ELIAMEP

The following paper has received a distinction in the policy paper competition organized by ELIAMEP’s Turkey Programme, focusing on Turkey’s domestic developments, foreign relations, and socio-political dynamics.

Turkey has long sought to position itself as a regional energy hub through gas infrastructure, exploiting its geographical position between eastern supply and western demand. As decarbonisation and electrification accelerate, this hub agenda is expanding beyond hydrocarbons. This paper assesses Turkey’s emerging ambition to become an “electricity hub” by analysing two relevant projects, asking whether Ankara is extending its corridor-to-hub approach to cross-border electricity corridors, and what this implies for EU-backed corridor priorities. Empirically, it traces two strands of policy: “hub-building” measures that deepen Turkey-centred connectivity and market interfaces, and “hub-defending” measures that challenge bypass routes and political and regulatory risk. It argues that Turkey is seeking to shape the region’s evolving electricity map through a mix of selective cooperation and competitive obstruction, bolstering its strategic relevance while complicating EU efforts to diversify routes and de-risk priority interconnections.

Read here in pdf the Policy Paper by Ioannis Voskidis, Master’s student, Sciences Po (Paris School of International Affairs), Paris.

Ioannis Voskidis is a Master’s student at Sciences Po (PSIA), focusing on energy geopolitics. He holds an MA in European studies from the College of Europe (Tirana campus), and a BA in international Affairs from Panteion University.

Introduction

The energy transition is changing the landscape of energy geopolitics. As electrification accelerates, cross-border electricity infrastructure such as HVDC links, interconnector corridors, converter stations and market interfaces are becoming a central variable rather than a set of purely technical assets, rivalling the importance of hydrocarbon infrastructure.[1] For the EU, this also means that strategic autonomy is no longer only about fuel suppliers, but it increasingly involves critical raw materials, clean-tech supply chains, and the digital infrastructures that operate modern grids. In Europe’s neighbourhood, this shift is already producing corridor competition, with rival routes for exporting “green” power, politically contested maritime spaces, and EU-backed projects whose success depends as much on bankability and geopolitics as on engineering. Interconnectors are increasingly the “arteries” of an electrifying region, and the actor that shapes their interfaces determines which corridors become the default. This makes them a growing focus of attention and contestation between geopolitical actors.[2]

Ankara’s long-standing ambition to be an “energy hub” has traditionally been pursued through natural gas and pipeline corridors connecting producers in the Caspian, Russia and the Middle East to European demand.

Turkey occupies a central position in this emerging regional geography. Ankara’s long-standing ambition to be an “energy hub” has traditionally been pursued through natural gas and pipeline corridors connecting producers in the Caspian, Russia and the Middle East to European demand.[3] This paper asks whether Turkey is now adapting that corridor-to-hub playbook to electricity, and what this means for the EU’s external electricity corridor strategy. It argues that electricity cannot replicate the classic gas-hub model of storage-enabled arbitrage and benchmark price formation, but it can reproduce the core geopolitical logic of routed energy through corridor power: shaping where interconnections are built, under what operational and market rules trade becomes routine, and which gateways become structurally central. Two short case studies highlight why the EU must treat Ankara’s external interconnections as geopolitical corridor choices and design response options accordingly.

Redefining hub leverage

Energy geopolitics is often less about who owns molecules and more about who shapes the routes and interfaces through which energy moves. In hydrocarbons, this logic is amplified by capital-intensive networks with high fixed costs and sunk investments.[4] Once infrastructure is built, pipelines and terminals lock in corridors, create dependence, and can confer bargaining power on states that host or control key infrastructure. As Europe’s energy transition accelerates electrification, a similar question arises for the emerging geography of cross-border electricity: what does it mean to be “central” in this new context.

…it conveys “corridor power”, meaning the ability to influence where interconnection is built, how cross-border capacity is governed, and under which market and regulatory arrangements trade becomes investable, reliable, and routinely usable.

In this paper, an “electricity hub” is defined in an operational, political-economy sense. It does not denote a single benchmark pricing point akin to TTF, nor does it imply control over point-to-point flows comparable to pipeline operations. Rather, it conveys “corridor power”, meaning the ability to influence where interconnection is built, how cross-border capacity is governed, and under which market and regulatory arrangements trade becomes investable, reliable, and routinely usable.[5] In electricity, centrality is therefore less about “owning” electrons than about shaping the geography and functioning of interconnector routes and landing points, as well as the rules that monetise and allocate access, including capacity allocation, congestion management and balancing arrangements.

Electricity interconnections differ fundamentally from hydrocarbon transport, so pipeline-style “corridor” analogies can only go so far.

Electricity interconnections differ fundamentally from hydrocarbon transport, so pipeline-style “corridor” analogies can only go so far. Power flows follow the physics of the grid (loop flows), meaning a transaction on one interconnector can load multiple lines across domestic and third-country networks.[6] As a result, congestion and access are system-wide and state-dependent, and cross-border trades can be curtailed on security grounds even under open access. Moreover, electricity lacks gas-style buy–store–resell dynamics at scale: with storage still limited and costly, trade is constrained by continuous real-time balancing and typically requires deeper operational integration and compatible market rules.[7] Gains from cross-border exchange often accrue primarily to a low-cost origin rather than the “corridor”, and value capture stems less from transit-style fees than from regulated access and scarcity pricing of constrained capacity (e.g., congestion rents). These distinctions are summarised in the table below:

Table 1. Why hydrocarbon hub logic doesn’t map onto electricity interconnections.

 

Dimension Electricity interconnection  

Implication Flow structure Loop flows: transactions spread across parallel lines Effects spill into internal/third-country grids Access under stress System-wide, state-dependent congestion “Open access” is bounded by reliability Intertemporal economics No large-scale buy–store–resell, storage limited/costly Arbitrage logic is weak compared to hydrocarbons Operational discipline Real-time balancing: supply = demand continuously Usable trade needs tight operational coordination Monetisation No transit fee by default, value via regulated access + congestion rents Rents come from scarcity, not per-unit tolls

Compiled by author. Source: Subhes C. Bhattacharyya, Energy Economics: Concepts, Issues, Markets and Governance

Yet the strategic logic of corridors still travels. Interconnectors are high-value, long-lived assets whose location reshapes regional dependence patterns as institutional and infrastructural leverage.[8] They can generate material gains such as cost savings, and renewable integration by expanding balancing options, as well as strategic gains by making a state a necessary partner for trade and long-term planning. These effects are magnified in contested environments where cable landing points, converter stations, and operational interfaces intersect with sovereignty claims and jurisdictional boundaries. In this adapted sense, transit and especially corridor remain analytically useful categories for electricity, while hub should be understood cautiously as shorthand for corridor power rather than as a claim to benchmark price-setting.

Applied to Turkey, the lens translates into two observable policy modes:

• Hub-building: promoting corridor architectures that route new cross-border power exchange through Turkey and embedding them in workable interfaces (interconnection choices, plus governance that makes exchange usable).
• Hub-defending: resisting bypass corridors that would consolidate alternative routes and reduce Turkey’s relevance in the emerging regional electricity map—especially where permitting, survey stages, landing points, and operational interfaces intersect with sovereignty claims.

The next section applies this diagnostic to two cases in order to test whether Turkey’s actions amount to corridor power in practice.

Turkey’s electricity hub strategy: a two-track approach

This section examines how effectively Turkey is translating its long-standing “corridor-to-hub” playbook from hydrocarbons into electricity through the two-track framework of hub-building and hub-defending.

This section examines how effectively Turkey is translating its long-standing “corridor-to-hub” playbook from hydrocarbons into electricity through the two-track framework of hub-building and hub-defending. Two cases operationalise the framework: the Great Sea Interconnector (Greece-Cyprus-Israel), which is the clearest illustration of (mainly) hub-defending dynamics, and the competing “green electricity corridor” agenda in the South Caucasus–Black Sea space, which illustrates hub-building dynamics. Both logics can coexist in practice, but each case foregrounds one mechanism more clearly than the other.

Great Sea Interconnector

The Great Sea Interconnector (GSI) is a planned HVDC submarine interconnector linking Greece (and thus the European grid) to Cyprus and Israel.[9] It has been framed at EU level as a Project of Common Interest (PCI) under the TEN-E framework, reflecting its role in a core EU objective: ending Cyprus’ electricity isolation and enabling the island’s fuller participation in the internal electricity market.[10] From a decarbonisation perspective, interconnection expands the menu of flexibility options for an island system, supporting renewable integration, adequacy and (in principle) lower system costs through trade and diversification. The EU has backed up this prioritisation with substantial support, including a reported €657 million CEF grant for construction and additional EU-backed financing instruments associated with project development.[11] Despite its advantages, the project faces significant domestic resistance in Cyprus. Beyond formal concerns over cost and viability,[12] parts of the electricity-sector debate have reflected opposition from actors worried about the impact of interconnection on the existing market structure, electricity prices and incumbent positions. Incumbents in an oligopolistic electricity market can have incentives to resist reforms that would come with deeper interconnection and competition, which would put downward pressure on prices over time.[13]

Figure 1. The Great Sea Interconnector

 

Source: https://tyndp2024.entsoe.eu/projects-map/transmission/219

From Turkey’s perspective, GSI is not merely an infrastructure project; it is a corridor choice that reconfigures an Eastern Mediterranean electricity route outside Turkish territory and provides no role for the Turkish Cypriot entity. In corridor terms, it reduces Turkey’s prospective centrality as a gateway between the Eastern Mediterranean and the European system by establishing a direct EU-backed route that shifts incentives of connectivity southwards.

From Turkey’s perspective, GSI is not merely an infrastructure project; it is a corridor choice that reconfigures an Eastern Mediterranean electricity route outside Turkish territory and provides no role for the Turkish Cypriot entity.[14] In corridor terms, it reduces Turkey’s prospective centrality as a gateway between the Eastern Mediterranean and the European system by establishing a direct EU-backed route that shifts incentives of connectivity southwards. Turkey’s hub-defending behaviour in the case of GSI is expressed through two mutually reinforcing mechanisms: First, Ankara is advancing a jurisdiction/consent argument, whereby the project cannot lawfully proceed without Turkish approval at those points where the route intersects maritime areas Turkey claims as part of its continental shelf or jurisdictional entitlement.[15] This is embedded in the wider Eastern Mediterranean delimitation dispute and is presented politically as a rejection of regional infrastructure planning that “excludes” Turkey and Turkish Cypriots. Second, Turkey’s posture generates a credible operational disruption risk during some of the most vulnerable phases of project execution (route surveying, permitting, and seabed works), where delays and uncertainty can rapidly translate into higher costs and contract instability. The 2024 Kasos incident in which Turkish naval assets reportedly moved to impede survey activity illustrates this point.[16] Even limited coercive signalling can interrupt technical work and increase the perceived probability of repetition.

Even in this primarily defensive case, a hub-building element is also visible. Turkey has promoted alternative interconnection concepts oriented toward Turkey-centred connectivity for Cyprus (or the island’s northern part).

The key effect is not necessarily permanent prevention but bankability erosion. Where investors, contractors and insurers anticipate recurring contestation, they account for political risk through higher contingencies, tighter contractual protections and longer implementation timelines. This can delay procurement, postpone construction milestones and, in practice, produce a gap between EU “priority” designation and deliverability. Reporting around GSI has linked geopolitical uncertainty to stoppages in surveying and to interruptions in project momentum, including pauses affecting key contractors and payment flows. From an EU perspective, this is a material risk because the Union’s objective depends on a corridor being buildable and operable under stress. Even in this primarily defensive case, a hub-building element is also visible. Turkey has promoted alternative interconnection concepts oriented toward Turkey-centred connectivity for Cyprus (or the island’s northern part).[17] The strategic logic is consistent: delay or complicate a bypass route, while keeping open (or advertising) an alternative architecture that would preserve Turkey’s corridor relevance.

The GSI shows what “hub-defending” looks like in an electricity context. No toll is extracted or price set, but corridor outcomes are shaped by raising execution risk and thereby influencing the feasibility, timing and bankability of a competing interconnection map.

Black Sea interconnector

The Black Sea Connectivity project (often referred to as the Black Sea Submarine Cable) is a proposed HVDC interconnector intended to link Georgia and Romania (Anaklia-Constanța) across the Black Sea.[18] For the participating and associated states (most prominently Azerbaijan, Georgia, Romania and Hungary) the initiative is framed as a platform for exporting renewable electricity from the South Caucasus/Caspian basin, strengthening regional energy security, diversifying supply options, and anchoring a broader package of infrastructure investment and regulatory coordination around the corridor. Institutionally, the project has been formalised through intergovernmental arrangements and the creation of a dedicated project company to advance development. However, the initiative remains less mature than GSI, with delivery horizons commonly placed in the early 2030s; this matters, because projects with long lead times are particularly exposed to substitution by faster or more controllable alternatives.

Figure 2. The Black Sea Interconnector

Source: https://big-europe.eu/publications/2024-10-30-corridors-of-power-the-black-sea-cable-between-azerbaijan-and-europe/

For the EU, the project is a strategic connectivity route serving two primary goals: decarbonisation and—in a post-2022 context—energy security, as future plans would incorporate Moldova and Ukraine. It creates a direct channel for renewable electricity into the Union via Romania and onward toward Central and Eastern Europe.[19] The Commission has embedded the project within the Global Gateway narrative and linked it to regulatory approximation with EU electricity market rules—an explicit attempt to ensure that physical connectivity is paired with market governance compatible with the internal energy market.[20] In EU procedural terms, the project’s promoters have sought Project of Mutual Interest (PMI) status under TEN-E, which would facilitate cross-border governance and prioritisation for corridors that connect the EU with neighbouring regions.[21]

…the Black Sea cable would cement a Romania–Black Sea gateway for South Caucasus electricity into the EU, thereby reducing the strategic logic of routing those same flows through a Turkey-centred corridor.

Turkey has been less publicly confrontational on this file than on GSI, largely because it does not intersect directly with the Eastern Mediterranean sovereignty dispute. Yet the corridor implications are structurally similar: if implemented, the Black Sea cable would cement a Romania–Black Sea gateway for South Caucasus electricity into the EU, thereby reducing the strategic logic of routing those same flows through a Turkey-centred corridor. In corridor terms, the project would “set the map” around a direct maritime interface between the South Caucasus and the EU, rather than a land-based corridor in which Turkey acts as the main operational and political gateway.

Ankara is advancing a competing corridor architecture that seeks to make Turkey the preferred transit interface for South Caucasus electricity into Europe. 

Ankara’s response in this case is therefore best understood as hub-building rather than hub-defending. Instead of relying on legal contestation or operational disruption to block a bypass route, Ankara is advancing a competing corridor architecture that seeks to make Turkey the preferred transit interface for South Caucasus electricity into Europe. Concretely, Turkey has promoted a framework with Azerbaijan, Georgia and Bulgaria which is oriented toward upgrading interconnections and developing the operational/trading arrangements needed to move electricity into the Turkish system and onward through Turkey–Bulgaria—and potentially extending across the Balkans and toward other EU markets.[22] The strategic value of this approach is twofold: it expands Turkey’s role as a regional gateway in a decarbonising neighbourhood, and it embeds prospective export flows within the Turkish network and its associated governance interface.

The competition between these routes is commercial and institutional. A credible Turkey-mediated corridor can weaken the Commission-backed Black Sea gateway by

• offering investors and offtakers a substitute route that reduces expected utilisation and revenue certainty for the submarine-cable project, and
• shifting planning momentum and regulatory cooperation toward a Turkey-facing interface. In this sense, Turkey’s hub-building strategy can indirectly shift the region’s centre of gravity and increase EU exposure to a corridor whose operability and access conditions are shaped by a non-EU actor.

The Black Sea case highlights a distinct mechanism of outcompeting by advancing a corridor that appears more implementable, more politically controllable, or faster to deliver, thereby influencing which corridor becomes the default route for South Caucasus–EU electricity exchange.

Putting the cases together

The broader implication of these two case studies is that several core logics associated with hydrocarbon route geopolitics are already visible in electricity. What changes in electricity is the leverage mechanism. Thus, influence is exercised less through controllable, point-to-point shipment and the collection of transit tariffs and more through the ability to shape the feasibility and bankability of projects (by affecting political and economic risk), their timing (by accelerating preferred routes or delaying rivals), and the governance conditions under which interconnection becomes routinised (operational interfaces, security rules, access under scarcity, and the market arrangements that convert a cable into a functioning corridor). This also determines the ways through which contestation is achieved:

Increase of perceived disruption risk → higher contingencies → delayed surveys/procurement → weaker bankability.

In a system of capital-intensive, path-dependent interconnectors, these mechanisms matter because they determine which corridors become “default” and which are crowded out before they ever materialise.

In a system of capital-intensive, path-dependent interconnectors, these mechanisms matter because they determine which corridors become “default” and which are crowded out before they ever materialise. In this context the EU must assess its external electricity corridors and design response options.

EU implications & policy recommendations

The preceding analysis implies that the EU should treat cross-border electricity interconnectors not only as decarbonisation infrastructure, but also as geopolitical corridor choices that shape the region’s long-run connectivity map. In this setting, the key vulnerability is not simply “dependence on imports”; it is dependence on the political, legal and institutional conditions that make a corridor bankable, buildable and operable. This also fits the EU’s broader resilience agenda, which is shifting from managing single-supplier fuel dependence to monitoring and mitigating strategic dependencies across the technologies and infrastructures of electrification.[23] Given interconnectors’ technical and financial traits, even modest increases in perceived uncertainty can harden financing terms, slow procurement, disrupt construction schedules and redirect system planning towards alternative routes. Where routes are politically contested or where there is a credible risk of disruption, contractors, lenders and insurers price in geopolitical risk through higher contingencies and longer timelines. The EU therefore faces a recurring gap between formal priority designations and practical deliverability. This matters because EU-backed interconnectors involve sunk costs well before any power flows (as the GSI makes clear). Repeated pauses, rerouting or rescoping can strand preparatory expenditure and consume time in a decade where grid bottlenecks are already a binding constraint on decarbonisation.[24] In parallel, corridor competition can reallocate regional centrality away from EU-preferred gateways, pushing Brussels away from designing connectivity on its own terms towards having to adapt to corridors whose operational interface and political conditions are shaped by non-EU actors.

Brussels is already building an industrial and screening toolkit relevant to this corridor challenge, with instruments ranging from the Net-Zero Industry Act and Critical Raw Materials Act to FDI screening and the Foreign Subsidies Regulation aimed at limiting strategic vulnerabilities in the electrified economy. However, measures specifically targeting the project-level risks that determine whether priority corridors are delivered, seem to be missing. In fact, recent disputes over other energy projects in sensitive areas, including the buffer zone in Cyprus,[25] illustrate that geopolitical implementation bottlenecks are not taken into sufficient consideration and often hinder project deliverability.

Against this backdrop, the EU’s response should be framed less as a binary choice between “confronting” or “accommodating” Turkey (and other actors) and more as corridor governance under contestation, which could be useful in other areas as well. Key policy recommendations include:

1. a) Financially de-risking the delivery of EU-priority corridors (making “bankability” a funded deliverable). Where the EU has already designated projects as strategic (TEN-E/PCI) and committed grant money (CEF/RRF), it should establish concrete disbursement milestones. By employing stage-gated sequencing (survey → permitting → procurement → construction) with milestone-based disbursement and procurement terms that explicitly price disruption, the EU can ensure that disruption does not automatically fatally undermine bankability. This approach would provide EU instruments with the confidence required to sustain financial support through extended development cycles.
2. b) Coalition-building around shared corridor benefits. To reduce corridor vulnerability, the Commission should widen the set of actors who pay a reputational and financial cost if implementation stalls. Operationalise this through implementation compacts that bind third beneficiary states, TSOs, regulators and financiers to a shared timetable, defined escalation channels, and pre-agreed responses to permitting or maritime disruption.
3. c) Pursuing managed interoperability with Turkey on EU terms. Given the geography and existing links, Turkey will remain relevant for regional flows. The question is whether that relevance is predictable or discretionary. The EU should focus cooperation on a narrow set of operational rules that make cross-border exchange routine and contestation-resistant. Concretely, this means working through TSOs/regulators so that day-to-day operability cannot be turned into political leverage. A separate EU–Turkey technical dialogue on Eastern Mediterranean electricity connectivity could also help reduce escalation risks. Such a channel could focus on practical issues without giving Ankara a veto over the GSI route or reopening the discussion on the project’s legal basis, while keeping the Crete–Cyprus section as an EU-backed priority and avoiding any implication of recognition of Cyprus’s occupied north.
4. e) Providing maritime assurance for lawful survey and maintenance (reducing the security premium). For (mainly) offshore corridors, bankability hinges on whether surveys, cable-laying and maintenance can proceed predictably. The EU and participating member states should therefore complement efforts with maritime security measures. A coordinated presence to ensure the safety of civilian vessels conducting lawful works is necessary.

In sum, the EU’s best defence is to convert emerging corridor politics into a rules-based connectivity strategy: de-risk delivery, broaden coalitions, engage Turkey pragmatically on operability, and preserve route optionality so that interconnection remains feasible, bankable and governable even in contested geopolitical environments.

Conclusion

For the EU, the implication is that “priority” labels and funding are necessary but insufficient. External interconnectors should be treated as geopolitical corridor choices whose deliverability depends on geopolitical conditions, too. EU strategy therefore needs to develop a corridor governance that is reliable under contestation.

As electrification becomes central to the EU’s strategic energy autonomy, the politics of interconnection will increasingly determine whether decarbonisation reduces vulnerability or simply shifts it to new chokepoints and dependencies. Where interconnectors are built, how quickly they become deliverable, and under what governance arrangements cross-border exchange is organised will increasingly shape the region’s strategic landscape and become a focal point of geopolitical competition.[26] Accordingly, Turkey’s long-standing effort to translate geography into energy centrality is already extending beyond hydrocarbons, with electricity corridors now being incorporated into Ankara’s strategic calculus. The two cases show how Turkey is adapting a familiar corridor-to-hub goal to electricity. In the Eastern Mediterranean, GSI illustrates corridor-defending via jurisdictional contestation and credible disruption risk, while in the Black Sea, the competition is more about corridor-building and outcompeting. For the EU, the implication is that “priority” labels and funding are necessary but insufficient. External interconnectors should be treated as geopolitical corridor choices whose deliverability depends on geopolitical conditions, too. EU strategy therefore needs to develop a corridor governance that is reliable under contestation.

The geopolitical implications of electricity-corridor politics remain largely underexplored. Future research should therefore examine the concrete forms of leverage that attach to controlling interconnection infrastructure, identify which market-design instruments most effectively “operationalise” corridors in practice, and assess how expanding storage and hybrid system assets could reshape corridor competition as the next decades unfold.

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[1] IEA. World Energy Outlook 2025. Paris: International Energy Agency, 2025, 19. https://www.iea.org/reports/world-energy-outlook-2025  License: CC BY 4.0 (report); CC BY-NC-SA 4.0 (Annex A).

[2] Tomas Jermalavičius, ed., The Ties That Bind: Energy Connectivity in the Age of Geopolitical Turbulence (Tallinn: International Centre for Defence and Security, April 2026), https://icds.ee/en/the-ties-that-bind-energy-connectivity-in-the-age-of-geopolitical-turbulence/

[3]Mahmoud A. Hammad, Sara Elgazzar, Matevž Obrecht, and Marjan Sternad. “Compatibility about the Concept of Energy Hub: A Strict and Visual Review”. International Journal of Energy Sector Management 16, no. 1 (2022): 4. https://doi.org/10.1108/IJESM-06-2020-0022

[4] Subhes C. Bhattacharyya, Energy Economics: Concepts, Issues, Markets and Governance (London: Springer, 2011), 237. https://doi.org/10.1007/978-0-85729-268-1

[5]Mahmoud A. Hammad, Sara Elgazzar, Matevž Obrecht, and Marjan Sternad. “Compatibility about the Concept of Energy Hub: A Strict and Visual Review”. International Journal of Energy Sector Management 16, no. 1 (2022): 5. https://doi.org/10.1108/IJESM-06-2020-0022

[6] Subhes C. Bhattacharyya, Energy Economics: Concepts, Issues, Markets and Governance (London: Springer, 2011), 409. https://doi.org/10.1007/978-0-85729-268-1

[7] Ibid. 228

[8] Mia Beams, “The U.S. Interconnection Challenge: Why Renewables Are Stuck in Line”, Council on Foreign Relations, October 2, 2025, https://www.cfr.org/articles/us-interconnection-challenge-why-renewables-are-stuck-line

[9] Βασίλης Νάνης, “Great Sea Interconnector: Η σημασία και η δύσκολη συγκυρία του εμβληματικού έργου”, Το Βήμα, 4 Σεπτεμβρίου 2025, https://www.tovima.gr/2025/09/04/explainers/kalodio-elladas-kyprou-i-simasia-kai-i-dyskoli-sygkyria-tou-emvlimatikou-ergou/

[10] Ιbid. 

[11] Ιbid.

[12] Lysandrou Miranda, “Ευλογία ή κατάρα ο GSI για την Κύπρο; Ιστορία, παρασκήνιο, αβεβαιότητες και αναπάντητα ερωτήματα για το μεγαλόπνοο έργο”, Politis, n.d., https://www.politis.com.cy/politis-news/oikonomia/964727/efloghia-i-katara-o-gsi-ghia-tin-kypro-istoria-paraskinio-avevaiotites-kai-anapantita-erotimata-ghia-to-meghalepivolo-ergho

[13] EnergyPress, “Καλώδιο Ελλάδας-Κύπρου: Τα συμφέροντα που δεν θέλουν το έργο”, October 13, 2025, https://energypress.gr/news/kalodio-elladas-kyproy-ta-symferonta-poy-den-theloyn-ergo

[14] Keep Talking Greece, “Ankara Threatens the Electricity Interconnection Greece-Cyprus Project (GSI)”, April 10, 2025, https://www.keeptalkinggreece.com/2025/04/10/turkey-gsi-interconnection-greece-cyprus-threats/

[15] Menelaos Hadjicostis, “EU Irked by Turkish Warnings against Greece-Cyprus-Israel Electricity Cable Link, Cyprus Says”, AP News (Associated Press), April 11, 2025, https://apnews.com/article/cyprus-turkey-greece-undersea-electricity-cable-interconnector-ccce85737cbf99cddd7cf1fa72678771

[16] Harry Aposporis, “Uncertain Future of Greece-Cyprus Great Sea Interconnector Project”, Balkan Green Energy News, September 9, 2025, https://balkangreenenergynews.com/uncertain-future-of-greece-cyprus-great-sea-interconnector-project/

[17] Igor Todorović, “Turkey promoting its alternative to Greece-Cyprus power cable”, Balkan Green Energy News, August 12, 2024, https://balkangreenenergynews.com/turkey-promoting-its-alternative-to-greece-cyprus-power-cable/

[18] Vladimir Spasić, “Azerbaijan, Georgia, Hungary, Romania Establish Firm for Black Sea Interconnector”, Balkan Green Energy News, September 5, 2024, https://balkangreenenergynews.com/azerbaijan-georgia-hungary-romania-establish-firm-for-black-sea-interconnector/

[19] Ibid.

[20] Thijs Van de Graaf, “Corridors of Power: the Black Sea Cable between Azerbaijan and Europe”, Brussels Institute for Geopolitics, October 30, 2024, https://big-europe.eu/publications/2024-10-30-corridors-of-power-the-black-sea-cable-between-azerbaijan-and-europe/

[21] European Commission, Directorate-General for International Partnerships, “Black Sea Connectivity Submarine Electricity Cable”, International Partnerships (Global Gateway), accessed January 25, 2026, https://international-partnerships.ec.europa.eu/policies/global-gateway/black-sea-connectivity-submarine-electricity-cable_en

[22] Igor Todorović, “Turkey Pushing against Rivals for Transmission of Green Electricity to EU”, Balkan Green Energy News, April 7, 2025, https://balkangreenenergynews.com/turkey-pushing-against-rivals-for-transmission-of-green-electricity-to-eu/

[23] European Commission, Commission Staff Working Document, Strategic Dependencies and Capacities, SWD(2021) 352 final (Brussels, May 5, 2021), 35, PDF.

[24] IEA (2025), Grid congestion is posing challenges for energy security and transitions, IEA, Paris https://www.iea.org/commentaries/grid-congestion-is-posing-challenges-for-energy-security-and-transitions  Licence: CC BY 4.0

[25] Cleaver Tom, “Buffer zone solar farm plans hit buffers, both sides silent as to why”, Cyprus Mail, April 3, 2025, https://cyprus-mail.com/2025/04/03/buffer-zone-solar-farm-plans-hit-buffers-both-sides-silent-as-to-why

[26] Kirsten Westphal, Maria Pastukhova, and Jacopo Maria Pepe, Geopolitics of Electricity: Grids, Space and (Political) Power, SWP Research Paper 2022/RP 06 (Berlin: Stiftung Wissenschaft und Politik, March 15, 2022), https://www.swp-berlin.org/10.18449/2022RP06/ ; https://doi.org/10.18449/2022RP06

 

 

In a changing Europe, ELIAMEP analysts assess the priorities highlighted by European Commission President Ursula von der Leyen and what was missing from her agenda. (in Greek)

 

• The ESS should provide a common strategic direction across defence, resilience, economic security, critical infrastructure and external partnerships, with greater emphasis on faster decision-making and implementation.
• A 360-degree approach should be combined with a differentiated assessment of threats, reflecting their immediacy, severity and systemic effects.
• The ESS should strengthen coordination across existing security instruments through faster response mechanisms, stronger preparedness and improved intelligence coordination.
• The paper proposes a Security and Defence Union with a ministerial Security and Defence Council to strengthen political coordination and shorten decision cycles.
• Maritime security should become a more explicit part of the ESS, with particular attention to the Eastern Mediterranean, maritime domain awareness and the protection of critical maritime and seabed infrastructure.
• Further priorities include Western Balkan defence integration, climate preparedness, external resilience to hybrid threats and sustained support for Ukraine.

The Policy paper was edited by: Elena Lazarou, Director General, ELIAMEP; Panayotis Tsakonas, Senior Research Fellow, Head, Foreign Policy & Security Programme, ELIAMEP; Professor, University of Athens; Αpostolos Samaras, Research Fellow at the European Programme ‘Ariane Condellis’, ELIAMEP; Athina Fatsea, Research Assistant to the Director General; European Programme Manager, ELIAMEP and Panos Politis Lamprou, Research Fellow, Defence Hub, ELIAMEP.

Contributions were made by (in alphabetical order): Ino Afentouli, Ioannis Armakolas, Spyros Blavoukos, Constantine Capsaskis, Athina Fatsea, Dimitris Gavalas, Ioannis N. Grigoriadis, Triantafyllos Karatrantos, Mihalis Kritikos, Elena Lazarou, Michalis Mathioulakis, Panos Politis Lamprou, Apostolos Samaras and Dimitris Tsarouhas.

The European Conservatives and Reformists (ECR) is currently the fourth largest group in the European Parliament, jockeying for the third position capitalizing on the appeal of the Italian Prime Minister, Giorgia Meloni, whose national party, Fratelli d’Italia, is one of the two main pillars of ECR. In this policy analysis, we examine the political trajectory of ECR, its current level of cohesion as well as its ideological proximity and positioning vis-à-vis the other political groups of the EP. Voting data place the group between the ‘governing majority’ (EPP, S&D, Renew and often the Greens) on one side and the sovereignist cluster (ESN, Patriots for Europe) on the other. When the ‘governing majority’ does not act in unison, the ECR can contribute to the formation of ad hoc and issue-specific alternative coalitions. However, at the same time, its relatively loose internal cohesion highlights its internal fragility, as parties that consistently diverge from the group’s political centre may be lured by other political groups, changing the political balance of the EP.

Read here in pdf the Working paper by Antonis Papakostas, former EU official; Research Associate, ELIAMEP; Spyros Blavoukos, Professor, Athens University of Economics and Business; Senior Research Fellow and Head of the ‘Ariane Condellis’ European Program, ELIAMEP and Georgios Matsoukas, Junior Research Fellow, ELIAMEP.

Amid the increasing urgency to address climate change, the European Union (EU) has assumed a leading role in establishing regulatory measures aimed at decarbonization through the implementation of a series of stringent measures. This policy paper analyzes the implications of the EU’s maritime decarbonization framework, with particular emphasis on the expansion of the EU Emissions Trading System to maritime transport (EU ETS Maritime) and the adoption of the Regulation on the Use of Renewable and Low-Carbon Fuels in Maritime Transport (FuelEU Maritime). While these initiatives are intended to reduce GHG emissions, promote cleaner fuels, and extend the EU’s climate policies to the shipping sector –positioning the EU at the forefront of decarbonization– they also trigger complex economic and geopolitical effects that transcend environmental considerations. Specifically, the paper argues that the extraterritorial scope of these regulations may elevate compliance costs for shipping companies, ports, and exporters, thereby incentivizing route diversion, carbon leakage, and the relocation of transshipment activities to nearby non-EEA ports. To address these challenges, the paper proposes targeted policy measures and concludes that the success of the EU’s maritime climate framework will rely on its ability to harmonize decarbonization objectives with competitiveness, market access, and geopolitical resilience.

Read here in pdf the Policy paper by George Dikaios, Senior Research Fellow, ELIAMEP; Marie Skłodowska-Curie Postdoctoral Fellow, Leiden University; Dimitris Gavalas, Senior Research Associate, ELIAMEP; Associate Professor, Department of Port Management and Shipping National and Kapodistrian University of Athens and Marianna Terezaki, Junior Research Fellow, ELIAMEP.

Introduction

…within Europe, shipping serves as a fundamental pillar of the European economy.

Global shipping accounts for 80% of the world’s trade, underscoring the significance of maritime transport to seaborne commerce and economic development. Similarly, within Europe, shipping serves as a fundamental pillar of the European economy. In recent years, it has experienced robust and steady growth, playing a crucial role in sustaining trade, economic advancement, connectivity, and access, with 74% of EU imports and exports relying on shipping.[1] In particular, the European shipping industry has seen a significant increase since the pandemic, as measured by total turnover, i.e., the direct and indirect impact of the shipping industry, recording an added value of approximately €241.4 billion in 2023, in line with robust demand for maritime transport services. This underscores the pivotal role of shipping in supporting European trade and supply chain activities during the post-pandemic recovery period. Simultaneously, the maritime sector of the EU assumes a crucial function within the broader global fleet, with the scope of the European-controlled fleet surpassing European waters and operating on a global scale, facilitating international trade across various regions and reinforcing Europe’s prominent position in global trade.[2]

Furthermore, in addition to economic growth and ongoing trade activities, the European shipping sector holds a strategically significant position. Notably, European shipowners possess nearly 50% of the world’s container ship capacity, 34% of oil tankers, 32% of LNG carriers, 28% of bulk carriers, and 28% of vehicle carriers, thereby facilitating the movement of the EU’s energy imports, transporting raw materials essential for the energy transition, and lastly linking European exporters to international markets.[3] Nonetheless, as the importance of the maritime sector continues to increase, so does the demand for its services, accompanied by additional environmental impacts.[4]

To mitigate the environmental impact of shipping, the EU has developed one of the most comprehensive climate policy frameworks, including measures targeting the maritime sector.

