Strategic autonomy: how it is achieved

Right now, strategic autonomy should be the top priority in the EU.

But strategic autonomy requires a profound reflection on what we want to be autonomous from and the institutional changes that are required.

What constitutes our strategic interest is not synonymous with the interests of business, which has been the definition of European politicians of glorious generations, the Round Table types.

We Europeans have never properly defined our strategic interest.

Instead, we have defined our values.

Both are related, but they are not synonymous.

Nor can we reduce the notion of strategic interests solely to security interests.

I would not start the debate with defense and foreign policy, but with what the EU really does for a living: running a customs union, a single market, a single trade policy, a single competition policy and a single currency.

Therefore, the first objective should be to achieve strategic economic autonomy.

That alone would be a great achievement.

My two priorities would be: strengthening the international role of the euro and the security of the supply chain.

The first requires massive policy changes that cannot be accomplished under the current treaty.

To displace the dollar as the world's number one currency, you cannot blindly follow strict fiscal rules, set price stability as the sole objective of monetary policy, and at the same time be the world champion of exports.

To strengthen the international role of the euro, it is necessary to absorb part of the world savings surplus.

This means running deficits and letting the central bank finance them.

The United States has run twin deficits for a reason.

Not a bug, but a feature, so to speak.

Monetary policy also needs to be placed under a broader umbrella.

A single price stability objective is too narrow.

I favor the Federal Reserve's dual mandate of price stability and full employment.

This mandate recognizes the inherent conflict of monetary policy and encourages the central bank to find a balance.

When it comes to economic policy, it is never a good idea to stick with one goal and forget about the rest.

Before the war in Ukraine, Germany and the Netherlands targeted fiscal balance, but allowed their current account surpluses to soar.

The stability guru was a source of macroeconomic instability for the whole of the EU.

My second priority is for the EU to become less dependent on others for essential supply chains.

Of course, the EU will still need to import oil and gas, rare earths, and other goods.

The goal is not complete supply chain independence—North Korea's option—but rather to diversify and de-risk supply chains to avoid a repeat of the Russia issue.

What is essential is that the notion of essential supply chain is not defined based on what companies need, but rather on what society needs.

This is very much a political decision, a decision that should not be left to lobbyists.

These two objectives cannot be achieved on the basis of intergovernmental coordination.

It has not happened in the past and it will not happen in the future.

Governments change every four or five years.

They all give priority to what they consider their own interests.

European strategies are designed to solve the problem of collective action from the beginning, and extend beyond the life of a Parliament.

The single market was a program that lasted several decades and is still ongoing.

The single market was preceded by a treaty change, as was the monetary union.

Strategic autonomy will also need it.

A limited fiscal union would have to be included in that treaty, if only to finance policies aimed at achieving strategic autonomy.

Without that treaty change, don't expect much.

When the United States launched the highly distorting Inflation Reduction Act, the EU was not in a position to respond, because its hands are tied by its current policies: the stability pact, competition policy and the lack of fiscal instruments discretionary

I am not saying that the EU has to respond with its own version of the Inflation Reduction Act.

There are reasons not to.

But it would be very unwise to forgo those policy instruments in a world of rival economic zones.

The EU prospered in the age of globalisation, but it is not ready for this new Hobbesian world.

So what is holding us back?

I think it's a combination of confused thinking and cheering from the stands.

The EU's worst enemies are also its biggest fans.

They defend the EU whatever it does.

They claim that much can be done under the current Lisbon Treaty, but they also have a vague understanding of what strategic autonomy entails.

They focus on the battles between institutions, but tend not to see the big picture.

If one maintains that changing the treaty is unrealistic, it is because strategic autonomy has been declared impossible.

In that case, it would be rational for Member States to look for other ways to organize their strategic interests.

Wolfgang Münchau

is director of eurointelligence.com

Translation of News Clips.

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