Rosa Balfour, Jan Techau, and Nathalie Tocci discuss how U.S. President Donald Trump’s second term is reshaping the transatlantic relationship.
The Trump administration has repeatedly signaled its rejection of the values that have long underpinned EU-U.S. relations.
Rosa Balfour, Jan Techau, and Nathalie Tocci ask whether Brussels must now chart its own course.
Carnegie Europe will be addressing the toughest questions facing the EU in its new project “Europe Head-to-Head.” Follow our work for insights and discussions shaping the continent's future.
[00:00:00] Intro, [00:01:29] Is Europe Able to Divorce From the United States?, [00:16:15] Europe’s Military Industrial Complex, [00:19:42] Europe’s Competitiveness and Lack of Trust, [00:33:25] Is Trumpism a Structural Trend?, [00:46:26] The Future of EU-U.S. Relations.
Jan Techau, Nathalie Tocci, January 7, 2026, “Can Europe Trust the United States Again?,” Carnegie Europe.
Rosa Balfour, January 6, 2026, “The Cost of Europe’s Weak Venezuela Response,” Strategic Europe, Carnegie Europe.
Rosa Balfour, September 22, 2025, “The European Radical Right in the Age of Trump 2.0,” Carnegie Europe.
Rosa Balfour, April 30, 2025, “Europe Tried to Trump-Proof Itself. Now It’s Crafting a Plan B.,” Emissary, Carnegie Endowment for International Peace.
Jan Techau, September 2025, “The Future of European Integration: A Threshold Moment of Hope,” Horizons Summer 2025, Issue No. 31, Center for International Relations and Sustainable Development.
Nathalie Tocci, January 13, 2026, “Breaking with a toxic partner: Why Trumpism may actually benefit Europe in the long run,” The Insider.
Nathalie Tocci, January 11, 2026, “Europe on high alert in the face of Trump’s strategic onslaught,” El País.
Nathalie Tocci, December 12, 2025, “How Europe Lost,” Foreign Affairs.
Nathalie Tocci, December 10, 2025, “Salvaging Global Order in the Post-American Era,” BKHS Magazine.
Nathalie Tocci, December 5, 2025, “Does Europe Finally Realize It’s Alone?,” Foreign Policy.
Rosa Balfour
Hello and welcome to Europe Inside Out. My name is Rosa Balfour and I'm the director of Carnegie Europe. Today we're, running a special episode outside our usual format because in the coming months we will be working on a new series called Europe Head-to-Head in which we will tackle the toughest questions facing Europe and the world in 2026.We have organized the series because we think that think tanks have a very special responsibility in bringing to wider audiences a debate about what the real challenges that Europeans are facing today. The questions range from is Europe in danger of becoming a U.S. or China colony? Or is the radical right threat to Europe an existential or overstated one? Our first question is can Europe ever trust the United States again? And I cannot think of two better speakers to discuss this topic. Nathalie Tocci is the director of the Istituto Affari Internazionali in Rome and a professor of practice at Johns Hopkins in Bologna. And Jan Techau is a director in the Europe team at the Eurasia Group based in Berlin. Formerly also director of Carnegie Europe.
I would really like to start with addressing the question head on to Nathalie and Jan and maybe in addition to can Europe ever trust the United States again? Can I perhaps ask you given that you have exhaustively answered this question already in your position paper. What are the three main U.S. actions of the past year that make you convinced of your position? Nathalie, I'd like to start with you.
Nathalie Tocci
Well, firstly, let me just say how delighted I am to be part of this first conversation. So, this kind of you know, main highlights, if we were to kind of or low points I should say if we were to sort of think back of the first year of the Trump administration, to me probably the three moments were. Well firstly, the JD Vance speech in Munich perhaps because I was in the room and kind of felt the shock. But that to me was a real moment of betrayal given of course not only the content of what he was saying, the fact that it was not in a sense signaled before. You know, everyone was expecting the Vice President to talk about the fact that Europeans had to take on greater responsibility on defense, in fact not unlike what Vance had said the previous year when he was also in Munich, actually on a panel that I moderated back then. So that to me was one moment which was followed up very soon, with the disastrous Oval Office, and meeting between Trump and Ukrainian President Zelensky. And of course, that was, I think, a second big moment of betrayal because it just smelled so much of a of a setup, basically. So that, to me, was kind of moment number two. And then I guess moment number three was the kind of confluence, because, of course, these things happen at a similar time. National Security Strategy and, just previously, the 28-point plan, kind of presumably a US plan, but probably should be defined more as a kind of Russian U.S. plan.
Rosa Balfour
So the 28-point plan for Ukraine.
