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

Strategic interdependence also has implications for domestic policy. Particularly since the financial crisis of 2007-2008, the benefits of globalization have clearly not been shared equally. How do governments organize migration, the introduction of novel technologies and a renewed push for European competitiveness in ways that protect citizens who ended up on the wrong side of global interdependence — those who saw their jobs move overseas and, in certain sectors and geographies, saw migration drive down wages and strain housing markets and public services? On migration, this means drafting a new social and political compact which takes into account economic and demographic realities while maintaining public buy-in. It means keeping open legal migration channels while continuing to combat irregular migration. Well-targeted investments in education and training in migrants’ countries of origin can build trust and reduce brain drain, while European universities should collaborate to attract and retain skilled students and researchers through pathways to residence and citizenship. Integration strategies need local-level support and public engagement, and should apply best practices from across the continent. On technology, Europe has long pitched itself as a regulatory powerhouse, setting important standards with global reach. But now it finds itself lagging behind in vital areas like artificial intelligence (AI). The rise of new big and middle powers reduces the imperative for the rest of the world to follow the EU’s digital rules. Achieving both technological competitiveness and security, and creating European digital champions, will mean placing research and innovation, science and technology at the heart of the European economy. It will also mean cutting red tape, investing in digital infrastructure and building partnerships with the rest of the world on semiconductors and rare-earth extraction and processing. None of these other forms of strategic interdependence can be achieved without an overall drive to restore Europe’s economic dynamism. The bloc cannot reverse its relative decline compared with the US and China until it manages to boost sliding productivity growth. So EU leaders should focus specifically on encouraging innovation in pivotal sectors by supporting the development of an ecosystem of venture capital funds, scaling up the activities of the European Innovation Council (EIC) and addressing the fragmentation of Europe’s innovation financing landscape. In the following chapters, members of the High-Level Group on European Strategic Interdependence of the World Economic Forum — co-convened by the European Council on Foreign Relations — will explore in more detail what strategic interdependence means across six sectors: foreign policy, defence, climate, migration, technology and economic competitiveness. They offer concrete policy proposals for each, together comprising a roadmap towards a strategically interdependent future for Europe. Europe cannot reverse its relative decline compared with the US and China until it boosts sliding productivity growth, so leaders should focus on encouraging innovation in pivotal sectors. Open but Secure: Europe’s Path to Strategic Interdependence 6