added benefit of boosting Europe’s de-risking efforts and, thus, its economic resilience. The way forward will not be easy, as Europe is facing intense competition from China when it comes to deepening global trade partnerships. This means that to forge new alliances, the EU will need to focus on its unique selling point to developing economies. In that field, the bloc could present itself as an alternative to China to those economies that hold vast reserves of critical raw materials, such as Indonesia, Brazil or Chile. Europe’s offer could include access to concessional financing, tailored trade deals and opportunities to access top-notch technology and know-how in the mining sector. In any event, the bloc should accept the new reality of developing economies increasingly standing up to defend their own interests and make deals with a variety of actors in a transactional fashion. Hopes to turn the EU into the world’s technology leader will likely remain unheeded amid an ageing population, high energy costs and geopolitical instability. But the bloc still has a shot at remaining indispensable in the global economy and easing its own dependencies on its competitors by charting a pragmatic course. Boosting venture capital for start-ups and coordinating innovation financing across member states are not just economic imperatives; they are essential to ensuring the EU retains enough leverage to shape global norms and safeguard its autonomy. In parallel, inking trade partnerships with developing economies will help the bloc to remain relevant on the global economic scene. In a world dominated by giants, Europe’s future relevance will depend less on the size of its tank and more on how astutely it drives. Summary of recommendations –Focus on boosting productivity growth by supporting the financing of European start-ups and going all-in at the EU level in a few frontier sectors. –Consider increasing the amount of financing available to European venture capital funds through measures supporting investments from insurance and pension funds. –Increase the budget of the European Innovation Council, laying the groundwork towards building a European sovereignty fund. –Tackle the fragmentation of Europe’s innovation financing landscape by creating an EU-wide mechanism for member states to identify a handful of critical technologies and focus on these fields. –Nurture the emergence of EU-based critical technologies, particularly domains such as artificial intelligence, cloud and edge, semiconductors, quantum technologies, electrification and renewables, and advanced connectivity. –Double down on building a network of trade partnerships, especially with developing economies. Open but Secure: Europe’s Path to Strategic Interdependence 23

Open but Secure Europe%E2%80%99s Path to Strategic Interdependence 2025