Nathalie Tocci
For Ukraine, absolutely. So to me, those were the sort of three moments that indicated that we're not in a ball game of, disentanglement, disengagement, detachment, or even abandonment, but we're really in a scenario of betrayal.
Rosa Balfour
Jan, what about you? What do you think?
Jan Techau
Yeah, thank you very much. And likewise, it's always beautiful to be back in the Carnegie universe. Thanks for having me. The short answer to the question is, no, of course not for the moment, but it's not the end of the story, because U.S. Foreign policy can change. I think Trumpism is bound to fail. And therefore there will be some space later on. I don't know when, but at some point later on where I think trust could return for the moment, that's not a possibility for the reasons that Nathalie has pointed out. On my list of three things that kind of make me reassess my transatlantic convictions I also have the Vance speech and then the Vance speech in Munich, backed up by the language in the National Security Strategy. That took the Vance message one step further from that accusation that Europe had no freedom of speech to active involvement of U.S. diplomacy actually basically in regime change in Europe. you know, an openly aggressive America that wants different outcomes in Europe, that's not what you do among allies. And that was a game changer, I think, quite clearly.
The second point for me was when in the trade negotiations between the EU and the U.S. the U.S. for the first time, played security dependencies against trade issues. They basically openly blackmailed us so that the European Union had to agree to the 15% trade, tariffs. And the negotiators on the U.S. side very openly said listen, guys, either you swallow this or we will punish you on the defense side, where you are most vulnerable. That was a clear game changer. And that also brought the NATO and the EU universe together into one context, which I think in the past was always carefully avoided. and that was a big sea change, I think as well. And then most recently probably the Greenland episode, which I think sits like a massive time bomb, a ticking time bomb in the center of the transatlantic relationship. This is now about not just about perhaps election interference, this is about land grab. That's kind of the ultimate level of hostility that you can develop. they're meeting in the White House as we are speaking in Washington, the foreign ministers of Denmark, Greenland, and the US and Vance. and I think much depends on how the U.S. wants to play this. They will probably make some sort of offer which they think the Danes can't refuse. And then I think the escalation might follow because the Danes will not accept the offer. And then this is going to develop in some, very unhappy ways, in my opinion. So, these were the three things that I thought I had to.
Rosa Balfour
So if I can just summarize it in a word, I mean, Nathalie, you mentioned, betrayal. Jan, would you say it's a temporary derailment or a temporary abandonment? Or an abandonment, or would you agree with the betrayal idea?
Jan Techau
I think there's a lot of betrayal in it and abandonment, how temporary it is we will see. Most of all, I think it's beautiful folly, It's just absolute folly to throw away an empire and to throw away your best allies to alienate them and at a time where you need them and are in some sort of standoff in the future with much bigger kind of adversaries and at a time where a new order emerges to throw away your best allies is just a foolish policy and which will therefore also not last. Foolish policies can survive for a while, but they can't survive forever.
Rosa Balfour
But my prediction is that for 2026, given that the midterm elections are upcoming in November, for 2026, we're going to see more of this, in fact, perhaps even an escalation of these policies rather than a de-escalation. So I think my next question. If we agree that, Europe cannot trust the United States, at least at the moment. Can we just ask a question about can Europe actually divorce the United States? In 2025 we've seen a sort of double strategy. On the one hand, do whatever Europe could actually to keep the U.S. in Europe, because of the Ukraine priority, because of the security priority. But this has not borne the hoped fruits really. So can Europe actually divorce the United States? Does it have the wherewithal? Does it have the capacity? Nathalie, I'm going to start with you.
