by Prof. Ecaterina MAȚOI•Published on April 13, 2025

At the end of 2023, European Union’s (EU) Gross Domestic Product (GDP) in Purchasing Power Parity (PPP) Terms was estimated at current $ 26.43 trillion, still below $ 27.72 trillion estimation for the United States of America (US), but in the same range and lower than China’s 34.66 trillion (World Bank GDP PPP, 2025).

The EU represents a major and politico-economic and international relations structure, emerging in a post-World War II bipolar order dominated by the Cold War, and American financial and military influence over Western Europe. The core values on which the Union is founded are related to those of the United Nations, and hence, this Union is relevant for both internal and external policies of a relatively heterogenous block of countries.

Post-1989 international relations resembled a stable unipolar world in which the American dominance was influencing major decisions, but the assumptions related to stability and outcome of decisions were limited, as any other dominance in history. The Bretton-Woods agreement is still relevant in 2025, but its deficiencies emerged already in the 1960s, when France realized that the convertibility of dollar was not as reliable as advertised and triggered the decoupling between dollar and gold. Subsequently, various crises, like the financial crisis from 2008, further contributed to a fundamental review of international relations by both favored countries and emerging economic powers alike.

A fundamental step in assessing EU’s security challenges is the analysis of EU’s relative position in global economic and security affairs, which relates to its ability to deliver outcomes matching its size and relevance. As one of the three largest markets in the world, the EU successfully managed to impose visionary legislation like personal data protection and maintain a relatively good quality of life for its citizens. In a globally peaceful and stable global development scenario, the EU was designed to efficiently add value to national development goals of members. However, the hypotheses on which the development scenario include the Bretton-Woods system backed by world’s largest military combined with US financial dominance. The implications of this reliance are systematic and had fundamental consequences for the European Union.

At ideological level, American leadership created a reliance of the Union on American innovation and development models, that resulted in a highly connected economic and financial system, as well as American guarantees for European security. Expensive or not, the European security landscape was stable and the American partners delivered, but the estimation of costs is a rather difficult task from both economic and historical perspectives. But the economic implications of this arrangement, which is often portrayed as an alliance rather than American control over Europe, also resulted in economic and financial definitions developed in the US, a fundamental reliance of the Euro on US Dollar, large Foreign Direct Investments (FDI) from Europe to the US and from the US to Europe, as well as very large trade volumes. As long as the US was able to defend its financial dominance and expand the usage of dollar either through economic growth or inclusion of other economies in its sphere of influence, an essential pre-condition of the so-called free-market economy, the European reliance was neither visible nor significant: the system allowed a relatively acceptable joint progress and it was thus a winning strategy to defend the status quo.

However, the American 2025 ideological stance appears to suffer deficiencies and attempts to question its own basis, through visible attacks on an international order that Americans themselves promoted: the internal struggle for political power reveals the fragility of certain foreign policy definitions and their role in the trans-Atlantic relations.

A potential intensive confrontation for defending the dollar could represent both an opportunity and a threat for EU’s position in global economic and security affairs, irrespective on which barricade the EU positions itself. A potential increase in EU’s own security control is a relatively new and dynamic concept, but it is not backed by a fundamentally new vision in the post-American era. Should the US win the confrontation, then a relatively old and inefficient financial system, i.e. set of definitions, will continue to place Europe in a secondary role at international level, and should the US become a secondary global economy after the conflict is consumed, then the reliance of Europeans on the Dollar, directly or indirectly, will systematically change the global economic landscape: the unavoidable devaluation of major (overvalued) global assets might result into a systematic crisis especially if this happened over short periods. From this perspective, it is important to thoroughly assess how to transform the existing coupling between economic definitions from value based on the union between the US military and value defined on dollar premises, and value defined on EU’s capability to advance and defend its long-term interests. This represents a fundamental challenge, but a rather necessary one because the dollar system has never fully worked as one would expect: the quality of the economic model may have been a success factor, but the ideological, diplomatic and military powers allowed the US to buy goods without paying for them, in the sense of a direct immediate payment, and “convincing” countries into buying treasuries and other assets defined and maintained in US jurisdiction, under direct US control on long term.

