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Global and European economy is presently involved in fierce “power games” measured by the military might and territorial influence: as in the age-old adage – those with huge armies can control the balance of power and relations among countries. Present geo-political scene confirms that “hard power” is more important than ever; but the speed of fragmentation of the global economy has already “alarmed” governing leaders in “shifting powers”.
Background
Present process of altering globalisation and trade liberalization is facing a critical period through modern challenges, i.e. by the impact of new digital technologies. Besides, the EU has had another fundamental challenge aligned with shifts in international order, increasingly defined by economic, technological and/or military powers.
Present world is full of imperial ambitions and hostile actors, with trans-factionalism and zero-sum games, traditional global economic relations are in a “permanent state of flux and disorder: i.e. “the world is changing faster than the EU’s policies; hence, the EU-wide institutions must transform the ways they think, formulate policies and make decisions to keep pace with a rapidly changing world” noted the Commission President at the Berlin Global Dialogue-2025 recently.
Reference to BGD-25 “Uniting global leaders to shape a new economic era”, in:
https://www.berlinglobaldialogue.org/
Europe in the world
The governance’s speed and urgency are the key factors in competitiveness: each state and/or region needs both, i.e. a long-term vision and speedy actions; hence, for the EU-27 the priority is to make faster socio-economic decisions, make business easier and invest in most advanced spheres, first of all, as the President confirms, in “what makes the EU a unique and strong community”, i.e. radically speed up the completion of the EU-wide Single Market. Including such sectors as energy and shifting the investment to “the active private capital” and to simplify the regulations. As the member states need fewer and less complex rules and corpore community needs less forms to fill out.
European Union is already an increasingly attractive place for investors: e.g. many high potential global startups in key technologies like quantum, AI or biotech have chosen the EU. But Europe’s attractiveness extends far beyond its investment potential, noted the President: it lies in such factors as: the EU’s strong institutions, commitment to the rule of law, excellence in broad education and top research, skilled workforce and advanced infrastructure; “it all makes the EU a uniquely balanced model in the world”.
Too often the limited availability of risk capital forces entrepreneurs to turn to foreign investors: in this way the EU’s growth and wealth, as well as national sovereignty, is moving somewhere else. The EU’s idea is to concentrate all investments in the member states, according to the “choose Europe” initiative: e.g. it shall be easier for innovative start-ups to scale up throughout EU-27 states. However, there are presently 27 different regulations in almost all spheres (which is often called the 28th regime) for innovative companies, instead of single and simple the EU-wide rules.
In line with the member states’ intention to activate private capital, the Commission is drafting new financing models aimed at stimulating private investors through a new Scaleup Europe Fund in order to keep up the speed of private-private capital cooperation.
More on the fund in: https://www.eunews.it/en/2025/10/28/scaleup-europe-fund-launch-eu-commission-accelerates-investment-in-advanced-technologies/
Other vital issues
Fundamental reshaping of the world economy puts the EU in the middle of a systemic shift for the member states’ governance and cooperation: it is a common place that the tools of traditional statecraft are being used to weaponize interdependencies and leverage alliances, to create chokeholds on countries and industries, as well as to exert control and impose coercion on others. And Europe has learned how imperial ambitions and wars undermined sovereignty and/or leading to disasters. Present EU integration model is different, although the “states shall not be naive and vulnerable” notes the President. This is why Europe is investing so heavily in military capabilities and in boosting its own defence industries: the EU will unlock up to € 800 billion in defence spending until 2030 to focus on deterrence and peace through military strength.
New geoeconomics has become the central instrument of power in present world: those who control the economic levers can exert control over others through the global supply chains and new disruptive technologies, through capital flows as the key inputs for European industries and societies.
As the dawn of globalisation promised, all of the existing tools can be used to create wealth, jobs and partnerships among countries: in fact, that was the initial idea that eventually has led to the creation of the World Trade Organization 30 years ago. When China joined the WTO a few years ago, most states hoped for a “new dawn” with low tariffs, shared security and prosperity. And in a number of ways it did happen, even when the benefits were not shared or spread evenly. But the leaders of a “cooperative world order” expected (or at least hoped for) 25 years ago are presently facing a confrontational global economy with stolen technologies and hostile investments, with the export controls and subsidies, which all undermine competition in an era of geoeconomics.