Nathalie Tocci
So I find this a fascinating question, or rather I find the kind of answers that we Europeans tend to give to it fascinating because they tell us a lot about kind of how we function in a kind of really weird and twisted way. Let us pretend that it's not three Europeans having this conversation and that actually there was a kind of Brazilian, Mexican, and Indonesian, or something having this conversation with us and asking. Looking at us, here we are, 30 of the richest countries in the world, on another continent, right. Facing, yes indeed, a kind of big military threat from Russia, but yet a military threat that in well over a decade of war has not been able to occupy more than 20% of Ukraine with, yes, indeed, Western support for Ukraine, but Western support with, at the very least, one hand tied behind our backs because of our own fears. So, of course we can divorce. Of course we can divorce. Yeah. I mean, it's kind of ridiculous to even contemplate the fact that this is impossible. The very fact that we're, ah, asking ourselves this question “oh, is it possible?” I think tells us a lot about our frame of mind. And this is, I think when we talk about autonomy, unless we develop an autonomy of thought, we're certainly never going to develop an autonomy of action right. Is this going to be easy? No, of course it's not going to be easy. Yeah. I mean, I'm not trying to belittle here. They're incredibly complex material conditions that underpin our dependencies and vulnerabilities vis-a-vis the United States. But it's not as if we don't have the capacities to kind of deal with this. Right. Only reason why we haven't done it up until now is because we didn't want to, because we never even tried, right? And now we're in this mindset of “oh, my God, it's all so difficult, all so difficult.” And, the buying time sort of strategy you can buy time for two different sets of purposes. You can buy time to basically say “I buy time because objectively there are some difficulties, and so I need time to do what I need to do.” Or you can buy time because you're actually deep down delusional. You don't accept the divorce. You actually think that by lying low, by flattery, humiliation, by pretending, by all sorts of kind of strategies you are basically sort of denying the fact that want to leave us. So, to me coming back to the original question, the past is no longer available. The past is past because even if indeed what the Trump administration is totally foolish and foolish things, as Jan rightly said, don't last forever. But the fact that this has happened means that it could happen again. And so, inevitably, the past is past. So the question is, are we going to make the mental switch not just at an individual level? Because the other thing that I find fascinating about this moment is that the frankness with which I'm saying this now publicly, in private conversation with most of the leaders, at least that I've had access to over the last months, you actually don't hear something very different. And yet the gap that still exists between the private talk and the public pronouncements and individual talk and the collective posture remains, that gap remains still wide. Now, maybe it's just a time lag, right? I mean, it takes time for the individual and private to kind of spill into the collective and institutional. Or maybe there's a deeper problem. I don't know.
Rosa Balfour
Jan, I'd like to turn the same question to you, in particular focusing a little bit on the frame of mind, because I think Germany, the country you live in and you come from, has been particularly traumatized. And I also was in the room when JD Vance mentioned those words, and you could hear the gulp and the gasp. And Germany has been one of the most transatlanticist countries. It is a country that has move forward and being one of. Has benefited enormously from European integration, but has been a pillar of European integration thanks to the U.S. security guarantees. How does that look like from your perspective?
Jan Techau
I think my answer to the question is slightly harsher on the Europeans. I fundamentally agree with Nathalie on that, of course, in theory, we have all of the ingredients ready to divorce. In theory, we do. You know, we are wealthy enough, we are big enough we are smart enough, we have the technology, we have the economies, in theory. But in reality, we have created political conditions in our member states back home where politics is being made that lead to this divorce of private conversations that Nathalie just mentioned, between private conversations and. And what people are willing to say in public. We have created spending patterns in our budgets for the last 70 or 80 years that we find very, very hard to break out of without losing control over our political peace at home. Politicians, regardless of whether they're from the left or the right, have no idea how they can sell the dramatic kind of reforms, the structural reforms, the redistribution of assets to the strategically more important kinds of spendings that you have to make, have no idea how to survive these kinds of political fights at home. And this is why it's a little more than If only we wanted it more and if only we could imagine it a little more. The domestic fights over getting to that divorce point, becoming autonomous enough, not just militarily, but also economically. And the mindset, the domestic fights to reach that point would be so brutal, governments will fall over it. Domestic unrest is possible and so it's that what makes me a bit more skeptical. I think that's the overarching narrative, and then there's a more kind of narrow military narrative. At the moment, we cannot divorce because there is a nuclear deterrence issue that we don't have an answer to as Europeans, as fully freshly divorced Europeans sitting out there being single again. You know, how do we deal with this nuclear issue? And at the same time, we have no idea whether we can trust the existing nuclear issue. So we pretend, we pretend that we can. And that kind of game that we are playing trying to pretend to trust in something that we don't trust anymore because we have to, that will continue for quite some time until we perhaps reach a point where we are more autonomous. But for the moment, I'm slightly more skeptical.
Rosa Balfour
Let's talk a little bit about that with divorce comes also the sort of division of the goods. And, let's talk a bit about policy. Nathalie, I'd like to ask you about the military industrial complex. And to what extent what has already been put in place. Is this a first step towards disentangling European security from the United States? Also in terms not just of defense spending, because we've seen the big commitments made, but also in terms of the military industrial complex.
