Diplomacy & Defense Think Tank News

Das Tempo, mit dem internationale Entwicklungsdebatten und entwicklungspolitische Leitbilder wegbrechen, ist hoch. Die AfD will das Entwicklungshilfeministerium abschaffen. Die Gesellschaft für Internationale Zusammenarbeit soll schrumpfen, die Nord-Süd-Kommission eine neue Rolle für Deutschland definieren.

Why do some firms experience more volatile growth rates than others? This paper seeks to shed light on this question using a rich data set of almost 92,000 Vietnamese firms for the period 2009–2018. Apart from firm-level characteristics, the paper examines the roles of province-level financial development, corruption control, and their interaction in explaining firm growth volatility. Our results show that there is a robust negative correlation between corruption control and firm-level volatility. Moreover, while local financial development — measured by financial depth — is generally negatively associated with volatility, the correlation between financial outreach and different measures of firm growth volatility varies. Crucially, we find a negative interaction between corruption control and local financial development, suggesting that financial development may exert a more substantial volatility-dampening effect in environments with robust corruption control, and conversely, that the effect of corruption control may be stronger in provinces with advanced level of financial development.

Why do some firms experience more volatile growth rates than others? This paper seeks to shed light on this question using a rich data set of almost 92,000 Vietnamese firms for the period 2009–2018. Apart from firm-level characteristics, the paper examines the roles of province-level financial development, corruption control, and their interaction in explaining firm growth volatility. Our results show that there is a robust negative correlation between corruption control and firm-level volatility. Moreover, while local financial development — measured by financial depth — is generally negatively associated with volatility, the correlation between financial outreach and different measures of firm growth volatility varies. Crucially, we find a negative interaction between corruption control and local financial development, suggesting that financial development may exert a more substantial volatility-dampening effect in environments with robust corruption control, and conversely, that the effect of corruption control may be stronger in provinces with advanced level of financial development.

Why do some firms experience more volatile growth rates than others? This paper seeks to shed light on this question using a rich data set of almost 92,000 Vietnamese firms for the period 2009–2018. Apart from firm-level characteristics, the paper examines the roles of province-level financial development, corruption control, and their interaction in explaining firm growth volatility. Our results show that there is a robust negative correlation between corruption control and firm-level volatility. Moreover, while local financial development — measured by financial depth — is generally negatively associated with volatility, the correlation between financial outreach and different measures of firm growth volatility varies. Crucially, we find a negative interaction between corruption control and local financial development, suggesting that financial development may exert a more substantial volatility-dampening effect in environments with robust corruption control, and conversely, that the effect of corruption control may be stronger in provinces with advanced level of financial development.

Das Bundesministerium für Wirtschaft und Energie hat den Leiter der Abteilung Unternehmen und Märkte im DIW Berlin, Tomaso Duso, für weitere vier Jahre in die Monopolkommission berufen. Er ist seit 2022 Mitglied und seit September 2024 Vorsitzender des Gremiums. Zudem ist er Professor für empirische ...

Cattle ranching drives approximately 78% of Amazon deforestation, yet research often overlooks the differentiated actors and power relations underlying this process. Among 335 articles examining cattle ranching dynamics in the Amazon, this narrative literature review identified 36 studies that enable systematic analysis of the actors, interactions, and logics driving cattle-induced deforestation, in this case through a political ecology framework informed by the coloniality of power perspective. Four main actors occupy distinct positions in territorial appropriation: smallholders function as precarious frontier agents through forced migration and socioeconomic vulnerability; large landowners concentrate land via capital accumulation and institutional capture; investors treat Amazonian land as speculative assets; and armed actors provide coercive enforcement for illegal appropriation. These actors interact asymmetrically through exploitative partnerships, labor arrangements including modern slavery, and institutional capture, enabling wealth concentration. Two contradictory deforestation logics emerge: capital accumulation through cattle laundering, land speculation, and the purchase of improvements from displaced smallholders, versus livelihood reproduction, where structural exclusion forces continuous frontier expansion. The analysis reveals cattle-driven deforestation as a structured dispossession process reproducing colonial patterns, where large landowners deforest disproportionately despite dominant narratives blaming peasant poverty. Critical gaps perpetuate this misunderstanding: Brazilian geographic bias limits pan-Amazonian perspectives, inconsistent smallholder definitions enable elite policy capture, and aggregate studies obscure the agency and power asymmetries driving dispossession. Effective conservation thus requires dismantling structural configurations that enable asymmetric resource appropriation rather than technical interventions treating actors homogeneously.

Cattle ranching drives approximately 78% of Amazon deforestation, yet research often overlooks the differentiated actors and power relations underlying this process. Among 335 articles examining cattle ranching dynamics in the Amazon, this narrative literature review identified 36 studies that enable systematic analysis of the actors, interactions, and logics driving cattle-induced deforestation, in this case through a political ecology framework informed by the coloniality of power perspective. Four main actors occupy distinct positions in territorial appropriation: smallholders function as precarious frontier agents through forced migration and socioeconomic vulnerability; large landowners concentrate land via capital accumulation and institutional capture; investors treat Amazonian land as speculative assets; and armed actors provide coercive enforcement for illegal appropriation. These actors interact asymmetrically through exploitative partnerships, labor arrangements including modern slavery, and institutional capture, enabling wealth concentration. Two contradictory deforestation logics emerge: capital accumulation through cattle laundering, land speculation, and the purchase of improvements from displaced smallholders, versus livelihood reproduction, where structural exclusion forces continuous frontier expansion. The analysis reveals cattle-driven deforestation as a structured dispossession process reproducing colonial patterns, where large landowners deforest disproportionately despite dominant narratives blaming peasant poverty. Critical gaps perpetuate this misunderstanding: Brazilian geographic bias limits pan-Amazonian perspectives, inconsistent smallholder definitions enable elite policy capture, and aggregate studies obscure the agency and power asymmetries driving dispossession. Effective conservation thus requires dismantling structural configurations that enable asymmetric resource appropriation rather than technical interventions treating actors homogeneously.