To mitigate the environmental impact of shipping, particularly greenhouse gas (GHG) emissions, which account for approximately 3% of global GHG emissions, the EU has developed one of the most comprehensive climate policy frameworks, including measures targeting the maritime sector.[5] Efforts to approach maritime decarbonization more systematically began as early as March 2011, when the European Commission released a white paper on transportation, proposing a 50% reduction in carbon emissions from maritime transport by 2050 compared to 2008 levels.[6] Moreover, four years later, the EU issued the regulation referred to as the “MRV Regulation” for the purpose of monitoring, reporting, and verifying GHG emissions from shipping. This regulation mandated annual reporting for shipping companies and independent verification of CO2 emissions from large ships calling at EEA ports.[7] These efforts reached a peak in 2019 with the European Green Deal and its interim plan, the Fit for 55 package, adopted in 2021 to achieve a 55% reduction in emissions by 2030. Important steps in maritime decarbonization include expanding the EU Emissions Trading System to maritime sector, hereafter referred to as EU ETS Maritime, and implementing Regulation 2023/1805, which promotes the use of renewable and low-carbon fuels, hereafter referred to as FuelEU Maritime.[8]

…shipping is a latecomer sector to be included within the framework of EU climate policy.

This policy paper aims to explore the impact of the newly introduced policy developments for the shipping sector by the EU that are directly connected to the broader European efforts to decarbonize the economy. It has to be noted, as already implied, that these efforts have been in place for over 20 years, and shipping is a latecomer sector to be included within the framework of EU climate policy.[9] The policy paper will focus on how stringent emissions standards and enhanced mitigation requirements are likely to affect the shipping industry and trade activities, with particular emphasis on the geopolitical and economic ripple effects. In the following section, a brief presentation of such standards and requirements will be provided, followed by a discussion of the potential geopolitical ramifications for different aspects of the maritime transport economy. The examples of China and Greece are also discussed, as they can shed light on the implementation of the said policies. Subsequently, several policy proposals for addressing the potential implications of such geopolitical/geoeconomic changes are sketched, while a concluding section summarizes the main points of the paper.

EU ETS, EU ETS Maritime, FuelEU Maritime

The EU ETS, established in 2005, constitutes the world’s first carbon market. This system mandates that polluters compensate for their GHG emissions, thereby reducing overall EU emissions and generating revenue to support the transition to cleaner energy sources. It operates on the principle of “cap and trade”: the “cap” limits the total GHG emissions, which are progressively decreased each year to align with the EU’s climate objectives, ensuring a consistent decline in emissions over time. The cap is structured through emission allowances, each authorizing the emission of one tonne of CO2; these allowances are auctioned and exchangeable, hence the designation “cap and trade”. As the cap is progressively tightened, the supply of allowances within the EU carbon market correspondingly diminishes (European Union, 2026). Since January 2024, the EU ETS has been expanded to encompass the maritime transport sector. This expansion involves the progressive inclusion of emissions from all large ships, i.e., exceeding 5,000 gross tons (GT), entering EEA ports, irrespective of their flag, with full implementation anticipated by 2027. At that point, the EU ETS Maritime will be fully operational, requiring shipping companies to surrender 100% of allowances corresponding to their reported emissions. At the same time, the scope will be extended to incorporate methane (CH4) and nitrous oxide (N2O) emissions, alongside CO2.[10]

While the EU ETS Maritime aims to limit emissions from the shipping sector and financially support the transition to cleaner energy, the FuelEU Maritime also operates as a complementary measure towards this objective. 

While the EU ETS Maritime aims to limit emissions from the shipping sector and financially support the transition to cleaner energy, the FuelEU Maritime also operates as a complementary measure towards this objective. Specifically, the latter is a pivotal initiative for EU maritime decarbonization, aiming to promote the consistent use of renewable and low-carbon fuels in the maritime sector across the EU. In particular, FuelEU Maritime, fully enforced since 2025, mandates progressively stringent GHG intensity targets for marine fuels, commencing with a 2% reduction by 2025 and escalating to 80% by 2050. These targets encompass not only CO₂ but also CH4 and N2O emissions.[11] In essence, it establishes a maximum allowable GHG content in the energy used by ships that arrive at, stay in, or depart from ports under a Member State’s jurisdiction and it also encourages the adoption of on-shore power supply (OPS) or zero-emission technologies in these ports.[12] Complementarily, to ensure its effective application, the enforcement mechanism outlined in the regulation entails severe consequences for non-compliance, including financial penalties and potential refusal of port entry or detention of the vessel for persistent violators.[13] Thus, the FuelEU Maritime Regulation aims to incentivize the maritime industry to transition gradually from fossil fuels to sustainable alternatives.[14]

Both measures serve the same overarching objective but employ different approaches to accomplish it. Notably, the EU ETS Maritime utilizes financial incentives and disincentives through a “cap and trade” system, whereas FuelEU Maritime establishes a maximum permissible limit on the annual GHG intensity of energy used by ships and promotes the adoption of cleaner fuels and energy sources.[15] Moreover, apart from their shared purpose, both measures are applicable to large vessels, regardless of their flag, and their mandates encompass not only voyages between Member States but also voyages between the EEA and third countries.[16]

…the implementation of the EU’s maritime decarbonization policies includes voyages between the EEA and third countries, thereby exemplifying the expansion of the EU’s influence beyond its borders. 

Overall, the implementation of the EU’s maritime decarbonization policies seeks to diminish emissions from the maritime sector and encourage the adoption of cleaner energy sources. At the same time, the scope of this framework includes voyages between the EEA and third countries, thereby exemplifying the expansion of the EU’s influence beyond its borders. Considering their extraterritorial scope and the fact that the EU is the largest economy and trading bloc globally,[17] these measures are likely to exert pressure on non-EU shipping companies and third countries to adhere to European climate standards to maintain market access, while also increasing costs for shipping companies and ports in their efforts to achieve decarbonization. Nevertheless, the increasing costs faced by shipping companies and ports in their decarbonization initiatives may prompt a search for ports in third countries not governed by these regulations.[18] This could potentially result in a reconfiguration of trade routes, which might be disadvantageous to European ports or could encourage additional non-EU investments in competing trade hubs, such as Chinese investments in strategic ports.

Geoeconomic ramifications Market Access and Compliance as a Trade Barrier

Given the importance of the EU’s external trade, accounting for approximately 77%, and the introduction of increasingly stringent maritime climate regulations, participation in EU-linked maritime trade has become more closely associated with compliance with European environmental standards.[19] Nonetheless, the linkage between EU market access and environmental compliance can exert asymmetric pressures on third countries and shipping companies.

More specifically, a notable implication stemming from the EU’s climate framework for shipping concerns the financial repercussions of compliance, influencing trading partners and transshipment hubs. In particular, direct trading partners of the EU may face escalating carbon costs embedded in their maritime supply chains, with shipping companies operating between non-EU ports and EU destinations bearing 50% of voyage emissions costs. In turn, these costs are systematically passed through as surcharges; Maersk, Hapag-Lloyd, and CMA CGM have announced substantial increases to their environmental surcharges, grouping EU ETS and FuelEU Maritime compliance costs under combined surcharges that will rise by approximately 45% in 2026.[20] Simultaneously, this also effectively raises the cost of trade with the EU, potentially distorting competitive dynamics between exporters and creating inflationary pressures on European consumers.[21]

Transshipment hubs are particularly vulnerable to severe consequences, as well. As Kotzampasakis has argued,[22] the implications extend beyond direct EU traders to countries that rely on EEA ports as transshipment hubs, a category that includes numerous developing economies dependent on European connectivity for global trade integration. Notably, the EU ETS incorporates anti-evasion measures that exclude stops at “neighboring container transshipment ports” located within less than 300 nautical miles of an EU port, provided that these ports have a transshipment share exceeding 65% of total container traffic, and have been in effect since January 2025. Tangier Med in Morocco and East Port Said in Egypt have already been designated under this provision, meaning calls at these ports are not treated as the start or end of a voyage for EU ETS Maritime calculation purposes.[23]

This market access conditionality has been further institutionalized through the adoption of the Global Gateway Green Shipping Corridors (GGGSC) initiative, launched by the European Commission to facilitate the transition towards green shipping. According to the report of the Joint Research Centre (JRC), eight overarching criteria for port inclusion in the GGGSC are identified, including “port interdependencies” and “safeguarding a level playing field for port operators in the EU and partner countries”.[24] Specifically, the report identified 30 ports classified as highly relevant across all three EU industry competitiveness scenarios, forming a “core network” that can ensure critical mass and availability along international shipping networks of interest to the EU. This core network can be complemented by ports important for the development aspect of the GGGSC, balancing competitiveness with sustainable development objectives. Case studies already underway include the Port of Antwerp-Bruges’ support for developing a hydrogen ecosystem in the Port of Walvis Bay (Namibia) through GGGSC funding.[25] Consequently, this creates a tiered system of market access whereby ports and countries aligning with EU standards receive preferential support and connectivity.

The EU’s climate framework has significantly pressured its direct trading partners and key transshipment hubs, strategically enhancing its influence via the GGGSC initiative. Nevertheless, this market-access conditionality, as observed, also introduces cost pressures and market impacts, which may lead to changes in trade routes and competition.

Trade Route Shifts

…increasing costs for shipping companies and ports might drive investments in ports in non-EU countries not subject to these regulations, potentially resulting in what is known as carbon leakage, as well as route diversion.

The compliance costs linked to EU maritime decarbonization initiatives are substantial and experiencing an upward trajectory. In particular, for the EU ETS Maritime alone, the European Community Shipowners’ Associations estimates that this measure generates revenue of approximately €7.65 to €9 billion annually at current carbon pricing levels.[26] Moreover, compliance costs per tonne of fuel have escalated markedly, i.e., from approximately $220 per tonne in 2025 to about $315 per tonne in 2026, representing a 45% increase. These costs are systematically transferred through the global trade network, resulting in notable increases in freight rates on European routes.[27] When considering the comprehensive scope of decarbonization measures, including fuel switching, OPS infrastructure, and alternative fuel adoption, the total cost burden is projected to reach up to €130 billion by 2027, and between €100 billion and €300 billion by 2035.[28]  As a result, increasing costs for shipping companies and ports might drive investments in ports in non-EU countries not subject to these regulations, potentially resulting in what is known as carbon leakage, as well as route diversion.

Carbon Leakage and Route Diversion

The financial costs imposed by the EU ETS are already prompting shipping operators to reconfigure their networks to minimize exposure to carbon expenses, a phenomenon termed carbon leakage. According to the cost-benefit analysis conducted by Lagouvardou and Psaraftis,[29] which examines the risk of container vessels substituting EEA transshipment hubs with nearby non-EEA competitors, their case studies concentrated on the Piraeus-Izmir and Algeciras-Tangier Med scenarios. Specifically for Greece, the Piraeus-Izmir comparison is particularly revealing; with a distance of 210 nautical miles between these ports, their analysis demonstrated that for carbon prices beyond 15-23 EUR/CO₂, there is a clear motive for cargo ships to redesign their networks to evade the EU ETS Maritime. Current carbon prices significantly exceed this threshold, suggesting that route diversion is not merely a theoretical possibility but an emerging reality. The hub switch, while reducing the operator’s EU ETS liability, paradoxically results in a rise in overall carbon emissions attributed to the service, as ships may take longer routes or use less efficient operational patterns.[30]

Evidence from European Commission indicates that the full implementation of the EU ETS in 2026 has transformed environmental surcharges from a marginal cost into a “structural cost of maritime transport.” Shipping lines are now reporting that the combined impact of EU ETS and FuelEU Maritime surcharges will increase “substantially” compared to 2025, with one major carrier noting that the rising cost of biofuels and falling cost of fossil fuels make the transition to lower-emission alternatives only more expensive.[31]

It is important to note that there is no observed evidence of carbon leakage attributable to the adoption of the EU’s maritime climate measures. This lack of evidence can primarily be ascribed to the fact that, until approximately 2030, these maritime climate measures will not be fully implemented. Therefore, the actual impact on carbon leakage across shipping routes is more likely to become fully evident in the coming years, as shipping companies consider multiple factors when designing their logistics chains.[32] Nevertheless, a recent economic study conducted by the European Commission et al.[33] assessing the potential for carbon leakage due to maritime mitigation measures, identified the relocation of transshipment operations to nearby non-EEA hubs as the most significant risk of carbon leakage, underscoring the existence of this risk.

Competitive Dynamics and Chinese Investment

…non-EU ports have increasingly gained transshipment traffic that EU ports have not been able to capture; this change is mainly attributed to the implementation of the EU ETS Maritime.

The potential shift of shipping activities from EU ports to competitors outside the EU is already manifesting, supported by evidence indicating that existing regulations have caused a considerable transition of transshipment operations from EU ports to non-EU ports, e.g., Morocco, Egypt, and Jordan.[34] Of particular note concerning the Eastern Mediterranean region is the loss of direct connectivity by EU ports, as the number of deep-sea services directly linking to their facilities diminishes. Concurrently, non-EU ports have increasingly gained transshipment traffic that EU ports have not been able to capture; this change is mainly attributed to the implementation of the EU ETS Maritime. Namely, 76% of route adjustments can be attributed to the EU ETS Maritime, which significantly influences route reconfigurations.[35] This situation not only results in employment reductions at EU ports but also diminishes the EU’s influence over international supply chains. Moreover, Chinese investments in strategic ports via the Belt and Road Initiative (BRI) further intensify this competitive dynamic.

According to the Mercator Institute for China Studies (MERICS), China’s influence on global ports has experienced a net reduction in the number of ports it either owns outright or operates in 2024. Notable instances include a Chinese state-owned enterprise divesting its share in the Port of Melbourne to interests from the United States, and Hong Kong-based Hutchison Port Holdings failing to secure renewal of the contract for King Abdul Aziz Port in Saudi Arabia. However, this slight decline should not distract from the fact that China’s port network remains largely coordinated from Beijing. Furthermore, the MERICS analysis emphasizes that most identified Chinese companies are state-owned enterprises (SOEs) directly under Beijing’s control, often required to meet non-commercial strategic goals set at the center of the party-state. As one analyst notes, “Chinese container shipper COSCO might be smaller than European giants MSC or Maersk, but it is more usefully viewed as part of a network of SOEs coordinated by the State-owned Assets Supervision and Administration Commission (SASAC), which is itself directly under the supervision of the State Council, China’s cabinet”.[36]

The growing concern about China’s influence in countries with Chinese-run ports appears to be an important factor in Beijing’s changing fortunes. Chinese investments are becoming increasingly controversial amid some Chinese-led projects that have gone awry, efforts to “de-risk” economies from overt dependence on China, and growing fears about national security risks. However, Beijing’s first-mover advantage means its influence on global shipping remains secure for now. In the coming years, Beijing is expected to shift its focus from creating demand in traditional industrial sectors to green and digital projects, as these are expected not only to increase Beijing’s influence but also to create demand for China’s key high-tech companies and technology.[37]

China’s port investments, despite experiencing some recent setbacks and facing growing international resistance, remain strategically important. 

Thus, EU’s climate policy for shipping is observed to contribute in certain instances to a shift of transshipment activities from EU ports to nearby non-EU competitors, thereby undermining EU port connectivity, employment, and influence within supply chains. At the same time, China’s port investments, despite experiencing some recent setbacks and facing growing international resistance, remain strategically important due to their coordination through state-linked enterprises and their increasing alignment with Beijing’s broader ambitions.

Aside from route reconfigurations and investments in competing trade hubs, it is also crucial to examine specific case studies and the following implications of the EU’s maritime climate measures. In particular, the next section will analyze Greece as an EU Member State with substantial maritime reliance, where increased compliance and infrastructure costs could cause economic disruptions and shift competitive dynamics.

Implications for Greece

The Greek government has articulated significant concerns regarding the practicality of certain decarbonization initiatives.

Greece has long held a central position in global shipping industry. A 2024 McKinsey & Company study reports that the Greek merchant fleet comprises more than 5,000 vessels, making Greece the largest ship-owning country, with approximately 20% of global seagoing cargo capacity. Greece also controls the world’s largest tanker and liquefied natural gas fleets by capacity, as well as the second-largest dry bulk and liquefied petroleum gas fleets. In economic terms, the Greek shipping sector contributes approximately $14 billion and supports around 150,000 jibs, reinforcing Greece’s importance to global trade and economic stability.[38] Against this background, Greece as an EU Member State heavily reliant on maritime activities is especially exposed to disproportionately adverse effects from the EU ETS Maritime and its associated measures. The Greek government has articulated significant concerns regarding the practicality of certain decarbonization initiatives, with Minister of Maritime Affairs and Insular Policy, Vassilis Kikilias, cautioning that:

Many of these measures are not feasible. Europe is already being tested by rising costs, conflicts, and the energy crisis. Such an additional burden cannot be placed on societies.[39]

What is practically emphasized is the necessity of balancing ambition with realism.

What is practically emphasized is the necessity of balancing ambition with realism; imposing broad-based taxation to attain zero emissions entails substantial risks to the economy, with the resultant costs ultimately transferred to charterers and subsequently to the broader economy, thereby elevating prices and exacerbating inflationary pressures.

Specific vulnerabilities for Greece include:

• Piraeus Port’s particular vulnerability: The analysis by Lagouvardou & Psaraftis[40] demonstrates the potential transshipment diversion to Izmir, threatening the port’s economic activity and development.
• Greek Shipping Cluster’s Strategic Positioning: As a major global shipping nation, Greece must balance the EU’s climate ambition with the commercial interests of its shipowners. This tension has manifested in Greece’s recent abstention at the International Maritime Organization (IMO) on the Net-Zero Framework, joining Cyprus in breaking ranks with the EU position. The Union of Greek Shipowners has explicitly called on the EU to scrap the EU ETS Maritime and FuelEU Maritime as soon as a global carbon tax takes effect, arguing that “measures at regional levels undermine shipping’s competitiveness and disrupt global trade”.[41]
• Geopolitical Alignment Concerns: Greece has been accused of aligning with the US and Saudi Arabia to undermine the EU’s climate laws, with Lloyd’s List[42] warning that Greece risks becoming Trump’s Trojan horse in the fight to decarbonize shipping. The Greek Minister for Environment and Energy, Stavros Papastavrou, has defended this position, emphasizing that Greece is “a voice of realism in Europe, when it comes to energy”.[43]
• Regional Disparities: Higher compliance and infrastructure costs may alter competitive dynamics within the Mediterranean, potentially benefiting non-EU ports at the expense of Greek and other European ports. The GGGSC initiative’s focus on ensuring a level playing field for ship and port operators suggests recognition of this risk,[44] but the EU’s ongoing designation of additional transshipment ports under the anti-evasion provisions will be crucial for Greek ports’ competitiveness.[45]

Therefore, the implications of EU’s maritime decarbonization policy framework are particularly significant given the country’s central position in global shipping and its dependence on maritime activity for economic growth and trade. While decarbonization represents a necessary long-term objective, the Greek case illustrates that climate measures ought to be designed with careful attention to competitiveness, port diversion risks, and geopolitical realities. For Greece, the challenge lies not in whether maritime decarbonization should advance, but in how it can be implemented in a manner that sustains the viability of the shipping sector, safeguards strategic ports such as Piraeus, and ensures that the transition toward zero emissions is both environmentally ambitious and economically sustainable. In this context, Greece publicly maintains a particularly cautious stance on the efforts being made, as well as strongly criticizing the EU for its lack of flexibility and promotion of a climate agenda that does not take into account reality.[46] This stance, of course, seems to contradict the European Climate Law and its broader implications, as well as all European climate policies and to contribute to an increasing effort to water down climate targets.

Essential Steps to Address Implications

Although the European Commission works closely with Member States to identify industries at high risk of carbon leakage,[47] further action is needed to ensure effective mitigation.

The extension of EU regulatory authority via the EU ETS and FuelEU Maritime positions the EU as a global standard-setter, compelling third countries and shipping operators to adopt European standards to preserve market access. Nevertheless, this projection of regulatory power engenders asymmetric pressures on other countries and shipping companies, potential carbon leakage through route diversion, while conferring competitive advantages upon ports and shipping operators equipped with advanced infrastructure. Simultaneously, these implications may also be transmitted, significantly impacting Member States heavily engaged in maritime activities, as exemplified by Greece. To address these geoeconomic ramifications, several key initiatives are proposed to be undertaken:

1. Avoiding increased costs and loss of EEA’s ports: As identified above, the primary concern is the potential transfer of increased costs via the global trade network, which may result in EEA’s transshipment hub relocation to nearby non-EEA hubs, posing a risk of carbon leakage and loss of competitiveness of EEA ports. Although the European Commission works closely with Member States to identify industries at high risk of carbon leakage,[47] further action is needed to ensure effective mitigation. In particular, the EU can utilize the revenues from the EU ETS to offset additional costs associated with this transition by formulating transparent allocation strategies that support green technologies and the energy transition for shipping companies, ports, and other stakeholders across the logistics chain.[48]

 

2. Mitigating carbon leakage: Introducing a specific “Carbon Leakage Factor” for deep-sea routes, as suggested in Puertos del Estado’s Report,[49] could be an effective step in reducing the risk of carbon leakage and route diversion. This mechanism would reduce incentives for route splitting by adjusting the volume of emissions subject to the surrender of allowances for each container-vessel voyage. The factor should be calibrated according to voyage distance, ensuring that longer routes are regulated in a way that discourages avoidance strategies while maintaining the environmental integrity of the EU ETS Maritime.

 

3. Preventing reconfigurations of transshipment activities outside the EEA: While the current framework seeks to prevent the relocation of transshipment activities outside the EEA, important gaps remain, especially where neighboring container transshipment ports compete directly with European ports without formally meeting the existing anti-evasion measures, introduced by the EU’s maritime climate framework, i.e., FuelEU & EU ETS Maritime. Evidence suggests that European maritime trade may continue to be affected despite these provisions, potentially weakening EEA port competitiveness and increasing the influence of external actors, including China, over global supply chains. Therefore, there is an imperative need to revise the criteria for identifying neighboring container transshipment ports by broadening the scope to include ports that, despite not presently meeting the 65% transshipment threshold or being more than 300 nautical miles from a European port, might serve as direct competitors, e.g. ports in Africa, the eastern Mediterranean, and the United Kingdom.[50]

 

4. Ensuring port competitiveness: To accelerate maritime decarbonization whilst maintaining the competitiveness of EEA ports, the EU is utilizing the GGGSC initiative as a strategic policy tool. In particular, by linking EU ports with key international partners, the GGGSC can improve access to sustainable, renewable, and low-carbon maritime fuels, expand fuel import capacity, and strengthen the resilience of EU maritime transport.[51] However, the EU must ensure that these partnerships remain inclusive and do not create a hierarchy in which only EU-aligned ports benefit from preferential connectivity, investment, and market access. To prevent market distortion and geopolitical fragmentation, particularly for Member States reliant on the maritime partnerships, such as Greece, the GGGSC should be accompanied by transparent participation criteria, targeted support for third-country partners, and safeguards that ensure equitable access to maritime trade.

 

5. Addressing the interconnected ramifications: Οur analysis indicates that compliance costs increase the cost of trade with the EU, and these costs are then transmitted through the global trade network. This contributes to the relocation of transshipment operations, heightens the risk of carbon leakage, and accelerates route reconfigurations. Consistent with Adjei et al.,[52] who identify the structural and institutional barriers of maritime transport governance as interconnected, policy measures should not address these changes in isolation. Instead, targeted action on one barrier can generate positive spillover effects across others. In this context, effective management of carbon leakage could also help reduce incentives for route reconfigurations and support a more coherent transition toward sustainable maritime transport.

Conclusions and the way forward(?)

Overall, the EU’s maritime decarbonization framework represents a transformative regulatory initiative with implications extending beyond the EU’s borders. By linking access to European maritime trade with compliance with European climate standards, it introduces significant geoeconomic implications. Namely, as identified from our research, this entails increased compliance costs for shipping companies, ports, exporters, and consumers, while also incentivizing route diversion, the relocation of transshipment activities from EU ports to nearby non-EEA competitors, and carbon leakage. These are all interconnected barriers which can potentially emerge from the implementation of the EU’s maritime climate framework.

Particular attention is drawn to EU (Eastern) Mediterranean ports, which are especially vulnerable; non-EU hubs such as ports in North Africa, Turkey, Egypt, Morocco, and Jordan could potentially gain a competitive advantage as shipping operators seek to avoid EU carbon costs. Simultaneously, declining competitiveness among EU ports may create opportunities for Chinese investment in strategic port markets. The case of Greece, as an EU Member State highly dependent on shipping, illustrates the broader tension between EU climate ambition and maritime competitiveness.

To address these challenges, this policy paper suggests several measures, i.e., improving the measurement of carbon leakage, strengthening existing anti-investment policies, strategically reallocating revenues from the EU ETS Maritime, and leveraging the GGGSC initiative to promote both decarbonization and competitiveness.

…the European Commission introduced two strategic initiatives in 2026: the EU Industrial Maritime Strategy and the EU Ports Strategy. Together, these signify a shift away from addressing the competitive effects of individual climate measures in isolation.

Looking ahead, the European Commission introduced two strategic initiatives in 2026: the EU Industrial Maritime Strategy and the EU Ports Strategy. Together, these signify a shift away from addressing the competitive effects of individual climate measures in isolation and towards integrating maritime decarbonization within a broader industrial, energy, and infrastructure policy framework.[53] Specifically, the EU Industrial Maritime Strategy, if successfully implemented, may serve as a solution to several challenges, including the energy transition, competitiveness, and Europe’s reliance on non-EU supplies. For instance, it proposes support for the adoption of renewable and low-carbon fuels through the Renewable and Low Carbon Fuel Alliance, which will convene shipowners, sustainable fuel producers, and financial institutions to enhance production capacity and supply chains.[54]

The EU Ports Strategy complements these targets by focusing more directly on port competitiveness and resilience. Its objectives include (a) providing greater regulatory clarity, (b) fostering fairer competition, and (c) ensuring investment certainty across EEA ports, while acknowledging the strategic role of ports as facilitators of energy. To achieve these goals, the Commission has proposed leveraging the opportunities offered by the Trans-Mediterranean Renewable Energy and Clean Tech Cooperation (T-MED) to strengthen sustainable energy connectivity among Mediterranean ports and to promote closer cooperation among ports, energy companies, grid operators, and local authorities. In addition, the Strategy envisions more consistent emissions measurement and reporting protocols within port areas to improve the availability of sustainable fuels. Lastly, the European Commission encourages Member States to allocate a portion of their revenues from the EU ETS to investments in maritime decarbonization across the maritime spectrum of the EEA.[55]

The effectiveness of the EU’s maritime climate framework will depend on its ability to balance decarbonization, competitiveness, market access, and geopolitical resilience without jeopardizing the EU’s trade power.

Although these strategies collectively lay the foundation for addressing several existing gaps and provide a significant framework for aligning decarbonization, infrastructure development, and competitiveness, their practical impact remains uncertain. Currently, both strategies, i.e., the EU Industrial Maritime Strategy and the EU Ports Strategy, function primarily as policy roadmaps rather than instruments that create legally binding obligations, thereby leaving some critical issues unresolved and necessitating further attention. Notably, the anticipated rise in compliance costs may continue to influence the competitiveness of EEA ports, especially those situated near non-EEA alternatives, where shipping operators may seek to mitigate exposure to EU carbon pricing. This could further incentivize the reorganization of transshipment activities outside the EEA, potentially undermining the competitiveness of European ports within regional and global maritime networks. Towards a similar direction acts the 2026 ETS Revision Proposal for maritime transport, with its provisions attempting to alleviate (some of) the criticized aspects of today’s system. For example, it suggests a change to the transshipment threshold from 65% to 50%, it promotes specific requirements for the use of sustainable maritime fuels and incentivizes the use of green shipping corridors. The critique of that, which can also explain the stance of Member States like Greece, is that the above revision favors liner over bulk/tramp trade, leading to an increase of the already existing distributional consequences that would assist the decarbonization of shipping segments that can be decarbonized more easily, instead of developing a policy framework that would cover the entire maritime sector in a (more) equal manner.

The effectiveness of the EU’s maritime climate framework will depend on its ability to balance decarbonization, competitiveness, market access, and geopolitical resilience without jeopardizing the EU’s trade power.

[1] European Environmental Agency-European Maritime Safety Agency Joint Report. (2025). “European Maritime Transport Environmental Report 2025”. https://www.eea.europa.eu/en/analysis/publications/maritime-transport-2025 (20/08/2026).

[2] European Community Shipowners’ Association (2026). “The economic value of European shipping”.  https://ecsa.eu/wp-content/uploads/2026/05/2026_05_04-ES-ECSA-The-economic-value-of-European-Shipping-FINAL.pdf (3/09/2026).

[3] Ibid.; Fratila, A., Gavril, I. A., Nita, S. C., and Hrebenciuc, A. (2021). “The Importance of Maritime Transport for Economic Growth in the European Union: A Panel Data Analysis”. Sustainability, 13(14), no. 7961.

[4] European Environmental Agency-European Maritime Safety Agency Joint Report. (2025), op. cit.

[5] Dikaios, G., Terezaki, M., and Gavalas, D. (2026). “Geopolitical Upheaval Through Climate Measures: IMO and EU Decisions for International Shipping”. Ocean and Society, 3, no 11894. https://www.cogitatiopress.com/oceanandsociety/article/view/11894/5168 (3/09/2026); UN Trade and Development (2023). “Review of maritime transport 2023”. https://digitallibrary.un.org/record/4042151?ln=en&v=pdf (20/08/2026).

[6] Dong J., Zeng J., Yang Y. and Wang H. (2022). “A review of law and policy on decarbonization of shipping”. Frontiers Marine Science, 9, no 1076352.

[7] European Maritime Safety Agency (2026). “EU ETS Extension to maritime”. https://www.emsa.europa.eu/reducing-emissions/extension-ets.html (20/08/2026); Wang, S., Zhen, L., Psaraftis, N.H. and Yan, R. (2021). “Implications of the EU’s Inclusion of Maritime Transport in the Emissions Trading System for Shipping Companies”. Engineering, 7(5), 554-557.

[8] Regulation (EU) 2023/1805 of the European Parliament and of the Council of 13 September 2023 on the use of renewable and low‐carbon fuels in maritime transport (2023). Official Journal of the European Union, L 234; European Commission (2026). Questions and answers on the EU Industrial Maritime and Ports Strategies. Brussels, 4 March. https://transport.ec.europa.eu/document/download/90cd648d-4a76-4f1e-9123-6bd6fb6d913a_en?filename=Questions_and_answers_on_the_EU_Industrial_Maritime_and_Ports_Strategies.pdf (25/08/2026).

[9] E.g., Dikaios, G. (2024). EU Climate Diplomacy towards the IMO and ICAO (Palgrave Macmillan). https://link.springer.com/book/10.1007/978-3-031-51123-3 (3/09/2026).

[10] European Maritime Safety Agency (2026). “EU ETS Extension to maritime”. https://www.emsa.europa.eu/reducing-emissions/extension-ets.html (20/08/2026); European Union (2026). “About the EU ETS”. https://climate.ec.europa.eu/areas-action/carbon-markets/about-eu-ets_en (20/08/2026).

[11] European Commission (2025). “Decarbonising maritime transport – FuelEU Maritime”. https://transport.ec.europa.eu/transport-modes/maritime/decarbonising-maritime-transport-fueleu-maritime_en (27/07/2026).

[12] Regulation (EU) 2023/1805 of the European Parliament and of the Council of 13 September 2023 on the use of renewable and low‐carbon fuels in maritime transport (2023). Official Journal of the European Union, L 234, Article 1.

[13] European Maritime Safety Agency (2025). “FuelEU Maritime: full application 1 January 2025”. https://www.emsa.europa.eu/newsroom/latest-news/item/5385-fueleu-maritime-full-application-1-january-2025.html (28/07/2026).

[14] Solakivi, T., Paimander, A., and Ojala, L. (2022). “Cost competitiveness of alternative maritime fuels in the new regulatory framework”. Transportation Research Part D: Transport and Environment, 113, no 103500.

[15] European Maritime Safety Agency (2026). “FuelEU Maritime Regulation”. https://www.emsa.europa.eu/reducing-emissions/fuel-eu-maritime-regulation.html (20/08/2026).

[16] European Maritime Safety Agency (2026). “EU ETS Extension to maritime”. https://www.emsa.europa.eu/reducing-emissions/extension-ets.html(20/08/2026); Kotzampasakis, M. (2023). “Intercontinental shipping in the European Union Emissions Trading System: A ‘fifty–fifty’ alignment with the law of the sea and international climate law?”. RECIEL, 32(1), 29-43; Regulation (EU) 2023/1805 of the European Parliament and of the Council of 13 September 2023 on the use of renewable and low‐carbon fuels in maritime transport (2023). Official Journal of the European Union, L 234.

[17] European Union (2026). “EU position in world trade”. https://policy.trade.ec.europa.eu/eu-trade-relationships-country-and-region/eu-position-world-trade_en (20/08/2026).

[18] Vaca-Cabrero, J., González-Cancelas, N., Camarero-Orive, A., Corral, M. M. E.-I., and Ricci, S. (2024). “Economic Impact of the Application of the ETS to European Ports: Analysis of Different Scenarios”. Sustainability, 16(23), no 10433.

[19] European Commission (2024). “EU trade policy and maritime transport”. https://trade.ec.europa.eu (18/07/2026).

[20] Journal of Commerce (2025). “Ocean carriers unveil hefty increases in Europe emissions surcharges”. https://www.joc.com/article/ocean-carriers-unveil-hefty-increases-in-europe-emissions-surcharges-6126958 (2/08/2026).

[21] Financial Times (2026). “Ships to pay higher EU carbon fees as Brussels seeks to close loophole”. 8 July. https://www.ft.com/content/9f2dafd6-a628-4d8d-9b84-b926f1f152b3?syn-25a6b1a6=1 (29/07/2026).

[22] Kotzampasakis, M. (2025). “Maritime emissions trading in the EU: Systematic literature review and policy assessment”. Transport Policy, 165, 28-41.

[23] Commission Implementing Regulation (EU) 2025/1127 of 6 June 2025 laying down rules for the application of Regulation (EU) 2023/1805 of the European Parliament and of the Council as regards of identifying neighbouring container transshipment ports. https://eur-lex.europa.eu/legal-content/EN/TXT/?uri=CELEX:32025R1127 (22/07/2026); Regulation (EU) 2023/1805 of the European Parliament and of the Council of 13 September 2023 on the use of renewable and low‐carbon fuels in maritime transport (2023). Official Journal of the European Union, L 234, Article 2.

[24] Christidis, P., Mendoza Villafuerte, P., Oliete Josa, S., Jimenez Espadafor Sardon, E., Hidalgo Gonzalez, I., Dolci, F., Grosso, M., Suarez Bertoa, R., Fontaras, G., Krause, J., Grigoriadis, A., Bellos, A., and Olariaga Guardiola, M. (2024). “Global gateway green shipping corridors: Scoping study for port identification. European Commission”. https://hellenicaid.mfa.gr/wp‐contentuploads/2025/01/Global‐Gateway‐Green‐Shipping‐Corridors.pdf (20/08/2026); European Commission, Joint Research Centre (2024). “Energy and Industry Geography Lab”. https://joint-research-centre.ec.europa.eu/scientific-tools-and-databases/energy-and-industry-geography-lab-0_en (16/07/2026).