Nathalie Tocci
So it's very clear that, as Europeans, particularly those that have really changed gears in terms of defense spending, we are becoming better able to defend ourselves against Russia. And that is ultimately who we're defending ourselves against. So, I would say that day after day we are becoming less vulnerable to the Russian threat. Now, the problem is that as we've become less vulnerable to Russia, we are also becoming, in some respects, even more dependent on the United States. And fundamentally, the reason why this is happening is that if, as is the case, most of the uptake of defense spending is national, a significant chunk of that will inevitably go for the acquisition of U.S. weapons. Now, I'm not arguing here that that is all necessarily bad. I think there are different types of capabilities. There are capabilities which you can buy because maybe you don't produce enough of them, say ammunition, which once you buy, they're yours. Right? And there's no problem with continuing to buy those from the U.S. or from others for that matter. The problem is with those capabilities that you can buy from others, but actually they're never really yours. You will still need the U.S. to give you a green light for that F-35 to be used. You will still need the U.S. to play a game, on the use and, delivery of interceptors for Patriot air defense systems. And you certainly will need the United States to provide those capabilities which you don't have at all, particularly in the area of intelligence and surveillance. That is the dependence where I think we should be most wary of and the increase of that dependence, given that we can no longer trust the United States, is, I think coming back to the original question, obviously we can no longer trust Trump and the Trump administration. That's a given. I think we will only be able to trust the United States again if we fundamentally change the relationship with them. Because, I mean, we have been betrayed. As I said that, there's no going back. And so, the only way to actually re-establish post-divorce a friendship is to actually work on the reduction of those dependencies. And I'm not sure that's what we're doing at the moment.
Rosa Balfour
But I would also like to bring in another aspect, and that is the European economy and to what extent can the European economy fly in this particular context. Are the right steps, are the right priorities have they been identified by the EU elite, by the European elites in order to strengthen Europe's economic resilience?
Jan Techau
You know, the European Union has known for a long, long time that it's losing ground in the competitiveness game. You're losing competitiveness ultimately you will not generate the kind of wealth that you need to become independent. This is why we've had this massive debate about the Draghi report last year and then ultimately the European Commission also adopting its competitiveness agenda, which is basically a watered down version of the Draghi report. And so that's all good. You know, we have awareness, we know exactly what we need to do. But of course it's not the European institutions that do the structural reform at the member state level, that's governments back home who need to embrace this agenda. And, and the reception by the governments has been very, very mixed. And again, I come back to the point that I just made in my last intervention. The structural reforms are so daunting in almost every single field, whether it's the labor market, whether it's research and development, whether it's your welfare state, your pensions, your health care, none of those are particularly great in terms of their future ability, if you will, their ability to survive future innovation shocks. And none of these are very sustainable. But do the member states fully embrace the Draghi agenda, the competitiveness agenda? I have my doubts. It's very, very tedious. I experienced this firsthand here in Berlin, where we have a coalition that came with lots of ambitions on the reform front when they entered office in May of last year. And because these two parties are on opposite ends of the political spectrum every single reform effort is being watered down to the smallest common denominator, none of that is structural change. We do get reform, yes. There’s actually already quite an impressive catalog of reform, steps they've taken. But none of this is nearly big enough to address the issues that we will have to face if we really want to become autonomous through our economic strength. That's the one point. The second point that I want to make is, almost all of us have a massive fiscal problem. You know, some countries, even some of the larger countries in Europe, find it hard to refinance their national debt in the capital markets. And this is a natural constraint. We have strong promises, for example, on defense spending, but the French government has absolutely no idea how to finance those promises it has made both at European and at the NATO level. The UK is no longer in the EU, but it's in NATO. Same problem. Massive fiscal issues, sloppy growth, no idea how to spend yourself out of your military malaise. They have absolutely no idea how to reach the promises they've made at the NATO level 3.5% plus 1.5%. So, we have these plans, we have ideas, but our fiscal situation is so dire that fiscal policy becomes a strategic issue for the Europeans. And very few countries have any kind of idea as to how to kind of reform themselves out of this malaise. So, if the question is have we taken all of the necessary economic reform steps to kind of get there, my answer is no. My firm, the Eurasia Group is using like a traffic light system where we look at competitiveness, progress in Europe. And out of the eight or so categories that we've chosen, only one has a green light. I think six or so have an orange light and one is red. It's all very mediocre, middle of the road kind of muddling through. Based on that kind of traffic light system alone you would not have an idea that we have an existential issue and that we really need to reform ourselves out of a malaise. It's just the kind of reform stuff that you would basically always get. And I don't know where that political capital is going to come from, especially when you have a populist uprising also in almost all European countries that further narrows down the wiggle room that governments have. Where's the political capital, the strength, the oomph coming from that can carry us to these kinds of reform steps? I don't have any kind of good answer to this, but it makes me quite pessimistic about the short to medium-term outlook.