Cattle ranching drives approximately 78% of Amazon deforestation, yet research often overlooks the differentiated actors and power relations underlying this process. Among 335 articles examining cattle ranching dynamics in the Amazon, this narrative literature review identified 36 studies that enable systematic analysis of the actors, interactions, and logics driving cattle-induced deforestation, in this case through a political ecology framework informed by the coloniality of power perspective. Four main actors occupy distinct positions in territorial appropriation: smallholders function as precarious frontier agents through forced migration and socioeconomic vulnerability; large landowners concentrate land via capital accumulation and institutional capture; investors treat Amazonian land as speculative assets; and armed actors provide coercive enforcement for illegal appropriation. These actors interact asymmetrically through exploitative partnerships, labor arrangements including modern slavery, and institutional capture, enabling wealth concentration. Two contradictory deforestation logics emerge: capital accumulation through cattle laundering, land speculation, and the purchase of improvements from displaced smallholders, versus livelihood reproduction, where structural exclusion forces continuous frontier expansion. The analysis reveals cattle-driven deforestation as a structured dispossession process reproducing colonial patterns, where large landowners deforest disproportionately despite dominant narratives blaming peasant poverty. Critical gaps perpetuate this misunderstanding: Brazilian geographic bias limits pan-Amazonian perspectives, inconsistent smallholder definitions enable elite policy capture, and aggregate studies obscure the agency and power asymmetries driving dispossession. Effective conservation thus requires dismantling structural configurations that enable asymmetric resource appropriation rather than technical interventions treating actors homogeneously.

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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EU Defence Series: PESCO Must Step Up. Tallinn: International Centre for Defence and Security (October 2025). 26 Kempin, R. & Kunz, B. (2017). France, Germany and the Quest for European Strategic Autonomy. SWP Comment 2017/48. Berlin. 27 Koops, J. (2017). Theorising Inter-Organisational Relations: The ‘Inverse Logic’ of NATO and EU Institutional Development. Journal of European Integration, 33(4). 28 Kramer, F. D. & Agachi, A. (2024). The Case for a Stronger European Pillar in NATO. Atlantic Council Report. Washington DC. 29 Lippert, B., Ondarza, N. & Perthes, V. (2019). European Strategic Autonomy: Actors, Issues, Conflicts of Interests. SWP Research Paper 4. Berlin. 30 Major, C. & Molling, C. (2020). European Strategic Autonomy: What It Is, Why We Need It, How to Achieve It. SWP Comment 2020/22. Berlin. 31 Manners, I. (2002). Normative Power Europe: A Contradiction in Terms? Journal of Common Market Studies, 40(2), 235–258. 32 Martin, L. & Sinkkonen, E. (2022). Europe’s Strategic Ambiguity: Security Partnerships in a Multipolar World. Routledge. 33 Meijer, H. & Brooks, S. G. (2021). Illusions of Autonomy: Why Europe Cannot Provide for Its Own Security. International Security, 45(4). 34 Michaels, J. & Sus, M. (2024). European Strategic Autonomy: Rhetoric and Reality. European Journal of International Security, 9(1). 35 Munich Security Conference (2025). Munich Security Report 2025: ‘Turning Point.’ Munich: MSC. 36 NATO (2022). NATO 2022 Strategic Concept. Brussels: NATO Public Diplomacy Division. 37 NATO (2025). NATO 2025 Hague Summit Declaration. Brussels: NATO. 38 O’Hanlon, M. (2024). The Art of War in an Age of Peace: U.S. Grand Strategy and Resolute Restraint. Yale University Press. 39 Retter, L. et al. (2021). European Strategic Autonomy in Defence: Transatlantic Visions and Implications for NATO, US and EU Relations. RAND Research Report RRA1319-1. Santa Monica. 40 SIPRI (2026). SIPRI Yearbook 2025: Armaments, Disarmament and International Security. Stockholm: Stockholm International Peace Research Institute. 41 Tardy, T. (2018). EU–NATO: Cooperation in a Changing Context. European Security, 27(2), 160–175. 42 Taylor, P. (2024). Europe’s Defence Dilemma: Why the EU Is Finally Getting Serious. Policy Review. Brookings Institution. 43 Vanhoonacker, S. & Jacobs, A. (2023). The EU’s Quest for Strategic Autonomy: From Rhetoric to Action? Journal of European Public Policy. 44 Yost, D. S. (2007). NATO and International Organizations. NATO Defense College Forum Paper 3. Rome.