[25] European Commission (2024). “Global Gateway: building sustainable and trusted connections that work for people and the planet”. https://international-partnerships.ec.europa.eu/policies/global-gateway_en (15/07/2026).

[26] Financial Times (2026), op. cit.

[27] Journal of Commerce (2025), op. cit.

[28] Financial Times (2026), op. cit.

[29] Lagouvardou, S., and Psaraftis, H.N. (2022). Implications of the EU Emissions Trading System (ETS) on European container routes: A carbon leakage case study. Maritime Transport Research, 3, no 100059.

[30] Ibid.

[31] European Commission (2025). “Commission adopts two new reports on the implementation of EU ETS in maritime transport and the maritime Monitoring, Reporting and Verification review”. https://climate.ec.europa.eu/news-other-reads/news/commission-adopts-two-new-reports-implementation-eu-ets-maritime-transport-and-maritime-monitoring-2025-03-19_en (25/07/2026).

[32] Vaca-Cabrero, J. et al., op. cit.

[33] European Commission: Directorate-General for Mobility and Transport, TISPT, Panteia, Oeko-Institut and Würzburg University (2026). “Economic study for an assessment of potential carbon leakage in the aviation and maritime sectors and mitigating measures: maritime sector: final report”. Publications Office of the European Union. https://data.europa.eu/doi/10.2832/3480829 (20/08/2026).

[34] Financial Times (2026), op. cit.; Vaca-Cabrero, J. et al., op. cit.

[35] Puertos del Estado’s Report (2026). “ETS Observatory Report 2”. https://www.puertos.es/system/files/2026-07/ETS%20OBSERVATORY%20REPORT%20MAR-2026%20EN.pdf (20/08/2026).

[36] Mercator Institute for China Studies (2024). Mapping China’s global port network: on the backfoot in 2024, but still well entrenched. https://merics.org/en/comment/mapping-chinas-global-port-network-backfoot-2024-still-well-entrenched (12/07/2026).

[37] Ibid.

[38] Koundouri, P., Alamanos, A., Deranian, C., Garcia, J., and Ni, O. (2025). “Too hard to decarbonize: insights from a decision support tool for the Greek maritime operations”. Environmental Research Letters, 20; McKinsey & Company (2024). “Greek shipping: Success factors and opportunities”. 30 July. https://www.mckinsey.com/industries/logistics/our-insights/greek-shipping-success-factors-and-opportunities#/ (28/08/2026).

[39] Delphi Economic Forum (2026). Delphi Economic Forum 2026: Minister Vassilis Kikilias speech on maritime decarbonisation. https://www.delphiforum.gr (10/07/2026).

[40] Lagouvardou, S., and Psaraftis, H.N. (2022), op. cit.

[41] Union of Greek Shipowners (2025). “UGS Annual Report 2024-2025”. https://ugs.gr/en/press-releases/2025/press-release-20250801/ (30/07/2026).

[42] Lloyd’s List (2025). “Furious officials consider legal action after Greece and Cyprus break EU unity at IMO”. Lloyd’s List, 23 October. https://www.lloydslist.com/LL1155198/Furious-officials-consider-legal-action-after-Greece-and-Cyprus-break-EU-unity-at-IMO (16/07/2026).

[43] Devaux, F. (2026). “Greece risks becoming Trump’s Trojan horse in the fight to decarbonise shipping”. Transport and Environment, 18 February. https://www.transportenvironment.org/articles/greece-risks-becoming-trumps-trojan-horse-in-the-fight-to-decarbonise-shipping (25/08/2026).

[44] Christidis, P. et al., op. cit.

[45] Financial Times (2026), op. cit.

[46] iefimerida (2026). “Kikilias: Concern about the European stance ahead of IMO negotiations on the decarbonization of shipping”. 1 September. https://www.iefimerida.gr/politiki/kikilias-anisyhia-diapragmateyseis-apanthrakopoiisi-naytilias (1/09/2026).

[47] European Union (2026). “Carbon leakage”. https://climate.ec.europa.eu/areas-action/carbon-markets/eu-emissions-trading-system-eu-ets/free-allocation/carbon-leakage_en (20/08/2026).

[48] Vaca-Cabrero, J. et al., op. cit.

[49] Puertos del Estado’s Report (2026), op. cit.

[50] Financial Times (2026), op. cit.; Mercator Institute for China Studies (2024), op. cit.; Vaca-Cabrero, J. et al., op. cit.

[51] Christidis, P. et al., op. cit.; European Commission (2024). “Global Gateway: building sustainable and trusted connections that work for people and the planet”. https://international-partnerships.ec.europa.eu/policies/global-gateway_en (15/07/2026).

[52] Adjei, M., Van Leeuwen, J. and Pereira, H. (2026). “Towards decarbonising shipping: Governance challenges and barriers to the implementation of EU emission trading system (ETS)”. Maritime Studies, 25, no 23.

[53] European Commission (2026). Questions and answers on the EU Industrial Maritime and Ports Strategies. Brussels, 4 March. https://transport.ec.europa.eu/document/download/90cd648d-4a76-4f1e-9123-6bd6fb6d913a_en?filename=Questions_and_answers_on_the_EU_Industrial_Maritime_and_Ports_Strategies.pdf (25/08/2026).

[54] European Commission (2026). Communication from the Commission to the European Parliament, the Council, the European Economic and Social Committee and the Committee of the Regions on the EU Industrial Maritime Strategy, COM (2026)111 final.

[55] European Commission (2026). Communication from the Commission to the European Parliament, the Council, the European Economic and Social Committee and the Committee of the Regions: EU Ports Strategy, COM (2026)112 final.

• Turkey aspires to emerge as an AI-enabled middle power. Its main advantage is the ability to add selected AI tools to areas where it is already strong, especially defence manufacturing, unmanned systems and regional security cooperation.

• Turkey’s position in AI is uneven. It is stronger in applications and systems integration than in advanced chips, computing infrastructure, cloud capacity or specialised talent. For Ankara, strategic autonomy is therefore less about becoming self-sufficient and more about managing dependence.

• Defence offers Turkey the clearest way to turn AI into geopolitical influence. As military systems become more software-driven, defence exports can create longer relationships through training, software updates, data management and cybersecurity.

• At the same time, AI creates a new dependency problem. More advanced systems require more energy, better chips, greater computing capacity and continued access to trusted NATO and European technology networks. Strategic autonomy may therefore depend as much on reliable partnerships as on domestic production.

• Turkey’s biggest limits may be political and institutional rather than technical. Brain drain weakens the talent base, economic instability makes long-term investment harder, and an unpredictable foreign policy can reduce the trust needed for sensitive cooperation in AI, defence and data.

Read here in pdf the Policy paper by Ahmet Erdi Öztürk, Non-Resident Senior Scholar, Turkey Programme.

ARTIFICIAL INTELLIGENCE IS BECOMING part of international power, not simply another technology sector. Much of the debate still focuses on which states can build frontier models, produce advanced chips or command huge computing resources. That makes sense when discussing the United States and China, while the European Union has tried to shape the field through regulation and standards (Landwehr-Matlé, Oppermann and Lambach, 2026). But this framework is less useful for middle powers. Turkey does not need to reproduce the whole AI ecosystem of the leading powers. The more relevant question is whether it can acquire and use selected technologies in areas where it already has an advantage. For this reason, Turkey is better understood as a possible AI-enabled middle power: a state that can turn selective technological capabilities into military, economic and diplomatic leverage.

This argument fits closely with the debate on strategic autonomy. In Turkish foreign policy, the term usually describes Ankara’s efforts to gain more room for manoeuvre while remaining inside Western security and economic structures. Öniş and Kutlay (2021) situate this strategy in the context of a more post-Western international order, where Turkey tries to diversify its partnerships and reduce excessive dependence on traditional centres of power. AI makes this harder. It relies on advanced chips, computing power, cloud services, electricity, data, software and highly skilled people. For Turkey, technological autonomy cannot realistically mean self-sufficiency; it means retaining access to critical technologies, limiting vulnerability and preventing outside actors from using technological bottlenecks as political pressure.

Recent work on digital sovereignty points in the same direction. Weymouth (2025) argues that competition over AI infrastructure is encouraging the formation of techno-blocs, as states try to secure key resources and reduce dependence on foreign suppliers. Brown and Ozluk (2026) make a similar point about Turkey. They describe its AI strategy as a search for sovereignty that still requires cooperation with larger regulatory and technological systems. The key point is simple: technological sovereignty is not a choice between dependence and independence. For a middle power, it is about controlling some critical areas while managing dependence in others.

The recent report by the National Intelligence Academy (Milli İstihbarat Akademisi, MİA) shows that this way of thinking is also emerging inside Turkey’s strategic community. The report does not reduce AI competition to software and algorithms; it also highlights chips, critical minerals, energy, data infrastructure and robotics (Milli İstihbarat Akademisi, 2026). This is useful, but the next question is how Turkey’s strengths and weaknesses are distributed across these areas. One way to see this is as an AI power stack. At the top of the supply chain are semiconductors, high-performance computing, energy and cloud infrastructure. In the middle are data, software and AI models. At the downstream end are sector-specific applications, systems integration and the ability to turn technology into practical results.

Turkey’s position is highly uneven. Its main weaknesses are upstream. It does not have a globally competitive advanced-chip industry, it does not control major cloud or GPU infrastructure, and it remains dependent on international supply chains. Talent is another problem. 

Seen this way, Turkey’s position is highly uneven. Its main weaknesses are upstream. It does not have a globally competitive advanced-chip industry, it does not control major cloud or GPU infrastructure, and it remains dependent on international supply chains. Talent is another problem. AI requires specialised researchers, data scientists and technical managers who can connect research with industrial and military use. Brown and Ozluk (2026) are therefore right to stress human capital and institutional capacity. These weaknesses matter even more as access to critical technologies becomes increasingly political.

Strategic technological power does not come only from producing the best algorithm. It also stems from connecting software to platforms, sensors, communications, doctrine and operational practice.

Turkey looks stronger further downstream. Over the past two decades it has built a substantial defence-industrial ecosystem linking state procurement, large defence firms, newer technology companies and export markets. AI can be added to this existing base in areas such as unmanned systems, intelligence processing, sensors, radar, electronic warfare and command-and-control. The key distinction is between invention and integration. Strategic technological power does not come only from producing the best algorithm. It also stems from connecting software to platforms, sensors, communications, doctrine and operational practice. Gormus (2025) shows this in the Turkish case, arguing that while AI-enabled military capabilities may support strategic autonomy, they can also create new interoperability problems within NATO.

This broader viewpoint also explains why Turkey should not be judged against the global technology leaders alone. Regional powers have very different strengths. Israel has a deeper research, cybersecurity and high-tech ecosystem. Saudi Arabia and the UAE have more capital, abundant energy and strong partnerships with major technology companies. Turkey’s advantage is different: it combines a sizeable defence industry, manufacturing capacity, operational experience with unmanned systems and a broad export network. Technological sophistication and strategic effect do not always move together. A state can remain dependent on advanced inputs while still producing major strategic effects, if it can successfully integrate imported and domestic components into usable systems.

This dynamic fits a wider debate on middle-power agency. Middle powers are often described as states that hedge between larger powers. Mishra (2026), however, uses the idea of positional power to show how they can benefit from rivalry and institutional competition. Viewed through this lens, Turkey’s technological position does depend in part on this kind of networked position: NATO membership, economic links with Europe, partnerships in the Gulf, ties with Asian suppliers and a widening defence-export geography. Now AI is poised to make these connections more valuable; unlike one-off hardware sales, modern military systems require ongoing relationships around software, training, data, cybersecurity, and interoperability.

An AI-enabled middle power can therefore be defined as a state that does not control the whole AI ecosystem, but has enough industrial and institutional capacity to turn selected technologies into strategic effects. For Turkey, three questions matter most. First, how exposed is it to external restrictions? Second, how well can it integrate AI into sectors where it already has advantages? Third, do these capabilities improve Ankara’s bargaining power with allies, rivals and customers?

More AI may strengthen Turkey’s defence and security autonomy, but it may also deepen dependence on foreign chips, computing infrastructure and specialised software. 

This leads to a central paradox. More AI may strengthen Turkey’s defence and security autonomy, but it may also deepen dependence on foreign chips, computing infrastructure and specialised software. Strategic autonomy in the AI era is therefore not about escaping interdependence; it is about organising it. The MİA report is right to focus on the material foundations of technological competition (Milli İstihbarat Akademisi, 2026). The middle-power perspective adds another point: these capabilities matter geopolitically only when they create leverage. The challenge facing Turkey is to reduce upstream vulnerability while using its downstream strengths to improve military capacity and foreign-policy influence.

From Drones to Algorithms: Defence, Regional Competition and Foreign-Policy Leverage

Turkey is not building military AI from scratch; it is adding new functions to an existing network of drones, sensors, electronic warfare, communications and command systems.

If Turkey is to become an AI-enabled middle power, defence is the most obvious space in which to test the idea. Because Turkey’s defence transformation began well before the current AI boom, AI is entering a sector that already has experience of localisation, procurement reform, battlefield use and exports. This matters. Turkey is not building military AI from scratch; it is adding new functions to an existing network of drones, sensors, electronic warfare, communications and command systems. The shift from heavy import dependence towards greater domestic production has already tied industrial policy more closely to foreign policy (Ciftci, 2023; Baysal, 2025). AI may deepen this link, because success increasingly depends on connecting sensors, data, software and weapons into faster and more effective systems.Turkey

Automation, autonomy and AI should not be treated as the same thing. An automated system follows predefined rules. An autonomous system can respond to its environment and carry out some tasks with less human input. An AI-enabled military system uses tools such as machine learning, computer vision or predictive analytics to process information and support decisions. This distinction matters because drones are often described as AI systems, when many are mainly automated or remotely controlled. The more important military uses of AI are likely to be in sensor fusion, intelligence analysis, target recognition, mission planning, electronic warfare, logistics and human-machine cooperation (Johnson, 2026; Omer, 2026). The main advantage may not be removing humans from the process, but helping them make sense of large amounts of battlefield information more quickly.

Turkey’s defence sector is already moving in this direction. Baykar receives most of the international attention, but the picture is much broader. TUSAŞ produces larger unmanned systems including ANKA, AKSUNGUR and ANKA III. ASELSAN provides much of the radar, electro-optics, communications, electronic warfare and command infrastructure needed for networked operations. HAVELSAN focuses heavily on software, simulation and command systems, while STM works on tactical UAVs, loitering munitions, maritime systems, swarms and AI-supported decision tools. STM, for example, has highlighted deep-learning image processing, sensor fusion and autonomous mission allocation, and in May 2026 demonstrated a 20-unit KARGU swarm with live ammunition during EFES-2026. None of this proves that Turkey has achieved military AI superiority. What it does show is that AI-related functions are spreading across several firms and operational areas, rather than being confined to one flagship project.

Turkey’s earlier drone experience helps explain why this matters. Turkish UAVs had effects well beyond their cost in Syria, Libya and the 2020 Nagorno-Karabakh war, although drones alone did not determine the outcomes of hose conflicts. Rossiter and Cannon (2022) show how Turkey learned and adapted after early operational use, while Hwang and Song (2022) link drones to Ankara’s ability to intervene at relatively low political and financial cost and then convert military visibility into diplomatic influence. More recent work also warns against technological determinism: drones matter because of how they interact with doctrine, other military capabilities and enemy weaknesses (Hutto and Rogers, 2026). The same caution applies to AI. Turkey’s next advantage is unlikely to come from a single autonomous platform; it will depend on whether AI improves the way intelligence, electronic warfare, targeting, communications and command systems work together.

These capabilities also matter for foreign policy. Defence exports can create influence that goes beyond battlefield performance. Boyle and Wolfe (2026) show that drone exporters use sales not only to achieve commercial reasons, but also to build political relationships and longer-term dependencies. Turkish deals may include training, joint production, technology transfer, end-use arrangements and continued software support. AI can make these links deeper: as systems become more software-dependent, suppliers and customers remain connected through updates, data management, cybersecurity, maintenance and interoperability. Defence diplomacy can therefore become less about selling a platform and more about providing an ecosystem. This does not guarantee political alignment, but it can make the relationship longer and more difficult to replace.

Turkey is also part of broader regional competition over military technology. Israel remains ahead in advanced research, cybersecurity, sensors and military-technological integration. Saudi Arabia and the UAE are following a different model, using capital, energy and partnerships with global firms to develop their AI and defence sectors. The UAE’s EDGE and Saudi Arabia’s SAMI are examples of this state-backed approach, although both still rely heavily on foreign technology and partnerships (Rózsa, 2025). Iran follows another path, one shaped by sanctions and pressure for self-reliance but constrained by limited resources. Atwood (2025) shows the gap between Iran’s official claims of AI sovereignty and the more fragmented reality of its computing infrastructure, data centres and digital labour. These differences make a simple regional ranking misleading. Israel’s model is research-intensive, the Gulf model capital-intensive, Iran’s sanction-driven, and Turkey’s more focused on integration and manufacturing.

Turkey’s potential advantage is therefore not that it has the region’s most advanced AI ecosystem; it is that it may be able to combine sufficient technological sophistication with defence products that are scalable, relatively affordable and operationally tested. 

Turkey’s potential advantage is therefore not that it has the region’s most advanced AI ecosystem; it is that it may be able to combine sufficient technological sophistication with defence products that are scalable, relatively affordable and operationally tested. This matters because strategic utility is not the same as technological quality. Turkish drones expanded partly because they filled a market gap between advanced but tightly restricted Western systems and cheaper alternatives with different capabilities. AI-enabled systems could follow a similar path if Turkey can improve intelligence processing, autonomy and electronic warfare without making its products too expensive for existing customers. The wider growth of the defence sector has already become part of Ankara’s more assertive foreign-policy toolkit (Ciftci, 2023; Baysal, 2025).

The regional effects will be broad but uneven. In the Gulf, AI-related defence cooperation could support Turkey’s rapprochement with Saudi Arabia and the UAE, but Turkish firms will also face strong local competitors. In North Africa, defence ties can reinforce Ankara’s political and security presence, especially where affordable unmanned and electronic systems are attractive. The South Caucasus offers the clearest example of defence technology creating political visibility, while Central Asia connects defence cooperation with wider Turkic and connectivity agendas. The Black Sea is more constrained by Russia, NATO and the war in Ukraine. The Middle East is also highly competitive, with Israel, Iran, Gulf states and outside powers all active there. Turkey’s technological reach should therefore not be confused with regional dominance. Its value lies in giving Ankara more ways to enter security relationships, strengthen partnership and remain part of regional strategic calculations.

The broader point is that AI may change the political economy of Turkish defence influence before it changes the regional military balance. Turkey’s drone experience showed that a middle power could turn a specialised technology into operational reputation, exports and diplomatic access (Rossiter and Cannon, 2022; Soyaltin-Colella and Demiryol, 2023). AI could deepen this leverage because it ties hardware to software, data and continuing technical support. But the opportunity is conditional: it depends on reliable integration, affordability, battlefield performance and continued access to the advanced technologies on which these systems rely. AI does not replace Turkey’s defence-industrial model; it makes that model both more valuable and more vulnerable.

The New Dependency Paradox

Turkey’s growing use of AI in defence creates a problem that is easy to miss in discussions about localisation. Because, while more domestic production may reduce dependence on imported weapons, it may also increase dependence on the infrastructure needed to run advanced systems. AI requires much more than software. It needs advanced chips, computing power, cloud infrastructure, data centres, reliable electricity, cooling, skilled people and secure networks. Weymouth (2025) argues that control over these concentrated supply chains is becoming a source of geopolitical power. For Turkey, the question is therefore not only how much AI it can put into defence systems, but whether it can retain access to the infrastructure those systems need during periods of geopolitical tension.

Energy is central to this problem because AI is highly electricity-intensive. Indeed, the International Energy Agency estimates that global data-centre electricity use could rise from about 485 TWh in 2025 to roughly 950 TWh by 2030, with AI-focused facilities growing even faster (IEA, 2026). While Turkey does not need to copy the huge computing centres being built in the United States or the Gulf, the price, availability and reliability of electricity will nonetheless increasingly shape its technological capacity. Consequently, the advent of AI inextricably links energy security with technology policy. Expanding domestic computing requires generation capacity, stable grids, storage, cooling and some protection from imported-energy shocks. Turkey’s investment in renewables and nuclear power may therefore have a direct technological value. The relationship also works both ways: AI can help with forecasting, grid management and infrastructure efficiency (IEA, 2025).

A further issue is that Turkey’s energy position is itself uneven. The country has expanded its renewable capacity and is adding nuclear power, but it still depends heavily on imported energy. 

A further issue is that Turkey’s energy position is itself uneven. The country has expanded its renewable capacity and is adding nuclear power, but it still depends heavily on imported energy. This matters because AI infrastructure needs a stable and predictable supply of electricity. A sudden rise in energy prices, pressure on gas imports or problems with the grid would not only affect households and industry; it could also limit the expansion of data centres and high-performance computing. In that sense, energy dependence can become a technological dependence as well. The more Turkey wants to build domestic AI capacity, the more important it becomes to reduce exposure to external energy shocks and strengthen the resilience of the electricity system.

There is also a regional dimension. Gulf states have an obvious advantage in their ability to combine cheap energy, capital and large-scale investment in data centres and computing infrastructure. Turkey is unlikely to be able to compete with them on scale alone. Its advantage may instead come from combining a relatively diversified energy mix with industrial capacity, proximity to European markets and existing links to NATO and EU technological networks. This could make Turkey more attractive as a regional location for selected AI- and defence-related infrastructure, particularly if it can improve grid reliability and regulatory predictability. Energy policy therefore becomes part of a wider strategic question: not simply how much electricity Turkey can produce, but whether it can provide the stable, secure and internationally connected infrastructure needed for an AI-intensive economy.

This creates a second layer of dependence. Reducing reliance on imported defence platforms can simply move the vulnerability further upstream, to chips and computing capacity in particular. Advanced semiconductors are particularly sensitive because production is concentrated in a small number of countries and depends on highly specialised equipment and supply chains. Rone (2025) shows how semiconductor policy in Europe has become closely linked to national security. Export controls make the issue even more important. Weymouth (2025) argues that controls on chips and digital infrastructure are helping to reorganise technological interdependence into competing blocs. For Turkey, which has tried to maintain room for manoeuvre between Western institutions and a wider set of partners, this could make technological hedging more difficult. In other words, greater technological sophistication may actually make strategic autonomy harder to sustain.

This is why Turkey’s NATO membership and its links to European technology networks can also be assets. NATO’s revised AI strategy places interoperability, good-quality data, testing, responsible use and an AI-ready workforce at the centre of allied planning. It also recognises the energy demands of AI and the need to protect systems from adversarial interference (NATO, 2024). Participation can give Turkey access to standards, testing networks, DIANA centres, industry links and shared practices that would be expensive to build alone. The paradox is that deeper participation in allied technology networks may increase Turkey’s practical autonomy. In this sense, autonomy can come through institutional embeddedness rather than separation.

That embeddedness also creates obligations, however. NATO interoperability is no longer only about whether systems can communicate; it increasingly involves shared standards for testing, data quality, explainability, accountability and human control. NATO’s Principles of Responsible Use stress lawfulness, accountability, traceability, reliability, governability and bias mitigation (NATO, 2024). EU regulation adds a further layer by linking access to markets and technological networks to risk management and technical standards (Kilian, Jäck and Ebel, 2025). Turkey could therefore face difficulties if military AI develops more rapidly than its systems for verification, accountability and regulation. Governance is not simply a normative issue here; it can directly affect interoperability, procurement and access to trusted technology networks.

Turkey has long struggled to retain its most highly skilled professionals. Research on brain drain shows how institutional and labour-market conditions shape the decision of skilled workers to leave or return.

Human capital is another possible bottleneck. Defence AI requires people who combine machine-learning skills with engineering, cybersecurity and an understanding of military systems. Turkey has long struggled to retain its most highly skilled professionals. Research on brain drain shows how institutional and labour-market conditions shape the decision of skilled workers to leave or return (Elveren and Toksöz, 2019). This matters even more in AI, where specialists can find highly paid jobs in the United States, Europe and increasingly the Gulf. Investment in hardware will not be enough if Turkey cannot retain the people needed to develop, maintain and improve these systems.

AI also creates new security risks that cannot be measured simply by looking at industrial capacity. Machine-learning systems can be manipulated through bad data or adversarial inputs. More networked military platforms create more cyber vulnerabilities. Faster decision-support systems may also reduce the time available for human judgement in a crisis. NATO therefore treats adversarial AI, system protection and testing as core aspects of military AI readiness (NATO, 2024). There is also a domestic issue: technologies developed for defence and security can expand state surveillance, making questions of accountability and proportionality increasingly important.

Turkey’s AI position is therefore shaped by a dependency paradox: the more successfully Ankara adds AI to domestic defence and security systems, the more important resources it does not fully control become: energy, chips, computing capacity, software, skilled labour and international standards. This does not make technological autonomy impossible, but it changes what autonomy should mean. The realistic goal is resilience, in the form more diverse supply chains, reliable energy, secure computing, access to allied innovation networks and credible governance. Turkey’s AI power will depend as much on how it manages these dependencies as on the technologies it develops.

The Political Limits of Turkey’s AI Ambitions

Turkey already has several of the ingredients it needs to become an AI-enabled middle power: a large defence industry, experience with unmanned systems, manufacturing capacity, NATO membership and a growing network of defence partners. But technology alone will not decide whether these advantages produce lasting geopolitical influence. The biggest obstacles may lie in the political, economic and institutional environment surrounding innovation.

The first problem is human capital. Advanced AI depends on strong universities, scientific freedom, international research links and the ability to attract and keep skilled people. Turkey’s authoritarian turn makes this more difficult. Pressure on universities, weaker institutional autonomy and doubts about meritocracy can encourage researchers, engineers and other highly educated professionals to leave (Aydin, 2021; Elveren and Toksöz, 2019). Recent research also finds that brain drain has had a measurable negative effect on technological progress in Turkey, where it has weakened both the domestic talent pool and the R&D capacity (Mike et al., 2025). This creates a basic contradiction: a state seeking technological sovereignty may be losing one of the resources it needs most.

Though Turkey’s defence industry shows that concentrated state support can produce strong results in selected areas, AI requires a much wider and more expensive ecosystem. With macroeconomic instability and competing public spending priorities, sustaining investment across the whole chain will be difficult. 

A second problem is economic capacity. Competitive AI requires long-term spending on computing infrastructure, data centres, energy, research and specialised staff. Though Turkey’s defence industry shows that concentrated state support can produce strong results in selected areas, AI requires a much wider and more expensive ecosystem. With macroeconomic instability and competing public spending priorities, sustaining investment across the whole chain will be difficult. Turkey may therefore develop pockets of advanced capability, especially in defence, without building the wider infrastructure needed to support them over time.

Foreign policy creates a third constraint. Turkey is geopolitically important because of its location, NATO membership and military capabilities. That makes Ankara difficult for both allies and rivals to ignore. But being indispensable is not the same as being trusted. Transactional diplomacy, changing alignments and repeated disputes with Western partners can create short-term bargaining power while also making Turkey look unpredictable. This matters in an AI environment that is increasingly built around trusted networks, sensitive data, interoperability and controlled access to advanced technology. Positional power is useful only if partners believe that cooperation with Ankara will remain sufficiently predictable.

Turkey’s AI future therefore depends on much more than successful defence platforms. The key question is whether technological ambition can be matched by institutional quality, economic resilience and international trust. 

Turkey’s AI future therefore depends on much more than successful defence platforms. The key question is whether technological ambition can be matched by institutional quality, economic resilience and international trust. AI could strengthen strategic autonomy and increase Turkey’s middle-power influence, but authoritarianism, brain drain, economic weakness and declining trust could also place a clear ceiling on those ambitions. The real competition is not only over technology; it is also over the political and institutional capacity to sustain it.

References

Atwood, B. (2025) ‘Artificial intelligence in Iran: National narratives and material realities’, Iranian Studies, 58(4), pp. 680–697.

Aydin, B. (2021) ‘Politically motivated precarization of academic and journalistic lives under authoritarian neoliberalism: The case of Turkey’, Globalizations, 19(5), pp. 677–695.

Baysal, B. (2025) ‘Evaluating the advances and challenges in Turkey’s defence industry: A comparative analysis’, Southeast European and Black Sea Studies, 25(1), pp. 31–52.

Boyle, M.J. and Wolfe, W. (2026) ‘Diplomatic drones? How states exploit drone exports for leverage’, European Journal of International Security, 11(2).

Brown, R.D. and Ozluk, D. (2026) ‘Regulatory autonomy and AI sovereignty: Türkiye at a crossroad’, Asian Journal of Law and Society, First View, pp. 1–27.

Ciftci, S. (2023) ‘Military might: A domestic economy explanation of Turkish foreign policy’, Turkish Studies, 24(5), pp. 764–787.

Elveren, A.Y. and Toksöz, G. (2019) ‘Hidden gender dimensions of the brain drain: The case of Turkey’, New Perspectives on Turkey, 60, pp. 33–59.

Gormus, E. (2025) ‘NATO’s artificial intelligence strategy and interoperability challenges: The case of Turkey’, Journal of Balkan and Near Eastern Studies, 27(4), pp. 513–529.

Hutto, J.W. and Rogers, J.P. (2026) ‘The drone revolution: Towards a synthesis in the drone debate’, European Journal of International Security, 11(2), pp. 145–165.

Hwang, W.-J. and Song, S.-H. (2022) ‘The extension of Turkish influence and the use of drones’, Comparative Strategy, 41(5), pp. 439–458.

IEA (2025) Energy and AI. Paris: International Energy Agency.

IEA (2026) Key Questions on Energy and AI. Paris: International Energy Agency.

Johnson, J. (2026) Artificial Intelligence and the Future of Warfare: The USA, China, and Strategic Stability. Manchester: Manchester University Press.

Kilian, R., Jäck, L. and Ebel, D. (2025) ‘European AI standards – Technical standardisation and implementation challenges under the EU AI Act’, European Journal of Risk Regulation.

Landwehr-Matlé, J., Oppermann, K. and Lambach, D. (2026) ‘Great power competition for global leadership in artificial intelligence (AI): Reconstructing AI narratives of the United States, China, and the European Union’, Review of International Studies, First View, pp. 1–19.

Mike, F., Akyıldız, İ.E., Doğanlar, M. and Kızılkaya, O. (2025) ‘The innovation exodus: How Türkiye’s brain drain challenges technological progress’, Economics of Innovation and New Technology.

Milli İstihbarat Akademisi (2026) Dünya Siyasetinde Teknopolitik Düzen Tartışmaları ve Türkiye. Ankara: Milli İstihbarat Akademisi.

Mishra, A. (2026) ‘Positional power: Middle power strategies in an era of institutional rivalry’, International Affairs, 102(4), pp. 1287–1315.

NATO (2024) Summary of NATO’s Revised Artificial Intelligence (AI) Strategy. Brussels: North Atlantic Treaty Organization.

Omer, N. (2026) ‘The AI kill chain in the defense sector: Strategic, ethical, and governance implications in the Middle East’, in Hacker, P. (ed.) Oxford Intersections: AI in Society. Oxford: Oxford University Press.

Öniş, Z. and Kutlay, M. (2021) ‘Turkish foreign policy in a post-Western order: Strategic autonomy or new forms of dependence?’, International Affairs, 97(4), pp. 1085–1104.

Rone, J. (2025) ‘The economy–security nexus: Risk, strategic autonomy and the regulation of the semiconductor supply chain’, European Journal of Risk Regulation, 16(1), pp. 279–293.

Rossiter, A. and Cannon, B.J. (2022) ‘Turkey’s rise as a drone power: Trial by fire’, Defense & Security Analysis, 38(2), pp. 210–229.

Rózsa, E.N. (2025) ‘Great power competition in defence technology – What can the Asia-Pacific offer for the Gulf?’, Asian Journal of Middle Eastern and Islamic Studies, 19(3), pp. 285–302.

Soyaltin-Colella, D. and Demiryol, T. (2023) ‘Unusual middle power activism and regime survival: Turkey’s drone warfare and its regime-boosting effects’, Third World Quarterly, 44(4), pp. 724–743.

Weymouth, S. (2025) ‘Digital disintegration: Techno-blocs and strategic sovereignty in the AI era’, International Organization, 79(S1), pp. 57–S70.

Spyros Blavoukos, Head, EU Institutions & Policies Programme, ELIAMEP; Head of the ‘Ariane Condellis’ European Programme;  Professor, Athens University of Economics & Business;  Apostolos Samaras, Research Fellow, European Programme ‘Ariane Condellis’ and Panos Politis Lamprou, Research Fellow, Defence Hub, ELIAMEP examine the recent debate over the future of the EU’s Common Foreign and Security Policy (CFSP), focusing on two developments that have brought questions about the Union’s foreign-policy architecture back to the forefront: proposals to reform the European External Action Service (EEAS) and renewed discussions on the use of qualified majority voting in CFSP decision-making. It places these developments in their broader institutional and historical context, exploring what is genuinely new in the current debate and what they could mean for the way the EU organises and conducts its external action.

Read the ELIAMEP Explainer here.

Which development will be at the centre of the European agenda in the coming months? The war in Ukraine, geopolitical shifts in the Eastern Mediterranean and the wider region, as well as the remarkable rise of the far right across Europe, are contributing to an increasingly complex environment. Which of these developments will have the greatest geopolitical significance and have the strongest impact on Europe’s future? ELIAMEP Analysts share their assessments. (the post in available only in Greek)

 

Climate change is no longer a distant threat, it is already affecting our homes, communities and daily lives. ELIAMEP’s analysts  examine how prepared we are to face a reality increasingly shaped by heatwaves, wildfires and floods.

The article is available in Greek.

In March 2026, the European Union adopted its first-ever Strategy on Intergenerational Fairness, placing the balance of interests between present and future generations at the centre of EU policy and law-making. The Strategy is a soft-law framework—it sets direction, vocabulary and a measurement architecture, rather than binding obligations—and its real value will therefore be determined at Member State level. This policy brief argues that Greece is one of the EU’s clearest test cases for the Strategy. The convergence of demographic decline, persistent youth insecurity, a structural housing crisis, large-scale emigration and a pension system in transition has placed a disproportionate share of the costs of the past fifteen years on the young, fraying the implicit contract between generations. Drawing on EU and Greek data and on the emerging international literature on intergenerational governance, the brief sets out what a coherent Greek response would require: translating the European framework into a National Plan for Intergenerational Renewal with measurable targets, an intergenerational impact test, a standing institutional anchor and transparent monitoring. Greece’s Council of the EU Presidency in the second half of 2027 offers a natural and consequential moment to begin.

Read here in pdf the Policy paper by Katerina Eirini Lambrinou, Research Associate, ELIAMEP; Member of the Network of Institutions and Leaders for Future Generations (NiFG).