Rosa Balfour
So if I can summarize quickly on the defense front we've agreed to spend but there still are question marks as to a) whether we're going to be spending efficiently, i.e. in conjuncture with the other European countries. So whether we're going to work towards defense integration but also whether we're going to make those necessary investments on the strategic enablers that will make Europe more, less dependent on the United States in the medium term. And on the economic front, member states are lukewarm in making the reforms that are necessary. We know what needs to be done but it's not being carried out. And most member states have very limited fiscal room to do so. So, what I'd like to move on to is actually looking at a big question which Jan, you raise in your paper actually, and that is can Europeans trust each other to do more together in order to respond to those challenges? What is the state of play of trust among the member states in your view?
Jan Techau
Yeah, this is the point that I made in the piece that I wrote for this occasion here, that ultimately, trust between the Europeans is more important for the European future than trust in the United States. Because as Nathalie said, no matter who's going to be in the White House over the long term, we will have to be autonomous either way, more autonomous either way. And that can only function if we work together. You know, Europe, from a historic perspective, if you, are not singularly focused in everything that's happened after 1955, or 1957, when European integration started historically, if you go a bit further back, is a low-trust political environment. European countries do not particularly trust each other, nor do they particularly like each other. And we had a very suspended political situation after the end of the Second World War, when the Americans stayed in the Western part of Europe and became the hegemon, quite benign hegemon, and kind of removed this old question of who rules Europe. It was a non-European power that ruled in Europe and became kind of the principal military power and therefore also a veto player in politics. And that served the Europeans well. Because once you remove that, that, that competition question between them, who's the nicest, biggest, and coolest then all of a sudden you have trust and you can cooperate, and that's what we build European integration on. Now, what happens when you take that American trust infusion out of the market? I think that's the completely unanswered question. And if you go back in history, the answer is not bright. You know, it's quite likely that the old patterns of jealousy and competition, and open hostility between the Europeans comes back. Now, of course as Nathalie said, that history is no longer available. That also means that we can do it better than in the past. But again we have to prove that first. And historical patterns are not great. I'm not our friends on this. And as we have sometimes seen, even within the EU, the moment push comes to shove, some of the old kind of suspicions and old ghosts tend to come back in the debate. You know, during the euro crisis, we saw this quite clearly when Germany became quite dominant again and that triggered old fears of German dominance. These ghosts are not gone. And that's why my sense is that yes, we are now 80 years smarter and we have an integration process under our belt, but there are also old forces in Europe that could well come back. And then we have an even bigger obstacle to overcome for all of those beautiful things that we want. So, my fear is that we still have to prove that first. I wouldn't 100% bank on us, just staying together just because we have to. I think Europeans have proven often enough in history that they don't and that they can be quite silly with each other.
Rosa Balfour
Thank you, Jan. I'd like to turn to Nathalie as well on this front. I mean, there's the question of trust among the Europeans, but also there's the question that perhaps some European countries are a bit more Trumpian than others. And I'm thinking in particular of the Prime Minister of Italy, whose statement in the wake of the, abduction of Maduro in Venezuela, was really quite ambivalent.
Nathalie Tocci
That was a very generous way of putting it. In fact, it was not ambivalent at all.
Rosa Balfour
Would you like to elaborate that? I mean, we have, obviously we have Hungary, and now the EU regularly comes out with statements at 26 because they can't do them at 27. But also among those 26, there are some who have questionable ideas about international law.
