Via Zerohedge

Authored by Sigmar Gabriel via Project Syndicate,

It is increasingly clear that the European Union was not built to be a global actor. The EU is a strictly European idea, designed to bring peace and prosperity to a region ravaged by centuries of incessant war. It was meant to mind its own business, leaving matters of global import to the two permanent members of the United Nations Security Council, Britain and France.

Under this arrangement, the EU achieved stability for its neighborhood. While other countries have pursued global political and economic strategies, we Europeans have relied on our shared history, democratic traditions, and moral compass in the service of fitful regional integration. But these strengths will not ensure Europe’s continued relevance. Economic change and technological advances (online platforms, artificial intelligence, automation, data monopolies, zero-marginal-cost distribution) are reshaping the global economy, upending longstanding power structures, and fueling political disruption within many countries.

This is where Europe’s true weakness is exposed. The EU and its member states have no effective response to the techno-political trends of our time. On one hand, the growth of supra-national corporations is reshaping standards across the global economy; on the other, China’s pursuit of technological independence (and then supremacy) is creating a schism in the world’s economic superstructure. These trends are somewhat contradictory, yet they have one thing in common: Europe is on the sideline.

Consider a few recent developments. Facebook has launched an initiative to create a unified global currency – Libra – building on its international user base and accumulated data. Google is working to catalog every bit of the world’s information, all of which will be used to offer more powerful products and services. And Amazon has turned its cloud-computing service into the backbone of the global Internet.

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In each case, Europe is playing the role of a common user. Europol is listed as a business “case study” on the Amazon Web Services page. Police forces across Europe have enlisted the US-based data-analytics firm Palantir to help with predictive policing. Volkswagen – an iconic German corporation if there ever was one – has formed a partnership with Amazon to develop its own “Industrial Cloud.”

It is only natural that the tech giants would seek to diversify by developing new proprietary services and introducing them into unsuspecting markets. Just as Facebook has Libra and Google has Waymo (self-driving cars), Chinese giants like Tencent and Alibaba have become pioneers in digital business solutions and payments, respectively.

The existence of similar digital service providers in both the United States and China is now a standard feature of the global economy. The root cause of this bifurcation is the conflict between China and the US, which is a battle for technological leadership between two economic models: China’s state capitalism and the US’s private-sector-led economy.

In August 2019, the Chinese firm Huawei introduced its own operating system, Harmony OS, which is said to be faster and more secure than Google’s Android. Though Harmony OS is predominantly geared toward use in the “Internet of Things” (IoT), it will also be easily adapted to Huawei’s smartphone portfolio. The rollout of Harmony OS shows that China is quickly responding to the new world ushered in by US President Donald Trump’s May 2019 executive order, which effectively banned Huawei from US markets. Though many adjustments have since been made over the course of Sino-American negotiations to soften the ban, the basic message was clear: China’s dependence on American business partners can and will be used against it.

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Once again, as the trade and technology war has unfolded, Europe has had precious little to do, other than watch. It has been relegated to the role of a consumer, choosing which payment provider or industrial cloud solution to use. To be sure, there are good services available out there, and there is no shame in opting for a readymade industrial IoT, an American logistics platform, or a Chinese 5G developer. For a company in Volkswagen’s position, tapping into Amazon’s web services is a no-brainer.

But assuming the role of a common user comes at a price: namely, a loss of autonomy, security, and global influence. The pride that we Europeans have in our shared history and values has often clouded our vision, leading us to forget that our global relevance is the result of economic power. By not playing a role in technological or political developments, we now stand to lose that power.

We Europeans believe in achieving peace and prosperity through cooperation and mutual respect, rather than through conflict, intimidation, and terror. We also believe in alliances and treaties. In our day and age, the world faces global challenges that can be tackled only through collective action. There can be no unilateral solution to the climate crisis, epidemics, economic disruption, migration, or the looming global recession.

But herein lies Europe’s core dilemma. To be relevant enough to propose and enforce its view of the world, Europe needs to accept reality. Competition, conflict, and nationalism are defining features of today’s world. Europe must start playing a game that it detests.

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To put it another way, Europe needs to become a little more American, and the US needs to rediscover its own European ideals. After all, the fundamental similarities between Europe and America have always been stronger than any superficial differences. With Trump, the US has elected not a president but a CEO – a businessman who focuses only on short-term deals, revenue maximization, and shareholder value. Such a leader is unable to play the long game, which requires accepting short-term losses and handling externalities responsibly and in close cooperation with one’s competitors.

Trump’s blinkered approach may work for stock markets and corporations, but it is no way to run an international order. Europeans and Americans alike need to reembrace the transatlantic alliance. That may sound like a platitude, but the US-European relationship really will be the key factor in building a secure and prosperous future.

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Sigmar Gabriel is a former vice chancellor and foreign minister of Germany.