It was apparent over the last decade, notes the President, that the lines between national security and economic security imperatives have become blurred; actually, they have now essentially merged. It is a clear sign for an accelerated escalation in the way interdependencies are leveraged and weaponised. During last months the world has seen a dramatic rise in export controls on critical goods, in a systemic use of tariffs and non-trade measures that were used in global supply chains’ disruption and pressure in numerous sectors – from energy to data, to food and to technologies.
Rethinking national security
The President has warned that “the EU member states have to rethink the ways they apprehend economic and national security challenges: it means anticipating better choices and acting faster, ensuring that the EU-wide economies and systems can absorb and adapt to shocks”.
It all requires adopting a new strategic mindset and approaches: e.g. by evaluating the range of resources, opportunities and risks, as well as adjusting policies to strengthen existing assets, seize opportunities and counter risks. It also involves the EU institutions to preparing anticipate progressive developments, act decisively and coordinate all available instruments in a consistent and strategic way.
That is why the Commission has advanced the “Made in Europe” strategy focused on a select set of sectors that are vital to national economics and security, including “a complete change of gear on military spending and investment”, or completing the overhaul the energy systems and supply, in rethinking industrial policy, and/or striking new economic and investment partnerships around the world.
As to the EU’s independence, notes the President, in recent months China has dramatically tightened export controls over rare earths and battery materials, which to some extent has been part of wider economic friction between China and the US. These actions have had big impact on Europe: it is known how important rare earths are for the modern industries: for cars, semiconductors and/or military equipment. The Chinese government decisions this October pose a significant risk: these actions would severely hamper several countries’ from developing a rare earths industry; it would threaten the stability of global supply chains and would have a direct negative impact on European companies. Considering that over 90% of the EU’s consumption of rare earth magnets comes from China, the risks are evident for the European most strategic industrial sectors: from automotives to industrial motors, defence to aerospace, or AI chips to data centres.
In the short term, the EU is focusing on finding solutions with our Chinese counterparts, in the long run, the EU is ready to use all available instruments to respond, e.g. working with the G7 partners on a coordinated response.
Global structural challenges
The EU’s response must match the scale of the risks: hence, the Commission drafted the new RESourceEU plan (together with the existing REPowerEU initiative) to assist the states in overcoming the energy crisis: the aim is to secure access to alternative sources of critical raw materials in the short, medium and long term for the European industrial sectors. The “resources’ plan” starts with the circular economy; without strict adherence to environmental “reasons”, the plan shall “exploit the critical raw materials already contained in products produced and sold in Europe”: some companies can recycle up to 95% of the critical raw materials in batteries. This means extracting precious raw materials, reducing waste, and promoting sustainable resource management.
Note. A “RESource plan” (resource plan) is a strategic Commission’s document that outlines the people, budget, materials and equipment needed to deliver: it identifies when these resources are required and how they will be allocated and managed to ensure the project stays on time and within budget. Essentially, it’s a blueprint for how an organization will use its resources effectively to meet project objectives. The plan will focus on everything from joint purchasing to stockpiling, to boost investment in strategic projects for the production and processing of critical raw materials in Europe.
More in: https://www.projectmanager.com/guides/resource-management
The Commission promised to speed up work on critical raw materials partnerships with numerous countries like Ukraine and Australia, Canada, Kazakhstan, Uzbekistan, Chile and Greenland; and the EU will invest in projects where Europe can benefit using the EU Global Gateway initiative; the latter is also within the joint interest of EU’s partners and the member states.
As soon as the present global economy is completely different from the old times, or even a few years ago, the EU has to adapt to the “painful lessons of energy and/or raw materials, defence or digital, the EU has to strive for its independence.
In an era of geoeconomic instability, the EU is offering the world cooperative deals: during just 2024, the EU reached new trade deals with Mercosur, Mexico, Indonesia and Switzerland; and the EU is in talks with India and wants to conclude a treaty soon. Besides, the EU is advancing with negotiations with the Philippines, Thailand, Malaysia, the UAE, etc. These new partnerships will open up rising markets, boost economic security and “avoid chokepoints in our supply chains”.
The general point is, concludes the President, that the EU “must use its geoeconomic weight to its advantage and for pursuing its own interests”: i.e. how the EU “can find its place in today’s global economy”, and how it can thrive within the new era of confrontational geoeconomics. Europe has everything it takes to make that happen, she confirms, “but it will require a new mindset of urgency, independence and courage”.
General reference and citations from: European Commission. “Speech by President von der Leyen at the 2025 Berlin Global Dialogue”, in: https://ec.europa.eu/commission/presscorner/detail/en/speech_25_2515