Dince 2020, Europe’s economic policy has been characterized by increasing state intervention in the economy. This change in policy was prompted by a series of shocks: the pandemic, the war in Ukraine and general international tensions linked to the geopolitical decoupling between the United States and China. As a result, Europe has re-examined the old debate about the degree of government intervention in the functioning of economies to prevent or manage supply disruptions of critical products such as vaccines in the event of a pandemic, natural gas in the event of major energy crisis, microchips in the face of digital transformation or critical raw materials in the face of the energy transition.
The industrial policy debate has centered on the notion of strategic autonomy. The idea is that if governments allow corporations to make investment, trade and supply chain decisions based solely on their own economic interests, countries will develop trading models that could making them too dependent on unreliable partners or potential adversaries. Not without negative geopolitical, economic and social consequences.
But the notion of strategic autonomy remains contested, in particular because its ultimate objective remains unclear. Under what circumstances could Europe consider itself strategically autonomous? While increasingly emphasizing the need for action to strengthen the continent’s strategic autonomy in a number of areas, European leaders have so far failed to explicitly address this fundamental issue.
Behind this question lies a trade-off between economic efficiency and geopolitical resilience. Take the example of clean technologies. China has developed a strong comparative advantage in the manufacture of these technologies. The argument of economic efficiency calls for European companies to continue importing these technologies from China. But since China controls at least half of their production, the geopolitical resilience argument invites European governments to actively encourage diversification away from China. This would avoid in the future a possible geopolitical militarization of these exports, like what Europe has recently experienced with Russian gas.
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