Academic and Policy References in French

No. Reference 1 Balfour, R. (2025). ‘L’Europe à la croisée des chemins: autonomie stratégique ou vassalité transatlantique?’ Politique étrangère, 90(1), 45–60. 2 Bélanger, L. (2025). ‘L’Europe de la défense à l’épreuve du retour de Trump.’ Revue internationale et stratégique, 137, 21–36. 3 Biscop, S. (2023). ‘Dissuasion nucléaire européenne: utopie ou nécessité?’ Politique étrangère, 88(2), 57–70. Paris: IFRI. 4 de Brichambaut, M. P. & Wauthier, J.-F. (2021). ‘L’autonomie stratégique européenne: concept, enjeux et perspectives.’ Annuaire français de droit international, 67, 17–46. 5 Grand, C. (2024). ‘L’Europe nucléaire: entre dépendance et émancipation.’ Revue Défense Nationale, hors-série, 2024. 6 IFRI (2024). L’Europe de la défense en 2024: bilan et perspectives. Paris: Institut français des relations internationales. 7 Kauffmann, P. (2025). ‘OTAN: le pilier européen en construction.’ Revue Défense Nationale, 878, 10–22. 8 Kempf, O. (2023). ‘La boussole stratégique de l’Union européenne: ambitions et limites.’ Stratégique, 128, 71–88. 9 Lagneau, L. (2025). ‘L’autonomie stratégique européenne à l’épreuve des faits: les lacunes capacitaires.’ Opex360.com (analyses). 10 Macron, E. (2024). Discours sur l’Europe de la défense. Sorbonne, 25 avril 2024. Élysée / Documentation française. 11 Masson, H. (2024). ‘La Base industrielle et technologique de défense européenne: vers une véritable intégration?’ Annuaire stratégique et militaire 2024. Paris: Odile Jacob / FRS. 12 Maulny, J.-P. (2024). ‘PESCO, FEO, Boussole stratégique: quel bilan pour l’Europe de la défense?’ Note de l’IRIS. Paris: Institut de Relations Internationales et Stratégiques. 13 Missiroli, A. (2023). ‘De la politique étrangère commune à la défense commune: l’évolution de la PSDC.’ Cahiers de la sécurité et de la justice, 42, 12–25. 14 Pezard, S. (2024). ‘La dissuasion élargie en Europe et l’avenir du parapluie nucléaire américain.’ Revue Défense Nationale, 876, 44–57. 15 Rapport Draghi (2024). L’avenir de la compétitivité européenne. Rapport au Président du Conseil européen. Bruxelles: Commission européenne. 16 Rizzo, M. & Benhamou, Y. (2024). ‘L’européanisation de l’OTAN: entre volonté politique et réalités capacitaires.’ Questions internationales, 124, 38–52. 17 Santopinto, F. (2022). ‘La Boussole stratégique de l’UE: un pas en avant pour l’autonomie stratégique?’ Note d’analyse du GRIP. Bruxelles. 18 Tardy, T. (2023). ‘Coopération UE-OTAN: vers un partenariat stratégique équilibré?’ Politique étrangère, 88(3), 67–80. 19 Védrine, H. (2024). ‘L’Europe de la défense: réalité ou fiction?’ Le Débat, 231, 3–18. Paris: Gallimard. 20 von der Leyen, U. (2025). Livre blanc pour la défense européenne — Bâtir l’Europe 2030. Bruxelles: Commission européenne (mars 2025) [version française].

Academic and Policy References in Greek

No. Reference 1 Αλεξόπουλος, Ν. (2023). «Η ευρωπαϊκή αμυντική ολοκλήρωση και η ΚΠΑΑ: προκλήσεις και προοπτικές», Διεθνής και Ευρωπαϊκή Πολιτική, 47, 15–38. 2 Αρβανιτόπουλος, Κ. & Μπαλτάς, Γ. (2022). «ΝΑΤΟ και ΕΕ σε περίοδο κρίσης: η ελληνική οπτική», Ελληνική Επιθεώρηση Πολιτικής Επιστήμης, 60, 5–30. 3 Βαληνάκης, Γ. (2021). Η Ευρωπαϊκή Ασφάλεια σε Μεταβατική Περίοδο, Αθήνα: Παπαζήση. 4 Δαλακούρας, Θ. (2024). «Η στρατηγική αυτονομία της ΕΕ και οι σχέσεις ΕΕ-ΝΑΤΟ: μία ελληνική αποτίμηση», Διεθνές και Ευρωπαϊκό Δίκαιο, 18(2), 123–148. 5 ΕΛΙΑΜΕΠ (2023). Έκθεση για την Ευρωπαϊκή Άμυνα και Ασφάλεια 2023, Αθήνα: Ελληνικό Ίδρυμα Ευρωπαϊκής και Εξωτερικής Πολιτικής. 6 ΕΛΙΑΜΕΠ (2025). Η Ελλάδα στη Νέα Αμυντική Αρχιτεκτονική της Ευρώπης, Policy Brief 142. Αθήνα. 7 Ηφαίστου-Ψαλλίδα, Π. (2019). Η Κοινή Πολιτική Ασφάλειας και Άμυνας της ΕΕ: Θεωρία και Πράξη, Αθήνα: Παπαζήση. 8 Θεοφάνους, Α. (2022). «Γεωπολιτικές διαστάσεις της ρωσικής εισβολής στην Ουκρανία και επιπτώσεις στην ευρωπαϊκή ασφάλεια», Διεθνείς Σχέσεις, 32, 7–29. 9 Κεντρωτής, Γ. (2024). «Ευρωπαϊκό ΝΑΤΟ: ορισμός, περιεχόμενο και προοπτικές», Στρατηγική Ανάλυση (ΙΔΙΣ), 12, 45–67. 10 Κουσκουβέλης, Η. (2018). Θεωρία Διεθνών Σχέσεων: Ισχύς, Ασφάλεια, Στρατηγική (4η έκδ.). Αθήνα: Παπαζήση. 11 Κουσκουβέλης, Η. & Ξαντόπουλος, Γ. (2023). «Μετά τη Μαδρίτη: ΝΑΤΟ, Ευρώπη και η ρωσική πρόκληση», Θέσεις, 162, 12–35. 12 Λυγερός, Σ. (2024). «Η Ευρώπη της Άμυνας απέναντι στη ρωσική απειλή: στρατηγικά διδάγματα», Επίκαιρα Θέματα Εξωτερικής Πολιτικής (ΕΛΙΑΜΕΠ). 13 Νικολαΐδης, Κ. (2023). «Ευρωπαϊκή κυριαρχία ή αυτονομία; Διαφορές έννοιας και πολιτικής», Εξωτερική Πολιτική, 9(1), 22–41. 14 Παπαδόπουλος, Α. (2024). «Ελλάδα, ΝΑΤΟ και Ευρωπαϊκή Αμυντική Ολοκλήρωση: Συμφέροντα και Θέσεις», ΙΔΙΣ Ανάλυση 2024/7. Αθήνα. 15 Παπασωτηρίου, Χ. (2019). Αμερικανική Εξωτερική Πολιτική: Ιστορία, Θεωρία και Πράξη. Αθήνα: Ποιότητα. 16 Σαρηγιαννίδης, Μ. (2023). «Η νομική βάση της ΚΠΑΑ: από τη Λισαβόνα στη Στρατηγική Πυξίδα», Επιστήμη & Κοινωνία, 41, 5–27. 17 Τζιφάκης, Ν. (2022). «Τα όρια της ΚΠΑΑ: θεσμοί, δυνατότητες και εθνικά συμφέροντα», Ελληνική Επιθεώρηση Πολιτικής Επιστήμης, 58, 33–60. 18 Φίλης, Κ. (2025). «ΝΑΤΟ 2025: η μεγαλύτερη πρόκληση από την ίδρυσή του», Εθνικό Συμβούλιο Εξωτερικής Πολιτικής (ΕΣΕΠ), Αθήνα. 19 Χρυσοχόου, Δ. Ν. (2021). Θεωρία Ευρωπαϊκής Ολοκλήρωσης. Αθήνα: Σάκκουλας. 20 Χρυσοχόου, Δ. Ν. & Μαυρομμάτης, Γ. (2024). «Η ευρωπαϊκή αμυντική ενοποίηση ως πολιτική διαδικασία: παράγοντες, δυναμικές, παράδοξα.» Διεθνής και Ευρωπαϊκή Πολιτική, 51, 3–26.

