European leaders have always preferred diplomacy over combative action. But the world has now changed. With Russia breathing down its neck, China making further inroads, trade wars, defense issues, and an aging population, Europe can no longer afford to just strategize and analyze. It needs to act.
Friedrich Merz, the Chancellor of Germany and Ursula von der Leyen, the President of the European Commission, have both been vocal, calling for a more independent Europe that can defend its own interests rather than rely on other powers; the European Union’s defense budgets have risen by as much as €800 billion by 2030. This number would have been considered astronomical a few years ago. But now European leaders understand that to gain technological advantage, with AI-driven systems and advanced battlefield intelligence, they need to invest in defense.
The plan is to create a European defense industry that does not depend on outside suppliers. These resolutions have only been made after recognizing that the power dynamics in the region have changed and soft power alone will not deter advancing tanks.
However, the European Union needs to move beyond fragmented defense spending and prevent the formation of a two-tier Europe where only some wealthy countries will be able to afford to update their defense industry. To prevent this, the EU needs to shift its focus toward long-term R&D and build a common infrastructure that includes all its members.
Europe’s economic policy is also changing to match its self-assured stance. Dependencies on other countries, like China, for key materials and technologies, are now seen as risks rather than efficiencies. In 2024, the Draghi Report brought attention to the fact that without an extra €800 billion of investment each year Europe risked a slow and grinding decline. As a result of the findings of this report, the EU created the Critical Raw Materials Act that helped initiate strategic supply-chain projects. It also started talking about the Single Market plan which will remove internal barriers preventing companies from scaling up to meet demand. It has strengthened trade and defense ties with India and Japan. These new relationships will also help strengthen its role in a world that’s being increasingly divided between Washington and Beijing.
A critical measure that can help Europe out of the slow-growth economic trap is the Savings and Investment Union, an initiative that could improve how the EU’s financial system channels savings into productive investments. The finalisation of this plan has seen slow progress because it requires consensus from all EU member states to proceed. This is one of the biggest challenges the EU faces. The veto power held by individual member states results in an institutional inertia that stalls critical economic decisions, requiring quick analysis and implementation, to be effective.
In comparison to economic strategy, Europe’s climate policies show more movement. Launched in 2019 to cut greenhouse gas emissions in Europe to net zero by 2050, the Green Deal was expanded to include the Clean Industrial deal. With this, energy transition became as much about sovereignty as about emissions. The Clean Industrial Deal focuses on mobilizing funding of over €100 billion for clean-tech manufacturing like batteries and clean hydrogen. This helps Europe evolve its climate policy from one that has purely environmental objectives to a strategic tool that can help it gain energy independence.
The EU now needs to act on building pipelines and grids to move cheap solar from the south or the Nordic wind energy to German industrial hubs. This cross-border energy infrastructure expansion could lower the cost of production, making the EU more competitive in the world market.
The European Union, since its inception, has tried to move away from the continent’s colonial past toward civic principles of international law, liberal democracy, privacy, and human rights. But there’s now a shared sense that the old, rules-based, liberal international order is fraying, and that pretending otherwise won’t help. With its recent efforts, Europe isn’t abandoning its past so much as adjusting to reality. It is finally willing to move before it’s forced to.