization, illustrated by the historic agreement on global minimum tax, demonstrates Europe's ability to launch structural reforms on an international scale. In December 2022, EU member states unanimously adopted a directive to ensure a minimum effective tax rate of 15% for large multinational companies, in line with "Pillar 2" of the OECD's international tax reform. This directive, which came into effect on January 1, 2024, aims to limit the "race to the bottom in corporate tax rates" and ensure fairer tax competition within the Union11.
With its 27 member states, 23 million companies, and over 450 million consumers with some of the highest purchasing power in the world, the European single market remains one of the most attractive on an international scale12. This economic power, reinforced by a stable and predictable regulatory framework, provides a favorable environment for innovation and technological development.
Massive investments for regained sovereignty
Europe is deploying massive investments to strengthen its technological and energy sovereignty, illustrating a renewed ambition in strategic sectors.
Semiconductors: Europe steps up its game
The European Chips Act, which came into effect on September 21, 2023, represents an ambitious initiative to regain autonomy in the strategic semiconductor sector. With a budget of 43 billion euros of public and private investments, this program aims to quadruple European production by 203013. In addition to direct funding, Europe is investing an additional 3.3 billion euros for research and innovation, seeking to develop the next generation of electronic chips. This comprehensive strategy combines support for R&D, the modernization of existing infrastructure, and the attraction of new investments.
Renewable energies: monumental projects
In the energy sector, Europe is also accelerating. The North Sea Wind Power Hub project is an example: the construction of artificial islands in the North Sea will deploy 300 GW of offshore wind capacity by 205014. Furthermore, the EU supports Important Projects of Common European Interest (IPCEI) in the field of hydrogen, aiming to strengthen industrial competitiveness while addressing environmental challenges15. These initiatives are part of the NextGenerationEU plan, which, with its 750 billion euros, represents an unprecedented commitment to accelerate the green and digital transition.
The "Transitioning Industrial Clusters towards Net Zero" initiative further illustrates Europe's new approach to industrial decarbonization. In the steel sector, for example, Europe is developing breakthrough technologies for low-carbon steel production, combining technological innovation and environmental protection16.
Europe on the brink of an industrial renaissance?
The transformation of the "Old Continent" is underway, driven by unprecedented investments and a renewed strategic vision. The coming years will be decisive in realizing these ambitions and confirming Europe's return as a major industrial power of the 21st century. To succeed in this metamorphosis, the EU will have to maintain its focus on strategic investments while preserving the unity of its member states - a delicate but necessary balance to secure its place in the concert of nations.
1. https://legrandcontinent.eu/fr/2024/04/26/en-20-ans-la-part-de-lunion-dans-le-pib-mondial-a-presque-ete-divisee-par-deux/
2. Eurostat, Key figures on the EU in the world, 2023 edition
3. https://ec.europa.eu/commission/presscorner/detail/fr/
qanda_20_1543
4. https://fr.statista.com/infographie/31917/repartition-capacite-mondiale-fabrication-avancee%25C2%25A0puces-electroniques-par-pays/
5. https://www.dcatvci.org/features/the-eu-s-api-supply-chain-under-focus/
6. https://www.euractiv.fr/section/energie-climat/news/les-enjeux-geopolitiques-de-lapprovisionnement-energetique-de-lue/
7. https://www.taurillon.org/bilan-encourageant-pour-la-politique-energetique-de-l-ue?lang=fr
8. https://www.epo.org/fr/news-events/news/nouvelle-etude-oeb-bei-le-marche-unique-de-lue-est-un-catalyseur-essentiel-pour
9. https://www.wavestone.com/fr/insight/banques-et-finance-durable-union-europrenne-a-un-tournant/
10. https://eur-lex.europa.eu/legal-content/FR/TXT/HTML/?uri=CELEX%3A52023DC0535
11. https://www.consilium.europa.eu/fr/press/press-releases/2022/12/12/international-taxation-council-reaches-agreement-on-a-minimum-level-
of-taxation-for-largest-corporations/
12. https://www.tresor.economie.gouv.fr/Articles/2024/03/05/le-marche-unique-europeen-un-vecteur-d-integration-economique-et-commerciale
13. https://www.europeaneconomics.com/european-chips-act/
14. https://www.touteleurope.eu/environnement/energie-un-sommet-de-la-mer-du-nord-pour-developper-l-eolien-offshore/
15. https://ipcei-hydrogen.eu/
16. https://www.ifri.org/fr/notes/la-siderurgie-europeenne-se-prepare-pour-etre-la-pointe-de-la-decarbonation