Nathalie Tocci
Well, yes, indeed. I mean, on the lack of ambivalence. What I meant, there for the listeners, is that, Giorgia Meloni actually defined the U.S.'s attack on Venezuela as a legitimate act of self defense. So, tragically, there was not much ambivalence there. so, look, Rosa, I'll put it in, in these terms. I do think that indeed of the threats that we've been discussing, the the threat from Russia, the betrayal from the United States, this threat from within is indeed the biggest threat. I want to, though, kind of in a sense reconnect to some of the reflections that Jan was making, a while ago. Well, just now. Sorry. Because indeed this is not just “a old story of European divisions.” This is a added on to that layer of kind of member states. Oh, they don't agree. Okay. It's kind of old as debates about European integration. but on top of this, there is indeed this kind of threat of a hollowing out from within of the European project through the empowerment of the far right, in which, in my mind, the most dangerous forms of far right are precisely the ones that, in a sense, in many respects tend to fall below the radar. So, everyone knows that Viktor Orban is a spoiler. But we also know that Viktor Orban is the Prime Minister, hopefully for not too long, but maybe I'm being overly optimistic here, but of a very, very small country, that cannot actually determine the fate, and the destiny of Europe. So, the main threat from within is this incremental threat that comes from the right, from the far right, the way in which the far right is increasingly cannibalizing the center right. The center right being so idiotic. And I literally define this as idiocy because empirically there is absolutely no evidence in any country, in which when the center right cooperates with the far right it succeeds in moderating the far right rather than radicalizing itself and losing support as a result of it. So basically this is the story that we're seeing in the European Parliament. Yeah, I mean, this kind of the quote, unquote, Venezuela majority, which as we've seen, has been instrumental, for example, in the passing of the first omnibus legislation where behind the kind of nice and docile and perhaps even desirable label of bureaucratic simplification, you basically ram through all sorts of deregulation/disintegration measures, particularly on issues like climate and digital, for example. So to me that is the main threat. And indeed it's these forces, parties, governments, leaders, which don't adopt an explicitly Eurosceptic discourse, but do so in a, frankly speaking, a more incremental and B more intelligent way which represent the more insidious, threat. And let us recognize that they belong all to the same camp. Right? Because we may like to believe that Meloni and Orban is different, but yesterday Giorgia Meloni endorsed Viktor Orban's campaign for reelection. Right? They belong to the same mindset. They are kind of I mean, unfortunately, they're for them, they're Europeans and not Americans, but they're MAGA through and through. This is basically who we are. And when we on the other side of the fence start, nitpicking and saying, oh, well, no, there are differences, there are no fundamental differences and the sooner we smell the coffee, the better it is.
Rosa Balfour
I would like to ask you. I'll start with you, Nathalie, because in your paper you say that you argue that Trumpism is a structural trend. So I'd like to say if that is the case, what are the odds that come three years or come seven years there can be some prospect for a different transatlantic relationship?
Nathalie Tocci
Well, I think it really depends on us. And this is the kind of point that I'm trying to make here. I think that there can be a trust-based relationship between a divorced couple that then becomes good friends. What I mean by structural is that the divorce is, I think irreversible. but then it depends on us if we are able to come to terms with that rather than gag for something which is dead right. Then possibly there can be a healthy relationship between a divorced couple, that maybe has some grown up kids. And there have maybe a few logistics to still sort out that is possible. But it's only possible if that divorced couple is made of two autonomous pillars and adults that understand themselves as such. And that is basically on us to do it. It's not for the United States.
Rosa Balfour
And Jan, you argue that Trumpism contains the seeds of its own destruction. And while I see what you're saying, I'm also wondering whether that is not wishful thinking.
Jan Techau
Yeah, I mean it could easily be dismissed as wishful thinking, but you know, when you look at some of the indicators, I think it's quite clear that the mix of policies that he's embraced on trade, on economics, on foreign policy, on culture wars none of this is really sustainable, in the medium to long term. You can sustain it for a while, especially if you start to generate income, through tariffs, for example, that can compensate for a while, but structurally it's not sustainable. So I think there is a case for Trumpism that or against Trumpism, it cannot really succeed. Economically, it's going to create some short term fireworks, flash in the pan really. But inflation is high. Industry, jobs are not going to come back no matter, no matter how many tariffs he's going to slap on foreign imports. Economy will become less productive over time creating similar problems like the ones that we have now here. As I said earlier, you alienate with your foreign policy your best allies. You throw away all of the insignia and instruments of empire from Radio Free Europe to development aid. You alienate people left and right. Your influence goes down. That's not a winning strategy. And also, if you believe that you can divide the world into kind of three or four or five influence zones and then peacefully coexist with three big powers administering the rest of the world. That's not going to work. If two of the other superpowers that are supposed to administer their zones of influence actually want to bring about your downfall, and the biggest aspiration that they have is to kill you, that's not a model that can work, a model of order. None of these things are built on solid ground, and so they will fail. That doesn't mean, and here I agree with Nathalie, that afterwards things will be peachy again. That depends entirely on our strength and how much we can bring to a good relationship. But it will also depend on whether the U.S. can return to this kind of more sober assessment of its own interests. At the moment, it's an auto aggression. America basically hurts itself, is at war with itself. It exports that war to its friends like us. But at some point, that will stop because exhaustion sets in. and we have to be ready for that moment because we can only then build a trusted relationship from a position of strength. So, this is where I'm totally in line with Nathalie. No matter how this thing plays out in the U.S. we have to become stronger. That's the homework. This is why obsessing about Trump is one thing. Addressing our own weaknesses is the fundamental truth of all of this.
Rosa Balfour
Now, there are two questions about two different regions of the world. So I'm going to put them together. And one is the implications of a transatlantic divorce for the Indo-Pacific strategy, for Europe's Indo Pacific strategy. And another is, to what extent the Mercosur agreement. To what extent can it change the EU's ability to decouple from the United States?