There are various degrees of and dimensions in which an economic block can advance its policy, basically separated in two categories: existing dimensions and new dimensions. Many paradigms of the 20^th century have been defined by the US, and Europe adapted them in a form or another. Examples span from the adoption of petroleum as a key economic component to space exploration and digital revolution. From this perspective, the EU appeared to follow the lead, but considering Europe’s leadership in environment protection, although not yet fully enforced at global, may be historically consequential at global level. Essentially, the modernization of European economies to meet environmental standards renders the relatively wasteful American economic model old, unless a fundamental review of Washington’s policy will emerge on short-term. And this is rather improbable, since the US in caught between modernization, challenging China, and attempting to maintain influence of European economies through control of energy supply or that of trade corridors.

Affirming that the United Nations Security Council (UNSC) system or the trans-Atlantic alliance are working is still possible, but the statement is probably more relative than during the 20^th century. But the type of prosperity based on military backing for the dollar and confronting the Russian Federation, or the envisioned European ideas of using pension funds to finance major military programs, i.e., to continue a controversial economic system that transfers wealth from the population to an industrial-military complex based on less transparent promises, can be considered outdated thinking models that might not withstand the test of time since they do not address new global realities. Hence, in the unfolding historical transformations, the vision related to EU’s role as a block represents the central strength and challenge of this organization and its security.

Two aspects of EU’s security have been mentioned in the sections above: energy and transport corridors. In terms of energy, Europe has never been as sovereign as, for example, the US, Russian Federation or Saudi Arabia in terms of primary (fossil) energy, but nevertheless, it hosted profitable economies with the combination of Russian energy, political and economic innovation, and by avoiding to compete other major economies in a confrontational manner. From this perspective, the switch to renewable energy on very short term was a maximalist goal, but not to be underestimated on long term: while the US is trying to profit from a so-called crisis of energy in Europe after Nord Stream, and is building capacity in the Egypt-Israel region along these countries, with the hope of rentiering on Europe’s economic development, other actors also bet on energy supply to the block. It is, for example, the case of companies active in Norway, and states like Türkiye or Qatar. From a security perspective, the need for energy in Europe has become a more complex topic from the Net Zero perspective, and the economic block oscillates between accepting older paradigms/monopolies, like the ones in the oil sector, and pursuing renewable energies, a field in which it has invested but does not have the level of access to minerals that China has. However, it is rather a political choice which path to pursue, and the consequences concern both security and long-term competitiveness.

In terms of trade corridors, the EU is strongly connected to trade with the US but also benefiting from various new trade routes with Asia, especially China. Economically, it would only make sense to consider an “alternative” to the Belt and Road Initiative (BRI) like India–Middle East–Europe Economic Corridor (IMEEC) just from the perspective of free competition. However, the idea of massive trade corridors is essentially a new Chinese international relations stance, part of a more complex vision on international relations, and it can be assumed that challenging such a program requires more than a simple infrastructure investment. Hence, it must be emphasized that especially continental Europe (without the United Kingdom) may not possess the political and military capital to enforce security over global trade routes in a manner similar to the US and potentially China in the future. If this represents a security challenge or not is however subject to debate: securing global routes is a relatively expensive task, and must be justified through trade volumes and a security quality increase in order to achieve sustainability.

The EU’s position vis-à-vis major and growing conflicts appears to be relatively conservative except the war from Ukraine. Open-source data does not necessarily reveal the intricacies of the situation, but the nature of the conflict suggests both a long-term expansional tendency of the (European) former colonial and neo-colonial powers, and a certain degree of urgency with respect to Ukrainian resources. The latter tendency is supported by two parallel developments: the increase of oil and gas production in the US at any cost, in the hope of maintaining a dominance at the cost of major environmental damage due to shale oil and gas production, and the propagandistic rejection of renewable technologies like the electric cars coupled with latest tariffs, in the hope of stopping China’s domination over key future markets. From this perspective, although the EU was aligned with the US in Ukraine, it must be emphasized that the competition between the UK and the US to dominate the outcomes of this conflict may present the EU with the risk of becoming a second-tier client to key Ukrainian resources and subject its global competitiveness to financial interests from New York or London.