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ELIAMEP’s analysts assess the latest developments and examine possible scenarios for the future of Iran–US relations, as well as their implications for the Middle East and international security.

Read it here (in Greek).

The following paper was awarded first prize in the policy paper competition organized by ELIAMEP’s Turkey Programme, focusing on Turkey’s domestic developments, foreign relations, and socio-political dynamics.

The policy paper examines the systematic erosion of press freedom and digital rights in Turkey, focusing particularly on events following the arrest of Istanbul Metropolitan Mayor Ekrem İmamoğlu on March 19, 2025. The Saraçhane protests that erupted in response revealed the full dimensions of the Turkish government’s digital censorship apparatus: bandwidth throttling, mass social media account suspensions, and the systematic suppression of citizen journalism. Through an analysis of recent policy developments, legal frameworks, and the relationship between the Erdoğan regime and Big Tech companies, this report documents how authoritarian governments leverage digital platforms to silence dissent.

The analysis shows that with 90% of traditional media under state control, journalists have migrated to YouTube and social media platforms only to face expensive licensing requirements, threats of arrest, and platform-level censorship. The report argues that İmamoğlu’s case represents a dangerous precedent: his social media accounts remain suspended, despite his legal case maintaining the presumption of innocence, which effectively prevents him from campaigning as a presidential candidate. This systematic destruction of information infrastructure has implications not only for Turkey, but for democratic movements worldwide.

Read here in pdf the Policy paper by Ezgi Daryurek, Master’s Program in Media and Migration Flows, National and Kapodistrian University of Athens.

Sorry, this entry is only available in Greek.

This policy brief argues that Greece should rethink its engagement with Sub-Saharan Africa through selective partnerships, education, religion, diaspora networks and civil society. Instead of competing financially with larger powers, Greece can generate long-term influence by concentrating resources where it has comparative advantages. A policy aligned with EU priorities that will focus on practical, low-cost initiatives can produce significant diplomatic dividends.

Read here in pdf the Policy brief by Asterios Huliaras, Professor in the Department of Political Science and International Relations, University of the Peloponnese and member of ELIAMEP’s Advisory Committee.

Introduction

Africa[1] is emerging as one of the most strategically important regions of the twenty-first century. Despite armed conflicts, democratic backsliding, debt crises, and persistent poverty, the continent is characterized by rapid demographic growth, increasing urbanization, expanding markets, and rising geopolitical significance. Global actors such as China, Russia, Turkey, India, the United Arab Emirates, and Brazil have significantly expanded their political and economic engagement with African countries. Greece, by contrast, has traditionally maintained weak and fragmented relations with Sub-Saharan Africa. However, recent European developments, particularly the European Union’s Global Gateway strategy and the African Continental Free Trade Area agreement (AfCFTA), create an opportunity for a strategic rethinking of Greek policy.

The challenge for Greece is not whether it should engage with Africa, but how it can do so with limited diplomatic, financial, and administrative resources. Rather than attempting to imitate larger powers, Greece should adopt a selective strategy emphasizing concentrated partnerships, network diplomacy, educational links, and societal actors.

The Policy Challenge

The starting point of Greek engagement with Africa is structurally weak. Although geographically close to the continent, Greece maintains only eight embassies across forty-nine countries of Sub-Saharan Africa serving a population of approximately 1.2 billion people (in comparison, Turkey maintains thirty-two embassies in the region). Furthermore, only the Greek embassy in South Africa has a commercial attaché, while official high-level political visits have been extremely rare (an exception was Foreign Minister Nikos Dendias official visits to several Sub-Saharan African countries, looking mainly for support for Greece’s candidature for the UN Security Council). No Greek Prime Minister has visited a Sub-Saharan African country during the last three decades. Greek exports to Africa represent only approximately 0.3 percent of total exports, while investment remains minimal.

The weakness of institutional engagement contrasts sharply with the continent’s growing significance. Africa currently hosts some of the fastest-growing economies in the world and the African Continental Free Trade Area aims to create a market of approximately 1.5 billion consumers. In addition, under the European Union’s Global Gateway initiative, €150 billion out of the overall €300 billion package are directed toward Africa.

At the same time, Greece possesses assets that remain largely underutilized.

Existing Greek Assets and Untapped Opportunities

The Orthodox Church represents one of Greece’s most important but often neglected channels of influence in Africa. The Patriarchate of Alexandria maintains bishoprics in twelve African countries with an estimated flock of approximately 1.2 million faithful. Historically, religious diplomacy has often operated as an informal channel for strengthening relations and promoting social initiatives in education, health, and community development.

The Church could therefore function as an instrument of soft power by supporting educational programmes, scholarships, local partnerships, and social services. For example, cooperation between Greek universities and schools connected to the Patriarchate of Alexandria could create educational networks extending from Egypt and Kenya to countries of Central and Southern Africa. Such initiatives would be relatively inexpensive while generating long-term influence. However, the Russian Orthodox Church has increasingly attempted to expand its presence in Africa, potentially weakening the historical position of the Patriarchate of Alexandria (numerous African Greek Orthodox priests have joined the Russian Church in recent years). Consequently, supporting the activities of the Patriarchate also acquires broader geopolitical significance, especially in the current context.

Diaspora communities constitute another important but largely underexploited resource. Although the Greek diaspora in Africa has declined dramatically—from approximately 150,000 individuals in 1960s to only a few tens of thousands today—it still provides networks and contacts across various sectors. At the same time, the African diaspora in Greece, including entrepreneurs, artists, athletes, and community organizations, has become more influential and can function as an important bridge.

Civil society organizations have already demonstrated the potential of such engagement. Organizations including the Greek-African Chamber of Commerce, several consultancies, but also NGOs like Doctors Without Borders–Greece, Lalibella, YouthmakersHub, and ELIX already undertake projects across African countries, often financed through European and private resources. University initiatives such as the AfriquEurope programme of the University of the Peloponnese illustrate that society has often moved ahead of the state and ELIAMEP’s agreement with Pretoria University.

Policy Recommendations

Given its limited resources, Greece should avoid a continent-wide strategy and instead focus on one or two strategic partner countries that can function as anchor states. Kenya, for example, combines strong economic growth, regional influence, and importance in logistics and maritime activities. Ethiopia represents another possible case because of historical links and religious connections. Concentrating resources would allow Greece to build expertise and create visibility at manageable cost.

Second, Greece should strengthen educational and digital partnerships. Universities could expand English-language and French-language programmes specifically targeting African students. Visa procedures should also be simplified. It is inefficient for prospective African students to wait five or six months for visa appointments.

Third, Greece should establish a national volunteer programme inspired by international examples such as the Peace Corps in the US or similar programmes in Europe. Young Greeks could participate in educational, environmental, or healthcare projects in African countries. Such a programme could seek financial support from the Greek Public Employment Service (DYPA) and the EU, create networks and simultaneously improve Greece’s currently limited development profile.

Moreover, Greece should create a digital platform on Greek–African relations that could serve as an innovative mechanism for strengthening coordination, visibility, and interaction among the multiple actors involved in the relationship. The platform could function as a shared digital ecosystem bringing together public institutions, private enterprises, civil society organizations, academic institutions, diaspora networks, and cultural actors from Greece and African countries. It could include databases of ongoing initiatives and partnerships, funding opportunities, business and educational collaborations, cultural exchanges, and development projects, while also providing interactive tools such as discussion forums, thematic working groups, and networking spaces. Beyond its informational role, such a platform could facilitate dialogue and the co-production of ideas, reduce fragmentation among existing initiatives, and create synergies between actors who currently operate in isolation. In this way, it could strengthen relational ties and transform dispersed activities into a more coherent framework of engagement, enhancing Greece’s visibility and influence through networking, participation, and sustained interaction rather than through traditional forms of state power.

Finally, Greece should adopt a broader understanding of migration and mobility by creating more legal pathways for seasonal workers in agriculture, construction, and care services. Bilateral agreements with countries such as Ethiopia could address labour shortages while strengthening long-term partnerships.

Conclusion

Greece cannot compete with larger powers in Africa through financial resources or extensive diplomatic infrastructures. However, it can develop influence through networks, education, religion, and societal links. Rather than perceiving Africa as a distant periphery, Greece should view the continent as an emerging strategic space where modest but carefully designed interventions can generate substantial diplomatic dividends.

 

 

[1] In this paper, the term “Africa” refers specifically to Sub-Saharan Africa, unless otherwise indicated. North Africa is treated separately due to its distinct historical, political, economic, and socio-cultural dynamics.

Russia’s full-scale invasion of Ukraine in 2022 and the return of Donald Trump to the White House in 2025 have produced the most consequential geopolitical jolt to European security since the end of the Cold War. Three questions have since been raised. How much should Europeans rely on the United States for their own defence? What does it mean to build a ‘European NATO’? Can the EU develop credible autonomous defence structures without fracturing the transatlantic alliance? This policy brief aims to define the concept of a ‘European NATO’, showing that “limited” European strategic autonomy is achievable within 5-10 years; full-spectrum collective defence without the United States remains difficult. The most viable near-term path is a strengthened European pillar within NATO — not decoupling from it.

• Strategic shock: Russia’s 2022 invasion of Ukraine and Trump’s 2025 return to office jointly forced Europe to confront long-deferred questions about defence dependence on the US, prompting a surge in spending (€864 billion in 2025, up 14% in one year) even as US spending fell.
• US doctrine shift: Secretary Hegseth (Feb 2025) and Under Secretary Colby (Feb 2026) delivered the clearest official US statements yet that Europe must assume primary responsibility for its own conventional defence, with Colby’s “NATO 1.0/2.0/3.0” framework describing a return to burden-sharing realism while the US retains nuclear deterrence and select capabilities.
• Defining “European NATO”: Not a formal category but a shorthand for Europeanising command, capability, and decision-making within the Alliance — distinct from replacing NATO with an EU army. It represents “de-risking, not decoupling.”
• Inside vs. alongside NATO: European allies can rebalance burden-sharing and command roles (e.g., SACEUR) within NATO, while the EU plays a complementary role through CSDP crisis missions, defence industrial policy (EDF, EDIS, EDIP, SAFE), and cyber/hybrid/space resilience.
• Post-Cold War drift: From 1991–2014 Europe cut forces sharply (Germany’s military nearly halved) chasing a “peace dividend”; repeated shocks (Yugoslavia, Iraq, Libya) failed to trigger sustained rearmament until 2022.
• Institutional track record: PESCO (2017), the Helsinki Headline Goal, and EU Battlegroups all show a pattern of ambitious commitments and underwhelming delivery, though the Rapid Deployment Capacity reached initial operational capability in 2025.
• Strategic autonomy defined: A spectrum from achievable near-term operational autonomy (crisis management) to a multi-decade goal of full-spectrum collective defence — with the “Trump paradox” being that a transactional US administration is simultaneously pushing Europe toward the autonomy it fears.
• EU Defence Union gaps: Juncker’s 2016 call for a Defence Union by 2025 remains unmet; PESCO, EDF, and EDIP show real but partial progress, blocked mainly by member states’ reluctance to pool sovereignty.
• Command and control debate: The MPCC is the EU’s only permanent military HQ but is small and limited to crisis management; expanding it toward a full EU “SHAPE-equivalent” is contested, with a moderately expanded MPCC seen as the realistic middle path.
• Five policy scenarios and recommendations: The report outlines pathways from a “Reinforced European Pillar” (most feasible, near-term) to a “Transatlantic Grand Bargain,” concluding that strengthening Europe’s role within NATO—not decoupling—is the most viable near-term route, alongside recommendations to consolidate procurement, expand the MPCC, and Europeanise command positions.

Read here in pdf the Policy Paper by Angelos Athanasopoulos, Geopolitics and Security Expert, Hellenic Foundation for European and Foreign Policy (ELIAMEP).

Summary

Russia’s full-scale invasion of Ukraine on 24 February 2022 and the return of Donald Trump to the White House in January 2025 have together produced the most consequential geopolitical jolt to European security since the end of the Cold War. The combination of a revisionist power at war on European soil and a transactional American administration openly questioning the unconditional nature of NATO’s Article 5 has finally forced Europe to confront questions it has deferred for three decades: How much should Europeans rely on the United States for their own defence? What does it mean to build a ‘European NATO’? And can the European Union develop credible autonomous defence structures without fracturing the transatlantic alliance?

This report aims to provide a comprehensive analysis of these questions. It defines the concept of a ‘European NATO’ — meaning the progressive Europeanisation of command, capability, and strategic decision-making within and alongside the Alliance — and distinguishes it from the more radical notion of replacing NATO with an EU defence organisation. It also probes the acute question of whether the EU needs its own independent command and control structure — and how far it has come toward that goal. Finally, it presents five differentiated policy scenarios with a comparative table.

The report’s central findings are as follows: European strategic autonomy is achievable in limited, operational domains within a timeframe of five to ten years; full-spectrum collective defence without the United States remains a multi-decade project at best. The most viable near-term path is a strengthened European pillar within NATO — not decoupling from it. The EU has made genuine but insufficient progress on command structures; the Military Planning and Conduct Capability (MPCC) requires significant expansion to serve as a credible autonomous headquarters. European defence spending has surged dramatically — reaching €864 billion in 2025 — but quantity does not automatically convert into usable military power without procurement consolidation, industrial integration, and political coherence. Above all, the report argues that Europe faces a structural, not cyclical, moment of strategic necessity.

Introduction: The New Strategic Context

Russia’s Return to Imperial War

Russia’s full-scale invasion of Ukraine shattered three decades of post-Cold War assumptions about the European security order. The invasion was not merely a regional conflict: it was a direct assault on the principles of sovereignty, territorial integrity, and the rules-based international system that Europe’s post-1945 order rested upon. For European NATO members, the invasion produced an immediate strategic shock. Defence spending, long stagnant across most of the Alliance, began to surge. Finland and Sweden abandoned their historic neutrality and joined NATO in 2023 and 2024 respectively, adding to the Alliance’s northern flank. The NATO Strategic Concept adopted at the Madrid Summit in June 2022 named Russia as ‘the most significant and direct threat to Allies’ security and to peace and stability in the Euro-Atlantic area’ — the clearest formulation of the Russian threat in Alliance history.

Beyond the immediate military reality, Russia’s war accelerated a broader reorientation of European strategic thinking. The invasion made tangible what analysts had argued for years: that European security could not be taken for granted, that the security dividend of the post-Cold War era had been spent, and that Europe would need to invest substantially in its own defence if it wished to maintain credible deterrence. The EU’s Strategic Compass, adopted in March 2022 just weeks after the invasion began, represented the most significant strategic document in EU defence history, committing member states to developing a Rapid Deployment Capacity (RDC) of up to 5,000 troops, expanding the MPCC, and deepening cooperation through Permanent Structured Cooperation (PESCO) and the European Defence Fund (EDF).

The Return of Donald Trump and the Transatlantic Rupture

If Russia’s invasion provided the external shock, the return of Donald Trump to the American presidency in January 2025 provided the internal one. Trump’s second administration moved rapidly to signal a strategic reorientation toward the Indo-Pacific, openly questioning the unconditional nature of America’s Article 5 commitment and demanding European allies spend up to 5% of GDP on defence. Secretary of Defence Pete Hegseth stated bluntly in February 2025 that ‘strategic realities prevent the US from taking primary responsibility for European conventional deterrence’ — a formulation without precedent in NATO’s history.[1]

The impact of this political earthquake on European capitals was immediate and profound. The Munich Security Conference of February 2025 was marked by open anxiety about American reliability. European leaders responded with a series of unprecedented commitments: the ReArm Europe plan, the Security Action for Europe (SAFE) instrument of €150 billion, activation of fiscal escape clauses for 15 EU member states, and the NATO Hague Summit of June 2025 establishing a binding 3.5% GDP defence spending target by 2035,  plus 1,5% GDP for wider security-related expenditure. European defence spending — already on a sharp upward trajectory since 2022 — reached €864 billion in 2025, growing at 14% in a single year, the fastest rate of any region in the world, even as US defence spending declined by 7.5%.[2]

Yet spending increases, however dramatic, do not automatically translate into strategic capability. Europe still depends critically on the United States for intelligence, surveillance and reconnaissance (ISR), strategic airlift, air-to-air refuelling, ballistic missile defence, space-based assets, and above all nuclear deterrence. Filling these gaps — the so-called ‘strategic enablers’ — is the central challenge of European strategic autonomy and the defining question of this report.

The U.S. Policy Position: Secretary Hegseth and Under Secretary Colby

The strategic reorientation demanded of European NATO allies has been articulated with exceptional clarity and directness by two key figures in the Trump administration’s defence leadership: Secretary of War Pete Hegseth and Under Secretary of War for Policy Elbridge Colby. Their statements at successive NATO ministerial meetings — Hegseth in Brussels in February 2025 and Colby in Brussels in February 2026 — represent the most explicit official U.S. articulation of a new transatlantic burden – shifting doctrine since the Alliance’s founding. Taken together, they constitute a coherent and mutually reinforcing framework: Europe must assume primary responsibility for its own conventional defence, the era of American strategic subsidy is ending, and the Alliance’s future credibility depends on European willingness to match that rhetorical commitment with real military investment and capability. Press coverage of both interventions confirmed that their impact on European capitals was immediate and profound.

Secretary Hegseth at the NATO Ministerial, Brussels (February 2025)

Secretary Hegseth’s press conference following the February 2025 NATO Ministers of Defence Meeting in Brussels was the new administration’s opening statement on transatlantic burden-sharing. Hegseth was blunt: European leaders must take primary responsibility for the defence of the continent. He called not just for the 2% GDP target long established by NATO, but for spending of approximately 5% of GDP — a figure he described as reflecting the genuine strategic requirements of the moment: “2 percent is a start, as President Trump has said, but it’s not enough, nor is 3 percent, nor is 4 percent. More like 5 percent. Real investment. Real urgency.”[3]

Hegseth grounded his demand in a frank assessment of strategic reality, invoking the limits of hard power and the lessons of recent history: “We can talk all we want about values. Values are important. But you can’t shoot values. You can’t shoot flags and you can’t shoot strong speeches. There is no replacement for hard power.” He was equally direct about the historical precedent, invoking President Eisenhower’s warning that Europe risked making “a sucker out of Uncle Sam” and stating unequivocally: “President Trump will not allow anyone to turn Uncle Sam into Uncle Sucker.” This invocation of Eisenhower was historically and rhetorically significant: it framed the current U.S. demand not as a Trumpian aberration but as a structural concern that has defined the burden-sharing debate since the Alliance’s earliest years.[4]

On the question of European ownership, Hegseth was categorical: “Leaders of our European allies should take primary responsibility for defence of the continent, which means security ownership by all allies guided by a clear understanding of strategic realities.” This formulation — primary responsibility resting with European allies, not shared between Europe and the United States — was without precedent in the public statements of a sitting U.S. Secretary of Defence. Hegseth also tied defence industrial reform directly to the burden-shifting imperative, warning that the war in Ukraine had exposed Europe’s chronic underinvestment in production capacity, and demanding rapid expansion of the transatlantic defence industrial base on both sides of the Atlantic. He called on NATO to prioritise “reviving the transatlantic defence industrial base, rapidly fielding emerging technologies, prioritizing readiness and lethality, and establishing real deterrence.”

On the question of U.S. troop presence in Europe and the geographical rebalancing of American strategic attention toward the Indo-Pacific, Hegseth offered a forthright explanation of comparative strategic logic: “It makes a lot of sense, just in a commonsense way, to use our comparative advantages. European countries spending here in defence of this continent, in defence of allies here against an aggressor on this continent with ambitions.” He nonetheless denied that this represented abandonment: “We are committed to that NATO alliance. We understand the importance of that partnership, but it can’t endure on the status quo forever in light of the threats we face and fiscal realities. Europe has to spend more. NATO has to spend more.”[5]

Under Secretary Colby and the NATO 1.0 / 2.0 / 3.0 Framework (February 2026)

One year later, Under Secretary Colby’s address to the NATO Defence Ministerial on 12 February 2026 provided the most intellectually systematic and historically grounded articulation of the U.S. burden-shifting doctrine to date. Where Hegseth had emphasised political will and financial commitment, Colby offered a conceptual framework for understanding the Alliance’s trajectory through the categories of NATO 1.0, NATO 2.0, and NATO 3.0 — a framework that has since become a reference point in Alliance debates and academic commentary.[6]

NATO 1.0 refers, in Colby’s framework, to the Cold War Alliance in its original and most demanding form: a hard-nosed, realistic, clear-eyed approach to deterrence and defence in which all allies were expected to carry their weight from the outset. Colby traced this ethos to Article III of the Washington Treaty and the Lisbon Commitments of 1951, noting that burden-sharing debates were a constant feature of the Cold War relationship — under Johnson, Nixon, Carter, and Reagan — and that President Eisenhower himself, “one of the men most responsible for Allied victory in the Second World War and the first SACEUR,” was clear that NATO’s success depended on allies stepping up to lead their own defence. Colby explicitly credited this demanding model with the Alliance’s fundamental Cold War achievement: “It made sure that the USSR never saw military aggression against the Western Alliance as a viable strategy. It thus saw us through the Cold War with peace in Europe — an incredible achievement for which we must all be grateful.”

NATO 2.0, in Colby’s account, emerged with the collapse of the Soviet Union and dominated the post-Cold War era for approximately three decades. It was characterised by a shift away from Europe’s defence toward “out of area” operations, “substantial disarmament on the continent,” and a reorientation of the Alliance’s conceptual framework “from the hard-nosed, flexible realism of the Cold War ‘NATO 1.0’ to much more of a liberal internationalist mindset of the ‘rules-based international order.’” Colby’s assessment of this phase was direct: “It is clear, however, that this approach of ‘NATO 2.0’ is no longer fit for purpose — certainly not for the United States and, we would submit, not for our allies either.” Crucially, Colby argued that continuing to proclaim the commitments of NATO 2.0 without the capability to back them would not merely be inadequate but actively harmful: “Continuing to proclaim the shibboleths of ‘NATO 2.0’ without a credible strategy for how to meet them would not help Europe — it would hurt it, by perpetuating expectations that cannot realistically be met.”

NATO 3.0, as Colby defined it, represents the necessary return to the logic of NATO 1.0 adapted to contemporary strategic realities: a model in which Europe assumes primary responsibility for the conventional defence of the European theatre, backed by American strategic power and nuclear deterrence, and in which the transatlantic relationship is defined not by European dependency on American resources but by “common strength and a shared grammar rooted in flexible realism.” This vision is explicitly framed not as anti-European, but as an expression of confidence in Europe’s capacity: “There is nothing anti-European about this vision. To the contrary, it reflects hope and indeed confidence in Europe’s capacity to act substantially and vigorously.” Colby acknowledged that signs of movement were already visible — increased spending across several allies, reformed procurement systems, a more demanding NATO defence planning process — but insisted that the pace must accelerate. He was categorical about what the Alliance’s future should look like: “The promise of 2026 and the years beyond is this: a NATO in which Europe is the primary conventional defender of the European theatre, backed by American strategic power and global reach; an Alliance that is militarily credible, politically durable, and strategically realistic.”[7]

The core strategic logic of Colby’s speech was grounded in a clear-eyed analysis of what the United States can and cannot do simultaneously across multiple theatres. He argued that “a strategy that pretends the United States can indefinitely serve as the primary conventional defender of Europe while also carrying the decisive burden everywhere else is neither sustainable nor prudent. It is an aspiration divorced from resources.” The prioritisation of the Indo-Pacific — where “only American power can play a decisive role” — was presented not as an abandonment of Europe but as the logical corollary of European allies’ undeniable capability to field the forces required for their own conventional defence. On the U.S. commitment, Colby was explicit about what would remain: “We will continue to provide the U.S. extended nuclear deterrent. And we will also continue, in a more limited and focused fashion, to provide conventional capabilities that contribute to NATO’s defence.” Colby also stressed the imperative of moving beyond spending commitments to actual operational outputs: “For Europe, it means moving beyond inputs and intentions toward outputs and capabilities. Defence spending levels matter, and there is no substitute for it. But what matters at the end of the day is what those resources produce: ready forces, usable munitions, resilient logistics, and integrated command structures that work at scale under stress.”

The reaction to both statements in European capitals and the press was significant. NPR reported that the Hegseth press conference left allies “confused and wondering what exactly lies in store” following U.S. signals that it had initiated Ukraine peace talks without European coordination. PBS noted that EU foreign policy chief Kaja Kallas expressed surprise that the administration appeared to be listing concessions to Russia before negotiations had even formally begun. The Colby speech, described by the Small Wars Journal as “one of the clearest official articulations to date on the strategic rebalancing within NATO,” was assessed by the SSRN working paper by Breitenbauch as creating a “structural dual-contingency planning requirement” for the Alliance, forcing NATO planners to test scenarios both with and without substantial U.S. conventional participation. NATO Secretary General Mark Rutte, for his part, explicitly welcomed Colby’s presence at the ministerial, describing him as “a consistent force over the years for Europe and Canada to really step up, when it comes to defence spending, when it comes to defence industrial production.”[8]

Defining ‘European NATO’: Concepts and Distinctions

What Is ‘European NATO’?

The concept of a ‘European NATO’ is not a formal Alliance category but rather an analytical and political shorthand for a structural shift within the Alliance in which European allies progressively assume greater responsibility for strategic decision-making, military command, capability development, and industrial production. It refers to the Europeanisation of NATO — not its replacement or dissolution — and encompasses several interrelated dimensions:

• A stronger European pillar within NATO: European allies taking the lead in conventional deterrence on the continent, with the United States providing strategic enablers (nuclear deterrence, ISR, long-range precision strike) rather than serving as the primary conventional force.
• Redistribution of command roles: More European officers in key NATO command positions, including potentially the Supreme Allied Commander Europe (SACEUR), traditionally a US appointment since 1950.
• European-driven capability development: A shift away from dependence on US-manufactured systems toward domestically developed European platforms, driven by Permanent Structured Cooperation (PESCO), the European Defence Fund (EDF), the European Defence Industry Program (EDIP) and the forthcoming programme for agile and rapid defence innovation (AGILE) for disruptive tech and SMEs.
• A European strategic culture: A shared European approach to risk assessment, threat identification, and willingness to use military force, which has historically been fragmented across member states.
• An EU defence dimension: Development of EU-specific instruments for crisis management, industrial policy, procurement coordination, and potentially collective territorial defence that operate in parallel to and complementary with NATO.

Crucially, ‘European NATO’ does not mean a European army, a European nuclear alliance, or a European security organisation that replaces NATO. As NATO Secretary General Mark Rutte warned the European Parliament in January 2026, anyone who believes Europe can defend itself without the United States in the near term is ‘dreaming.’[9] The concept is better understood as a grand strategy of de-risking rather than decoupling — reducing European vulnerability to American volatility while preserving the fundamental transatlantic bond.

Key Terminological Distinctions

Key Concepts in European Security and Defence European Strategic Autonomy (ESA): The EU’s capacity to assess, decide, and act militarily without requiring permission from a third party. It exists on a spectrum from limited operational autonomy (crisis management) to full-spectrum collective defence. European Pillar of NATO: A strengthened bloc of European NATO members which collectively carry primary responsibility for conventional deterrence in Europe, while the Alliance’s integrated command structure, including Article 5, remains intact. Common Security and Defence Policy (CSDP): The EU’s institutional framework for crisis management, peacekeeping, and security sector reform operations outside EU territory, established under the Treaty of Lisbon. This is something different from collective territorial defence. European Defence Union (EDU): An aspirational concept — not yet achieved — for deep EU defence integration including common capability development, shared procurement, European-owned command structures, and potentially a mutual defence guarantee rooted in the EU Treaty (Article 42.7). Strategic Enablers: Critical military capabilities — intelligence, reconnaissance, strategic airlift, ballistic missile defence, nuclear deterrence — currently dominated by the United States and representing Europe’s most acute gap. Berlin Plus Arrangements (2003): The formal framework under which the EU can access NATO planning assets and capabilities for EU-led operations. The Role of European Allies: Within and Alongside the Alliance

Inside NATO: Rebalancing Command and Burden-Sharing

The most immediate and practically achievable dimension of European NATO concerns the redistribution of roles and responsibilities within the existing Alliance structure. This involves three interconnected areas: spending and capability, command positions, and strategic planning.

Defence Spending and Investment

The original NATO target of 2% of GDP on defence, agreed at the Wales Summit in 2014, was long met by only a handful of allies. By 2025, the landscape had transformed dramatically. The NATO Hague Summit of June 2025 adopted a new binding commitment of 3.5% of GDP on core defence by 2035, with an additional 1.5% for defence-related expenditure including infrastructure, cyber, and resilience — an effective target of 5% of GDP, matching the Trump administration’s longstanding demand. Poland has led the way, committing 4.7% of GDP in 2025, while Estonia and the Baltic states have exceeded 3%. However, Spain expressed its disagreement and received an opt-out from this arrangement. Germany overhauled its constitutional ‘debt brake’ to fund a massive multi-year rearmament programme. EU-27 defence expenditure reached €343 billion in 2024 — a 57% increase from €218 billion in 2021 — and is projected to rise further. However, increased spending alone is insufficient. Europe’s defence industry, with an annual turnover of approximately €183 billion and some 600,000 jobs, remains smaller and less efficient than its American counterpart. Three decades of underinvestment have created structural weaknesses: outdated production lines, limited surge capacity, fragmented procurement across 27 national markets, and heavy reliance on US-manufactured platforms. US Foreign Military Sales represented 51% of European NATO countries’ equipment spending between 2022 and 2024, up from 28% in the previous three-year period.[10] Correcting these structural imbalances — through EDIP, SAFE, and a consolidated European defence industrial market — is a prerequisite for genuine strategic autonomy.

Command and Leadership

The question of command distribution within NATO is politically sensitive but strategically central. The tradition of a US SACEUR — maintained since General Dwight Eisenhower in 1950 — reflects the Alliance’s historical dependence on American military primacy. If Europeans are to assume greater strategic responsibility, a fundamental debate about the structure of NATO’s command architecture becomes inevitable. Several proposals have been advanced: an empowered ‘European’ Deputy SACEUR who assumes operational command of the European theatre while the US retains strategic command; rotating the SACEUR between US and European officers; or creating a European Operational Command within NATO’s existing structure.

Any significant change to NATO’s command architecture would require consensus among all 32 members and would face strong resistance from those — particularly in Eastern Europe — who believe US leadership of NATO commands is essential to the credibility of Article 5. Nevertheless, the question of Europeanising NATO’s command positions is certain to gain political momentum as European spending rises, and the expectation of a genuine European contribution grows.

Alongside NATO: The EU’s Parallel Role

Crisis Management and the CSDP

The EU’s distinctive contribution to European security lies not in territorial collective defence — which remains NATO’s exclusive domain — but in the broader spectrum of crisis management, security sector reform, stabilisation, and hybrid threat response. The CSDP has deployed over 40 military and civilian missions since 2003, operating in the Balkans, Africa, the Middle East, and the Eastern neighbourhood. These missions represent a unique EU capability: the ability to combine military crisis management with rule of law programmes, border assistance, training, and development instruments in a single integrated response.

Since February 2022, the EU member-states have also assumed an unprecedented role in supporting Ukraine — not through direct military intervention under NATO’s Article 5 framework, but through the European Peace Facility (EPF), providing over €11 billion in military assistance to Ukrainian forces, and the EU Military Assistance Mission Ukraine (EUMAM UA) training Ukrainian soldiers on EU territory.

Defence Industrial Policy

A genuinely new EU role has emerged in defence industrial policy. The European Defence Fund (EDF), endowed with €7.95 billion for 2021–2027, has co-funded collaborative research and capability development across member states. The European Defence Industrial Strategy (EDIS, 2024) and the European Defence Industry Programme (EDIP, 2025) go further: they establish binding targets for intra-European procurement (50% of procurement within the EU by 2030; 35% collaboratively). Additionally, the SAFE instrument was created, — a €150 billion loan programme to fund joint European defence investment. The ReArm Europe/Readiness 2030 framework may mobilise up to €800 billion through a combination of these instruments, fiscal flexibility, and member state spending increases.

Hybrid Threats, Cyber, and Space

The EU has developed strength in domains that do not fall neatly within NATO’s traditional hard-power focus: cyber security, hybrid threat response, resilience and civil preparedness, election security, and space. The EU Cyber Solidarity Act, the European Cyber Resilience Act, and the Space Strategy for Security and Defence represent areas where EU regulatory and financial instruments can complement NATO’s operational focus. The Niinistö Report (2024) on EU-wide civil preparedness pointed to the need for a ‘whole of society’ approach to resilience that goes beyond what NATO alone can deliver.

European Efforts for Autonomous Security Since 1991

The Post-Cold War Illusion of a Peace Dividend

The end of the Cold War in 1991 produced a broad assumption across European capitals that the era of great power conflict was over and that defence spending could be safely reduced in pursuit of a ‘peace dividend.’ Between 1991 and 2014, European NATO members consistently cut their armed forces, reduced defence budgets, and downsized military industrial capacity. Germany’s armed forces shrank from 333,000 in 1998 to approximately 185,000 by 2014. France, the UK, Italy, and Spain all followed similar trajectories.[11] By 2014, only four of NATO’s then-28 European members met the 2% GDP spending target, and the Alliance’s European military capacity had been substantially hollowed out.

This strategic holiday was periodically interrupted by sobering operational experiences. The Yugoslav wars demonstrated European military dependence on the United States. The 2003 Iraq War exposed deep transatlantic divisions over the use of force. The 2011 Libyan intervention — in which the US, after initially leading, deliberately ‘led from behind,’ exposing European allies’ lack of precision munitions, ISR, and aerial refuelling — laid bare the capability gaps in stark operational terms. Yet none of these shocks produced sustained European rearmament or institutional reform.

PESCO: Promise and Underperformance

The Permanent Structured Cooperation (PESCO), launched in December 2017 following the Brexit vote and Trump’s first term, represented the most ambitious attempt at institutionalised EU defence cooperation. With 26 participating member states and more than 70 collaborative projects across land, air, maritime, cyber, and space domains, PESCO has created a new framework for binding commitments on capability development, spending, and interoperability. However, implementation has been hampered by inadequate financial planning, divergent national priorities, the fundamental reluctance of member states to genuinely pool sovereignty in defence, and limited political ownership at the highest levels.[12]

The Helsinki Headline Goal and Battle Groups: Repeated Disappointments

Europe’s track record on rapid reaction force development is one of persistent ambition and disappointing delivery. The Helsinki Headline Goal (1999) — 60,000 troops deployable within 60 days — was never achieved. The EU Battlegroup concept (2004) created two standby battlegroups of approximately 1,500 troops each on a rotating basis; despite decades of maintenance, no EU Battlegroup has ever been deployed operationally [13], a fact that starkly illustrates the political constraints on EU military action. The 2007 Lisbon Treaty’s introduction of a mutual defence clause (Article 42.7 TEU) remained largely symbolic; when France invoked it after the November 2015 Paris terrorist attacks, the response was bilateral rather than genuinely collective.