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.

Die Monopolkommission hat heute ihr 26. Hauptgutachten dem Bundeswirtschaftsministerium übergeben. Tomaso Duso, Leiter der Abteilung Unternehmen und Märkte im DIW Berlin und Vorsitzender der Monopolkommission, äußert sich dazu wie folgt:

Die Probleme der deutschen Industrie lassen sich nicht mit immer neuen Einzelmaßnahmen lösen. Viele staatliche Eingriffe sind teuer und oft wirkungslos. Stattdessen braucht es starken Wettbewerb und Rahmenbedingungen, die Innovation ermöglichen. Wettbewerb sollte der Kompass für die Wirtschaftspolitik sein – in der Energiepolitik, bei der Förderung von Künstlicher Intelligenz sowie bei anderen Standortfaktoren. 

Deutschlands größte Industrieunternehmen wachsen, aber immer seltener in Deutschland. Besonders betroffen ist das verarbeitende Gewerbe. Dass große Industrieunternehmen ihre Wertschöpfung vermehrt im Ausland erzeugen und die Produktivität in Deutschland sinkt, ist ein Warnsignal. Deutschland muss als Standort wieder attraktiver werden. Dazu muss Wirtschaftspolitik Innovationen und neue Technologien fördern, statt auf überkommene Branchen zu setzen.

Die Monopolkommission empfiehlt den Abbau staatlich verursachter Energiekosten, die Stärkung des Technologietransfers aus der Forschung in die Anwendung und eine deutliche Entbürokratisierung. Subventionen für einzelne Branchen oder Unternehmen verzerren oft den Wettbewerb. Sie sollten nur dort eingesetzt werden, wo notwendige Investitionen sonst ausbleiben oder die Transformation der Wirtschaft nicht gelingt — und dann wettbewerbsoffen, transparent und befristet sein sowie regelmäßig evaluiert werden.

Deutschland hat etwa ein Labyrinth branchenspezifischer Stromhilfen aufgebaut: Strompreiskompensation, Industriestrompreissubventionen, Stromsteuersenkungen, Zuschüsse zu Netzentgelten. Es werden vor allem große Verbraucher begünstigt, während kleinere Unternehmen oft leer ausgehen. Die Monopolkommission empfiehlt stattdessen breite Entlastungen, etwa durch die Senkung staatlich geprägter Strompreisbestandteile und vor allem eine höhere Effizienz des gesamten Stromsystems. Hilfen für einzelne Branchen sollten auf eng begründete Ausnahmefälle beschränkt bleiben.

Auch die Anwendung von KI kommt in Deutschland nicht mit der notwendigen Schnelligkeit voran. Die Gründe sind vielfältig – von Trägheit in den Unternehmen über Rechtsunsicherheiten bis zu einem Regulierungsrahmen, der insbesondere kleinere Unternehmen und Start-ups belastet. Problematisch ist, dass im KI-Sektor nach wie vor große Abhängigkeiten von wenigen US-Unternehmen bestehen. Die Monopolkommission spricht sich daher für eine konsequente Durchsetzung des Wettbewerbsrechts und des europäischen Digital Markets Acts aus. Zudem sollte die Regulierung von KI verschlankt und Doppelregulierung vermieden werden.

USA schwächt mit Hafengebühren für in China gebaute Schiffe eigene Im- und Exporte – Auch viele Schwellenländer und EU-Länder betroffen – Deutschland könnte hingegen Ausfuhren in USA ausbauen – EU reagiert auf Chinas Dominanz mit neuer maritimer Industriestrategie Mit den ab November geplanten ...