Nathalie Tocci
So, I'll start with the comfortable part of the answer and then get to the uncomfortable one. The comfortable part of the answer is, well, very clearly, if we are in a phase of divorce, decoupling, disengagement from the United States, we have rightly understood that if you dilute dependencies, or at least try to, on the one hand, you should diversify your relationships on the other. And I think sort of a lot of what we're at least trying to do then whether we succeed is a different ball game. But indeed the agreement of Mercosur, hopefully if that comes to fruition in the European Parliament, but the negotiations with India, the agreement with Indonesia, I mean all of this belongs this acceleration of you know, moving forward with your partnerships with others, opening up for talks with the Comprehensive and Progressive Trans Pacific Partnership, all that belongs to a diversification strategy which is intuitive, which I think is broadly shared, which we shall see how successful it is. But that makes a lot of sense. Now the more uncomfortable part of the answer is indeed more related to the Indo Pacific, more related to David's question and it really has to do more specifically with China. Now when we lived in the wonderful world in which it was autocracies versus democracies in which we were one and the same with the United States and there was a conflict between the democratic global West and the authoritarian global East. Weak and given the rivalry between the United States and China and given the increasing, let's say, alliance between Russia and China, it made a lot of sense for us to become increasingly tough on China. I'm not necessarily arguing here that therefore that has to radically change. But I think we have to start from the assumption that the context is radically different. And the radically different context is that Russia and China are still very closely aligned. And of course our main enemy is Russia. However, I do not think that the United States is actually prioritizing its rivalry with China. It seems to be more interested in the business of colonizing you know, us and others in the Western hemisphere rather than competing with China. And if that is the situation, if we are no longer in that democracy versus autocracy game, autocratic and nasty as China is, we cannot do everything at the same time. We need to prioritize and inevitably a priority is Russia and it is our divorce from the United States. Now as I say, don't interpret what I've just said as meaning and therefore we have to be cuddly, cuddly to China. No, of course we don't. Nor do we have to be naive in assuming that by simply asking China to whatever, stop buying Russian oil, they're going to do that. What I am saying is that I think we should have a little bit more of a nuanced strategy. So, if we go to China and basically say “Hey, we understand that you're with Russians, and we can't expect you to radically change that. But if you want to have I mean, a deal with us, and of course we understand that a deal with us requires us to give you something that you are interested in, our asks may be rather limited.” They may be, whatever, stop selling dual use goods to Russia. So I'm not talking about a break in the Russia-China relationship. I think that's not available. But I do think that if we were to actually be ready to give something to the Chinese that they want, we may be realistically put in the position to ask something. At the moment what we're doing is just asking, just telling the Chinese we want this, that, and that, we don't want your electric vehicles, we don't want you to buy Russian oil, we don't want you to sell dual use to Russia and they just look at us and laugh. Frankly speaking. Now that doesn't seem to be a very effective strategy.
Rosa Balfour
Jan, what about, what's your take on this? Both China and also, let's not forget Mercosur, which has been agreed and will be signed this Saturday, I believe, in Paraguay, but still needs to be agreed in Parliament.
Jan Techau
Yeah, Mercosur first because it's the slightly easier bit, I guess, of course, that's exactly the kind of step in the right direction. we need to diversify, we need to find partners elsewhere in the world for, for trade, for investment partnerships and so on and so forth. And Nathalie's just said that we need other options and Mercosur, of course is an important one. But Mercosur also illustrates how our domestic politics makes strategic reorientation so difficult. We've all seen the farmers’ protests. We have now heard that the votes in the European Parliament might not be there for finally ratifying it. And so we have domestic situations that make these kinds of big ticket items quite costly at home. And so, a very good illustrator. We need to push this through and we need more of this. That's quite clear. And so, step in the right direction on Mercosur. On the, on the Pacific, I think the one thing that we have to keep in mind is that compared to the threat that ultimately we will have to face from China, none of the stuff that Putin can do to us is particularly worrisome. The real threat for our future, comes from China, which is hell bent on basically undermining, destroying our industrial base. they've been quite successful in doing this, on the solar panel issue. They have now four or five other sectors, from electric vehicles to batteries to microchips to wind turbines, where they actually really want to kill our market. They want to build every single electric vehicle on the planet the same way that they decided 20 years ago every single solar panel needs to be built in China. Their market share is now 90% or so. So basically they're there. This is what they want to do. And they're doing this quite systematically. And, we have, the divorce from the U.S. makes it more difficult for us to de risk from China because nobody has a huge appetite to pick another trade fight with the Chinese, de-risk or perhaps even decouple from the Chinese when you're at the same time fighting your most important ally on the trade fund as well. Nobody has the bandwidth for this or the political capital. So we have to kind of since we're so preoccupied with the Trump situation, because that's where the security dependence is, we have to play nice with the Chinese, when in reality we will have to decouple in a much more radical way, even more radical than the European Commission, in my opinion, rightly suggests. The member states are not there yet. Nobody really wants to pick a fight with the Chinese. I think the bargain that naturally just suggested with them, give them something so that you can get something in return that only comes from a position of strength. I'm not quite sure where we have that vis-a-vis China. My fear is that our Trump obsession killed so much bandwidth both publicly and politically in the political sphere, that the real threat that we have from China, which is growing quite fast and quickly, is kind of overseen and not being addressed as decisively as it should be. So, I'm quite worried on that front as well. And the Trump divorce makes it so much more difficult to address this issue. I think that's the connection between the two.