The EU Strategic Compass of 2022 attempted to correct this pattern by establishing a Rapid Deployment Capacity (RDC) of up to 5,000 troops and strategic enablers, such as strategic airlift, ISR capabilities and space-based communications — significantly larger than the battlegroup concept — and by assigning the MPCC as its preferred headquarters. The RDC achieved initial operational capability in 2025, though its actual deployment readiness and the political will to activate it remain untested.

The French Tradition of Strategic Autonomy

France has been the most consistent advocate of European strategic autonomy; a position rooted in Gaullist strategic culture and France’s unique status as the only European nuclear power within NATO’s integrated command. France rejoined NATO’s integrated military command structure in 2009 after a 43-year absence but has simultaneously insisted on the EU’s right and duty to develop independent military capacity. President Macron has been the most vocal European proponent of a genuine European defence identity, famously declaring NATO ‘brain dead’ in 2019 and calling for a ‘European Sovereign’ capable of acting autonomously in its strategic neighbourhood.[14]

Macron’s April 2024 Sorbonne speech called for a ‘European Defence Initiative,’ including a rapid reaction force, European air defence, and a European long-range strike capability. His 2025 proposals regarding the extension of France’s nuclear deterrence to European partners[15] — discussed with Germany, Poland, and other allies — represented perhaps the most dramatic development in European nuclear doctrine since the Cold War, though the practical implications and French political willingness to genuinely multilateralise the deterrent remains deeply uncertain.

The EU and Strategic Autonomy

Conceptual Clarification

The concept of ‘European Strategic Autonomy’ (ESA) has been simultaneously one of the most debated and least precisely defined concepts in European security discourse. Its meaning has evolved continuously since it gained currency in the EU Global Strategy of 2016 — from an initial focus on defence to encompass economic sovereignty, technological independence, supply chain resilience, cyber capacity, and space capabilities. Some scholars and policymakers prefer the term ‘strategic sovereignty,’ others ‘capacity to act,’ arguing that ‘autonomy’ unnecessarily implies confrontation with the United States.

For the purposes of this report, European strategic autonomy in the defence domain is understood as the EU’s and its member states’ collective capacity to assess threats, make strategic decisions, and conduct military operations at a meaningful scale without requiring prior authorisation or enabling support from a third party — particularly the United States — when vital European interests are at stake. This is explicitly understood as a spectrum, not a binary. At one end lies operational autonomy for limited crisis management missions (evacuations, peace enforcement, maritime security) — achievable in the near term. At the other lies full-spectrum collective defence against a major military power — a multi-decade project involving massive capability investment and political integration far beyond what is currently envisaged.

American Perceptions: From the ‘3 Ds’ to the Trump Paradox

American attitudes toward European strategic autonomy have oscillated between cautious support and active suspicion over the past three decades. The Clinton administration’s Secretary of State Madeleine Albright famously set out the ‘3 Ds’ framework in 1998 — European defence should not Decouple from the Alliance, not Duplicate existing NATO capabilities, and not Discriminate against non-EU NATO members. This framework effectively constrained European ambitions for a generation, as any EU defence initiative could be criticised on one or more of these grounds.

The Trump paradox is historically notable: an American administration whose unilateralism and transactionalism have done more than any previous administration to convince Europeans that they must develop autonomous capacity is simultaneously one of the most assertive in demanding that Europe shoulder its own defence burden. This paradox resolves itself only if one accepts that Trump’s objective is not to weaken European defence but to make it financially and operationally less dependent on American resources — which is precisely what strategic autonomy advocates have argued for. The danger lies in the mismatch of timescales: Trump demands rapid burden-shifting that Europeans cannot responsibly achieve without years of capability development.

The Strategic Compass and Readiness 2030

The EU Strategic Compass, adopted in March 2022, was the most ambitious European strategic document since Saint-Malo (1998). It identified four operational priorities: acting (crisis management), securing (protecting EU and its partners), investing (building capabilities), and partnering (deepening cooperation). On capability development, it committed EU member states to PESCO fulfilment by 2025, MPCC expansion, the Rapid Deployment Capacity, enhanced cyber posture, and joint exercises. On the EU-NATO relationship, it affirmed complementarity while asserting the EU’s right to autonomous action.

The March 2025 White Paper for European Defence — Readiness 2030 built further on this foundation[16], presenting the ReArm Europe/Readiness 2030 framework with its Security Action for Europe (SAFE) pillar — a €150 billion EU-backed loan instrument for joint defence procurement — alongside the European Defence Industry Programme (EDIP) with €1.5 billion allocated for 2026–2027 and European Defence Projects of Common Interests (EDPCIs). The combined financial mobilisation of up to €800 billion through SAFE and the activation of the national escape clause to allow increased defence spending by member-states represents an unprecedented EU commitment to defence investment, though the conversion of financial commitments into actual deployable military capability remains the central challenge.

The EU Defence Union: Progress and Gaps

The Vision of a European Defence Union

The concept of a European Defence Union (EDU) was first given prominent articulation by European Commission President Jean-Claude Juncker, who called in 2016 for a ‘fully-fledged European Defence Union by 2025.’ Juncker’s vision envisaged the progressive convergence of European defence capabilities, industrial bases, and ultimately command structures into a genuinely unified defence entity — supplementary to NATO but institutionally distinct from it, rooted in EU treaty law, and accountable to EU democratic institutions.

By 2026, this vision has not been achieved. The EU has made significant progress in specific domains — capability development frameworks (EDF, PESCO, CARD), defence industrial policy (EDIS, EDIP, SAFE), operational coordination (MPCC), and cyber/space — but a European Defence Union in the full sense remains aspirational. The fundamental obstacles are political: member states remain deeply reluctant to pool sovereignty over defence, the most jealously guarded domain of national prerogative; NATO’s integrated command structure provides a ready alternative; and the heterogeneity of European strategic cultures — ranging from the Gaullist tradition of French strategic independence to the Atlanticist orthodoxy of Poland and the Baltic states — makes genuine political convergence enormously difficult.

PESCO: The Engine of Defence Cooperation

PESCO, launched in December 2017 under Articles 42.6 and 46 of the Treaty on European Union and the Protocol No. 10, involves 26 participating member states (all except Malta) in more than 70 collaborative projects spanning all operational domains. Participating states undertake binding commitments on spending increases, collaborative procurement (35% target), PESCO project participation, and interoperability. PESCO has demonstrated genuine utility as a political forum for harmonising requirements and launching joint development programmes. Notable projects include the Eurodrone (MALE RPAS), the Cyber Ranges, the European Medical Command, the Multinational CBRN Battalion, the Military Mobility infrastructure programme, frequently mentioned as a “model PESCO project” as it fosters EU-NATO cooperation in a field of mutual interest[17] and TWISTER (space-based ballistic missile detection).

However, implementation has lagged seriously behind ambition. The second PESCO Strategic Review (2024) confirmed that commitments need to be made more measurable, that the link to EDF funding needs to be formalised, and that the operational dimension — PESCO forces actually deploying together — remains underdeveloped. Political ownership at the ministerial and head of government level has been insufficient, with PESCO largely relegated to defence ministry technocratic processes. As of 2025, a small number of the ongoing projects have been completed, and many of the most strategically significant projects remain in development phases. However, it should not be underestimated that the majority of the ongoing PESCO projects have seen progress.

The EDF and EDIP

The European Defence Fund (EDF, 2021–2027) with its €7.95 billion budget represents a historic breakthrough: the first time EU common funds have been used to co-finance collaborative defence research and capability development. EDF projects are selected based on collaborative criteria — they must involve, in principle, at least three entities from at least three member states and/or associated countries — creating financial incentives for the kind of cross-border cooperation that EU defence has historically lacked.

The European Defence Industry Programme (EDIP), approved in December 2025 with a €1.5 billion work programme for 2026–2027, goes further: it funds not just research but actual production ramp-up, ammunition stockpiling, and common procurement. EDIP also includes the Ukraine Support Instrument (€300 million), reflecting the EU’s commitment to sustaining Kyiv’s defence capacity. Together with SAFE, these instruments aim to stimulate a consolidated European defence industrial market that can support the surge in defence spending with European-manufactured products rather than continuing the trend of large-scale US arms purchases.

The European Commission is also planning a massive boost in defence spending in the upcoming 7-year Multiannual Financial Framework (MFF). According to the initial Commission’s proposal, 131 billion euros ar scheduled to be allocated for defence purposes under the European Competitiveness Fund (ECF) – a significant increase compared to the current MFF aiming to to end years of underinvestment by the EU. 

Capability Gaps: The Strategic Enablers Problem

Despite this institutional and financial progress, Europe’s fundamental capability gap lies not in infantry or armoured vehicles but in the strategic enablers that multiply the effectiveness of all other forces. These include: intelligence, surveillance and reconnaissance (ISR) systems including persistent airborne surveillance and space-based imagery; strategic airlift and aerial refuelling capabilities that allow European forces to deploy rapidly at scale; ballistic missile defence, where Europe depends on US PATRIOT and THAAD systems for upper-tier intercepts; advanced command, control, communications and intelligence (C3I) integration, which at its highest classification levels depends on US systems and architecture; and nuclear deterrence, where Europe relies entirely on the American extended deterrent except for France’s independently commanded force de frappe.

Closing these gaps would require sustained investment over decades, deep political agreement on sharing sensitive capabilities across national boundaries, and willingness to accept significant US supply chain risk while European alternatives are developed. The European Union Institute for Strategic Studies (EUISS) assessment of June 2025 warned that even with the Trump administration’s anticipated European Command (EUCOM) force reductions, European allies could not absorb the loss of US strategic enablers in the near term without significant degradation of the Alliance’s deterrence posture.

Command and Control: Should the EU Develop Independent C2?

The Case for EU Command Structures

The question of whether the EU should develop its own independent command and control (C2) architecture is among the most practically significant — and politically contentious — in the European security debate. The argument for an autonomous EU C2 rests on three pillars.

First, operational necessity: if the EU is to conduct crisis management operations — including potentially more demanding executive operations involving combat elements — it cannot rely indefinitely on ad hoc national headquarters offered by willing member states, nor on Berlin Plus access to NATO’s SHAPE (which is unavailable for EU operations where NATO as a whole is engaged or where political conditions prevent Alliance consensus). The EU needs a permanent, capable, and exercised planning and command structure.

Second, strategic credibility: a credible European security actor cannot depend on another organisation’s command infrastructure. If European strategic autonomy means anything operationally, it must include the capacity to plan, direct, and terminate military operations through European-controlled channels.

Third, industrial and technological sovereignty: command and control systems are not merely operational tools — they are expressions of technological sovereignty. Dependence on US command architecture entails dependence on US communication protocols, encryption standards, satellite systems, and intelligence assessments. Building European C2 systems — from battlefield networks to the strategic level — is integral to genuine strategic autonomy.

The Military Planning and Conduct Capability (MPCC)

The Military Planning and Conduct Capability (MPCC), established by the EU Council on 8 June 2017, is the EU’s first and so far, only permanent military strategic headquarters. Located in Brussels and integrated within the EU Military Staff (EUMS), the MPCC initially assumed command of the three EU non-executive training missions in Somalia, Mali, and the Central African Republic. Its scope was expanded in November 2018 to include executive missions (operations with combat elements), and it subsequently assumed command of the EU Military Assistance Mission Ukraine (EUMAM UA).

The EU Strategic Compass designated the MPCC as the preferred military strategic-level C2 structure for the new Rapid Deployment Capacity (RDC) and for EU live exercises by 2025. The MPCC achieved a significant milestone in 2024’s MILEX 24 exercise[18], successfully acting as the Operation HQ (OHQ), while Eurocorps functioned as the Force Headquarters (FHQ). As of 2025, the MPCC has reached its declared full operational capability (FOC), with the capacity to plan and conduct two small-scale or one medium-scale executive operation simultaneously, plus non-executive missions and live exercises.

The MPCC Director is double-hatted as the Director General of the EU Military Staff — a pragmatic arrangement that creates unity of direction but limits institutional depth. The MPCC has a maximum of approximately 200 personnel in its expanded configuration, compared to the thousands of staff at SHAPE. It relies partly on the Multinational Joint Headquarters Ulm (Germany) for planning support in exercises. Despite these constraints, the MPCC represents a genuine institutional achievement — the EU has, for the first time, a permanent command authority that can direct military operations through European political channels.

The Limits of the MPCC

The MPCC’s limitations reflect deeper structural realities. It lacks the depth of staff expertise and the volume of personnel to plan and conduct large-scale operations — particularly high-intensity combat operations against a peer adversary. It has no dedicated communications infrastructure and depends on member state contributions for exercise support. It is not structured to provide the full range of NATO’s planning functions: detailed contingency planning, force generation processes, logistics coordination, and the classified intelligence architecture that underpins NATO’s operational planning. The MPCC is a crisis management headquarters, not a collective defence command. For NATO-level territorial defence, the EU would need fundamentally different — and far more extensive — command structures.

The Debate on a Full European Operational HQ

An emerging debate concerns whether the MPCC should be expanded into a full European Operational Headquarters — an EU equivalent of SHAPE — capable of planning and commanding operations across the full spectrum of military tasks, including territorial defence. Advocates argue that such a headquarters is the logical endpoint of the European Defence Union and a prerequisite for genuine strategic autonomy. They point to the progressive development of the MPCC, the Eurocorps (a multinational corps headquarters available to both NATO and the EU), and the emerging EU RDC as building blocks that could be consolidated into a permanent European command structure.

Sceptics counter that a full EU operational headquarters would be ruinously expensive, would duplicate NATO’s existing command structure, would require a level of political integration — including agreement on command authority, rules of engagement, and strategic direction — that EU member states have consistently refused to contemplate, and would undermine NATO cohesion by creating a parallel command system. NATO Secretary General Rutte’s January 2026 warning against European defence structures that would replicate or substitute for American-provided capabilities is relevant here: building a European SHAPE-equivalent would be a multi-decade and multi-trillion-euro undertaking.

The most practical near-term pathway lies between these poles: a significantly expanded MPCC with greater staff depth, dedicated intelligence capabilities, permanent communications infrastructure, and the capacity to plan not only crisis management but also the higher end of the operational spectrum — without attempting to replicate NATO’s collective defence planning functions. This expanded MPCC should have a direct link to the EU Political and Security Committee and should exercise regularly with EU member state forces, Eurocorps, and national operational headquarters.

Command Structures in the Nuclear Domain

The nuclear dimension of EU command is the most sensitive and least developed aspect of European strategic autonomy. France’s ‘force de frappe’ remains strictly under national command — the French President alone holds the decision to use nuclear weapons, and France has historically refused to place its deterrent under any collective authority. The Franco-British nuclear relationship, codified in the 2010 Lancaster House Treaties, provides a bilateral framework for some cooperation in nuclear capabilities, but without a political commitment to extend deterrence.

Macron’s 2025 proposals to open a structured dialogue on France’s nuclear deterrence in the European context — potentially extending some form of French deterrence guarantee to EU partners — represent an unprecedented development. The practical modalities remain deeply unclear: France cannot credibly extend a nuclear guarantee without establishing some form of joint consultation and crisis management procedure, but any such procedure would begin to multilateralise a deterrent that French strategic culture has always insisted must remain sovereign. The debate is beginning, however, and it will inevitably involve questions of C2 — specifically, what consultation procedures, warning systems, and potentially delivery systems a European nuclear dimension would require.

Policy Scenarios: Five Pathways for European NATO

The following five scenarios represent analytically distinct pathways for the development of European NATO. They are not mutually exclusive — elements of several may co-exist — and they are presented in roughly ascending order of institutional ambition and political difficulty.

Scenario Label Key Features Risks & Challenges Feasibility 1 Reinforced European Pillar Within NATO Europeans assume primary role in conventional deterrence; US retains nuclear umbrella and strategic enablers; EU defence spending reaches 3.5% GDP; command and planning roles redistributed within NATO structures toward European officers Risk of weakening transatlantic bond if perceived as internal fragmentation; US may reduce commitments faster than Europeans can fill gap; requires unprecedented coordination among 32 allies HIGH Near-term (2025-2030) 2 EU Defence Union (Complementary to NATO) Full activation of PESCO, EDF, EDIP; MPCC upgraded to full operational headquarters; European Defence Union progressively institutionalised; EU acquires autonomous planning for crisis management; SAFE/ReArm deployed strategically Possible institutional duplication with NATO; sovereignty concerns from member states;  non-EU NATO members (UK, Turkey) excluded from EU structures MEDIUM Medium-term (2027-2032) 3 Nuclear Strategic Dimension France extends nuclear deterrence framework to EU partners; structured dialogue on nuclear burden-sharing; possible revision of Franco-British nuclear cooperation post-Brexit; European deterrence dialogue formalized at EU/NATO level France’s strategic culture resists multilateralisation of its deterrent; UK outside EU creates complications; US may object to reducing reliance on extended deterrence; legal and political hurdles immense LOW-MEDIUM Long-term (2030+) 4 Differentiated Defence Integration / European Security Council (proposed by Commissioner of Defence and Space Andrius Kubilius as an intergovernmental structure) Core group of willing and capable states (France, Germany, Poland, Nordics, Baltics) forge vanguard defence arrangement within EU/PESCO framework; others join progressively; functional sovereignty pooling in specific domains Risk of two-tier Europe; smaller states may feel excluded from key decisions; institutional complexity; difficult to maintain political cohesion across a differentiated structure MEDIUM-HIGH Medium-term (2026-2031) 5 Transatlantic Grand Bargain Formal new burden-sharing compact between US and European NATO; Europeans commit to 3.5% GDP; US commits to maintaining Article 5; joint procurement frameworks; EU-NATO institutional reform to formalise European pillar with treaty basis Dependent on US political will; Congressional approval required; Trump administration’s transactionalism makes binding commitments uncertain; requires sustained diplomatic effort over multiple election cycles MEDIUM Medium-term (2026-2030)

Analysis of Scenario Feasibility

Scenario 1 — the Reinforced European Pillar — represents the path of least institutional resistance and greatest near-term feasibility. It requires no new EU treaties, no new organisations, and no fundamental change to NATO’s command structure. It relies on increased spending, capability development, and political agreement among European allies to take primary responsibility for conventional deterrence. Its principal risk is that Europe cannot fill the gap quickly enough if the United States reduces commitments before European capacity is ready.

Scenario 2 — the EU Defence Union — is more institutionally ambitious and requires sustained political will across 27 member states over multiple election cycles. PESCO must be fundamentally strengthened, the MPCC significantly expanded, and the EU’s common defence provisions under Article 42 TEU meaningfully activated. This scenario is achievable over a 5–10 year horizon but requires breaking the political log-jam that has prevented genuine sovereignty pooling in defence.

Scenario 3 — the Nuclear Dimension — is the most uncertain and the longest-horizon scenario. It depends entirely on France’s political decisions about its deterrent, which remain sovereign prerogatives. The Macron initiative of 2025 has opened the debate, but translation from rhetorical opening to operational arrangements would require years of classified negotiation and potentially treaty revision.

Scenario 4 — Differentiated Integration — may be the most politically realistic pathway for genuine capability development. A smaller group of capable states with aligned strategic cultures — France, Germany, Poland, the Nordics, and potentially the Baltics — can move faster in building shared command, procurement, and operational structures than all 27 EU members acting collectively. The risk is further fragmentation of European solidarity.

Scenario 5 — the Transatlantic Grand Bargain — represents the most favourable outcome for long-term Alliance stability but depends on variables beyond European control, primarily the US political cycle and Congressional disposition. It is the scenario that European diplomacy should work toward while building autonomous capacity as insurance.

Policy Recommendations

For European Governments

• Convert defence spending into deployable power: Create a dedicated European Defence Procurement Cell within EDA to channel increased national budgets toward jointly agreed capability priorities and avoid uncoordinated national purchases that perpetuate fragmentation.
• Enhance and deepen PESCO: Reform PESCO’s governance to provide political-level ownership, establish a formal link to the EDF and EDIP, and focus on 10 to 15 high-priority flagship projects with clear delivery milestones and financial commitments.
• Invest in European strategic enablers: Prioritise collaborative development of ISR, aerial refuelling, precision strike, and cyber capabilities through EDF-funded programmes. Accelerate the Eurodrone, TWISTER space-based missile detection, and European communication satellite programmes.
• Preserve the transatlantic link: Pursue European capability development explicitly as a contribution to NATO burden-sharing, not as an alternative to it. Engage Washington as partners in the transition, offering concrete burden-sharing compacts that formalise European commitments.
• Develop a European nuclear dialogue: Support President Macron’s invitation for a structured European nuclear discussion and develop a common European position on extended deterrence, consultation mechanisms, and burden-sharing in the nuclear domain.

For the EU Institutions

• Expand the MPCC significantly: Double the MPCC’s planning staff, develop dedicated intelligence assessment capabilities, establish permanent communication infrastructure, and exercise the MPCC regularly in scenarios beyond crisis management — including resilience and civil-military support to allies.
• Implement SAFE strategically: Ensure the €150 billion SAFE instrument is deployed primarily to fund European-manufactured capabilities, with criteria that give priority to projects that fill identified strategic enablers’ gaps and strengthen PESCO’s operational dimension.
• Develop a European defence industrial market: Accelerate the implementation of EDIS targets (50% EU procurement by 2030), reduce national industrial protectionism, and create regulatory frameworks that enable cross-border mergers in the European defence industry.
• Resolve the NATO-EU institutional deadlock: Work diplomatically to address the Turkey-Cyprus participation issue by ensuring that the Republic of Cyprus can fully exercise its legitimate right as an EU member-state.

For NATO

• Reform the Defence Planning Process: Update NATO’s defence planning methodology to account for variable US force availability, enabling the Alliance to plan contingencies in which European forces must carry primary operational responsibility with US support in strategic enabler domains only.
• Europeanise key command positions: Begin a structured discussion on rotating the SACEUR between US and European officers over an agreed multi-year timeline, while possibly offering more operational authority to DSCACEUR.
• Formalise the European pillar: Develop a formal European Pillar within NATO’s institutional structure — not a new organisation but a recognised bloc of European allies with coordinated positions, shared planning processes, and common capability targets. However, a serious and in-depth discussion should take place on the possible inclusion of non-EU member-states such as the United Kingdom in such a format.

References

Academic and Policy References in English

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Academic and Policy References in Greek

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Primary Source Documents: Hegseth and Colby

 Hegseth, P., Secretary of Defense, Press Conference Following NATO Ministers of Defense Meeting in Brussels, Belgium, 13 February 2025. U.S. Department of War Official Transcript. Available at: https://www.war.gov/News/Transcripts/Transcript/Article/4066734/secretary-of-defense-pete-hegseth-press-conference-following-nato-ministers-of/ [Accessed May 2026]. Also archived at: GlobalSecurity.org, https://www.globalsecurity.org/military/library/news/2025/02/mil-250213-dod01.htm

Colby, E. A., Under Secretary of Defense for Policy, Remarks at the NATO Defense Ministerial (As Prepared), 12 February 2026. U.S. Department of War Official Speech. Available at: https://www.war.gov/News/Speeches/Speech/Article/4404801/remarks-by-under-secretary-of-war-for-policy-elbridge-colby-at-the-nato-defense/ [Accessed May 2026]. Also archived at: GlobalSecurity.org, https://www.globalsecurity.org/military/library/news/2026/02/mil-260212-dod02.htm, and Public Technologies, https://ebs.publicnow.com/view/164ABF4B01465DAE5F8A83FD9DCB6008A6BF78B3

Colby, E. A., Remarks by NATO Secretary General Mark Rutte and US Under Secretary of War, Elbridge A.

Colby. NATO Official Transcript, 12 February 2026. Available at: https://www.nato.int/en/news-and-events/events/transcripts/2026/02/12/remarks-by-nato-secretary-general-mark-rutte-with-us-under-secretary-of-war [Accessed May 2026].

Colby, E. A., ‘A Conversation With Elbridge Colby.’ Council on Foreign Relations Event Transcript, 4 March 2026. Available at: https://www.cfr.org/event/conversation-elbridge-colby [Accessed May 2026].

Hegseth, P., and Rutte, M., Joint Statement at the NATO Defense Ministerial Meeting in Brussels, Belgium. U.S. Mission to NATO, 13 February 2025. Available at: https://nato.usmission.gov/secretary-of-defense-pete-hegseth-and-secretary-general-mark-rutte-joint-statement-at-the-nato-defense-ministerial-meeting-in-brussels-belgium/ [Accessed May 2026].

Press References in English

Agrawal, R., ‘Elbridge Colby: NATO Is Actually Stronger Than Ever.’ Foreign Policy Live, 14 February 2026 (transcript published 25 February 2026). Available at: https://foreignpolicy.com/2026/02/14/elbridge-colby-us-russia-nato-america-first/ [Accessed May 2026].

Breitenbauch, H., ‘European contingency: NATO’s defence plans after Colby.’ SSRN Working Paper, submitted for review, 9 April 2026. Available at: https://papers.ssrn.com/sol3/papers.cfm?abstract_id=6587301 [Accessed May 2026].

Defense News, ‘Hegseth to Europe: You Must Take Primary Responsibility for Your Own Conventional Defense,’ 12 February 2025. Available at: www.defensenews.com [Accessed May 2026].

Jozwiak, R., ‘What To Expect From Pete Hegseth’s First Meeting At NATO.’ Radio Free Europe/Radio Liberty, 11 February 2025. Available at: https://www.rferl.org/a/pete-hegseth-nato-defense-spending/33309792.html [Accessed May 2026].

PBS NewsHour, ‘Hegseth denies U.S. is betraying Ukraine at meeting of NATO defense ministers,’ 13 February 2025. Available at: https://www.pbs.org/newshour/politics/watch-live-hegseth-holds-news-conference-at-nato-defense-ministerial-meeting-in-brussels [Accessed May 2026].

Schultz, T., ‘Defence Secretary Pete Hegseth addresses NATO for the first time.’ NPR, 13 February 2025. Available at: https://www.npr.org/2025/02/13/nx-s1-5293160/defense-secretary-pete-hegseth-addresses-nato-for-the-first-time [Accessed May 2026].

Small Wars Journal, ‘Colby NATO Speech: Rebalancing’ [staff commentary on Colby’s NATO Defence Ministerial remarks], 12 February 2026. Available at: https://smallwarsjournal.com/2026/02/12/colby-nato-speech-rebalancing/ [Accessed May 2026].

U.S. Mission to NATO, ‘Hegseth Tells NATO Hard Power Provides Deterrence, Defense.’ Available at: https://nato.usmission.gov/hegseth-tells-nato-hard-power-provides-deterrence-defense/ [Accessed May 2026].

Financial Times, ‘Pentagon Chief Signals US Strategic Pivot Away from European Defence,’ 13 February 2025.

The Guardian, ‘Europe’s Defence Spending: Historic Turning Point or Too Little Too Late?’ 28 March 2026.

Defense News, ‘Can Europe’s Defence Industry Close the Gap?’ 7 May 2026. Available at: www.defensenews.com [Accessed May 2026].

McKinsey & Company, ‘NATO Defense Spending: Tracking the Numbers,’ February 2026. Available at: www.mckinsey.com [Accessed May 2026].

NATO, ‘Secretary General’s Annual Report 2025,’ Brussels, 26 March 2026. Available at: www.nato.int [Accessed May 2026].

Références de presse en français

Le Monde, ‘Macron et l’autonomie stratégique européenne: du discours aux actes,’ 26 avril 2024.

Le Figaro, ‘Macron à la Sorbonne: l’Europe de la défense face à ses contradictions,’ 26 avril 2024.

Les Échos, ‘Défense européenne: le Livre blanc, acte fondateur ou vœu pieux?’ 20 mars 2025.

Touteleurope.eu, ‘Défense: comment l’UE et l’OTAN travaillent ensemble pour la sécurité européenne,’ septembre 2025. Disponible sur: www.touteleurope.eu [Consulté mai 2026].

RTBF, ‘OTAN: les chiffres édifiants des dépenses de défense en 2025,’ 27 mars 2026. Disponible sur: www.rtbf.be [Consulté mai 2026].

Παραπομπές από τον Ελληνικό Тύπο

Το Βήμα (της Κυριακής), πρωτοσέλιδο — τεύχος 4 Μαΐου 2025: “Οι 55 μέρες που κρίνουν την Άμυνα”. Διαθέσιμο στο: www.tovima.gr [Επισκόπηση Μαΐος 2026].

Capital.gr, “Σχέδια για ένα πιο ευρωπαΐκό ΝΑΤΟ”, 15 Απριλίου 2026. Διαθέσιμο στο: www.capital.gr [Επισκόπηση Μαΐος 2026].

Capital.gr, “Πρώην επικεφαλής ΝΑΤΟ: Βιώνουμε την ‘αποσύνθεση’ της Συμμαχίας”, 8 Μαΐου 2026. Διαθέσιμο στο: www.capital.gr [Επισκόπηση Μαΐος 2026].

Euronews ελληνικά, “Πώς θα επιταχυνθεί η ευρωπαΐκή άμυνα: καινοτομία, ΝΑΤΟ και προκλήσεις,” 7 Μαΐου 2026. Διαθέσιμο στο: gr.euronews.com [Επισκόπηση Μαΐος 2026].

[1] Defence News, ‘Hegseth to Europe: You Must Take Primary Responsibility for Your Own Conventional Defence,’ 12 February 2025. The Financial Times similarly reported that Hegseth’s statement ‘represented the most explicit US disavowal of European conventional defence responsibility since NATO’s founding.’ See: Financial Times, ‘Pentagon Chief Signals US Strategic Pivot Away from European Defence,’ 13/2/2025.

[2] NATO Secretary General Annual Report 2025, NATO HQ Brussels, 26 March 2026; McKinsey & Company, ‘NATO Defence Spending: Tracking the Numbers,’ February 2026, which noted that European defence equities had delivered a 401% total shareholder return since 2022. The Guardian reported that ‘the surge in European military budgets represents the most dramatic peacetime rearmament since the 1930s.’ The Guardian, ‘Europe’s Defence Spending: Historic Turning Point or Too Little Too Late?’ 28/3/2026.

[3] Secretary of Defence Pete Hegseth, Press Conference Following NATO Ministers of Defence Meeting in Brussels, Belgium, 13/2/2025. U.S. Department of War Transcript. Available at: https://www.war.gov/News/Transcripts/Transcript/Article/4066734/ [Accessed May 2026]. See also: U.S. Mission to NATO, ‘Hegseth Tells NATO Hard Power Provides Deterrence, Defence,’ available at: https://nato.usmission.gov/hegseth-tells-nato-hard-power-provides-deterrence-defense/ PBS NewsHour reported live on the press conference: ‘Hegseth denies U.S. is betraying Ukraine at meeting of NATO defence ministers,’ 13/2/2025, available at: https://www.pbs.org/newshour/politics/watch-live-hegseth-holds-news-conference-at-nato-defense-ministerial-meeting-in-brussels

[4] Hegseth, Press Conference, 13/2/2025, op. cit. The Eisenhower reference is drawn directly from Hegseth’s prepared remarks. NPR reported on allied reactions: Schultz, T., ‘Defence Secretary Pete Hegseth addresses NATO for the first time,’ NPR, 13/2/2025, available at: https://www.npr.org/2025/02/13/nx-s1-5293160/defense-secretary-pete-hegseth-addresses-nato-for-the-first-time. The RFE/RL preview of the ministerial noted that Hegseth had previously described NATO as ‘a defence arrangement for Europe, paid for and underwritten by the United States’: Jozwiak, R., ‘What To Expect From Pete Hegseth’s First Meeting At NATO,’ RFE/RL, 11/2/2025, available at: https://www.rferl.org/a/pete-hegseth-nato-defence-spending/33309792.html

[5] Hegseth, Press Conference, 13/2/2025, op. cit. On European reactions, PBS reported the EU’s Kaja Kallas expressing concern that pre-negotiation concessions ‘play to Russia’s court’. French Defence Minister Sébastien Lecornu warned that ‘the real question is will that still be the case in 10 or 15 years,’ describing U.S. demands as ‘a false debate.’ See: PBS NewsHour, 13/2/2025, op. cit. The joint statement of Secretary General Rutte and Secretary Hegseth is available via U.S. Mission to NATO: ‘Secretary of Defence Pete Hegseth and Secretary General Mark Rutte Joint Statement at the NATO Defence Ministerial Meeting in Brussels, Belgium,’ available at: https://nato.usmission.gov/secretary-of-defense-pete-hegseth-and-secretary-general-mark-rutte-joint-statement-at-the-nato-defense-ministerial-meeting-in-brussels-belgium/

[6] Under Secretary of Defence for Policy Elbridge Colby, ‘Remarks at the NATO Defence Ministerial (As Prepared),’ 12/2/2026. U.S. Department of War Speech. Available at: https://www.war.gov/News/Speeches/Speech/Article/4404801/remarks-by-under-secretary-of-war-for-policy-elbridge-colby-at-the-nato-defense/ [Accessed May 2026]. The speech was also distributed by GlobalSecurity.org (https://www.globalsecurity.org/military/library/news/2026/02/mil-260212-dod02.htm ) and Public Technologies. The Small Wars Journal assessed the speech as ‘one of the clearest official articulations to date on the strategic rebalancing within NATO,’ noting that Colby argued ‘Europe must assume primary responsibility for its own conventional defence’: Small Wars Journal, 12/2/2026, available at: https://smallwarsjournal.com/2026/02/12/colby-nato-speech-rebalancing/

[7] Colby, Remarks at the NATO Defence Ministerial, 12/2/2026, op. cit. The NATO 1.0 / 2.0 / 3.0 framework was further elaborated by Colby in his subsequent appearance at the Munich Security Conference and in his address to the Council on Foreign Relations on 4/3/2026. At CFR, Colby confirmed: ‘people are now bought into NATO 3.0, and similarly in the Indo-Pacific — the conversation I was having just before I came here with a major European ally is how do we think about syncing industrial production so that we can scale together.’ See: Council on Foreign Relations, ‘A Conversation with Elbridge Colby,’ 4 /3/2026, available at: https://www.cfr.org/event/conversation-elbridge-colby. At the Munich Security Conference, Colby was interviewed by Foreign Policy on Article 5, burden-sharing and the Indo-Pacific: Foreign Policy, ‘Elbridge Colby: NATO Is Actually Stronger Than Ever,’ 14/2/2026 [transcript dated 25/2/2026], available at: https://foreignpolicy.com/2026/02/14/elbridge-colby-us-russia-nato-america-first/.

[8] NPR, ‘Defence Secretary Pete Hegseth addresses NATO for the first time,’ 13 February 2025, op. cit.; PBS NewsHour, 13/2/2025, op. cit.; Small Wars Journal, 12/2/2026, op. cit.; Breitenbauch, H., ‘European contingency: NATO’s defence plans after Colby,’ SSRN Working Paper, 9/4/2026, available at: https://papers.ssrn.com/sol3/papers.cfm?abstract_id=6587301; NATO Transcript, ‘Remarks by NATO Secretary General Mark Rutte and US Under Secretary of War, Elbridge A. Colby,’ 12/2/2026, available at: https://www.nato.int/en/news-and-events/events/transcripts/2026/02/12/remarks-by-nato-secretary-general-mark-rutte-with-us-under-secretary-of-war

[9] According to a report on Greek website Capital.gr, entitled ‘Plans for a more European NATO’ 15 April 2026, NATO Secretary General Mark Rutte mentioned that these discussions concern not only technical issues but also deeper strategic disagreements. Additionally, the Greek newspaper ‘To Vima tis Kyriakis’ said that the Trump administration could be Europe’s chance, ‘To Vima, 4 May 2025.