Es ist ein bemerkenswerter Erfolg für das Sozio-oekonomische Panel: Der Wissenschaftsrat bewertet das beantragte große strategische Erweiterungsvorhaben als „exzellent“. In der Gesamtbewertung aller Anträge von Leibniz-Instituten liegt das SOEP auf Platz 1. In seiner Stellungnahme vom 3. Juli 2026 ...

Je länger die Schäferhündin Gin schon verschwunden ist, desto schwieriger wird die Suche nach ihr. Nach drei Monaten hofft die Besitzerin vor allem darauf, dass sie bei der Polizei abgegeben wird. Allerdings wirft auch das Verschwinden von Gin viele Fragen auf.

Der Paläolibertarismus der amerikanischen Tech-Elite macht sich auch in Europa breit. Er schwächt den Staat und nur ein scheinbares Ideal: Freiheit für alle., Es gibt Jahrestage, die mehr sind als Erinnerung. Sie mahnen zur Bilanz. Der 250. Geburtstag der Vereinigten Staaten am 4. Juli ist ein solcher Moment. Wenn sich für viele Menschen in Europa und dem Rest der Welt der Blick auf die USA in den vergangenen Jahren grundlegend verändert hat, so bleiben ...

Bonn, 6. Juli 2026. Gemeinschaften in besonders stark vom Klimawandel betroffenen Ländern passen sich an dessen Auswirkungen an, doch die nötigen Ressourcen bleiben aus.

Die alljährlichen Zwischenverhandlungen der UN-Klimarahmenkonvention im Juni (SB64) erreichten bei mehreren zentralen Agendapunkten, darunter dem Globalen Anpassungsziel (Global Goal on Adaptation, GGA), nur begrenzte Fortschritte. Das GGA ist eine Verpflichtung aller Unterzeichnerländer des Pariser Abkommens. Es soll die Anpassungsbemühungen koordinieren, Rechenschaftspflichten stärken und Finanzmittel für vulnerable Länder mobilisieren. Obwohl die Staaten den Umsetzungsrahmen finalisieren sollten, bleiben langjährige politische Streitfragen ungelöst. Entwicklungsländer kritisierten die Industrieländer, weil die schriftliche Einigung auf mindestens eine Verdreifachung der Anpassungsfinanzierung ausblieb, wie sie im „Mutirão“ der COP30 verankert ist. Ohne diese Einigung zur Finanzierung stocken die Verhandlungen.

Die festgefahrene Situation reicht über die Verhandlungsräume in Bonn hinaus. Für klimavulnerable Länder wächst mit der Lücke der Anpassungsfinanzierung die Kluft zwischen Klimaverpflichtungen und ihrer Umsetzung. Oft reichen nationale Anpassungsbudgets nicht aus und konkurrieren mit anderen dringlichen Entwicklungsprioritäten. Dadurch sind Millionen Menschen weiterhin Klimarisiken ausgesetzt, während hart erkämpfte Entwicklungserfolge gefährdet werden. Zwar wenden viele Entwicklungsländer bereits erhebliche öffentliche Mittel zur Bewältigung der Klimafolgen auf, doch bleiben diese Investitionen deutlich hinter dem notwendigen Umfang zurück und engen zugleich den finanzpolitischen Spielraum für andere Entwicklungsziele weiter ein. 

Die jüngsten Mittelzuweisungen im Staatshaushalt Bangladeschs, einem der weltweit am stärksten vom Klimawandel bedrohten Länder, zeigen die Folgen des stockenden Fortschritts beim GGA auf nationaler Ebene. Laut dem nationalen Anpassungsplan von 2023 werden bis 2050 jährlich rund 8,5 Mrd. USD benötigt, um die Herausforderungen der Anpassung zu bewältigen. Der Staatshaushalt für 2026–2027 sieht jedoch nur rund 3,19 Milliarden USD für Klimaanpassung vor. Die auf 25 Ministerien verteilten Mittel fließen in Programme zur Katastrophenvorsorge, klimaresilienten Landwirtschaft, Ernährungssicherheit und für soziale Sicherung. Der Betrag mag hoch erscheinen, deckt aber weniger als die Hälfte des geschätzten jährlichen Anpassungsbedarfs und zeigt deutlich, dass inländische Ressourcen allein nicht ausreichen, um die Anpassungsziele zu erreichen.

Die Mittelzuweisung für Anpassungsmaßnahmen, die rund 4,15 % des Staatshaushalts ausmacht, stellt zwar eine Steigerung gegenüber den Vorjahren dar, verdeutlicht jedoch zugleich die haushaltspolitischen Zielkonflikte. Die öffentlichen Investitionen in den Klimaschutz bleiben begrenzt: Im Haushalt 2026–27 sind lediglich 814 Mio. USD für erneuerbare Energien, Energieeffizienz, emissionsarmen Transport und Aufforstung vorgesehen. Das liegt deutlich unter den geschätzten 1,78 Mrd. USD, die jährlich erforderlich sind, um Bangladeschs Ziele für erneuerbare Energien bis 2030 zu erreichen – darunter 553 Mio. USD an öffentlichen Investitionen –, während die derzeitige Zuweisung von 31,1 Mio. USD lediglich 2,2 % dieses Bedarfs deckt. Die unzureichende öffentliche Finanzierung bremst weiterhin den Ausbau erneuerbarer Energien, während Steuerbefreiungen für den Import fossiler Energieträger die Abhängigkeit von diesen Importen weiter festigen.

Für Länder wie Bangladesch ist eine auf Zuschüssen basierende Anpassungsfinanzierung daher unerlässlich. Ohne sie drohen die Klimaziele weitgehend Rhetorik zu bleiben. Eine anhaltende Unterfinanzierung kann die institutionellen Strukturen der Klimaanpassung schwächen und die über Jahre aufgebauten Umsetzungsbemühungen untergraben. Die Verantwortung dafür liegt jedoch nicht allein bei den nationalen Regierungen. Der Krieg in der Ukraine und zwischen den USA und dem Iran haben die Sorgen um Energiesicherheit, Inflation und wirtschaftliche Stabilität verschärft – und damit finanzielle Ressourcen sowie politische Aufmerksamkeit von Klimaschutz und Anpassung abgezogen.

