Is Greenland the wake-up name Europe wanted? | EUROtoday

This 12 months’s annual assembly of the World Economic Forum (WEF) in Davos was at all times going to be a Donald Trump present. After all, the US president, who’s returning to Davos after six years, is liable for a lot of the fragmentation of the worldwide order that the Davos crowd expects to debate throughout the five-day occasion.

But by threatening a few of the closest US allies with tariffs to coerce them into supporting his plans to annex Greenland from Denmark, a NATO member, Trump has raised the stakes a number of notches greater.

For the European leaders descending on the Swiss Alpine city, the tariff menace is yet one more main blow to the already broken transatlantic relationship.

The European Union has hit again towards Trump’s threats, even drawing up retaliatory financial measures towards US corporations and discussing using its so-called Anti-Coercion Instrument (ACI) that may restrict US companies’ entry to the large EU single market.

The episode has as soon as once more underscored Europe’s have to shrug off its complacency and reassess its reliance on the US for all the pieces from protection to know-how, a theme that is additionally a giant speaking level on the WEF assembly.

EU Commission President Ursula von der Leyen instructed WEF members that the “seismic change” Europe was at present going via was “an opportunity,” and in truth “a necessity to build a new form of European independence.”

“The truth is also that we will only be able to capitalize on this opportunity if we recognize that this change is permanent,” she added.

An alternative for Europe

EU leaders have to date tried to maintain Trump from turning their commerce and diplomatic points right into a full-blown rupture in transatlantic relations. This has come at the price of diplomatic and financial setbacks. For instance, they have been sidelined from of the Ukraine peace talks regardless of being Kyiv’s largest navy and monetary backers, and signed off on a lopsided commerce cope with the US.

Some consultants say Europe must be extra forceful in its dealings with the US, given the large leverage it enjoys. The area will not be solely an enormous marketplace for US corporations but additionally America’s largest lender, proudly owning trillions of US bonds and equities, virtually twice as a lot as the remainder of the world mixed. This is important, contemplating how a lot the US depends on debt to pay its payments.

They level to China’s instance. Beijing used its management over rare-earth metals to power Trump to again down on his exorbitantly excessive tariffs. While dumping US treasuries is less complicated mentioned than achieved, the EU is already contemplating measures that might make life troublesome for US companies coping with the bloc.

But there are others who agree with von der Leyen that the EU ought to take this chance to deal with its long-term challenges, even because it offers with the rising tensions with the United States within the quick time period.

“The more productive you are, the more competitive you are, the more leverage you have in the world,” Matthias Tauber, head of operations in Europe on the Boston Consulting Group, instructed DW. ” Recent developments underscore just how critical productivity and competitiveness are. This is where Europe needs to raise its game.”

Struggling financial system and misplaced competitiveness

The European financial system has been rising at subdued, modest tempo for years now, held again by deeper structural points comparable to sluggish determination making due to its advanced governance construction, a much less versatile regulatory framework, vitality insecurity and its dependency on imports for vital uncooked supplies.

Some of the structural points have prompted Europe to fall additional behind the US in financial development, disposable-income positive aspects, and productiveness, making it much less enticing for investments. Many European companies, significantly the newer ones, have struggled to lift investments as a result of capital markets throughout Europe are small and fragmented.

Many of those points are well-known and have been additionally highlighted in a report on European competitiveness by former European Central Bank (ECB) chief Mario Draghi in 2024. But greater than a 12 months later not a lot progress has been made on Draghi’s advice.

Von der Leyen lined these challenges in her Davos speech, together with the necessity for making a extra predictable and easy regulatory surroundings.

“We live in an age where capital or data can cross Europe in a second. And business must be able to move just as freely,” she mentioned.

Diversifying dangers, slicing US reliance

The modified international order that von der Leyen referred to is already creating a way of urgency inside the EU as evidenced by the signing of a mega free commerce cope with the Mercosur commerce bloc in South America after 25 years of negotiations, in addition to one other one ready to be signed with India.

The bloc can also be investing closely in protection — a whole bunch of billions of euros collectively — because it appears to reduce dependence on non-EU nations, together with the US.

There is yet one more dependency that the EU is trying deal with: its overreliance on US Big Tech corporations. German corporations like Siemens and SAP are already working to make sure that Europe cuts its reliance on US know-how, however they rule out an entire decoupling.

The Siemens CEO of Digital Industries, Cedrik Neike, instructed DW that it might be “foolish” to suppose that Europe would ever be capable of produce European software program, or private computer systems outfitted with GPUs and all the opposite elements wanted.

“The reality is that the world is extremely dependent. We can reduce the risk, but we can never eliminate our reliance,” he mentioned.

Edited by: Uwe Hessler