[10] European Parliament Think Tank, ‘European Defence Industry,’ 9/2/2026. Defence News reported that the shift toward European-manufactured systems remained slow, with EU ammunition production rising from 300,000 rounds per year in 2022 to an estimated 2 million by end-2025 — a pace described by the Financial Times as ‘exceeding peacetime growth rates by a factor of three.’ Defence News, ‘Can Europe’s Defence Industry Close the Gap?’ 7/5/2026.

[11] For the relevant data, see NATO’s factsheets on defence expenditures of its member-states for the years 1998 and 2014.

[12] For more details on PESCO, see below in paragraph 6.2.

[13] For more details on this specific issue, see Spyros Blavoukos and Panos Politis Lamprou,” The ’Magnificent Seven’ of European Defence Integration”, ELIAMEP Policy Paper 73, June 2021.

[14] On Macron’s comments, see Le Monde, ‘Macron et l’autonomie stratégique européenne: du discours aux actes,’ 26/4/2024.

[15] On Macron’s speech concerning the extension of France’s nuclear deterrence, see https://www.elysee.fr/en/emmanuel-macron/2026/03/02/visit-to-the-ile-longue-operational-base

[16] European Commission, White Paper on European Defense — Looking Ahead to 2030, March 2025. The French newspaper ‘Les Échos’ reported that the White Paper “reflects an ambition unprecedented in the history of EU defense policy, while leaving questions of political will entirely unresolved.” Les Échos, “European Defense: The White Paper—A Founding Document or Wishful Thinking?” 20/3/2025. See also: Touteleurope.eu, “Defense: How the EU and NATO Are Working Together for European Security,” 20/9/2025.

[17] For more information on the PESCO Military Mobility project, see https://www.pesco.europa.eu/project/military-mobility/

[18] The Greek edition of Euronews mentioned that in the defence exhibition DEFEA 2026 in Athens it was clearly noted that the efficiency of the European defence efforts depends on EU – NATO coordination,” How can we speed up European defence?’. Euronews Greece, 7 May 2026.

This Policy Paper examines the renewed debate on completing the EU Single Market. It argues that the challenge is not simply to adopt more EU legislation or to choose between regulations and directives, but to turn formal market access into operational market integration. Focusing on capital markets, services and governance, the paper shows that fragmentation persists when legal convergence is not matched by implementation capacity, supervisory alignment and political incentives for compliance. Completing the Single Market means making Europe the natural scale for firms, capital and innovation.

Read here in pdf the Policy Paper by Dr Apostolos Samaras, Research Fellow, European Programme ‘Ariane Condellis’, Hellenic Foundation for European and Foreign Policy (ELIAMEP).

Introduction: From Single Market Completion to European Scale

“All those who, in trying to meet the economic challenges set out by the treaty of Rome, neglected the political dimension have failed. As long as [those] challenges will be addressed exclusively in an economic perspective, disregarding their political angle, we will run – I am afraid – into repeated failures” 

Paul-Henri Spaak, Discours à la Chambre des Représentants, 14 June 1961.

To date the Single Market is the EU’s most significant economic achievement. However, its relevance depends on its ability to support European competitiveness under rapidly changing global conditions. In January 2025, the European Commission unveiled the so-called “competitiveness compass”, a fresh strategy aimed at revitalising EU’s dynamism (European Commission, 2025a). The Commission views competitiveness as a multifaceted concept, structured around several crucial elements including the functioning of the Single Market, access to capital, innovation, skills and infrastructure (European Commission, 2024). Within this framework, a well-functioning internal market is presented as a central condition for enabling businesses to scale, facilitating investment and supporting productivity growth across the EU.

The European Commission has consistently identified hurdles affecting the functioning of the Single Market, particularly in services and areas requiring administrative coordination (European Commission, 2020a). The aforementioned barriers increase costs for businesses, reduce legal certainty and discourage cross-border activity. Moreover, recent policy reports place these issues in a broader economic context. Draghi (2024) links Europe’s investment gap to structural inefficiencies, including fragmentation within the Single Market. Letta (2024) similarly argues that the Single Market must evolve to support scale, speed and strategic resilience. Institutional policy analysis reinforces this assessment, e.g. the International Monetary Fund (IMF) notes that Europe’s growth potential is restrained by weak productivity and limited scale (IMF, 2024).

The European Council has endorsed a renewed focus on the Single Market as a key driver of competitiveness, emphasising the need to remove barriers and improve its functioning.

These findings are indicated in current EU political priorities. The European Council has endorsed a renewed focus on the Single Market as a key driver of competitiveness, emphasising the need to remove barriers and improve its functioning (European Council, 2026). Market fragmentation is affecting investment decisions, innovation, productivity growth and the global position of European businesses, also having broader strategic implications. As recent policy analysis emphasises, the absence of an integrated internal market limits businesses’ ability to scale and raises capital costs, weakening Europe’s position in an increasingly bloc-based global economy, where size and coordination determine competitiveness (Jacques Delors Institute, 2026).

This paper argues that the next phase of Single Market reform should not be framed simply as a choice between more or less EU legislation. The central question is whether EU legal instruments, enforcement mechanisms and supervisory structures can convert formal market access into operational market integration. Capital markets and services show that fragmentation persists where legal convergence is not matched by administrative capacity, supervisory alignment and political incentives for compliance.

The Problem: What Kind of Fragmentation?

 Α precise understanding of fragmentation requires distinguishing between its main sources. Two factors are particularly relevant. The first is incomplete regulatory convergence. […] The second is implementation failure. Even where appropriate EU legislation exists, its application may still be uneven. 

A precise understanding of fragmentation requires distinguishing between its main sources. Two factors are particularly relevant. The first is incomplete regulatory convergence. In certain areas, EU legislation does not fully eliminate cross-border burdens. Capital markets provide a clear example, where differences in insolvency law, taxation in cross-border investing and market infrastructure continue to create barriers to integration. The second is implementation failure. Even where appropriate EU legislation exists, its application may still be uneven. Although not confined to Single Market law, the persistence of infringement litigation before the Court of Justice of the European Union (CJEU) confirms that uneven application remains a structural problem in EU law enforcement, with 200 infringement actions brought between 2021 and 2025 (Court of Justice of the European Union, 2026). Enforcement mechanisms are often slow and reactive. The Commission has acknowledged the need to strengthen enforcement as part of its broader strategy (European Commission, 2022).

At a deeper level, fragmentation signifies a structural trade-off. Greater market integration entails constraints on national regulatory autonomy, especially in areas such as finance, taxation or supervision. 

Moreover, Member States apply EU law within national systems shaped by domestic institutional structures and policy priorities. This can create incentives to preserve regulatory discretion or to delay reforms, particularly in politically sensitive areas, even where legal obligations are clear. At a deeper level, fragmentation signifies a structural trade-off. Greater market integration entails constraints on national regulatory autonomy, especially in areas such as finance, taxation or supervision. The extent to which this trade-off is genuinely accepted varies across Member States and over time, shaping the pace and the depth of integration.

These factors can be interlinked in practice. Regulatory divergence may endure because implementation is weak, whilst domestic political incentives sometimes discourage convergence. The European Commission’s May 2025 Single Market Strategy identifies the “Terrible Ten” barriers disrupting the market, such as restrictive national services rules, long delays in standard-setting and overly complex EU rules (European Commission, 2025b). Evidence from the services sector exemplifies this dynamic. Despite existing EU legislation, barriers remain widespread, reflecting both regulatory and implementation challenges (European Commission, 2020a).

The Digital Single Market provides a useful illustration of this broader pattern. Recent analysis identifies mutually reinforcing bottlenecks: uneven regulatory implementation, nationally siloed infrastructure, barriers to data flows and skills mobility, and insufficient growth-stage finance. This confirms that Single Market reform cannot rely on legal harmonisation alone. Uniform rules must be connected to enforcement capacity, digital infrastructure, public procurement, capital market depth and practical compliance tools if firms are to scale across borders (Aarnio et al., 2026).

IMF staff estimates suggest that persisting internal barriers within Europe may be equivalent to an indicative 110% tariff on services and 44% for manufactured goods […] recent audit evidence finds that only around 20% of services in the EU are provided cross-border, while approximately 60% of barriers identified more than two decades ago remain in place.

IMF staff estimates suggest that persisting internal barriers within Europe may be equivalent to an indicative 110% tariff on services and 44% for manufactured goods (Kammer, 2025). This shows the economic scale of fragmentation. European consumers and businesses face these costs through reduced competition, increased prices and lower productivity. Moreover, recent audit evidence finds that only around 20% of services in the EU are provided cross-border, while approximately 60% of barriers identified more than two decades ago remain in place (European Court of Auditors, 2026). At the same time, weaknesses in prioritisation, enforcement and monitoring suggest that fragmentation persists due to regulatory inconsistencies across the bloc and limited EU strategic capacity to remove the most significant obstacles (European Court of Auditors, 2026).

A competitiveness agenda that creates startups but fails to support scaleups would leave Europe’s structural scale problem unresolved.

Kyriakos Pierrakakis, the President of the Eurogroup, has stressed that Europe faces a pivotal decision: it must swiftly advance toward greater financial integration or face the risk of falling behind in a world that is rapidly changing (ANA-MPA, 2026a). More specifically, Europe’s startup problem is increasingly a scaleup problem. Eurobarometer evidence supports the view that the Single Market should be judged not only by market access, but by its capacity to help firms grow across borders. A competitiveness agenda that creates startups but fails to support scaleups would leave Europe’s structural scale problem unresolved (European Commission, 2025c). EU innovative startups and scaleups continue to face fragmented regulatory regimes, high compliance costs, limited access to late-stage capital, skills shortages and difficulties in using cross-border procurement and institutional markets (Thomadakis & Marcus, 2025).

…EU stock markets have a combined capitalisation of roughly 60% of EU GDP, while the two largest US exchanges alone exceed 200% of US GDP

A credible SIU should therefore be judged by whether it enables firms to scale inside the EU, with institutions such as the European Investment Bank helping to mobilise capital (ANA-MPA, 2026b). It is noteworthy that EU stock markets have a combined capitalisation of roughly 60% of EU GDP, while the two largest US exchanges alone exceed 200% of US GDP (Jacques Delors Institute, 2026). This disparity highlights the structural difficulty of mobilising capital at scale within a fragmented Single Market. The SIU framing places greater emphasis on the role of households and institutional investors, as well as on the integration of savings products and capital markets. Nonetheless, mobilising savings depends on trust in financial systems, consistent regulatory frameworks and efficient cross-border infrastructure.

FIGURE 1: Market barriers and the rationale for the SIU

 

Legal Integration and its Limits

The EU’s legislation governing the Single Market is prima facie comprehensive. It encompasses primary law provisions, specified and complemented by extensive secondary law. This common binding framework establishes directly enforceable rights for economic actors and prohibits a wide array of restrictions on cross-border activities. In that respect, EU law is sound and unavoidable.

Even though it has been established that EU legislation prohibits unjustified restrictions on the free movement of capital, services, goods, and persons, it certainly does not eliminate the conditions under which those restrictions arise. 

However, the strength of EU law should not obscure its limits. Even though it has been established that EU legislation prohibits unjustified restrictions on the free movement of capital, services, goods, and persons, it certainly does not eliminate the conditions under which those restrictions arise. Nor does it ensure convergence in administrative practices, regulatory approaches or institutional capacity. These are structural limitations, since the implementation of EU law depends on national authorities that operate within different legal traditions, administrative systems and policy priorities. This leads to the familiar paradox that the same EU legal rule may produce different outcomes across Member States.

…there is increasing support for regulations (Wax & Ionta, 2026), which are binding and directly applicable, reducing the scope for divergence. 

Policy debates have focused on this issue, which is also intrinsically correlated to national sovereignty concerns. Directives, as binding legal acts that allow flexibility in national transposition, granting Member States some national discretion to decide how to achieve the set objectives, have often resulted in divergent implementation. In response, there is increasing support for regulations (Wax & Ionta, 2026), which are binding and directly applicable, reducing the scope for divergence. The shift towards regulations is already visible in EU legislative practice: in recent years regulations have become the dominant instrument among legislative acts adopted under the ordinary legislative procedure (Publications Office of the European Union, n.d.). This approach aims to address possible legal confusion among Member States, without being a panacea for every problem, since ultimately all EU rules depend on national enforcement. Legal uniformity, in that sense, mitigates one aspect of market fragmentation, whilst not addressing other disparities in administrative capacity or supervisory practices.

Recent OECD evidence links regulatory compliance costs to weaker productivity and lower business dynamism.

Recent OECD evidence links regulatory compliance costs to weaker productivity and lower business dynamism (Andrews et al., 2026). This matters for the Single Market because firms experience EU law also as compliance tasks, administrative procedures and enforcement practices. Regulations can reduce one important source of fragmentation by limiting divergent national transposition, but they do not remove the practical costs of compliance. Evidence on cumulative compliance costs for SMEs shows that burdens often arise from national interpretation, monitoring and enforcement practices, as well as from the accumulation of obligations over time (European Commission, 2015). These costs may affect firms’ decisions to innovate, enter new markets or expand across borders. The implication is that the choice of legal instrument matters, but it must be accompanied by clear implementation planning, proportionate enforcement and attention to administrative capacity. Otherwise, directly applicable rules may still produce uneven market effects across Member States (European Commission, 2015; Capuano, 2025).

The increasing reliance on regulations should be treated as a governance choice, not as a shortcut to integration.

Even where EU rules are directly binding, Member States remain central to how their effects materialise for businesses and citizens (OECD, 2025). The increasing reliance on regulations should be treated as a governance choice, not as a shortcut to integration. Regulations can limit national divergence, but where they postpone application, rely heavily on implementing acts, or require substantial national administrative adjustment, they may reproduce some of the same practical problems usually associated with directives (Capuano, 2025). The question is therefore not whether regulations are preferable in abstract terms, but under what conditions they can produce uniform market effects without increasing legal complexity or weakening accountability.

Policy discussions have also explored the use of optional EU-wide legal regimes, such as the so-called “28th regime” corporate legal framework, as a means of reducing fragmentation without requiring full harmonization.

Policy discussions have also explored the use of optional EU-wide legal regimes, such as the so-called “28th regime” corporate legal framework, as a means of reducing fragmentation without requiring full harmonization (Hallak, 2026). It would allow businesses to operate under a single set of EU rules across Member States, bypassing divergent national frameworks. This approach is clearly manifesting an attempt to reconcile regulatory uniformity with political limitations on deeper harmonisation. It aims to be a transition towards a legal framework specifically designed to more effectively facilitate cross-border activities in Europe. It goes hand in hand with the argument that before venturing into the global market, European companies should prioritise strengthening their presence within Europe.

Capital Markets as a Stress Test: From Free Movement to SIU

Regarding the freedom of capital, primary EU law is particularly liberal. Article 63 of the Treaty on the Functioning of the European Union (TFEU) prohibits all restrictions on capital movements within the EU and between Member States and third countries. The CJEU has even interpreted EU law on capital and payments in a dynamic way that reinforces its role as a central pillar of market integration (Samaras, 2022). Even so, further provisions in the TFEU stipulate a number of exceptions to the principle of free movement of capital. Article 65 TFEU stipulates derogations related to taxation, prudential supervision of financial institutions, public policy and public security.

The free movement of capital is enshrined in primary EU law, but in practice it relies largely on trust in banks, institutions, and the country’s economic performance.

Sometimes the implementation of the free movement of capital lacks certainty. As an example, one might cite the experience of “capital controls” in Cyprus (2013-2015) and in Greece (2015-2019) over the past decade, as it provides a picture of the realistic limits of legal integration within the Single Market under conditions of economic turmoil and financial crisis. The free movement of capital is enshrined in primary EU law, but in practice it relies largely on trust in banks, institutions, and the country’s economic performance. When that trust is broken, exceptions become the norm.

Today, although no comparable emergency capital controls are in place in the Member States, the free movement of capital within the EU is still not fully utilised. Capital markets provide a clear test of the limits of the current integration model.

The gradual process of further liberalising the Single Market is not always linear. Naturally, the banking and financial sector’s stability has been prioritised during periods of severe crisis. Exceptional measures have been adopted in the past, in line with EU law. Consequently, the EU’s economic freedoms are not absolutely guaranteed in perpetuity, regardless of the state of the Member States’ domestic economies and the solutions offered by the EU at the time. Even the most liberal Treaty freedom operates within institutional, financial and crisis-management constraints. Today, although no comparable emergency capital controls are in place in the Member States, the free movement of capital within the EU is still not fully utilised.

Capital markets provide a clear test of the limits of the current integration model. Successive CMU initiatives have addressed several layers of capital-market integration, including prospectus rules, securitisation, long-term investment funds, company disclosure through the European Single Access Point (ESAP), trading transparency, listing rules and withholding tax procedures.[1] Yet these measures have not removed deeper structural fragmentation in supervision, insolvency law, taxation, market infrastructure and growth-stage finance.

This means that companies and investors face higher transaction costs and legal uncertainty when operating across borders. The European Commission has identified these frictions as key impediments to the effective functioning of capital markets and to the broader objective of financing growth within the EU (European Commission, 2020b). Recent analysis indicates that the main obstacle to deeper capital market integration lies in the limited centralisation of supervisory powers at EU level, with the European Securities and Markets Authority (ESMA) still lacking the authority required to ensure consistent application of rules across Member States (Gortsos, 2026).

More integrated capital markets support private risk sharing across Member States, improve the allocation of capital and enhance the resilience of the euro area to asymmetric shocks.

The European Central Bank (ECB) has also noted the macroeconomic importance of capital market integration. More integrated capital markets support private risk sharing across Member States, improve the allocation of capital and enhance the resilience of the euro area to asymmetric shocks (European Central Bank, 2024). Fragmentation reduces these benefits, it reinforces reliance on bank-based financing and constrains access to risk capital, particularly for innovative and high-growth businesses. The CMU agenda has addressed some of these issues through targeted legislative initiatives, facilitating cross-border investment and promoting supervisory convergence. Nevertheless, structural differences in national frameworks are still problematic in a cross-border context.

The initiative for a SIU, presented by the European Commission in March 2025, suggests a recalibration into a holistic approach that incorporates the entire EU financial system, attempting to mobilise European savings more effectively and to channel them into productive investment within the EU.

The initiative for a SIU, presented by the European Commission in March 2025, suggests a recalibration into a holistic approach that incorporates the entire EU financial system, attempting to mobilise European savings more effectively and to channel them into productive investment within the EU (European Commission, 2025d). It is designed to transform the foundational work of the two main CMU Action Plans (i.e. the pioneering 2015 CMU Action Plan and the 2020 CMU Action Plan), along with the parallel efforts to develop the Banking Union, into a high-impact, more inclusive and citizen-focused, financial engine. This is closely linked to concerns about the EU’s investment gap and the need to finance large-scale transitions, including digitalisation and decarbonisation (Draghi, 2024).

Towards a results-oriented EU governance approach

The governance of the Single Market is based largely on decentralised implementation.

The governance of the Single Market is based largely on decentralised implementation. Member States are responsible for applying EU law, while the European Commission -acting as the “guardian of the Treaties”- monitors compliance and initiates enforcement when required. It is unavoidable that structural challenges and disputes rise from time to time, since the application of EU law varies in practice across the 27 EU Member States. The infringement procedure against a Member State that fails to implement EU legislation remains a crucial enforcement tool. However, despite its usefulness, it addresses specific Member State breaches of EU law, not systemic patterns of violations. The Commission has framed enforcement as a strategic and preventive function, rather than merely a reactive infringement mechanism, with particular emphasis on own-initiative investigations, incorrect transposition of directives, and infringements that obstruct fundamental freedoms or the effective functioning of the Single Market (European Commission, 2022).

…the main challenge for the EU continues to be ineffective governance.

The completion of the Single Market also requires a credible delivery framework that combines, other than political commitment, a coherent legislative package and clear timelines (Jacques Delors Institute, 2026). Recent EU initiatives point towards a more targeted and measurable enforcement strategy. The “2026 Annual Single Market and Competitiveness” report introduces the first annual “Single Market Enforcement Agenda”, focused on priority barriers such as late payments and obstacles in construction and installation services linked to the green transition, while simplification packages seek to reduce administrative burdens and make Single Market rules easier to apply in practice (European Commission, 2026). Nonetheless, institutional limits hinder enforcement. Coordination mechanisms rely on cooperation and do not always generate strong incentives for compliance. Consequently, the main challenge for the EU continues to be ineffective governance.

A turning point appears to be marked by more recent developments towards a results-oriented EU governance approach. The joint “One Europe, One Market” roadmap, agreed in late April 2026 between the European Parliament, the Council and the Commission, seeks to introduce a structured implementation framework through priority legislative deliverables and clear timelines, as well as regular monitoring through quarterly stocktaking. Europe’s fragmentation was translated into a structured work programme built around five priorities: simplifying rules, deepening Single Market integration, strengthening trade, reducing energy prices while advancing decarbonisation, and driving the digital and AI transformation, supported by more than forty legislative and policy deliverables.

The roadmap shows the political commitment of the EU institutions for setting out concrete steps towards a more operational Single Market governance (Council of the European Union, 2026). It converts a broad competitiveness agenda into a delivery test: capital markets, energy, digital infrastructure and industrial policy are placed within one political framework, with timelines that make delays more visible and politically costly (Letta, 2026a).

FIGURE 2: “One Europe, One Market” roadmap (April 2026), from political commitment to measurable delivery

The roadmap’s “market integration and supervision package” is particularly relevant in this respect, since the Commission’s December 2025 proposals seek to address capital-market fragmentation through changes to trading, post-trading, asset management and ESMA supervision, confirming that the SIU depends not only on new rules but on a more integrated supervisory architecture (European Commission, 2025e).

Policy Recommendations

Completing the Single Market requires targeted action. The adoption of these strategic priorities is strongly encouraged:

• Target harmonisation and implementation where fragmentation is structural: EU legislative action should focus on areas such as insolvency, taxation procedures and other market obstacles, where national discrepancies create permanent barriers. Where the Treaty basis allows it, regulations may be more effective than directives, since they reduce transposition delays and limit divergent national implementation. Moreover, the Commission should track the implementation of major Single Market initiatives early, using detailed guidance and reporting to prevent new fragmentation from emerging. Attention should be paid to reducing “gold-plating” (adding extra layers of rules at the national level), which often increases compliance costs without clear policy justification.
• Reinforce supervisory convergence in capital markets: As has been pointed out in the Draghi Report (2024), the EU lacks a single securities market regulator. The ESMA ought to be transformed to serve as the sole common regulator for all securities markets within the EU. The EU should strengthen convergence through the ESMA, reinforcing transparency and technical standards, attaining a more unified supervision of capital markets.
• Constitutional discipline for restrictions on capital movements: Past episodes of capital controls show that EU law can accommodate emergency restrictions on capital movements where they are justified, proportionate and temporary. The unresolved issue is institutional. These safeguards have operated mainly through ad hoc assessment and monitoring, rather than through a permanent framework designed to protect capital-market integration. The EU should therefore develop, first through secondary legislation and eventually through Treaty reform, a stricter constitutional discipline for the use of Article 65 TFEU. Its provisions should not be abolished, since taxation, prudential supervision and public policy/security remain legitimate public interests. Its invocation, however, should be tied to clearer EU-level conditions: notification, time limitation, strict periodic review and consistency with the objective of capital-market integration. The aim would not be to invent new legality criteria, but to make their application more predictable, reviewable and aligned with the completion of the SIU.

Conclusion

Eliminating internal obstacles across the EU is essential for enabling market dynamics to operate effectively on a large scale.

In 2024, the findings and recommendations of the Letta and Draghi reports had been met with widespread enthusiasm (Kritikos, 2024). Eliminating internal obstacles across the EU is essential for enabling market dynamics to operate effectively on a large scale. A true unified market is needed, ensuring that conducting business between Vilnius and Madrid is as seamless as it is between Athens and Thessaloniki. The competitiveness debate is therefore also a debate about scale. The EU’s difficulty is that companies, banks and capital markets are primarily organised around national markets. In a global economy shaped by continental-scale competitors from the United States and China, the relevant benchmark is whether businesses in the EU can achieve sufficient growth to establish themselves as truly European entities, rather than remaining confined to national prominence. This does not alter the fact that slow convergence may be insufficient in sectors where technological cycles and global competition move faster than EU implementation.

A more integrated Single Market needs rules that are clear and sufficiently uniform to support cross-border growth, while avoiding unnecessary procedural burdens that make compliance easier for incumbents than for new entrants.

A more integrated Single Market needs rules that are clear and sufficiently uniform to support cross-border growth, while avoiding unnecessary procedural burdens that make compliance easier for incumbents than for new entrants. National regulatory discretion may protect domestic dominant players and, possibly, reduce unwanted competitive pressure from other Member States. This might explain why many barriers still exist even when their aggregate cost to the EU economy is widely recognised. Completing the Single Market requires confronting the domestic interests that benefit from partial integration.

A functioning SIU should be assessed by whether it enables European firms to grow within Europe, rather than pushing them towards capital markets elsewhere.

Greater scale should not be understood as a goal only for large Member States or large firms. Smaller Member States and SMEs may benefit most from a genuinely integrated Single Market, because domestic scale is structurally limited. Deeper integration can expand their addressable market and create more credible paths from local innovation to European growth. Besides, Europe does not lack startups or entrepreneurial talent, but many firms face a financing and market-size ceiling once they move from creation to scaleup. A functioning SIU should be assessed by whether it enables European firms to grow within Europe, rather than pushing them towards capital markets elsewhere.

Recent EU policy developments set out the way forward regarding greater regulatory uniformity and less economic overreliance on third countries. This direction addresses important aspects of the problem. However, legal convergence does not automatically produce effective integration. The central challenge is mostly operational, since the EU has demonstrated its ability to identify barriers and design policy responses. Ensuring consistent implementation across Member States is more difficult. The long-term political sustainability of the Single Market depends also on ensuring that mobility remains a choice rather than an obligation. As emphasised in recent policy debates, deeper integration must be accompanied by economic and social cohesion in order to remain politically viable (Letta, 2026b).

Completing the Single Market should be understood not only as an economic reform, but as a condition for European resilience and sovereignty.

The link between competitiveness and European security is also central to the Single Market debate. In a global economy, fragmentation weakens the EU’s capacity to invest, innovate and act strategically. Completing the Single Market should be understood not only as an economic reform, but as a condition for European resilience and sovereignty (Letta & Lamy, 2026). It is time for the EU to compete with the dominant players, benefitting from a higher degree of autonomy by boosting its economy. For the EU this requires a decisive shift from agenda-setting to delivery. It implies departing from mediocrity, with stronger enforcement, greater administrative capacity and sustained political commitment.

Completing the Single Market means making Europe the natural scale of economic activity, rather than leaving firms, capital and innovation trapped in national markets.

From the early stages of the internal market, European policymakers recognised that incomplete integration risks reducing the market to a form of managed openness instead of a fully functioning economic space (European Commission, 1985). The struggle over the same strategic choice is still relevant today. The key question is whether Europe can transition from a culture of national protectionism to a European-scale mindset. Completing the Single Market means making Europe the natural scale of economic activity, rather than leaving firms, capital and innovation trapped in national markets.

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[1] See, indicatively, Regulation (EU) 2017/1129; Regulation (EU) 2017/2402; Regulation (EU) 2023/606; Regulation (EU) 2023/2859; Directive (EU) 2024/790; Regulation (EU) 2024/791; Regulation (EU) 2024/2809; Directive (EU) 2024/2811; Council Directive (EU) 2025/50.

Cleopatra Kitti, Senior Policy Advisor to ELIAMEP and Founder of the Mediterranean Growth Initiative, offers a review of Cyprus’s Presidency of the Council of the European Union, which concluded a few days ago.

Read the ELIAMEP Explainer here.

Greece has established itself as a consistent and committed participant in the EDF. Across the 2021-2025 reference period, Greek entities participated in all annual EDF calls without interruption, logging 306 total participations from 88 unique entities. Participation levels remained relatively stable year-on-year.

SMES are the backbone of Greek EDF engagement. They consistently account for the largest share of Greek participants, largely mirroring the structure of the Greek Defence Technological and Industrial Base. Yet, nearly 45% of unique Greek entities participated only once and a significant share recorded no activity in the call cycle immediately following their first project.

Greece’s partners are geographically concentrated. Whether in a coordination or simple participation role, Greek entities overwhelmingly cluster around the big defence-industrial players. Critically, Greek entities tend to cooperate with large for-profit prime contractors from those countries.

Greek EDF participants view the instrument, in principle, as a strategic success but flag a set of concerns. Most respondents to the paper’s survey highlighted the absence of pathways from EDF-funded R&D outputs to actual procurement by EU member-states, creating a structural gap that diminishes the instrument’s industrial and economic multiplier and prevents sustained participation.

The paper makes 9 targeted policy recommendations:

• Strengthen matchmaking mechanisms for Greek entities with foreign entities to build EDF consortia.
• Promote strategic partnerships with major European defence ecosystems through country-level agreements.
• Develop an open-access national monitoring and mapping mechanism for EDF participation.
• Provide targeted initiatives to achieve the transition to coordinator roles.
• Further boost the EDF’s logic and budget in the next MFF.
• Launch targeted reskilling and upskilling campaigns in dual-use technologies to strengthen Greek SME participation in the EDF.
• Develop and publicly communicate a national defence technological and industrial strategy.
• Procurement-oriented initiatives for the EDF outputs should be considered for the next MFF negotiations.
• Enhance the visibility and the legitimacy of the EDF outputs.

Read here in pdf the Policy paper by Spyros Blavoukos, Head, EU Institutions & Policies Programme, ELIAMEP; Head of the ‘Ariane Condellis’ European Programme; Professor, Athens University of Economics & Business; Panos Politis Lamprou, Research Fellow, Defence Hub, ELIAMEP; Georgios Matsoukas, Junior Research Fellow, Defence Hub, ELIAMEP; Panagiotis Kakis, Research Assistant, Defence Hub, ELIAMEP.

Introduction

Τhe European Defence Fund (EDF) represents a landmark initiative in the European Union’s (EU) efforts to strengthen collaborative defence research, innovation and capability development across member-states and associated countries. Created under the 2021-2027 Multiannual Financial Framework (MFF), the EDF is endowed with a budget of nearly 8 billion EUR, of which more than 5 billion EUR is allocated to consortia-based defence capability development projects. Since its first call for proposals in 2021, the EDF has become an established financing instrument for transnational research and industrial programmes, aiming to bolster, inter alia, interoperability, with a cumulative EU budget reaching almost reaching approximately 5.25 billion EUR applied across 281 projects selected for funding based on the results for the period 2021-2025 (DG DEFIS, 2021, 2022, 2023, 2024, 2025).

Despite its institutional consolidation, the EDF emerged through contentious negotiations for the 2021-2027 MFF. The European Commission initially proposed an ambitious budget of 11.5 billion EUR (in constant 2018 prices) for the Fund. However, during the final stages of the negotiations, which were strongly influenced by the economic pressure associated with the COVID-19 pandemic, the proposed allocation was reduced by approximately 39% (Dobber, 2020). Even though the European Parliament criticised the cuts, the debate persisted over whether significant investments should be directed towards defence research and development or alternatively towards other areas, such as policies that tackle international instability before it results in war or conflict (Csernatoni & Martins, 2019). These debates remain particularly relevant in view of the next MFF negotiations. Although security and defence are framed as strategic priorities for the Union, trade tensions and inflationary pressures, very much but not exclusively due to rising energy costs and global political tensions, continue to intensify the political dilemma between ‘guns and butter’, namely between defence spending and competing socio-economic priorities.

Against this background, broader debates on the future of EU defence and competitiveness funding have gained renewed importance. While discussion on broader EU competitiveness initiatives continues and new instruments have been proposed in the framework of the next MFF, like, for example, the Commission’s proposal for a European Competitiveness Fund, the EDF, or a new and more robust permanent funding mechanism, which will follow the same logic, will need to exist within the EU’s defence industrial architecture. In this evolving context, understanding how national defence and innovation ecosystems engage with EDF-funded collaborative networks becomes increasingly important, both for assessing the EDF’s impact and for evaluating the position of member-states within the EU defence industrial landscape.

The Greek case is particularly relevant in this regard. Despite its growing importance, the participation of the Greek defence and dual-use innovation ecosystem in EDF-funded projects, at the level of individual entities, has not been systematically and thoroughly examined. Most analyses document exclusively the number and thematic distribution of projects involving Greek entities. While this remains of utmost importance, a project/country-level perspective cannot reveal which specific entities participate or the nationality of the entities with which Greek entities most frequently collaborate. These questions matter for both academic understanding and policy-oriented purposes.

Accordingly, this paper addresses the following research question: What does the Greek defence ecosystem that participates in selected for EDF funding projects consist of? Specifically, how many and what types of Greek entities participate and with entities from which countries do they tend to cooperate? A secondary research question complements this structural mapping: How do Greek participants assess the EDF instrument, and what institutional support is provided by Greek public authorities?

To respond to the abovementioned questions, the paper is structured as follows. Chapter 2 offers a brief literature review, summarising existing research on the EDF and further elaborating on our paper’s contribution and added value. Chapter 3 describes the methodology we implemented, including our data collection and mining procedures, the reference years covered and the classification system we employed to categorise entity types. Chapter 4 presents and interprets empirical findings across two sections. The country-level dimension analyses and maps Greek entities’ coordination role and project-based cooperation footprint, by visualising Greek-led consortia structures and identifying trends apparent in the country-level overviews of projects with Greek participation. The entity-level dimension profiles the categorisation and volume of Greek entities selected for EDF funding, as well as their transnational partnership patterns, illustrated by linkages between Greek and foreign entities by thematic category and year. Throughout both analytical sections of the discussion, empirical findings are contextualised by key observations integrated directly within each set of findings, alongside relevant qualitative insights drawn from questionnaires. Chapter 5 formulates targeted recommendations for public authorities.

Brief literature review and the paper’s triple added value

The EDF serves diverse strategic and industrial purposes across member-states. According to Fiott (2024), major industrial powers such as France view the EDF as a vehicle for heavily subsidising domestic defence sectors and for building a European ‘strategic autonomy’ free from US export controls. Germany utilises common funding to support its military modernisation (Fiott, 2024; Brøgger, 2025), while Spain and Italy leverage the fund to boost their defence industrial bases. Small and medium-sized countries like Poland and Finland participate in projects led by larger partners to access new technology and secure their position in cross-border supply chains (Blavoukos, Politis Lamprou & Matsoukas, 2025; Fiott, 2024). Conversely, countries like Romania participate only to a limited extent, partly because their defence industries are small and their procurement policies prioritise off-the-shelf US military equipment for immediate security needs over long-term European integration (Iancu, 2025).

