Europe, It Is Time To Decide

The war in Ukraine and economic reform are two sides of the same coin — and the U.S. needs to be dealt with.

There is opportunity in every crisis, whether it involves war or tariffs. However, major policy choices are needed at major historical turning points.

Donald Trump has subjected Europe to an “electroshock,” as Emmanuel Macron called it, over Ukraine and trade barriers and has put Europe on the defensive. However, it does not necessarily have to be that way. If the EU countries discard the hollow institutionalist perspective that leads them to focus on internal disputes and succeed in clarifying exactly what their role is in the world, the historic challenges confronting all of us can set them on an assertive rather than a submissive path. Policy decisions would be of far greater use than endless discussions over the unanimous consent of the European Council. It’s not easy, but neither is it impossible.

One thing is certain: Europe’s destiny depends on knowing how to respond to developments in the Ukrainian conflict. Trump's phone calls with Vladimir Putin and then with Volodymyr Zelenskyy have created enormous turmoil. It is unclear whether the American president has an objective, and if so, what it might be. For now, Trump’s objective appears to be making major concessions to Putin without [getting] anything in return. The U.S. has no intention of admitting Ukraine into NATO and will not deploy American troops in the country to secure a proposed truce. Newly confirmed U.S. Secretary of Defense Pete Hegseth has said it out loud. While this was already a fact when Joe Biden was in the White House, it is now virtually official. It is probable that Trump will also contribute very little to rebuilding Ukraine. Yesterday in Munich, Vice President JD Vance made clear the near 360-degree gap between both sides of the Atlantic. Europe is in disarray but should hope for the best, while preparing for the worst.

The EU countries do not have the capacity to replace the United States in supporting Kyiv if Ukraine decides not to accept a truce. It is not just a question of political will, which cannot be taken for granted, but of impossibility, given the state of European armed forces and the production limits of the continental military-industrial complex. Nonetheless, European countries could commit to sending their troops to Ukraine as a deterrent once the fighting is over, ready to protect Ukrainians with whatever is needed. They could also disinvest a substantial part of the 300 billion in Russian reserves that they seized shortly after the invasion.

Not all EU capitals will be inclined to do so. On Feb. 23, elections will take place in Germany, a key country, and Friedrich Merz, predicted to be the chancellor, has made clear his strong belief that Ukraine should not be defeated and that Russia should not win. French President Macron, despite his political problems, says the same thing: Europe “has no choice” and “this is Europe’s moment to accelerate and execute.” Poland, the three Baltic republics, Sweden, Finland, Denmark and the Netherlands all feel the same urgency, as do London and Oslo. Italy will need to decide. If Europe succeeds in protecting Ukraine from being carved up and in raising a wall against Putin’s Russia, it would not only benefit Europe’s security. Europe’s role in the world would be completely different from the one it holds today as a trading giant but a political dwarf. If it is not capable of doing so, it faces a future wave of recriminations and internal divisions, possibly deadly.

Trump is proposing to levy tariffs on the EU as well. This could be painful for many companies. The trans-Atlantic relationship is based on commerce, so what one side gains, the other side loses, which will impoverish everyone. The European Commission apparently wants to aim for a treaty with the White House, perhaps putting countermeasures on the negotiating table — and it will try to hold the EU together. The true response, however, cannot be anything other than what we already knew before Trump was elected, put down in black and white by Enrico Letta, Mario Draghi and former Finnish President Sauli Niinistö in reports to the EU.

Far more than from U.S. tariffs, the continent's economy is suffering and will continue to suffer from a situation that has lasted decades: too much national and European bureaucracy; limited possibilities for business growth; innovation that can't access capital; exaggerated levels of taxation; ambitious plans such as the Green Deal that are losing the wind in their sails; and a certain amount of protectionism within markets, both protecting some farming and presenting as the fight against climate change.

Entrepreneurs and top managers have said recently that Trump is freeing animal spirits in the U.S., while Europe is suppressing them. We will see just how free animal spirits will run thanks to Trump, but in Europe it is clear that they are chained up. If tariffs are a problem, Europe's sclerosis is a tragedy.

It has been clear for some time that there is a need to reduce onerous regulations on businesses; complete the single market for services; create single markets for capital and energy; reduce the tax burden on those who do business and create work; and further open up markets to other parts of the world. Now there is the opportunity, born of necessity, to do so, and to be the open continent, while others shutter.

Ukraine and economic reform are different sides of the same coin. In fact, Trump reminds us about this every day. Rather than fighting it, we should rise to the challenge of the moment. The best revenge is living well. In other words, doing what you must and what you can.