Zugleich stehen viele klimavulnerable Länder vor einer doppelten Herausforderung: Sie müssen eskalierende Klimarisiken bewältigen und sich gleichzeitig in einem zunehmend unsicheren geopolitischen Umfeld behaupten. Zu der ohnehin langen Liste von Klimagefahren – darunter Meeresspiegelanstieg, Überschwemmungen, Dürren, Versalzung, Ernährungsunsicherheit, Vertreibung und der Verlust von Ökosystemen – sind inzwischen eine unsichere Energieversorgung, Lieferkettenstörungen und wirtschaftliche Schwankungen hinzugekommen.

Der mangelnde Fortschritt beim GGA auf der SB64 ist daher äußerst besorgniserregend. Klimavulnerable Länder benötigen kontinuierliche und ausreichende Finanzmittel, um Anpassungsmaßnahmen umzusetzen und ihre klimapolitischen Verpflichtungen zu erfüllen. Doch der politische und finanzielle Spielraum für Anpassung schrumpft – nicht, weil die Klimarisiken abgenommen hätten, sondern weil konkurrierende Krisen die politische Agenda auf nationaler wie internationaler Ebene zunehmend bestimmen. Die COP31 muss den Verhandlungen neuen Schwung verleihen, indem sie ein umsetzungsfähiges GGA beschließt, das messbar ist, den Finanzierungsbedarf berücksichtigt und auf die Umsetzung ausgerichtet ist. Dafür braucht es gemeinsame Anpassungsindikatoren, klare Rechenschaftsmechanismen und verlässliche Zuschüsse, damit besonders gefährdete Länder ihre Anpassungsprioritäten umsetzen können.

A B M Hasanuzzaman ist Fellow des Internationalen Klimaschutzstipendiums der Alexander von Humboldt-Stiftung 2025 und Gastwissenschaftler am IDOS.

Dr. Aparajita Banerjee ist Soziologin und wissenschaftliche Mitarbeiterin in der Abteilung „Umwelt-Governance“ des German Institute of Development and Sustainability (IDOS).

Bonn, 6. Juli 2026. Gemeinschaften in besonders stark vom Klimawandel betroffenen Ländern passen sich an dessen Auswirkungen an, doch die nötigen Ressourcen bleiben aus.

Die alljährlichen Zwischenverhandlungen der UN-Klimarahmenkonvention im Juni (SB64) erreichten bei mehreren zentralen Agendapunkten, darunter dem Globalen Anpassungsziel (Global Goal on Adaptation, GGA), nur begrenzte Fortschritte. Das GGA ist eine Verpflichtung aller Unterzeichnerländer des Pariser Abkommens. Es soll die Anpassungsbemühungen koordinieren, Rechenschaftspflichten stärken und Finanzmittel für vulnerable Länder mobilisieren. Obwohl die Staaten den Umsetzungsrahmen finalisieren sollten, bleiben langjährige politische Streitfragen ungelöst. Entwicklungsländer kritisierten die Industrieländer, weil die schriftliche Einigung auf mindestens eine Verdreifachung der Anpassungsfinanzierung ausblieb, wie sie im „Mutirão“ der COP30 verankert ist. Ohne diese Einigung zur Finanzierung stocken die Verhandlungen.

Die festgefahrene Situation reicht über die Verhandlungsräume in Bonn hinaus. Für klimavulnerable Länder wächst mit der Lücke der Anpassungsfinanzierung die Kluft zwischen Klimaverpflichtungen und ihrer Umsetzung. Oft reichen nationale Anpassungsbudgets nicht aus und konkurrieren mit anderen dringlichen Entwicklungsprioritäten. Dadurch sind Millionen Menschen weiterhin Klimarisiken ausgesetzt, während hart erkämpfte Entwicklungserfolge gefährdet werden. Zwar wenden viele Entwicklungsländer bereits erhebliche öffentliche Mittel zur Bewältigung der Klimafolgen auf, doch bleiben diese Investitionen deutlich hinter dem notwendigen Umfang zurück und engen zugleich den finanzpolitischen Spielraum für andere Entwicklungsziele weiter ein. 

Die jüngsten Mittelzuweisungen im Staatshaushalt Bangladeschs, einem der weltweit am stärksten vom Klimawandel bedrohten Länder, zeigen die Folgen des stockenden Fortschritts beim GGA auf nationaler Ebene. Laut dem nationalen Anpassungsplan von 2023 werden bis 2050 jährlich rund 8,5 Mrd. USD benötigt, um die Herausforderungen der Anpassung zu bewältigen. Der Staatshaushalt für 2026–2027 sieht jedoch nur rund 3,19 Milliarden USD für Klimaanpassung vor. Die auf 25 Ministerien verteilten Mittel fließen in Programme zur Katastrophenvorsorge, klimaresilienten Landwirtschaft, Ernährungssicherheit und für soziale Sicherung. Der Betrag mag hoch erscheinen, deckt aber weniger als die Hälfte des geschätzten jährlichen Anpassungsbedarfs und zeigt deutlich, dass inländische Ressourcen allein nicht ausreichen, um die Anpassungsziele zu erreichen.