For Greece, this reliance on EU frameworks is driven by hard economic and structural realities. Following drastic budget cuts to the Ministry of National Defence during the country’s almost decade-long harsh financial crisis, Greek private-sector defence firms were forced to actively pursue alternative pan-(EU)ropean financing like the EDF (Kamaras, 2023). This structural need for supranational financing converges directly with the institutional characteristics of the EDF, whose regulatory framework and incentives architecture promote (and in certain cases, require) the inclusion of SMEs, which constitute the backbone of Greece’s domestic defence technological and industrial base. As such, Greece strategically leverages the EDF Regulation, treating it as a structural equaliser to, among others, embed its local industry into broader European supply networks (Efstathiou, 2020). Ultimately, Greece views this funding as a useful tool for research and development of military capabilities, the acquisition of technical know-how, the rebirth of its domestic industry and the reversal of the ‘brain drain’ of young scientists. At the same time, Greece demonstrates, in practice, that it supports a stronger and more robust EU defence industrial policy.

Giumelli and Marx (2023) argue that although a limited number of large industrial actors occupy a central position in market consolidation within the European defence (still far from single) market, EU institutions simultaneously promote geographical dispersion and actively encourage the inclusion of SMEs in order to safeguard institutional legitimacy. This effort aims to preserve legitimacy through participation criteria and incentives, which, on the one hand, expand the number of participating entities but, on the other hand, slow the consolidation process. Masson (2025) also highlights this tension empirically by demonstrating a clear hierarchy in funding allocation. While SMEs account for approximately 39-43% of entities selected for funding, they receive only 18-20% of EU financial contributions. As a result, a two-speed dynamic exists: one geared toward market consolidation favoring large primes, and another driven by the institutional mandate for geographical dispersion and the inclusion of SMEs.

So far, there has been no previous work exclusively focusing on the Greek defence (and dual-use) ecosystem’s participation in selected for funding EDF projects entity-wise. Our own prior data-driven research (i.e., Blavoukos, Politis Lamprou & Matsoukas, 2025) adopted only a project-based perspective, mapping the thematic distribution of projects involving Greek participation. In contrast, the present study provides additional quantitative information on project-related Greek participation and, most importantly, shifts the core of the analysis from projects to entities. As explained earlier, we examine which types of Greek actors (i.e., for profit companies, SMEs, non-profit organisations, associations, universities, governmental entities and public research organisations, and consultancies) are selected for EDF funding, how frequently they assume the role of project coordinator, and which entities from which member-states or associated countries they most commonly tend to cooperate with.

By doing so, the article has a triple added value: a) to provide data-driven insights to Greek entities interested in joining EDF calls as consortium members (or coordinators), and b) to inform foreign entities seeking to collaborate with Greek ones within the framework of the EDF, and c) to assist the relevant Greek public authorities (e.g., Secretariat-General of National Security, Directorate-General for Defence Investments and Armaments, the Hellenic Centre for Defence Innovation) in shaping a beneficial support mechanism for the Greek defence industry and beyond.

Methodology

For the purposes of our research, we pursued the following data collection and mining process. Data were extracted for European Defence Fund (EDF) projects in which Greek entities were selected for funding based on the 2021, 2022, 2023, 2024 and 2025 results. All the data (e.g., official entities’ names, entity nationality, etc.) were extracted from the relevant official project-based factsheets available on the Commission’s website for each year.[1] Following thorough validation, these data were subsequently organised into a large database that categorises every project (including the entities and their nationality) by year and thematic category. To record industrial relationships, two (2) matrices were constructed from the database.

The first matrix classifies entities in Greece and partner entities into four distinct types: For-profit organisations; small and medium-sized enterprises (SMEs), according to the Commission’s definition (Entities that are subsidiary to other entities that do not meet the same criteria are classified as for-profit organizations); non-profit organisations, associations, universities, governmental entities and public research organisations; and consultancies. This classification partially reproduces the process implemented by the Fondation de Recherche Stratégique (FRS). This matrix aims to provide information on a) the types of Greek entities selected for EDF funding, b) the nationality of the entities under Greece’s coordination, and c) the nationality of the entities-coordinators which coordinate the Greek entities selected for EDF funding. The SME type follows the Commission’s definition, and the classification is made possible by open-access data available on each entity’s website. The consultancy type specifically documents the participation of companies whose research and development functions are limited or non-existent, recording their project management and advisory roles within these consortia. Information on each selected entity’s primary focus and/or activity was extracted from its website or public data. In some cases, however, publicly available data do not allow for a fully unambiguous classification; therefore, some deviation may occur. The authors did not access each project’s contractual agreement and/or arrangements to further investigate whether consulting/advisory companies were partially involved in the core R&D process. A sub-matrix was generated for each year to record total metrics by country. These data document the number of entities’ nationalities under Greece’s coordination as well as the number of countries coordinating with Greece.

The second matrix records industrial partnerships between countries, with each country represented by its entities. To prevent the duplication of data entries, a filtering mechanism was utilised. Entities from countries participating in a consortium in which at least one Greek entity also participates, within a specific thematic category, were excluded after their initial entry.

To complement the quantitative analysis, questionnaires were administered to representatives of Greek entities that participated in EDF consortia between 2021 and 2025. We received responses from all categories of entities, including SMEs, mid-caps, research organisations and large for-profit subsidiaries (simple participants and consortium coordinators). Questions covered motivations for participation, partner-finding mechanisms, perceived benefits, the conversion of EDF partnerships into bilateral cooperation, evaluations of the EDF instrument itself, and assessments of Greek institutional support.

Results and Discussion

Country/project-level dimension

The following figures cover the full reference period (2021 to 2025) and distinguish between coordination and simple participation roles to avoid overlaps. Two complementary figures are presented.

The first figure captures the number of projects in which a Greek entity assumes the role of coordinator, broken down by the nationality of the other participating entities. The second figure illustrates the number of projects in which at least one Greek entity participates alongside entities from other countries, excluding projects in which a Greek entity acts as coordinator. In both figures, the thickness of each line reflects the volume of projects. The thicker the line, the greater the number of projects. For access to country-specific project numbers, the interactive version is recommended.[2]

Figure 1: Greek-coordinated projects by nationality of participating entities (2021-2025) (interactive version)

 

Figure 2: Projects with Greek participation by nationality of participating entities (2021-2025) (interactive version)

A pattern emerges across both figures. Greek partnerships, whether in coordination or participation, are highly concentrated within the largest EU defence industrial ecosystems. France, Italy, Germany, and Spain occupy the most prominent positions in virtually every call across both types of consortia. Given the sheer volume of participation in EDF calls, this degree of alignment is expected. The structural weight of the defence industries of said partners is reflected in the EDF, as they participate in and coordinate the largest share of projects, while maintaining the strongest presence throughout the reference period (Fiott, 2026).

Entity-level dimension

Figure 3 shows the total number of Greek entities participating in or coordinating EDF projects annually. It shows the number of unique entities involved in each year separately and does not correspond to the total number of unique entities across the entire period, as the same entity may participate in (or coordinate) projects in more than one year. [3]

Figure 3: Total number of unique Greek entities participating in or coordinating EDF projects from 2021 to 2025.

 

 

 

 

 

 

 

 

Source: Authors’ compilation from official European Commission/DG DEFIS factsheets

A first observation concerns the evolution of participation levels across the reference period. The total number of Greek entities involved in EDF projects exhibits relatively minor year-to-year fluctuations. Participation levels are influenced by the thematic priorities of each call, the readiness of domestic actors to build networks and form consortia and the access to information about EDF calls. While participation levels vary, Greek entities maintain a consistent presence across all years, indicating that the national ecosystem has successfully positioned itself from the outset within the most important supranational defence-industrial scheme. This pattern suggests that Greece is not a marginal player and could move towards a more stable and strategically coordinated participation profile. Moreover, the coordination data point to limited leadership capacity (compared to the normal participation levels) among Greek entities that have assumed coordinator roles over the years, yet coordination remains relatively sporadic. Figure 4 illustrates the top 6 Greek entities by total participation from 2021 to 2025.

Figure 4: Greek entities positioned as the most recurrent participants within the reference period (2021-2025)

The composition of the most frequent Greek participants in the EDF broadly mirrors the structure of the wider Greek participant pool. However, the complete pool of unique Greek participants reveals more complex dynamics (Annex II). Nearly 45% of the 88 unique entities are one-time participants, suggesting that for a large share of the Greek ecosystem, EDF participation functions as a one-off experience rather than a sustained engagement. Among entities that do return, over a third record zero activity in the year immediately following their first participation. This recurring pattern suggests significant administrative friction, whereby the obligations of a first EDF project absorb substantial organisational capacity, crowding out the subsequent call cycle. What emerges is a two-speed dynamic: a small core of -primarily large- entities with genuine multi-year engagement, alongside a much larger number of smaller and medium-sized entities, with the depth of participation contingent on the capacity to absorb the instrument’s administrative demands.

The following figures present the number and types of Greek entities that received (a share of) EDF financial contribution during the period 2021-2025. The entities are classified according to the types defined in the methodology chapter and are presented both in terms of Greek coordinators and the total number of Greek participating entities.[4]

Figure 5: Categorisation per type and volume of coordinations for Greek entities in EDF projects (2021-2025)

 

Figure 6: Categorisation per entity type and volume of total participations (including simple participations and coordinations) for Greek entities in EDF projects (2021-2025) 

An important finding concerns the types of Greek entities involved in EDF projects. The data indicate that Greek participation is predominantly driven by SMEs, which consistently account for the largest share of Greek actors across the examined period. This trend aligns closely with the structural characteristics of the Greek Defence Technological and Industrial Base (GTIB), which is widely recognised as being composed mainly of smaller firms rather than large prime contractors. In addition to SMEs, the data also reveals a significant presence of research and non-governmental organisations, paving the way for greater involvement of the Greek university and research community. Looking more closely at the annual distribution of coordinations and total participations further reinforces this observation. The Greek industry’s interest in Open SME Calls is evident in Figure 9 below.

The following figures provide the same data visualisation but for foreign entities involved in consortia in which a Greek entity a) acts as the project coordinator, and b) participates.[5]

Figure 7: Categorisation per entity type and volume of coordinations for Greece’s foreign consortium partners in EDF projects (2021-2025) 

Figure 8: Categorisation per entity type and volume of total participations (simple participations and coordinations) for Greece’s foreign consortium partners in EDF projects (2021-2025)

What clearly emerges is that in contrast to the Greek entities’ EDF participation, the foreign entities with which Greek actors collaborate are often for-profit companies (e.g., established defence-industrial players). Overall, the results reveal that Greek entities tend to cooperate predominantly with the largest EU defence-industrial ecosystems. This reflects both the high concentration of major defence companies in other member-states with a substantial defence industrial sector, their tendency to participate in EU-level consortia, and the incentive for Greek entities to partner with established (prime) contractors to strengthen their technological know-how and integrate smoothly into the European defence value chain.

Entity-level networks by year, Greek entity-coordinator and thematic category (2021-2025)

The following figure illustrates the number and nationality of foreign entities participating in consortia led by Greek coordinator entities, mapping the cross-border networks formed around Greek coordinators by thematic category, covering the full reference period (2021 – 2025).[6]

Figure 9: Foreign entities in consortia led by Greek coordinators per thematic area of EDF project (2021-2025) (interactive version)

 

Created with flourish.studio.

Greek entity-level total participations per year and thematic category (2021-2025)

 The subsequent figure maps cooperation patterns at the entity level, covering the full reference period (2021 to 2025). Organised by thematic category, it illustrates the number and nationality of foreign entities collaborating with Greek entities in projects selected for EDF funding, providing a direct visualisation of transnational industrial linkages per thematic category. The darker the colour of each cell, the greater the number of entities. For access to the specific number of entities per country, the interactive version is recommended.[7]

Figure 10: Volume of third-country entity participation with Greek entities by thematic category (2021-2025) (interactive version)

Created with flourish.studio

Entity-level total participation data by nationality and thematic category reinforce our previous observation and indicate recurring patterns of intense collaboration with a group of entities from leading EU defence-industrial countries, as illustrated in Annex 1 (Figures 12-16).

In 2021, Greek entities most frequently collaborated with Italian, German, French, and Spanish entities, mainly across 4 thematic areas: energy and environment, air combat, digital transformation, and materials and components. This pattern continues in 2022, although the thematic focus expands to other areas, including medical response and CBRN, space, and sensors. In 2023, which also records the highest level of Greek participation overall, cooperation with entities from the same countries intensifies further across multiple domains, such as technological challenges, force protection and mobility, and ground combat. A similar configuration persists in 2024, particularly with French, Spanish, and Italian industrial players. Finally, a comparable trend occurs in 2025. Greek entities continue to collaborate most intensively with the aforementioned partners (plus German ones), with some evolution in thematic emphasis. Ground combat registers as the most engaging across the four core partners, closely followed by naval combat – particularly with France, Italy, and the Netherlands – while air combat remains highly relevant. Space and technological challenges consolidate as structurally significant themes across the 2025 call.

Figure 11 illustrates the distribution of the number of entities per EDF project in which at least one Greek entity participates, covering the full reference period (2021 to 2025) as well as each individual year. Each dot represents a project. The figure shows considerable variation in consortium size, ranging from 3 to 92 entities per project, with the majority clustering between 10 and 40 entities. The outlier observed in 2022 corresponds to the RESILIENCE project, which recorded the highest number of participating entities (92) across the entire reference period.[8]

Figure 11: Distribution of total volume of entities per EDF project for the reference period (2021-2025) (interactive version)

Created with flourish.studio

Insights from Greek EDF participants

The responses to the questionnaire material are organised into six thematic clusters. First, respondents articulate a range of overlapping motivations, with funding for R&D being the most commonly recurring motivation. Within this cluster, some SMEs specifically frame their motivation in terms of advancing to higher TRL. Beyond funding, participation is also linked to alignment between the technology focus and EDF priority areas, as well as to domains. A second motivation relates to access to major European prime contractors, to high-calibre consortia, and to defence markets that would otherwise remain inaccessible to Greek SMEs. A third one is more strategic in nature, framing participation as a contribution to reversing import dependence and building indigenous defence capacity, alongside engagement. Furthermore, on partner-finding mechanisms, responses reveal a relatively even distribution across three modalities: a) being approached by an existing consortium, b) proactively seeking partners, and c) establishing a consortium and inviting other entities to join. Several respondents reported using more than one of these modalities across different calls. Notably, only a minority of respondents have established consortia from scratch, a finding directly relevant to the matchmaking gap discussed below.

In addition, respondents describe benefits at multiple levels. At the technological level, EDF participation has accelerated R&D roadmaps, with one respondent reporting that their technologies are now close to the release of exploitable products. At the organisational level, one respondent reports the development of in-house capabilities in programme governance, legal and contractual management (including IPR allocation and Consortium Agreement negotiation), and financial oversight at multi-partner scale, primarily as a consequence of their coordinator role; other respondents mention capacity building in more general terms. At the strategic level, EDF involvement is described by one respondent as a “technical calling card” that provides the validation needed to enter prime contractors’ supply chains, and by another as a vehicle for European visibility and recognition. One coordinator describes a qualitative shift in positioning, from being “selected by others” to selecting partners and setting the technical and commercial agenda of collaboration, although other coordinators in the sample do not report a comparable shift, and one notes that coordination did not extend their network.

Findings regarding the conversion of EDF participation into bilateral industrial cooperation are mixed. Several respondents report concrete conversion, including business contracts, joint proposal submissions, and the exploration of other collaborative opportunities. Other respondents, however, report no conversion into bilateral cooperation or note that pre-existing relationships with primes (predating the EDF) have not been substantially altered by EDF participation. One coordinator identifies three structural barriers to conversion, namely export control constraints, differing national procurement priorities across member-states, and the inherent length of defence procurement cycles.

Respondents almost unanimously consider the EDF a success, particularly as a first-generation instrument establishing the principle of EU-level collective investment in defence R&D. Recognised achievements include the consolidation of a unified European defence ecosystem, the bridging of national industries, the increase in the number of European defence companies and their innovation capacity and a contribution to European strategic autonomy.

On the assessment of Greek institutional support, respondents who name specific Greek bodies distinguish between the General Directorate for Defence Investments and Armaments (GDDIA), described as proactive, supportive and operationally agile, and the Hellenic Centre for Defence Innovation (HCDI), described as a newcomer, still building institutional capacity but evolving rapidly. Another respondent highlights that the HCDI is now beginning to establish its support structure. These observations are consistent with recent work calling for HCDI’s budget to be doubled, as part of a wider strategy for the Greek defence technological industrial base (Kamaras, 2025).

At the same time, a consistent set of concerns emerges:

• Disproportionate administrative and reporting burden: The burden is particularly heavy for SMEs that take on coordinator roles and calls for alignment with Horizon Europe simplification practices.
• Disconnect between funded R&D and procurement: the most consistently cited weakness. Respondents describe this in various terms, including the absence of pathways from R&D to procurement, the lack of follow-up on real product development, weak adoption of EDF-developed solutions by member-states, and limited progress toward producing ammunition and platforms. The absence of a credible pan-EU joint procurement mechanism is a significant concern.
• Excessive timelines: Administrative delays are flagged as important barriers to further engagement and participation in successive calls.
• Perceived imbalances in participation: There is a view that participation remains largely concentrated among a relatively small number of member-states. In major capability categories, primes continue to play a dominant role and competition between consortia may be limited, whereas SMEs-focused calls tend to be extremely competitive, resulting in a high number of unfunded SMEs proposals. At the same time, in order to achieve maximum geographical inclusion, an entity’s (in particular, an SME’s) participation and funding may be marginal and limited compared to large primes, mostly reflecting a need by primes to satisfy specific composition requirements vis-à-vis the inclusion of SMEs in a consortium rather than a genuine intention for industrial collaboration.
• Lack of transparency in EDF commercialisation results: If we compare the U.S. Defence Innovation Unit, which publishes data vis-à-vis the number of prototype contracts and successful transitions, the EDF needs to establish a public reporting system that shows how many SMEs ultimately sell developed products to EU MoDs and what the economic multiplier of the EDF funding is.
• Barriers to a true Single Market: Export control constraints, differing national procurement priorities and lengthy procurement cycles hinder the successful conversion of EDF partnerships into long-term bilateral industrial cooperation. Concerns over participation by consultancies with limited or no R&D function. 

Policy Recommendations

Based on the data analysis and the discussion presented above, policy recommendations emerge for the public authorities: 

• Strengthen matchmaking mechanisms for Greek entities with foreign entities to build EDF consortia

Public authorities, including the HCDI, could offer additional structured consortium-building and matchmaking services. These services should actively connect Greek entities, especially SMEs and research organisations, with potential partners in other countries, even before the publication of calls. Such initiatives could take place in international defence exhibitions, which attract a large number of relevant entities. This will allow for easier integration into the European defence value chain.

• Promote strategic partnerships with major European defence ecosystems through country-level agreements.

Our data have revealed that Greek entities frequently collaborate with entities from major defence-industrial countries. Public authorities, especially the network of Military and Economic & Commercial Affairs Attachés in our embassies abroad, should attempt to institutionalise and deepen these cooperation channels through bilateral initiatives.

• Develop an open-access national monitoring and mapping mechanism for EDF participation.

Public authorities, such as the HCDI and GDDIA, should launch an online platform that tracks Greek participation in EDF projects at the entity level, by year and by thematic category. This would allow firms (especially SMEs) and research organisations, to showcase their capabilities to potential partners across Europe. This visibility can be particularly valuable for SMEs and mid-caps that may possess strong know-how but lack international recognition compared to large prime contractors. It would also facilitate partner discovery and consortium formation among Greek actors, enabling them to form stronger national clusters before joining multinational consortia.

• Provide targeted initiatives to achieve the transition to coordinator roles.

Public authorities should implement capacity-building initiatives to strengthen coordination capabilities, particularly among high-performing SMEs. This could include training in project management, consortium building, leadership and EDF regulatory procedures

• Further boost the EDF’s logic and budget in the next MFF.

The Greek Government should actively advocate for the continuation of the EDF or a similar instrument in the next MFF, ensuring that a fund for the European defence technological and industrial base remains available. It goes without saying that the fund should be allocated a larger budget, which would expand participation opportunities. 

• Launch targeted reskilling and upskilling campaigns in dual-use technologies to strengthen Greek SME participation in the EDF.

Greece’s participation in the EDF is driven predominantly by SMEs; public authorities should design structured national campaigns to reskill and upskill SMEs’ workforces in dual-use technologies directly relevant to EDF priorities, such as artificial intelligence and advanced materials. These campaigns should focus on helping civilian technology firms adapt their existing competencies to defence applications. The financing of these initiatives should be strategically layered across available instruments, such as ESPA, which could offer substantial co-financing opportunities for human capital development towards dual-use upskilling.

• Develop and publicly communicate a national defence technological and industrial strategy.

Greece should develop and publicly communicate a medium-term national defence technological and industrial strategy, identifying priority technologies and capabilities domains for public support and investment. The strategy should cover areas that the EDF does not sufficiently address, in line with Greek priorities, and aim to complement EU funding tools. This would improve predictability for Greek firms regarding future investment and research and development priorities, thereby supporting longer-term industrial planning.

• Procurement-oriented initiatives for the EDF outputs should be considered for the next MFF negotiations.

Due attention should be paid to the commercialisation process for the EDF outputs, with an emphasis on mechanisms to address the persistent procurement “disconnect” or “gap” between R&D activities (co-)funded by the EDF and the subsequent acquisition of their outcomes by interested member states.

• Enhance the visibility and the legitimacy of the EDF outputs.

Greece’s institutional stakeholders should establish a transparent reporting framework to track the transition of EDF-funded projects into defence procurement and exportable products. Inspired by the US Defence Innovation Unit’s “Transition Success” KPI, HCDI should annually report the value of EDF-supported projects that result in acquisition by the Hellenic Armed Forces, integration into European supply chains, or exports to foreign markets. This would enable better measurement of the return on public R&D investment, provide visibility for successful SMEs, incentivise the development of commercially viable technologies that strengthen both Greece’s industrial base and its export capacity and strengthen the accountability and the legitimacy of the EDF outputs.

 

[1] For years when the European Commission did not provide a thematic category for each project, categorisation was based on the project context and available information. Subcontractors or other entities which may participate in the execution of an EDF project, but whose names are not mentioned in the relevant factsheet, are not taken into account for the purposes of this paper.

[2] The annual breakdown, which illustrates the above figures disaggregated across each reference year, is available in Annex I.

[3] Table 1 lists all unique Greek entities that participated in at least one project selected for EDF funding during the examined years, along with the number of projects they participated in per year, in alphabetical order (See Annex II).

[4] The annual breakdown, which illustrates the categorisation of Greek beneficiaries across the 5 years, is available in Annex III. For each year, two graphs are shown, one showing Greek coordinators and one showing total participation by Greek entities.

[5] The annual breakdown, which illustrates the categorisation of foreign beneficiaries across the  years, is available in Annex IV. For each year, two graphs are shown, one showing foreign coordinators and one showing total participation by foreign entities.

[6] The annual breakdown, presenting a separate figure for each year and thematic category, is available in Annex V.

[7] The annual breakdown, presenting a separate figure for each year of the reference period (2021, 2022, 2023, 2024, and 2025), is available in Annex VI.

[8] The breakdown of the most prominent foreign participants in projects involving Greek participation and coordination, by nationality and thematic area for each year of the reference period (2021-2025), is available in Annex VII.

 

 

 

 

 

 

Greece faces a democratic governance challenge with two dimensions: (a) low and declining citizens’ trust in political institutions, and (b) limited citizens participation in policymaking between elections. Institutional data underline the urgency of the matter. Greece faces a dual governance challenge: chronically low trust in political institutions and limited citizen participation. Data from the OECD (2024) and the Eurobarometer (2023–2025) consistently show Greece falling back European averages.

Deliberative democracy presents a pragmatic institutional response: it convenes a broadly representative group of people, supports them to learn from evidence and varied perspectives, and enables structured deliberation that produces reasoned recommendations. International experience and standard setting show this approach is most useful for issues involving trade-offs and values disagreements, exactly the kind of issues that can otherwise become stuck in “consultation fatigue”, mistrust, or policy reversals (OECD, 2020).

The policy implication is clear: Greece needs deliberative processes with clear mandates, inclusion safeguards, and credible follow-up in order to restore participation rates and trust in government and institutions. European and international experience and practice converge on the same lesson: impact relies less on the implementation phase alone and more on setup as the mandate, governance, recruitment, evidence integrity, and follow-up as formal response, implementation pathway, and evaluation (Bertelsmann Stiftung & FIDE, 2025).

This policy brief features a comparative-institutional synthesis of European standard-setting processes (Council of Europe, 2023; European Commission, 2023), comparative evidence on the impact of deliberative practice on institutional trust, and documented case experience from selected European best practices. Drawing on this evidence base, it derives policy opportunities and ramifications for the Greek context. The analysis aims to identify principles associated with high-integrity deliberation and to translate them into actionable policy recommendations calibrated to Greek institutional realities.

Read here in pdf the Policy Paper by: Savvas Papadopoulos, Junior Research Fellow, ELIAMEP, PhD(c), Athens University of Economics & Business; Spyros Blavoukos, Head, EU Institutions & Policies Programme; Senior Research Fellow, ELIAMEP, Professor, Athens University of Economics & Business; Myrto Xanthopoulou, Project Manager, DemoAct project, ELIAMEP; Katerina Eirini Lambrinou, Institutional Capacity building lead of the DemoAct project, ELIAMEP

• Turkey’s middle-power status is neither rhetorical inflation nor a recent discovery; it is the product of a long-standing strategic self-positioning that combines NATO-embedded military weight, geostrategic exposure, diplomatic activism, defence-industrial growth, and regional reach. Ankara’s middle-power identity is therefore not merely about prestige, but about converting vulnerability into influence and exposure into diplomatic relevance.
• The core of Turkey’s middle-power behaviour lies in “calibrated non-exclusivity”: Ankara remains anchored in NATO, European markets, and Euro-Atlantic institutions, while simultaneously expanding room for manoeuvre with Russia, the Gulf, Central Asia, Africa, and parts of Asia. This does not amount to a full break with the West, but to a strategy of staying connected everywhere while becoming fully dependent nowhere.
• Turkey’s defence-industrial rise, especially through drones, unmanned systems, and new European partnerships such as Baykar–Leonardo and Hürjet-related cooperation with Spain, has transformed hard power into diplomatic leverage. Turkish military capacity is no longer only about deterrence; it now creates export ties, training networks, maintenance dependencies, and political influence across conflict zones and partner states.
• Geography is both Turkey’s greatest constraint and its greatest asset. The Russia–Ukraine war, Syria, Iraq, Iran–Israel tensions, the Eastern Mediterranean, and the South Caucasus all expose Turkey to overlapping crises; yet the same geography allows Ankara to act as a connector between Europe and the Middle East, NATO and the Black Sea, energy producers and consumers, and conflict zones and negotiation tables.
• Turkey’s biggest problem is not the absence of middle-power resources, but the difficulty of converting them into durable credibility. Economic fragility, inflation, currency volatility, democratic backsliding, weak rule-of-law perceptions, politicised institutions, and the unresolved post-Erdoğan question all limit Turkey’s ability to become a more trusted, coherent, and institutionally continuous middle power.

Read here in pdf the Working paper by Ahmet Erdi Öztürk, Non-Resident Senior Scholar, Turkey Programme, ELIAMEP.

Mark Carney, Canada’s prime minister and former governor of both the Bank of Canada and the Bank of England, has recently helped reopen the wider debate on middle powers by arguing that, in a fractured international order, “middle powers must act together, because if you are not at the table, you are on the menu.” Yet for Turkey, this conceptual framework is far from a novelty; rather, it represents a long-standing element of its diplomatic self-definition. Ankara has been presenting itself in broadly middle-power terms for decades: as early as 1998, Foreign Minister İsmail Cem argued that Turkey aspired to a “pivotal role” in Eurasia rather than a peripheral one. More recent Turkish foreign-policy doctrine has continued to situate the country in an expansive strategic space stretching across the Balkans, the Middle East and North Africa, the South Caucasus, and Central Asia. In this sense, Turkey did not discover the middle-power idiom after the current crisis of world order; rather, it was utilizing this framework to articulate its foreign-policy identity well before leaders such as Carney returned the concept to the forefront of geopolitical debate. This self-positioning is also grounded in material capability. NATO has repeatedly described Turkey as the ally with the second-largest army in the Alliance—a military weight that matters in a volatile neighbourhood where regional instability it is not a peripheral concern for Turkish strategy is not external to Turkish strategy but intrinsic to its immediate security environment. For a state located at the intersection of Europe, the Black Sea, the Eastern Mediterranean, the Caucasus, and the Middle East, middle-power status is therefore far more than a matter of prestige. It is an advantage indeed and rather it serves as a mechanism for converting geostrategic exposure into diplomatic relevance, alliance weight into bargaining power, and regional vulnerability into selective activism.

Which is to say middle-power status is meaningful for Turkey not because it flatters its ambitions, but because it offers the most plausible framework via which a state located amidst so many theatres of crisis can convert exposure into influence and vulnerability into strategic agency.

In the post-post-Cold War period, how states define themselves matters almost as much as the material capabilities they possess (Ikenberry 2024). In an age of layered uncertainty, strategic self-description may not eliminate ambiguity altogether, but it does clarify at least one critical dimension; how an actor wishes to be seen, what scale of role it claims, and what kind of responsibilities it is prepared to shoulder (Blühdorn 2007). In this respect, Turkey has increasingly described itself in middle-power terms in recent years. Foreign Minister Hakan Fidan has been reported as casting Turkey as a “key middle power” and vital diplomatic broker, while official Turkish foreign-policy statements consistently project the country as an effective and respected international actor pursuing a proactive, multilayered strategy across its contiguous maritime and terrestrial neighbourhoods. Yet this is not simply a voluntary branding exercise or aspirational identity claim; it is a strategic necessity dictated by Turkey’s position at the nexus of multiple overlapping security crises. Turkey sits in the middle of multiple overlapping conflict zones and security crises. These include the Russia–Ukraine war to the north, the Iran–Israel confrontation to the south-east, the some of the still on-going crises in Syria and Iraq on its southern borders, persistent tensions in the Eastern Mediterranean, and recurrent instability in the Caucasus. In such an environment, it is not enough for Ankara merely to call itself a middle power; it must also behave like one through a combination of military readiness, diplomatic activism, alliance management, regional mediation, and strategic selectivity. Which is to say middle-power status is meaningful for Turkey not because it flatters its ambitions, but because it offers the most plausible framework via which a state located amidst so many theatres of crisis can convert exposure into influence and vulnerability into strategic agency.

However, as Alper Coşkun rightly notes, Turkey’s middle-power trajectory is accompanied by important tensions and vulnerabilities. These do not stem primarily from an absence of structural assets; on the contrary, Turkey already possesses many of the material and geopolitical ingredients that make middle-power behaviour plausible. The more critical question is whether Ankara can translate these assets into a sufficiently coherent strategic posture. Coşkun’s analysis suggests that Turkey’s primary challenge lies in managing the contradictions of multi-alignment: seeking greater room for manoeuvre vis-à-vis Russia, China, and the wider non-Western world, while continuing to rely on NATO, Western markets, and established security ties that remain indispensable to its national interests. If these tensions were reduced, Turkey could derive even greater advantage from its middle-power position than it does today. But that would require greater clarity on three intertwined issues: interest, morality, and identity. Ankara must be more consistent in defining which interests are truly vital and which are negotiable; which normative principles it is prepared to defend beyond immediate expediency; and how it understands its own place between the West and the non-Western spaces with which it also seeks deeper engagement. Without such clarification, strategic flexibility risks appearing as opportunism, and autonomy as inconsistency. If these questions are answered more clearly, however, Turkey’s middle-power status would become not only more credible, but also more effective.

Against this backdrop, this policy paper proceeds from a simple but consequential premise: Turkey’s middle-power status should neither be taken for granted nor dismissed as rhetorical inflation; rather, it must be explained. The analysis therefore first examines why and how Turkey has come to occupy a middle-power position, identifying the principal pillars of that status: military capability, geostrategic location, diplomatic activism, alliance embeddedness, defence-industrial capacity, and regional reach. It then turns to a more difficult question: what prevents that status from being consolidated more fully and translated into a durable strategic advantage? In doing so, the paper argues that Turkey’s future as a middle power will depend not only on the resources it commands, but also on the coherence with which it defines its interests, the credibility with which it projects its identity, and the consistency with which it aligns power with purpose.

The Resources of Turkish Middle-Power Status: How Ankara Turns Strategic Diversity into Influence

In the academic literature, middle powers are generally understood not simply as states that sit somewhere between great powers and small states in material rank (Abbondanza 2020), but as countries that combine significant regional weight with the behavioural capacity to shape outcomes beyond their immediate borders through coalition-building, selective activism, and multidimensional diplomacy (Henke 2019). What distinguishes a middle power, in other words, is not size alone but the ability to convert limited structural power into disproportionate political influence (Jordaan 2003). This definition fits Turkey especially well. Turkey is neither a great power capable of unilaterally imposing order across regions, nor a secondary state subject to the preferences of stronger actors. Rather, it is a state with substantial military, economic, diplomatic, and geographic assets that allow it to project its influence across multiple theatres, even as its capabilities stop short of hegemonic control. Its middle-power status therefore rests not only on what it has, but also on how it uses what it has.

Turkey’s middle-power practice seeks to remain connected everywhere while becoming fully dependent nowhere. In doing so, Ankara endeavours to generate a diverse mix of opportunities within an international order that rewards flexibility, selective engagement, and strategic adaptability.

Turkey’s evolution into a middle power is best understood through this combination of resources and agency. A defining strength of its contemporary foreign policy is its capacity to sustain multidimensional alignments without becoming fully absorbed by any single strategic axis. In earlier decades, Turkey was often characterised—fairly or unfairly—as the satellite of a particular bloc or a straightforward extension of the Western security order. Today, that picture is no longer adequate. Ankara has not broken with the West, but neither does it allow itself to be defined solely by its Western institutional belonging. It remains embedded in NATO, tied to European markets, and connected to long-standing Euro-Atlantic institutions, while simultaneously seeking room for manoeuvre vis-à-vis Russia, the Gulf, Central Asia, Africa, and parts of Asia. This is a strategy not of detachment, but of calibrated non-exclusivity. Situated precisely at this intersection, Turkey’s middle-power practice seeks to remain connected everywhere while becoming fully dependent nowhere. In doing so, Ankara endeavours to generate a diverse mix of opportunities within an international order that rewards flexibility, selective engagement, and strategic adaptability.

That strategy is sustained by a set of concrete instruments that impart practical substance to Turkish middle-power behaviour powerhood. The first is military cooperation, through which Turkey projects influence, builds defence partnerships, and translates hard-power capacity into political leverage (Yalcinkaya and Dumankaya 2025). The second is economic engagement, including trade, investment, and infrastructure, which allows Ankara to deepen its relational ties well beyond the security sphere. The third is its geopolitical location at the intersection of Europe, the Black Sea, the Eastern Mediterranean, the Caucasus, the Middle East, and wider Eurasian corridors. The fourth is the use of religious and cultural elements, which enable it to extend its influence through softer, identity-based, and society-facing channels (Ozturk 2021). The fifth is energy, in terms both of transit routes and the wider politics of connectivity and interdependence. Taken together, these resources explain not only why Turkey can plausibly be described as a middle power, but also how it has sought to behave like one: by turning strategic diversity into influence without fully anchoring itself to any single pole within the international system.

