European leaders gathered at the Alden Biesen castle in Belgium and subsequently at the Munich Security Conference in Germany this week to define a new path for European strategic autonomy. Facing pressure from the ongoing war in Ukraine, aggressive trade competition from China, and a shifting transatlantic relationship, the discussions centered on two main pillars: financing the defense industry and integrating the European Single Market.
The meetings highlighted a growing consensus on these ambitions, though significant divisions remain regarding how to finance them—a point of particular contention for the fiscally conservative Nordic countries.
The Economic Pillar: “Modify or Die”
At the Alden Biesen summit on Thursday, the conversation was dominated by the implementation of the reports commissioned to former Italian Prime Ministers Mario Draghi and Enrico Letta.
Draghi, tasked with a report on European competitiveness, delivered a stark message to the gathered leaders. He argued that the previous global economic order is “dead” and that the European Union (EU) risks becoming “subordinated and deindustrialized” if it does not act immediately. His proposal calls for a transition from a confederation of states to a closer federation in specific sectors, advocating for massive joint investment to close the productivity gap with the USA and China.
Enrico Letta focused on the friction points within the internal market. His presentation emphasized the need to eliminate barriers in the energy, telecommunications, and financial sectors. Letta argued that without a fully integrated Single Market, European companies lack the scale necessary to compete globally.
Ursula von der Leyen, President of the European Commission, supported these assessments, announcing an upcoming “Industrial Accelerator Act.” This legislation aims to simplify regulations and potentially introduce “Buy European” clauses for strategic sectors—a policy strongly supported by French President Emmanuel Macron but viewed with skepticism by free-trade advocates in Northern Europe.
The Security Pillar: A “Child of Europe” in Munich
Following the economic discussions in Belgium, the focus shifted to defense at the Munich Security Conference. The mood was defined by the urgent need to ramp up military production and the presence of USA Secretary of State Marco Rubio.
German Chancellor Friedrich Merz opened the conference by calling for a “new transatlantic partnership,” warning that “in the era of great-power rivalry, even the United States will not be powerful enough to go it alone.” Merz urged European countries to repair and revive transatlantic trust, positioning Germany as a central pillar in this renewed alliance.
Danish Prime Minister Mette Frederiksen reinforced the call for immediate action, aligning with the hawkish northern bloc. She stressed that European capitals must move beyond pledges to the tangible delivery of defense capabilities, arguing that the threat from Russia allows for no further delays in ramping up industrial production.
Macron seized on this momentum to reiterate his push for European defense autonomy. The French President argued that Europe must be capable of defending itself regardless of who sits in the White House, urging member states to prioritize European military equipment over off-the-shelf purchases from non-EU suppliers.
British Prime Minister Keir Starmer echoed this sentiment, describing Europe as a “sleeping giant” that must wake up and reduce its reliance on Washington. Seeking to distance his government from the isolationism of the past, Starmer declared that the UK is “no longer the Brexit Britain” of recent years. He argued for the necessity of a “European NATO”—a distinct, robust European pillar within the alliance—emphasizing the indivisibility of regional safety: “There is no UK security without European security.”
Despite fears of a USA disengagement under President Donald Trump, Secretary Rubio offered a reassuring message, describing the USA as a “child of Europe.” However, he stressed the need for “reciprocity,” signaling that Washington expects European allies to shoulder a significantly larger share of the burden.
The Nordic Dilemma: Security vs. Protectionism
For the Nordic countries—Denmark, Sweden, Finland, Norway, and Iceland—the outcomes of these summits present a complex strategic dilemma.
On security, the region is aligned with the hawkish stance taken in Munich. Sweden and Finland, as the newest NATO members, along with Denmark, have already moved to increase defense spending significantly. The threat from Russia ensures that the Nordic capitals are among the strongest supporters of a robust European defense industry.
However, the economic proposals discussed at Alden Biesen face resistance in the North. The “Buy European” approach and Draghi’s push for joint borrowing (often referred to as Eurobonds) friction with the traditional Nordic preference for open markets and fiscal prudence.
While governments in Stockholm, Copenhagen, and Helsinki agree on the need for competitiveness, they favor structural reforms and deregulation over new common debt instruments. The prospect of state-subsidized industrial champions, a model favored by Paris and Berlin, is often viewed by Nordic economists as a threat to smaller, export-oriented economies that rely on a level playing field globally.
Next Steps for the Union
The summits concluded with a broad agreement to move forward on an implementation plan for the Single Market reforms by March. However, the mechanism for financing these ambitions remains unresolved.
Von der Leyen indicated openness to a “multi-speed Europe,” suggesting that if a unanimous agreement among all 27 member states cannot be reached regarding capital markets union or defense funding, a smaller group of countries could move ahead independently. This leaves the door open for further negotiations, but also the risk of fragmentation as the EU attempts to transform its economic and security architecture.