Die Mittelzuweisung für Anpassungsmaßnahmen, die rund 4,15 % des Staatshaushalts ausmacht, stellt zwar eine Steigerung gegenüber den Vorjahren dar, verdeutlicht jedoch zugleich die haushaltspolitischen Zielkonflikte. Die öffentlichen Investitionen in den Klimaschutz bleiben begrenzt: Im Haushalt 2026–27 sind lediglich 814 Mio. USD für erneuerbare Energien, Energieeffizienz, emissionsarmen Transport und Aufforstung vorgesehen. Das liegt deutlich unter den geschätzten 1,78 Mrd. USD, die jährlich erforderlich sind, um Bangladeschs Ziele für erneuerbare Energien bis 2030 zu erreichen – darunter 553 Mio. USD an öffentlichen Investitionen –, während die derzeitige Zuweisung von 31,1 Mio. USD lediglich 2,2 % dieses Bedarfs deckt. Die unzureichende öffentliche Finanzierung bremst weiterhin den Ausbau erneuerbarer Energien, während Steuerbefreiungen für den Import fossiler Energieträger die Abhängigkeit von diesen Importen weiter festigen.

Für Länder wie Bangladesch ist eine auf Zuschüssen basierende Anpassungsfinanzierung daher unerlässlich. Ohne sie drohen die Klimaziele weitgehend Rhetorik zu bleiben. Eine anhaltende Unterfinanzierung kann die institutionellen Strukturen der Klimaanpassung schwächen und die über Jahre aufgebauten Umsetzungsbemühungen untergraben. Die Verantwortung dafür liegt jedoch nicht allein bei den nationalen Regierungen. Der Krieg in der Ukraine und zwischen den USA und dem Iran haben die Sorgen um Energiesicherheit, Inflation und wirtschaftliche Stabilität verschärft – und damit finanzielle Ressourcen sowie politische Aufmerksamkeit von Klimaschutz und Anpassung abgezogen.

Zugleich stehen viele klimavulnerable Länder vor einer doppelten Herausforderung: Sie müssen eskalierende Klimarisiken bewältigen und sich gleichzeitig in einem zunehmend unsicheren geopolitischen Umfeld behaupten. Zu der ohnehin langen Liste von Klimagefahren – darunter Meeresspiegelanstieg, Überschwemmungen, Dürren, Versalzung, Ernährungsunsicherheit, Vertreibung und der Verlust von Ökosystemen – sind inzwischen eine unsichere Energieversorgung, Lieferkettenstörungen und wirtschaftliche Schwankungen hinzugekommen.

Der mangelnde Fortschritt beim GGA auf der SB64 ist daher äußerst besorgniserregend. Klimavulnerable Länder benötigen kontinuierliche und ausreichende Finanzmittel, um Anpassungsmaßnahmen umzusetzen und ihre klimapolitischen Verpflichtungen zu erfüllen. Doch der politische und finanzielle Spielraum für Anpassung schrumpft – nicht, weil die Klimarisiken abgenommen hätten, sondern weil konkurrierende Krisen die politische Agenda auf nationaler wie internationaler Ebene zunehmend bestimmen. Die COP31 muss den Verhandlungen neuen Schwung verleihen, indem sie ein umsetzungsfähiges GGA beschließt, das messbar ist, den Finanzierungsbedarf berücksichtigt und auf die Umsetzung ausgerichtet ist. Dafür braucht es gemeinsame Anpassungsindikatoren, klare Rechenschaftsmechanismen und verlässliche Zuschüsse, damit besonders gefährdete Länder ihre Anpassungsprioritäten umsetzen können.

A B M Hasanuzzaman ist Fellow des Internationalen Klimaschutzstipendiums der Alexander von Humboldt-Stiftung 2025 und Gastwissenschaftler am IDOS.

Dr. Aparajita Banerjee ist Soziologin und wissenschaftliche Mitarbeiterin in der Abteilung „Umwelt-Governance“ des German Institute of Development and Sustainability (IDOS).

Bonn, 6. Juli 2026. Gemeinschaften in besonders stark vom Klimawandel betroffenen Ländern passen sich an dessen Auswirkungen an, doch die nötigen Ressourcen bleiben aus.

Die alljährlichen Zwischenverhandlungen der UN-Klimarahmenkonvention im Juni (SB64) erreichten bei mehreren zentralen Agendapunkten, darunter dem Globalen Anpassungsziel (Global Goal on Adaptation, GGA), nur begrenzte Fortschritte. Das GGA ist eine Verpflichtung aller Unterzeichnerländer des Pariser Abkommens. Es soll die Anpassungsbemühungen koordinieren, Rechenschaftspflichten stärken und Finanzmittel für vulnerable Länder mobilisieren. Obwohl die Staaten den Umsetzungsrahmen finalisieren sollten, bleiben langjährige politische Streitfragen ungelöst. Entwicklungsländer kritisierten die Industrieländer, weil die schriftliche Einigung auf mindestens eine Verdreifachung der Anpassungsfinanzierung ausblieb, wie sie im „Mutirão“ der COP30 verankert ist. Ohne diese Einigung zur Finanzierung stocken die Verhandlungen.

Die festgefahrene Situation reicht über die Verhandlungsräume in Bonn hinaus. Für klimavulnerable Länder wächst mit der Lücke der Anpassungsfinanzierung die Kluft zwischen Klimaverpflichtungen und ihrer Umsetzung. Oft reichen nationale Anpassungsbudgets nicht aus und konkurrieren mit anderen dringlichen Entwicklungsprioritäten. Dadurch sind Millionen Menschen weiterhin Klimarisiken ausgesetzt, während hart erkämpfte Entwicklungserfolge gefährdet werden. Zwar wenden viele Entwicklungsländer bereits erhebliche öffentliche Mittel zur Bewältigung der Klimafolgen auf, doch bleiben diese Investitionen deutlich hinter dem notwendigen Umfang zurück und engen zugleich den finanzpolitischen Spielraum für andere Entwicklungsziele weiter ein. 