Union’s role in other conflicts, like the ones from Syria or Yemen, was/is limited by the definition of common European security and historical interests of various member countries. However, the prominent role of Türkiye in Syria and European acceptance of so far questionable outcomes, suggest a certain breakthrough in an unclear direction. No alignment with current US interests is apparent as of early April 2025, since the EU sends envoys while the US prepares to ban travel from Syria to the US as part of a broader travel ban policy.

The migration to Europe has been a relatively old phenomenon and issues had arisen even before the beginning of the war in Syria (2011). However, instead of correcting measures, the policy flaws transformed into political populism, in what appears to mimique American and British (Brexit) political reshuffle that promotes a propagandistic anti-globalism. It is a matter of debate whether migration is an internal or external security threat, or whether the migrants themselves or the post-colonial arrangements and inconsequent measures represent a security challenge.

European assets like the International Court of Justice and International Criminal Court appear to lose importance, and while some countries aimed to restrict Russian President Vladimir Putin and delegitimize him, Hungary received Israeli Prime-Minister Benjamin Netanyahu despite an international arrest warrant on his name, either to profit economically or to delegitimize European claims against President Putin. The lack of enforcement for what the EU presents as rule of law is thus utilized as a weakness by various actors, with potentially significant security and economic impact on the block.

Further delegitimization of Europe’s political stance is apparent in the negotiations with Iran. While the US left the deal during President Trump’s first mandate, rendering thus JCPOA null due to the missing implementation of sanctions relief and other measures, it is the US who asks for negotiations independent from European partners and the Iranian part likely considered bilateral agreements. From this perspective, European threats of triggering a UN sanctions mechanism are revealing systematic European failures in understanding and addressing what is presented as major threats. Firstly, the EU is not an impartial security guarantor for the Middle East, nor is the US: the request to accept oversight is applied differently to Iran and Israel. Secondly, as major global decision-makers for more than three quarters of century, neither European powers nor the US managed to conclude the Israeli-Palestinian conflict, that may be a significant factor in the erosion of 20^th century global order. Thirdly, the threat or reimposing sanctions, in the context of heavy sanctions after 2018 anyway, which would actually imply that the signatories met their obligations and Iran did not, is difficult to justify and such an approach can only empower to neo-decolonization, which includes the strive of emerging economies to decouple from monopolistic financial systems with an apparently limited application of the rule of law, among others. From a security perspective, such attempts require military backing, hence additional costs to enforce what appear to be arbitrary decisions.

The above arguments identify European security at a crossroads between past and future, between the West and East, and between balance and attempts to impose major political decisions by force. However, in order to integrate a new security architecture in a sustainable manner, in the context of potentially lower American security guarantees, Europe might require more than copying American success models from 20^th century. No threat is to be underestimated, and both the so-called Russian threat, which is presented as a short-term Damocles Sword especially by the proponents in order to rush channeling massive funds to military complexes, and American and Chinese economic competition threats, can represent sources of concern. However, precise assessments of the situation and implications of action on both short and long term are required, in order to increase the effectiveness of European security instruments deployment and the preparation of the latter for future victories. In doing so, one has to consider that historical evolutions meant rebalancing the power ratios by redefining the coordinates rather than striving to beat the numbers. From this perspective, Europe cannot rely anymore on a relatively accommodating Africa or on American military domination for its security at a relatively stable price. Likewise, concepts like security deployment and integration, preparedness and reaction speed require thorough contextualization and integration with defined and measurable goals, in order to maximize efficiency and sustainability. From this perspective, defining which fights to pick and what winning them means, may represent the key to further historical achievements and a safer and more prosperous Europe.

Bibliography

World Bank GDP PPP. (2025, April 13). Retrieved from World Bank Group – Data: https://data.worldbank.org/indicator/NY.GDP.MKTP.PP.CD?locations=EU-US-CN

Prof. Ecaterina MAȚOI

Prof. Ecaterina MAȚOI is Director Program at Middle East Political and Economic Institute.