In the sections that follow, the paper unpacks these instruments one by one. It first examines Turkey’s military and defence-industrial capacity as a source of hard-power credibility, before turning to the economic networks that sustain its external reach. It then considers the geopolitical value of Turkey’s location, the role of religion and culture in extending influence beyond formal diplomacy, and finally the importance of energy routes and connectivity in strengthening Ankara’s bargaining position. By examining these resources separately, the analysis shows how Turkey’s middle-power status is produced not by any single asset, but by the cumulative interaction of material capacity, strategic location, diplomatic agency, and adaptive statecraft.

Military Capacity and Defence Cooperation: Hard Power as Middle-Power Leverage

…defence industries are increasingly shaped by technological competition, industrial integration, and the pursuit of national and regional resilience within a rapidly changing security environment. Turkey’s answer has been to build a defence sector that supports autonomy without abandoning alliance embeddedness.

Military capacity is one of the clearest foundations of Turkey’s middle-power status. Turkey has long been one of the few countries in its region able to sustain a relatively self-reliant security posture, partly because of its own state tradition and partly because of the deterrent and institutional support provided by NATO. Its membership in the Alliance has given Ankara access to strategic depth, interoperability, training, intelligence-sharing, and collective defence structures, while Turkey itself has remained one of NATO’s most militarily significant members. NATO Secretary General Mark Rutte has described Turkey as having the Alliance’s second-largest army and spending over 2% of GDP on defence, underlining its centrality to NATO’s security architecture. Yet the changing character of war has also pushed Ankara to move beyond reliance on alliance structures alone. The rise of drone warfare, air-defence saturation, electronic warfare, long-range precision strike, and hybrid conflict has encouraged Turkey to invest heavily in its own defence-industrial ecosystem. The Swedish Defence Research Agency’s Defence Industrial Outlook 2025 captures this wider global context well. According to this analysis, defence industries are increasingly shaped by technological competition, industrial integration, and the pursuit of national and regional resilience within a rapidly changing security environment. Turkey’s answer has been to build a defence sector that supports autonomy without abandoning alliance embeddedness.

The most visible symbol of this transformation has been Turkey’s drone and unmanned-systems industry.

The most visible symbol of this transformation has been Turkey’s drone and unmanned-systems industry. The Bayraktar TB2, Akıncı, Kızılelma and other unmanned aerial vehicles (UAVs/SİHAs) have provided Ankara with a relatively low-cost, politically visible, and exportable military instrument. These systems have not only reshaped Turkey’s own military doctrine; they have also expanded its influence through defence exports, training, maintenance, and operational partnerships. A recent assessment by the Bloomsbury Intelligence & Security Institute noted that Turkey’s rapid emergence as a drone power was driven by state-backed domestic production and by the export success of the Bayraktar TB2, which has become central to the country’s technological autonomy and foreign-policy reach. This matters for middle-power politics, because drones allow Turkey to convert technological niches into diplomatic leverage. They create durable relationships with partner states, increase dependence on Turkish maintenance and training ecosystems, and give Ankara visibility in conflicts where it may not wish to deploy large conventional forces directly. In other words, Turkish drones are not only weapons; they are also instruments of relationship-building.

Turkey’s military-industrial rise is also increasingly embedded in private-sector-led cooperation with European partners. The 2025 Baykar–Leonardo joint venture is especially important in this regard. Following a memorandum of understanding signed in Rome, Leonardo and Baykar established LBA Systems as a 50–50 joint venture—headquartered in Italy—for the development of unmanned technologies. Furthermore, Baykar’s acquisition of Piaggio Aerospace further deepened this Italian connection, showing that Turkey’s defence industry has moved beyond exporting platforms to entering the European defence-industrial ecosystem through ownership, co-production and joint development. A similar pattern is visible in Spain, where Airbus and Turkish Aerospace have advanced their cooperation on the Hürjet advanced jet trainer; Airbus is leading Spain’s new combat training system, while Turkish Aerospace serves as the manufacturer of the Hürjet platform. According to industry reports  Spain and Turkey signed a €2.6 billion agreement for 30 Hürjet aircraft, the first foreign sale of the aircraft, with deliveries planned from 2028 through to 2036 and deeper defence cooperation between the two NATO allies expected to follow. These partnerships matter because they show Turkey acting not as a peripheral consumer of Western defence technology, but as a co-producer and agenda-shaper within European defence supply chains.

Turkey’s hard-power profile is also visible in its military footprint beyond its borders. While its overseas presence is not comparable to that of a great power, it is far more extensive than that of a typical regional state. In Somalia, the establishment of Camp TURKSOM in Mogadishu in 2017—Ankara’s largest overseas military base—has serves as a primary vehicle for training Somali forces and building a long-term security partnership. In Qatar, Turkey maintains a military presence that reinforces its Gulf security role and gives Ankara a foothold in one of the region’s most strategically sensitive theatres. In Libya, Turkish forces and military advisers have supported the Tripoli-based Government of National Unity. In wider assessments of Turkey’s regional military posture, bases or facilities linked to Misrata and Al-Watiya are consistently identified as components of Ankara’s Mediterranean security architecture. In Northern Cyprus and the Eastern Mediterranean, Turkish military deployments remain central to Ankara’s understanding of deterrence, maritime rights, and regional balance. Taken together, these deployments illustrate a classic middle-power pattern; thus, while Turkey cannot impose order globally, it can build forward positions in selected theatres where its security interests, historical ties, and diplomatic ambitions overlap.

The same logic applies to Turkey’s role in shaping conflict outcomes, where its influence often operates through training, intelligence, drones, logistics, partner-force support and diplomatic leverage rather than direct combat alone. In the South Caucasus, Ankara’s support for Azerbaijan demonstrated that Turkey could affect the regional military balance through training, defence cooperation, strategic signalling, and technological assistance, while avoiding the profile of a conventional occupying power. More broadly, Turkey’s role in the Russia–Ukraine war shows how military capacity and diplomatic positioning can reinforce one another. Ankara has maintained relations with both Moscow and Kyiv, closed the Turkish Straits to warships under the Montreux Convention, supplied military equipment to Ukraine, and repeatedly offered itself as a venue for negotiations. More recently, Turkey has signalled a possible role in any post-ceasefire reassurance or peacekeeping architecture. Carnegie Europe has argued that Turkey is positioning itself as a key player in a postwar reassurance force for Ukraine, especially in the Black Sea. Turkish officials have also indicated that any troop deployment would require a ceasefire and a clearly defined mission, and that Ankara would be well placed to support Black Sea security and freedom of navigation. Thus, Turkey’s military capacity does not simply make it stronger; it gives Ankara the practical tools to act as a broker, security provider, deterrent actor, and selective stabiliser in a highly unstable neighbourhood.

Economic Reach: Fragile Foundations, Flexible Openings

The economic pillar of Turkey’s middle-power status is more complicated than its military or geopolitical profile. On the one hand, the Turkish economy remains one of the most serious constraints on Ankara’s external ambition. Persistent inflationary pressures, currency volatility, dependence on external finance, periodic balance-of-payments anxieties, and uneven investor confidence all limit the degree to which Turkey can convert diplomatic ambition into sustained material power. This is a major vulnerability, and we will return to it more fully in the section on constraints. Yet it would be misleading to treat economic fragility as economic insignificance. Turkey still possesses a large domestic market, a young and substantial population, an internationally active private sector, a sizeable diaspora, and a geographic position that places it at the intersection of European, Eurasian, Middle Eastern, Mediterranean, and African commercial spaces. These assets do not make Turkey an economic great power, but they do give it the capacity to build bilateral economic partnerships, expand trade corridors, and use economic connectivity as a practical instrument of middle-power influence.

The European Union remains the central reference point in this picture. Politically, EU–Turkey relations are often strained, and the long-discussed modernisation of the Customs Union has been blocked by wider political disagreements. Economically, however, the relationship remains too significant  and too deeply embedded to be treated as secondary. The European Commission states that EU–Turkey trade reached a record level of more than €210 billion in 2024, making Turkey the EU’s fifth-largest trading partner. This matters not only because of the scale of trade, but also because the relationship anchors Turkey to European production chains, investment flows, regulatory standards, customs procedures, and export markets. For Turkey, the EU is not simply one partner among many; it remains the most important economic anchor of its external relations. For Turkey, the EU is not simply one partner among many; it remains the most important economic anchor of its external relations. For the EU, Turkey is not simply a difficult candidate country; it is also an industrial, logistical, and commercial partner whose geography and market size make it strategically valuable. The paradox, therefore, is clear; political relations are often frozen, but economic interdependence remains alive. That paradox is central to Turkey’s middle-power behaviour. Ankara is seeking strategic autonomy, but does so from within a dense web of economic interdependence with Europe.

Turkey and the UK already have a trade agreement, inherited and adapted after Brexit, but redundant have been negotiating an enhanced Free Trade Agreement. 

This also explains why Turkey has tried to widen, rather than replace, its economic partnerships. The United Kingdom is a useful example. Turkey and the UK already have a trade agreement, inherited and adapted after Brexit, but redundant have been negotiating an enhanced Free Trade Agreement. The UK government reported that the fourth round of negotiations took place in London in the week commencing 23 February 2026, and that progress had been made in several areas, including services. A deeper UK–Turkey agreement would matter, because it could move the relationship beyond goods trade into services, digital trade, investment, procurement, and regulatory cooperation. For Ankara, this kind of agreement is not an alternative to the EU market, but it is part of a wider strategy of diversification. Turkey’s economic statecraft is increasingly seeking to create a portfolio of relationships, with the EU serving as the structural anchor, the UK as a post-Brexit bilateral opportunity, the Gulf as a source of capital and investment, Africa as a field of commercial expansion, and the Balkans as a nearby space of trade, logistics, construction, and political familiarity. This is precisely how a middle power attempts to maximise its room for manoeuvre—not by discarding old dependencies, but by multiplying its options regarding them.

The Balkans illustrate this logic especially well. Turkey does not dominate the region economically in the way the EU does, but its presence is visible, flexible, and politically meaningful. Proximity matters, and Turkish firms can operate easily across Balkan markets. Moreover, Turkish Airlines and transport corridors connect the region to wider commercial networks, and historical and diaspora ties create familiarity that pure market metrics often miss. Turkish exports to Balkan countries reportedly rose by around 17% in 2024, reaching $23.4 billion, which points to the growing commercial density of the relationship. The Balkans’ importance for Turkey is not only trade volume, however; it is trade combined with construction, banking, infrastructure, cultural familiarity, and political access. In middle-power terms, this gives Ankara a layered form of influence. It cannot displace the EU as the region’s main economic horizon, but it can become a practical partner in sectors where speed, familiarity, and political flexibility matter. Turkey’s role in the Balkans therefore reflects the broader character of its middle-power strategy, which works best not when it tries to replace larger actors, but when it inserts itself into the gaps between them.

Africa reveals the same pattern on a larger and more ambitious scale. Turkey’s economic engagement with Africa has expanded dramatically over the past two decades, driven by trade, contracting, aviation, development assistance, diplomacy, and defence-industrial links. Turkish officials have stated that Turkey–Africa trade exceeded $37 billion in 2024, while Turkish contractors have completed major infrastructure projects across the continent. This is not Chinese-style economic statecraft based on massive lending and infrastructure dominance, nor is it EU-style engagement driven by regulatory frameworks and development conditionality. Instead, Turkey’s African presence is more relational and entrepreneurial. It combines embassies, business councils, airlines, construction firms, humanitarian agencies, schools, trade fairs, and—increasingly—defence cooperation. That combination is important, because it allows Ankara to present itself as a partner that is more accessible than Europe, less overbearing than China, and less historically freighted than some Western actors. Whether that image is always accepted is another matter, but the strategic intention is clear: Turkey uses economic networks to create political access, and political access to deepen economic opportunity.

…the Turkish economy is both a constraint and a resource: It limits Ankara’s ambitions, but it also gives Turkey enough reach to act as a middle power—not as a dominant economic pole, but as a flexible connector capable of turning commercial relationships into strategic relevance.

This is where economics connects most clearly to middle-power status. Turkey’s economy is not strong enough to sustain a global power role, and its macroeconomic fragilities can undermine credibility, raise borrowing costs, and reduce the predictability of its external commitments. Yet middle powers do not need to dominate the global economy to matter. They need to use available resources selectively, relationally, and strategically. Turkey does this by combining market size, private-sector dynamism, bilateral trade agreements, construction capacity, transport connectivity, diaspora networks, and geographic access. Its economic influence is uneven, but it is real. It is strongest where Turkish business networks, political familiarity, logistical proximity, and cultural access reinforce one another; it is weakest where financial instability and policy unpredictability damage trust. In this sense, the Turkish economy is both a constraint and a resource: It limits Ankara’s ambitions, but it also gives Turkey enough reach to act as a middle power—not as a dominant economic pole, but as a flexible connector capable of turning commercial relationships into strategic relevance.

Geography as Constraint and an Advantage

Behind Turkey’s middle-power behaviour lies a powerful geopolitical reality. Ankara’s active stance is driven not only by ambition, but also by necessity. Turkey is in one of the most demanding strategic environments in the world, where almost every major regional crisis has direct implications for its security, economy, domestic politics, and diplomatic room for manoeuvre. The Russia–Ukraine war affects Black Sea security, grain routes, energy flows, NATO strategy, and the future of the European security order. Instability in Syria and Iraq directly touches Turkey’s borders through terrorism, migration, state collapse, Kurdish politics, and the presence of external military actors. The Iran–Israel confrontation and wider Gulf tensions shape Turkey’s calculations in the Middle East, from energy security to regional alignment. The Eastern Mediterranean remains a theatre of maritime competition, energy politics, and unresolved sovereignty disputes, while the South Caucasus links Turkey to questions of corridor politics, post-conflict reconstruction, Azerbaijan, Armenia, Russia, and Central Asia. In other words, Turkey does not have the luxury of being strategically passive—its geography constantly pulls it into overlapping theatres of crisis. Its middle-power posture is therefore partly a response to exposure: Ankara must remain active, because surrounding instability would otherwise be managed by others, often in ways that could constrain Turkish interests.

Turkey is therefore pressured by its geography but also profits from it: the challenge for Ankara is to convert this exposure into influence without becoming overextended, and to use its location not only as a defensive shield but as a platform for selective, disciplined, and credible regional statecraft.

Yet the same geography that exposes Turkey to risk also gives it leverage. Turkey’s location allows it to act as a connector between spaces that are often treated separately: Europe and the Middle East, NATO and the Black Sea, the Caucasus and Central Asia, the Mediterranean and the Gulf, energy producers and energy consumers, and conflict zones and negotiation tables. This is precisely where geography becomes a middle-power asset. Turkey cannot impose order across all these spaces, but it can make itself relevant in many of them at once. It controls critical access to the Black Sea through the Straits, sits on major migration and energy routes, offers logistical corridors between Europe and Asia, and maintains political relationships with actors that often do not speak easily to one another. Its position allows Ankara to bargain, mediate, block, facilitate, and connect. This is why Turkey’s middle-power status should not be understood merely as a self-description or a diplomatic aspiration; it emerges from the interaction between geopolitical compulsion and strategic opportunity. Turkey is therefore pressured by its geography but also profits from it: the challenge for Ankara is to convert this exposure into influence without becoming overextended, and to use its location not only as a defensive shield but as a platform for selective, disciplined, and credible regional statecraft.

Normative Reach: Ottoman Memory, Sunni Islam, and Diaspora Networks

Turkey’s middle-power status is not sustained by military capacity, economic ties, or geography alone; it also rests on a set of normative and identity-based resources that allow Ankara to project influence through history, religion, culture, and diaspora mobilisation. Unlike many middle powers whose external influence is mainly institutional or economic, Turkey can draw on the symbolic geography of the former Ottoman space. This does not mean this Ottoman memory is uniformly welcomed or uncontested: in fact, it is received ambivalently in many regions and can generate suspicion (Yavuz 2016). Nonetheless, it does provide Turkish foreign policy with a recognisable historical vocabulary across the Balkans, the Middle East, North Africa, parts of the Caucasus, and beyond. Institutions such as TİKA, the Yunus Emre Institute, Turkish state media, educational organisations, and religious bodies have helped translate this historical-cultural geography into practical instruments of public diplomacy, especially in regions with which Turkey claims familiarity, shared memory, or civilisational proximity. Studies of Turkish cultural diplomacy in the Balkans identify TİKA, the Yunus Emre Institute, TRT and the Anadolu Agency as key instruments of Turkish soft power (Bechev 2012), while other work highlights Diyanet, Maarif, YTB and related organisations as part of Turkey’s wider cultural, religious and educational expansion in the region.

Under the AKP, religious diplomacy has become more visible and more institutionalised, with Diyanet playing a role not only in the provision of religious services to Turkish citizens abroad, but also in mosque construction, imam networks, religious education, and engagement with Muslim communities beyond Turkey’s borders.

Sunni Islam and Diyanet constitute a second and more explicitly religious component of this normative reach. Under the AKP, religious diplomacy has become more visible and more institutionalised, with Diyanet playing a role not only in the provision of religious services to Turkish citizens abroad, but also in mosque construction, imam networks, religious education, and engagement with Muslim communities beyond Turkey’s borders (Ozturk and Baser 2022). This matters for middle-power politics, because mosques and religious institutions can become durable social infrastructures through which Turkey sustains influence below the level of formal diplomacy. The Namazgah Mosque in Tirana, inaugurated in 2024 after construction financed by Turkey’s state-run Diyanet organisation, is a clear example: the mosque is one of the largest in the Balkans, and Diyanet is represented on its governing board. At the same time, this tool is not without limits. In Germany, for instance, concerns about foreign influence through Turkish state-employed imams have led to an agreement to gradually reduce the deployment of imams from Turkey and train more imams locally, showing that religious reach can also generate resistance in host societies. This duality is important, since Diyanet gives Turkey social access and legitimacy in some contexts, but can also generate suspicion where religion is seen as an extension of state influence.

The diaspora is the third pillar of Turkey’s normative middle-power toolkit. Ankara increasingly treats communities of Turkish origin abroad not merely as migrant populations, but as political, cultural, and diplomatic assets. The Presidency for Turks Abroad and Related Communities states that Turkey has a diaspora of around seven million people, mostly in continental Europe, and describes its role as pursuing a multidimensional and inclusive diaspora policy aimed at preserving ties between the Turkish diaspora and their homeland. Since the establishment of YTB in 2010, diaspora engagement has become more systematic, encompassing cultural programmes, scholarships, legal and social support, institutional relations, and identity-preserving activities. For a middle power, this diaspora capacity is significant because it extends Turkey’s national presence into the domestic spaces of other countries through communities, associations, business networks, religious institutions, media ecosystems, and electoral mobilisation. Yet, here too, the asset is double-edged: Diaspora engagement can strengthen Turkey’s voice, create bridges with host societies, and support public diplomacy, but it can also deepen polarisation within diaspora communities and provoke concern in host states when it appears too closely tied to Ankara’s domestic political agenda. In middle-power terms, Turkey’s normative reach is therefore powerful but delicate, since it can amplify influence where historical memory, religion and diaspora networks generate trust, but it can weaken credibility if those same tools are seen as intrusive, partisan, or overly instrumentalised.

Energy and Critical Resources: From Import Dependence to Corridor Power

Energy is both one of Turkey’s clearest vulnerabilities and one of the most important sources of its middle-power relevance. Turkey is not an energy-rich country in the conventional sense. Its economy remains heavily dependent on imported fossil fuels, especially oil and gas, and the IEA notes that this dependence leaves the Turkish economy exposed to volatility in international energy markets. This weakness matters, since energy import dependence places pressure on the current account, magnifies the effects of exchange-rate volatility, and limits Ankara’s strategic autonomy in times of price shocks or supply disruption. Yet, as with other elements of Turkish middle-power status, the story is not only one of vulnerability. Because Turkey’s value lies less in the energy it owns than in the energy systems it can connect. Its geography places it between producers and consumers, between the Caspian and Europe, between the Middle East and the Mediterranean, and between emerging supply routes and European diversification needs. In this sense, Turkey’s energy role is not that of a dominant producer, but that of a corridor, connector, and potential hub. This is a classic middle-power advantage: namely, exerting influence through position, interdependence, and infrastructure rather than through outright resource control.

Ankara’s middle-power role is strengthened when it can position itself as the indispensable passage between regions whose direct connections are constrained by war, sanctions, geography, or mistrust.

This corridor role could become even more significant after the Iran war and the renewed anxiety over Gulf energy security. The disruption of traffic through the Strait of Hormuz has forced governments and markets to rethink alternative export routes for Middle Eastern oil and gas; it has been described Hormuz as the most critical global oil transit chokepoint, while noting that existing alternatives remain limited and vulnerable. In such a context, Turkey’s potential role in linking the Gulf, Iraq, the Eastern Mediterranean, the Caspian and Europe becomes more strategically valuable. The Iraq–Turkey pipeline, possible future connections running from the Gulf through Iraq and Turkey, and broader corridor politics all strengthen Ankara’s relevance as Europe searches for diversification options. At the same time, the Caspian and Central Asian dimension is also growing in importance. The Middle Corridor already links China and Central Asia to Europe through the Caspian Sea, the South Caucasus and Turkey, and analysts have pointed to the long-discussed Trans-Caspian pipeline as a possible way of moving Turkmen gas towards Azerbaijan and onward through the Southern Gas Corridor. These projects are politically and technically demanding, and they should not be treated as immediate solutions. Still, they do show why Turkey’s energy importance exceeds its domestic resource base: Ankara’s middle-power role is strengthened when it can position itself as the indispensable passage between regions whose direct connections are constrained by war, sanctions, geography, or mistrust.

The Eastern Mediterranean adds another layer to this picture, but also reveals the legal and political limits of Turkey’s energy ambitions. The region contains hydrocarbon resources and has long been shaped by overlapping maritime claims involving Turkey, Greece, Cyprus and other coastal actors. Turkey is not a party to UNCLOS, while Greece and Cyprus frame many of their claims through UNCLOS-based maritime entitlements; Ankara, by contrast, argues that maritime delimitation must reflect equity and cannot allow islands to generate maximal zones that effectively confine Turkey’s access to surrounding seas. This legal disagreement matters, because energy potential in the Eastern Mediterranean cannot be decoupled from maritime delimitation, sovereignty disputes, and the unresolved Cyprus question. For Turkey, the Eastern Mediterranean is therefore both an energy opportunity and a diplomatic constraint. It offers the possibility of participation in future hydrocarbon and energy-connectivity arrangements, but only if legal disputes and regional exclusion dynamics can be managed. Again, this is a middle-power pattern and Turkey has enough weight to prevent arrangements that ignore its interests, but not enough to unilaterally impose a comprehensive settlement. Its influence lies in its bargaining power, disruption capacity, and ability to make itself a necessary part of any durable regional energy architecture.

Finally, Turkey’s potential role in the energy politics of tomorrow is not limited to pipelines and hydrocarbons. Critical minerals may become increasingly important to its middle-power profile. The claimed rare earth element reserves in Beylikova, Eskişehir, reported at 694 million tons, have attracted considerable attention, although certification, processing capacity, and technological partnerships remain unresolved questions. Reports also identify other rare earth mineralisations in Turkey, including in the Konya and Sofular Malatya areas; these could become relevant as demand grows for green technologies, defence systems, batteries, electronics and advanced manufacturing. Here, too, the distinction between potential and power is crucial. Rare earth reserves do not automatically translate into strategic leverage; extraction, separation, processing and integration into global supply chains require technology, capital, environmental governance and trusted partnerships. However, if Turkey can develop these capacities, critical minerals could add a new layer to its middle-power status. They would allow Ankara to move beyond being an energy corridor and towards becoming a participant in the strategic supply chains of the green and digital transitions. In short, Turkey is energy-vulnerable today, but it is not energy-irrelevant. Its middle-power advantage lies in its ability to connect routes, mediate access, contest exclusion, and potentially convert critical resources into future strategic leverage.

The Limits of Turkish Middle-Power Status: Economy, Trust, and Democratic Credibility

If Turkey is to consolidate itself as a more disciplined, constructive, and widely trusted middle power, it will need to move beyond strategic agility alone. The ability to speak to multiple actors, build flexible coalitions, and operate across different geopolitical theatres is already one of Ankara’s main advantages. 

If Turkey is to consolidate itself as a more disciplined, constructive, and widely trusted middle power, it will need to move beyond strategic agility alone. The ability to speak to multiple actors, build flexible coalitions, and operate across different geopolitical theatres is already one of Ankara’s main advantages. Yet a more mature form of middle-power statecraft requires not only reach, but also reliability. Two constraints are especially important here. The first is economic fragility, with persistent inflation, currency volatility, external financing needs, and uncertainty over the investment environment limiting Turkey’s capacity to sustain long-term commitments and reducing the credibility of its wider strategic ambitions. The second is trust, which is closely connected to domestic democracy, the rule of law, institutional predictability, and the perception of political stability. Middle powers depend heavily on reputation and must therefore be seen not only as useful, but also as consistent, credible, and sufficiently predictable partners. Turkey’s challenge, therefore, lies not in whether it has the resources to act as a middle power, but in whether it can align those resources with the economic stability and democratic credibility needed to build broader, deeper, and more durable coalitions.

Economic Fragility: The Hardest Constraint on Turkey’s Middle-Power Ambition

The first major constraint on Turkey’s ability to act as a more confident and coalition-building middle power is economic fragility. Middle powers do not need to be economic giants, but they do need enough macroeconomic stability to be reliable partners, credible investors, and predictable contributors to regional initiatives. Turkey’s problem is not that it lacks economic scale: it has a large domestic market, a sizeable population, an active private sector, and extensive trade links. The problem is that these strengths are repeatedly weakened by inflation, exchange-rate volatility, dependence on external finance, and vulnerability to energy-price shocks. The IMF noted that Turkey’s inflation fell from 49.4% year-on-year in September 2024 to 30.9% in December 2025, which shows some progress, but also underlines how far Turkey remains from price stability. The OECD also described Turkey’s inflation as still elevated, noting that it remained at 32.9% in October 2025, while the World Bank expects disinflation to progress gradually rather than quickly. These figures matter for foreign policy, because inflation and currency instability reduce purchasing power, complicate defence and infrastructure planning, weaken investor confidence, and make long-term external commitments harder to sustain. A middle power that wants to build coalitions must be able not only to convene, mediate, and signal ambition, but also to contribute resources consistently. Turkey’s economy gives it reach, but its volatility limits the credibility of that reach.

Unless macroeconomic stability improves, economic fragility will remain the hardest ceiling on Turkey’s transition from an agile middle power to a more trusted and durable coalition-builder.

This is one of the two biggest weaknesses in Turkey’s middle-power profile. Coalition-building requires economic contributions in the form of inter alia development finance, reconstruction support, credit lines, infrastructure investment, trade facilitation, humanitarian assistance, defence-industrial financing, and the capacity to absorb short-term costs for long-term strategic gain. Turkey can do some of this selectively, especially through trade, construction, logistics, and defence exports, but it cannot yet do it at the scale, or with the stability and predictability, expected of a more consolidated middle power. Its dependence on imported energy is especially important. Recent reporting on IMF projections notes that higher oil and gas prices following the US–Israeli conflict with Iran pushed Turkey’s 2026 current account deficit forecast to 2.8% of GDP, while S&P-linked reporting has highlighted Turkey’s reliance on imported oil and gas as a major source of inflationary and balance-of-payments vulnerability. This means that geopolitical shocks in Turkey’s surrounding regions quickly become domestic economic constraints. Ankara may have the diplomatic ambition to connect coalitions across the Balkans, the Caucasus, the Middle East, Africa, and Europe, but its ability to underwrite those coalitions materially is more limited. Put simply, while Turkey can often be a useful broker, corridor state, security partner, and political convenor, it is less consistently able to be a major financial provider. Unless macroeconomic stability improves, economic fragility will remain the hardest ceiling on Turkey’s transition from an agile middle power to a more trusted and durable coalition-builder.

Democratic Credibility and the Politics of Trust

The second major constraint on Turkey’s middle-power consolidation is political trust, and this is inseparable from the country’s domestic democratic trajectory. President Erdoğan remains the undisputed centre of political authority in Turkey, not only at the level of the presidency and ruling party, but also across much of the wider institutional field. The highly centralised presidential system has weakened parliamentary oversight and the separation of powers, while the judiciary, media environment, public bureaucracy, universities, municipalities, and regulatory bodies operate under strong executive pressure or political influence. This does not mean that Turkish society is simply passive, or that Erdoğan’s rule rests only on coercion. His political authority has always combined genuine mass support, electoral mobilisation, welfare distribution, conservative identity politics, and charismatic leadership with more coercive forms of institutional control. In other words, the system works through both consent and pressure. However, the balance between the two has increasingly shifted toward an uneven political arena in which opponents are not only defeated at the ballot box; they are often weakened before they reach it. The 2023 elections were competitive and Erdoğan won re-election, but OSCE observers also noted an uneven playing field, restrictions on freedoms, bias in public media, and problems of transparency in electoral administration. Furthermore, the European Commission’s 2025 Turkey report similarly underlined that the centralised presidential system remained in place and had seriously weakened the separation of powers along with the prerogatives of parliament.

Turkey has many of the material assets required for middle-power influence, but its democratic backsliding complicates the reputation it needs to turn those assets into durable partnerships. The treatment of opposition figures is a particularly glaring example. After the opposition’s major municipal victories in 2024, Freedom House reported that the government launched criminal investigations which led to the arrest of hundreds of opposition representatives in 2025, including Istanbul Mayor Ekrem İmamoğlu, who was arrested shortly before being formally chosen as the CHP’s presidential candidate and later faced charges carrying extremely severe potential penalties. Human Rights Watch described İmamoğlu’s detention as part of a pattern of politically motivated investigations, while the Turkish government denied a crackdown and insisted that the judiciary is independent. These cases resonate internationally, because they suggest that political competition is shaped not only through elections, but also through judicial, media, and administrative pressure before elections take place. For a country that wants to be considered a responsible, constructive, and coalition-building middle power, this creates a serious trust deficit. If Turkey were able to strengthen the rule of law, judicial independence, media pluralism, and democratic predictability, its middle-power role would become more credible and more attractive. Without such improvements, Ankara can still act as an agile and influential middle power, but it will struggle to become the kind of trusted middle power that can build broader, deeper, and more durable coalitions.

Conclusion: A Middle Power Operating Below Its Potential

Turkey is already a middle power, but it remains a middle power that operates below its potential. Its status is not imaginary, rhetorical, or merely aspirational. It rests on tangible resources: one of NATO’s most significant military capacities, a rapidly developing defence-industrial base, a strategically indispensable geography, deep economic connectivity with Europe and adjacent regions, a visible presence in the Balkans, Africa, the Caucasus and the Middle East, and a set of cultural, religious and diaspora networks that extend Turkish influence beyond formal diplomacy. Few states of comparable rank possess this combination of assets. Turkey can speak to actors that do not easily speak to one another; it can operate simultaneously within NATO and across non-Western diplomatic spaces; it can project hard power in selected theatres while presenting itself as a broker, corridor state, security provider and political intermediary. These are not the characteristics of a passive or peripheral actor. They are the foundations of genuine middle-power agency.

Yet the central argument of this paper is that resources alone do not make a fully effective middle power. Middle-powerhood is not only about what a state possesses; it is about how coherently, credibly and consistently those resources are converted into influence. This is where Turkey’s limits become visible. Ankara has learned to benefit from strategic diversity, but it has not always translated that diversity into strategic clarity. It has multiplied its options, but not always reduced ambiguity. It has built military and diplomatic reach, but its economic fragility restricts the material depth of its external commitments. It has cultivated influence through identity, religion and diaspora networks, but these tools can also generate suspicion when they appear overly partisan or instrumentalised. It has positioned itself as an autonomous actor in a fragmented order, but autonomy without predictability can easily be read as opportunism.

A further regional constraint concerns Israel. If Turkey wants to become a more effective power in its own region, it cannot treat Israel only through the language of moral opposition, crisis diplomacy or episodic confrontation. This does not mean abandoning the Palestinian question or normalising every Israeli policy. Rather, it means developing a more disciplined balance policy: one that preserves Turkey’s normative position on Palestine, while recognising Israel’s structural weight in Eastern Mediterranean security, US regional strategy, technology networks, energy politics and Gulf normalisation. A consequential middle power must be able to compete, criticise and communicate at the same time. Turkey’s ability to shape outcomes in the Middle East will therefore depend partly on whether it can manage a calibrated equilibrium with Israel without losing credibility in the wider Muslim world or undermining its Western security ties.

A more influential middle power needs the capacity to contribute materially to the coalitions it seeks to build. Turkey can convene, mediate, connect and provide selective security assistance, but persistent inflation, currency volatility, dependence on external finance and vulnerability to energy shocks limit its ability to act as a stable economic underwriter. 

The two most serious constraints, however, remain economic weakness and democratic credibility. A more influential middle power needs the capacity to contribute materially to the coalitions it seeks to build. Turkey can convene, mediate, connect and provide selective security assistance, but persistent inflation, currency volatility, dependence on external finance and vulnerability to energy shocks limit its ability to act as a stable economic underwriter. Similarly, middle powers rely heavily on trust. They must be seen as useful, but also as reliable. Turkey’s domestic democratic backsliding, pressure on opposition actors, weak rule-of-law perceptions, and politicisation of institutions create reputational costs that travel beyond its borders. They do not erase Turkey’s influence, but they make that influence harder to consolidate.

There is also a temporal and institutional question. Erdoğan is currently a very powerful leader and has been central to the personalisation, visibility and tactical flexibility of Turkey’s middle-power status. Yet, precisely because so much of this activism has been associated with presidential authority, leader-to-leader diplomacy and personalised crisis management, the post-Erdoğan question remains unresolved. A durable middle power cannot depend only on one leader’s instincts, networks or risk appetite. It requires institutional capacity, bureaucratic memory, predictable decision-making, professional diplomatic depth, and policy continuity across governments. Turkey’s ability to sustain its middle-power role after Erdoğan will therefore depend on whether its status can be institutionalised beyond personal leadership. At present, that remains an open question.

This is why Turkey’s middle-power future depends less on acquiring entirely new assets than it does utilizing the assets it already has in a more disciplined manner. If Ankara can stabilise its economy, strengthen institutional predictability, restore democratic credibility, clarify the relationship between interests, morality and identity, manage a more balanced relationship with Israel, and reduce the gap between strategic flexibility and perceived inconsistency, its middle-power status could become far more durable. Turkey does not need to become a great power to matter. It needs to become a more trusted, coherent, economically resilient and institutionally continuous middle power. The paradox is therefore clear: Turkey has the geography, military capacity, diplomatic reach and historical depth to be one of the most consequential middle powers of the post-post-Cold War era. But until it resolves the internal and regional constraints that weaken its credibility, reliability and continuity, it will remain powerful enough to shape outcomes, but not stable enough to fully define them. 

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