Die jüngsten Mittelzuweisungen im Staatshaushalt Bangladeschs, einem der weltweit am stärksten vom Klimawandel bedrohten Länder, zeigen die Folgen des stockenden Fortschritts beim GGA auf nationaler Ebene. Laut dem nationalen Anpassungsplan von 2023 werden bis 2050 jährlich rund 8,5 Mrd. USD benötigt, um die Herausforderungen der Anpassung zu bewältigen. Der Staatshaushalt für 2026–2027 sieht jedoch nur rund 3,19 Milliarden USD für Klimaanpassung vor. Die auf 25 Ministerien verteilten Mittel fließen in Programme zur Katastrophenvorsorge, klimaresilienten Landwirtschaft, Ernährungssicherheit und für soziale Sicherung. Der Betrag mag hoch erscheinen, deckt aber weniger als die Hälfte des geschätzten jährlichen Anpassungsbedarfs und zeigt deutlich, dass inländische Ressourcen allein nicht ausreichen, um die Anpassungsziele zu erreichen.

Die Mittelzuweisung für Anpassungsmaßnahmen, die rund 4,15 % des Staatshaushalts ausmacht, stellt zwar eine Steigerung gegenüber den Vorjahren dar, verdeutlicht jedoch zugleich die haushaltspolitischen Zielkonflikte. Die öffentlichen Investitionen in den Klimaschutz bleiben begrenzt: Im Haushalt 2026–27 sind lediglich 814 Mio. USD für erneuerbare Energien, Energieeffizienz, emissionsarmen Transport und Aufforstung vorgesehen. Das liegt deutlich unter den geschätzten 1,78 Mrd. USD, die jährlich erforderlich sind, um Bangladeschs Ziele für erneuerbare Energien bis 2030 zu erreichen – darunter 553 Mio. USD an öffentlichen Investitionen –, während die derzeitige Zuweisung von 31,1 Mio. USD lediglich 2,2 % dieses Bedarfs deckt. Die unzureichende öffentliche Finanzierung bremst weiterhin den Ausbau erneuerbarer Energien, während Steuerbefreiungen für den Import fossiler Energieträger die Abhängigkeit von diesen Importen weiter festigen.

Für Länder wie Bangladesch ist eine auf Zuschüssen basierende Anpassungsfinanzierung daher unerlässlich. Ohne sie drohen die Klimaziele weitgehend Rhetorik zu bleiben. Eine anhaltende Unterfinanzierung kann die institutionellen Strukturen der Klimaanpassung schwächen und die über Jahre aufgebauten Umsetzungsbemühungen untergraben. Die Verantwortung dafür liegt jedoch nicht allein bei den nationalen Regierungen. Der Krieg in der Ukraine und zwischen den USA und dem Iran haben die Sorgen um Energiesicherheit, Inflation und wirtschaftliche Stabilität verschärft – und damit finanzielle Ressourcen sowie politische Aufmerksamkeit von Klimaschutz und Anpassung abgezogen.

Zugleich stehen viele klimavulnerable Länder vor einer doppelten Herausforderung: Sie müssen eskalierende Klimarisiken bewältigen und sich gleichzeitig in einem zunehmend unsicheren geopolitischen Umfeld behaupten. Zu der ohnehin langen Liste von Klimagefahren – darunter Meeresspiegelanstieg, Überschwemmungen, Dürren, Versalzung, Ernährungsunsicherheit, Vertreibung und der Verlust von Ökosystemen – sind inzwischen eine unsichere Energieversorgung, Lieferkettenstörungen und wirtschaftliche Schwankungen hinzugekommen.

Der mangelnde Fortschritt beim GGA auf der SB64 ist daher äußerst besorgniserregend. Klimavulnerable Länder benötigen kontinuierliche und ausreichende Finanzmittel, um Anpassungsmaßnahmen umzusetzen und ihre klimapolitischen Verpflichtungen zu erfüllen. Doch der politische und finanzielle Spielraum für Anpassung schrumpft – nicht, weil die Klimarisiken abgenommen hätten, sondern weil konkurrierende Krisen die politische Agenda auf nationaler wie internationaler Ebene zunehmend bestimmen. Die COP31 muss den Verhandlungen neuen Schwung verleihen, indem sie ein umsetzungsfähiges GGA beschließt, das messbar ist, den Finanzierungsbedarf berücksichtigt und auf die Umsetzung ausgerichtet ist. Dafür braucht es gemeinsame Anpassungsindikatoren, klare Rechenschaftsmechanismen und verlässliche Zuschüsse, damit besonders gefährdete Länder ihre Anpassungsprioritäten umsetzen können.

A B M Hasanuzzaman ist Fellow des Internationalen Klimaschutzstipendiums der Alexander von Humboldt-Stiftung 2025 und Gastwissenschaftler am IDOS.

Dr. Aparajita Banerjee ist Soziologin und wissenschaftliche Mitarbeiterin in der Abteilung „Umwelt-Governance“ des German Institute of Development and Sustainability (IDOS).

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.

Die EU-Erweiterung auf dem Westbalkan ist strategisch wichtig. Doch wer den Beitrittsprozess beschleunigen will, darf Demokratie und Rechtsstaatlichkeit nicht zur Nebensache machen. Ein Beitrag von Karina Mross.

Die EU-Erweiterung auf dem Westbalkan ist strategisch wichtig. Doch wer den Beitrittsprozess beschleunigen will, darf Demokratie und Rechtsstaatlichkeit nicht zur Nebensache machen. Ein Beitrag von Karina Mross.