2023-05-22 16:46:26 UTC
"Russia's war against Ukraine, the Sino-American rivalry, and the rise of new middle powers is spurring a profound reorganization of the international order that will leave Europe at a distinct disadvantage.
the broader danger for the international system stems not from the war in Ukraine (Russia is too weak to pose a truly global threat), but from the deterioration of US-China relations. True, notwithstanding China’s bellicose rhetoric over Taiwan and its aggressive naval exercises in the waters around the island, the confrontation so far is less military than economic, technological, and political. But that is cold comfort, because it is an intensifying zero-sum conflict.
Some of the biggest losers in this confrontation are likely to be Japan and Europe. Chinese firms have built massive production capacities in the automobile industry – especially in electric vehicles (EVs) – and are now poised to outcompete the European and Japanese automakers that have long been globally dominant.
Making matters worse, America’s own response to Chinese competition is to pursue an industrial policy that will come at European and Japanese manufacturers’ expense. Recent legislation such as the Inflation Reduction Act, for example, provides large subsidies for cars produced in the US. From the US perspective, such policies kill two birds with one stone: protecting large domestic manufacturers and providing them with incentives to pursue EV development.
The eventual outcome will be a thorough reorganization of the global auto industry, with Japan and Europe (primarily Germany) losing competitiveness and market share. And lest we forget, this major economic development represents merely the beginning of a much larger global confrontation and strategic reordering.
Not only must Europe take great pains to preserve its economic model during this reorganization of the global economy. It also must manage high energy costs, the growing digital technology gap vis-à-vis the two superpowers, and the urgent need for increased defense spending to counter the new threat from Russia. All these priorities will grow even more urgent as the next US presidential election approaches, given the distinct possibility that Donald Trump could return to the White House.
Europe thus finds itself especially disadvantaged. It resides in an increasingly dangerous region, yet it remains a confederation of sovereign nation-states that have never mustered the will to achieve true integration – even after two world wars and the decades-long Cold War. In a world dominated by large states with growing military budgets, Europe still is not a real power.
Whether that remains the case is up to Europeans. The world will not wait for Europe to grow up. If Europe is going to confront today’s global reordering, it had better start soon – or, preferably, yesterday. "