February 2022 reshaped Europe’s self-understanding. The Union that thought it had found the recipe for lasting peace suddenly faced war at its doorsteps. Paired with drastic change in US foreign policy, Europe has rediscovered the virtue of unity in putting up its own vision for security and defence on our continent.
Hundreds of billions of euros have since been spent on relaunching our defence industry, modernising our armies, acquiring last generation weapon systems and moving towards more coordinated governance of our armed forces.
Long needed, and further proof that, in the face of tangible crises, humankind (and Europe is no exception) is capable of making quantum leaps to catch up with reality.
Even though, with ongoing and widening armed conflicts in Europe and our immediate proximity, we have no real reason to feel safe, we do seem to have somehow gotten used to the new normal of a world where peace is no longer the default scenario.
The ability to mobilise unprecedented resources to step up our security agenda may be creating a false sense of security, leading us to believe that we can deter military aggression - but are we really safe? Is it enough to stock up our weapon arsenals to secure our sovereignty? Will this be enough for Europe to be taken seriously as the superpowers divide the world amongst themselves? Will Europe have a seat at that table – or will we be on the menu?
The concept of sovereignty and defence
Let us revisit this concept of sovereignty and defence for a moment. And let us assume that forces emerging in the currently changing world order genuinely seek to harm Europe. In its values, in its societal model, in its territorial integrity and political borders.
How would one go about making this threat a reality? Would such forces let tanks roll into Europe? Or attack it with drones? Or missiles? Play the nuclear card? Or would they rather shut down the airspace of that contested island in Asia on which more than 70% of high-tech semiconductors for the digitalised economy are produced and exported to the entire world?
Would such a power perhaps shut down the supply chain for oil, still a dominant energy source for Europe and a raw material to dozens of industries? Or shut down the cloud services of the global tech companies that provide computing and data storage capacity for an overwhelming part of Europe’s economy?
How long would we last?
If any of these scenarios were to materialise, one wonders how long Europe would sustain. How much sovereignty do we have in any of these systems-critical value chains to sustain our economies – and with them our political system and the social cohesion? Days? Weeks? Certainly not months.
Doesn’t it feel odd that, in a matter of months, we managed to mobilise hundreds of billions to step up our expenditure on security and defence, while at the same time turning a blind eye to the fact that the US spend – across public and private sources – an amount on artificial intelligence that is twenty times greater than what Europe is putting forward?
Are we comfortable finding extraordinary budgets for weapons and ammunition, creating new state deficit spending rules within the EU economic governance for that purpose while we count the leftovers in public spending to support technology and innovation – the very industries that will decide our autonomy, our competitiveness and our living standards of tomorrow?
And what if the vicious game we are in does not stop there? What if we, as united Europe, were intentionally left to look after our security and defence on our own, precisely at this crucial moment when the ramifications of the 4th industrial revolution are being set?
What if we were, deliberately, led to spend every single euro we can spare from state budgets on military expenditure, knowing that Europe’s self-imposed fiscal discipline would then constrain us in scaling up our capacity in cybersecurity, artificial intelligence, quantum computing, or space technology at the same time?
While we are led to believe that we are deterring aggressors from military action against Europe, we may lose the war without even becoming aware that we weren’t on the right battlefield until it’s too late.
Capital on the fence
With the public sector caught up in a debate over which urgency to tackle first, venture capital – the fuel for innovation in Europe – has been reduced to a hobby of a few European family offices and non-European sovereign wealth funds that find investing in Europe cute.
And Europe can’t even agree on whether we welcome such non-European capital into our continent, as it may undermine our industrial leadership and leak European technologies to unfriendly countries. Meanwhile, European institutional capital sits on the fences, watching a game it pretends it is not part of.
What are we thinking? We have allowed economies on other continents to scale to such an extent that a handful of companies in cutting-edge technologies now have a market capitalisation bigger than that of all European stock markets combined and still wonder why no one fears any rivalry from our continent? Not in geopolitics, not in new technologies, nor in economic competitiveness.
Public policy seems to be focused on nostalgically preserving the “European way of life”, while the private sector – under the pretext of fulfilling fiduciary duties of return maximisation in asset management, is pouring capital into non-European economies. Both share a common trait: playing their hand without any aces.
Meanwhile, the rest of the world is holding a royal flush face up in plain sight. Why would they bother hiding it from us if Europe itself has dealt them their hand?
Maybe it’s time for a reset. Starting with rewriting the rules of the game, dealing the cards again and Europe playing with real money this time round.
It is time to show that, with the talent we have, the entrepreneurial tissue of our economies, and the human values we offer – we can do better than being the technology incubator for the rest of the world.