Several crises over the last two decades, including the Covid-19 pandemic and, most recently, the Russian war against Ukraine, have shown the vulnerability of global supply-chain systems and have shattered illusions about ever-progressing globalisation. This has forced the EU to rethink its traditional reliance on and support for multilateralism and global cooperation, which had led to an over-dependence on certain countries and producers in crucial fields such as raw materials and chemical products. Over the last couple of years, the Union has responded to these developments by creating a series of policies and launching initiatives to de- risk its economic relations and reduce the potential for political blackmail.

The biggest systemic competitor in this respect is China, due to its economic power, political governance system and global revisionist ambitions. The challenges posed by its unique politico-economic system require a comprehensive answer from all open and market-based societies in the West.

Any de-risking strategy has to consider the effects on the sustainable transformation the EU is currently undergoing. Europe has always been a herald for open markets and globalisation. As it undergoes a massive transformation towards a low-emission economy, Europe should not build ‘green walls’ and engage in a subsidy race that may damage its long-term competitiveness.

The success and flexibility of Europe’s economy lie largely in supporting flourishing ecosystems for small and medium-sized enterprises. Industrial policy can contribute to enhanced resilience but must avoid over- regulation and unilaterally favouring large companies.

Shielding Europe’s economy and political system from external risks should not lead to abandoning the efforts to revitalise an open and sustainable global trade system. The priority should be to create alliances of the willing and promote the EU as a regulatory leader and reliable partner for third countries, particularly in the Global South. Strengthening the transatlantic trading relationship will continue to be a key element of this strategy.