Executive summary
Europeans like to believe the European Union has the collective economic size and
capacity to determine its own economic destiny. But the behaviour of others global powers
is increasingly calling this ability into question. China and the United States, especially, do
not separate economic interests from geopolitical interests in the same way the EU does.
They are increasingly using economic connections, from cyberspace to financial links, to
gain geopolitical advantage or to serve geopolitical goals. Europe’s economic sovereignty is at
stake.
The problem for Europe is real but manageable. This Policy Contribution examines
the specific problems that China and the US pose for European economic sovereignty,
and considers how the EU and its member states can better protect European economic
sovereignty in a range of areas, including state aid to domestic industries, competition policy,
investment screening, export controls, the international role of the euro, the role of European
development banks, the European payments infrastructure and the global governance
system. In each area, we recommend ways to improve the EU’s capacity to wield economic
power, without advocating increased protectionism or a retreat from globalisation.
We make recommendations on how to adapt the EU and national policy systems to better
integrate economic and geopolitical considerations. The next European Commission should
develop an economic sovereignty strategy to boost Europe’s research and scientific base,
protect assets critical to national security from foreign interference, enforce a level playing
field in domestic and international competition, and strengthen European monetary and
financial autonomy.
To guide the implementation of this strategy, an economic sovereignty committee should
be established that will seek to integrate economic and security considerations within the
European Commission. But the answer to this problem does not lie only in Brussels. We
recommend a flexible implementation strategy that connects with member-state policy
debates and makes use of ‘mini-lateral’ groups of member states