Rosa Balfour
We will be obviously organizing another event which is looking at technological dependencies of Europe in the context of the technological and AI race between the U.S. and China. There are a few more questions here which are a bit more in internal politics, trust-related. I'm going to put two to you. And one is about financial infrastructure and about the European money that is invested in U.S. Business and in Wall Street. And the question is actually are Germany, France, Italy and others ready to pay the short-term price for such decoupling for mid to long-term benefit? And then the second question. And again I would ask you to sort of pick and choose where you feel fit. The second question is really about trust. And we talked a bit about, talked about Germany, we talked about Italy, we talked about Hungary. But what about the perceptions of Central Europe vis-a-vis Russia and the priority of the Russian aggression, Ukraine being the front line for Europe's security. But putting that in the broader context of the need for short-term divorce from the United States and China? And can that sort of, can that framing be understood also in countries such as Central Europe that feel very much on the front line, and you know, under the security threat of Russia?
Nathalie Tocci
Yeah, I mean, just very briefly on the money question and European money that ends up in the United States. I mean, I think that, I mean, I'm not quite sure what is meant by the short-term pain. But in many respects the way to address this question is to proceed with the capital markets union and any step in integration entails short-term pain, particularly from those financial actors. I'm thinking about small banks, left, right, and center. I mean in the country represented in this panel, that probably would stand to lose quite a bit. That is Germany, but not just Germany, of course. So, if that is what is meant by short-term pain, yes, there would be short-term pain, but there is massive gain. Is this happening? No, it's not happening. But I think we come back to some of the reasons the rise of far right, the way in which this is contaminating the center right. I mean there's a broader political context why we're not really implementing why the points that Jan was making about the sort of unimpressive performance on the Draghi report, the competitiveness report, I think that's basically where the answer lies. On the, the trust question, Eastern Europe. You know, to be honest, I actually don't think there's an Eastern European problem here. Because particularly those countries that really, really, really do feel the heat from Russia, they are the ones that are most aware about the American betrayal. They may not trumpet this in public, but I think if one has conversations with the Balts and the Poles and the Romanians, in many respects that's where I think most there's been most of the Utah that we've seen in terms of actually taking seriously discussions on European autonomy, not because that was the first choice, but because it's the only available one. Where I think there is actually far more reluctance is precisely in those countries that don't feel the threat from Russia. Countries like my own Italy. You go tell Giorgia Meloni that she should go for European autonomy, meaning some sort of decoupling from the United States or at least distancing from the United States. And the response is definitely not a very warm one. I mean there's still this attachment of you know, the Atlantic alliance and we, the West and all the rest of it because it's cheap. I mean, sorry if I put it in such a blunt way because you can afford to say it because you're actually not being threatened by anyone.
Jan Techau
Briefly on both, on both topics. On the last one, completely agree with Nathalie. The worrisome parts of Europe are ah, not on the Eastern flank of Europe. That’s where the betrayal is felt the strongest. Just as Nathalie said, it's other countries that don't feel the heat as much and therefore perhaps stand in the way of the defense ramp up and the consensus burden that you need both in the EU and NATO for these kinds of things. So that's where I would look. On the other, on the other issue, capital markets union. I had an interesting conversation about four or five months ago in London, with a representative of the Royal Bank of Canada, one of the largest banks in the world, top 10 bank in the world. And that person, we talked about the same issue, and the person said “Europe is essentially an undercapitalized continent because its banking scene, its banking world is too small in size to really operate the large kind of sums that you need for massive investments, that you also need to absorb the risk, for example to invest more in your startup scene.” It's just a volume issue, and Nathalie rightly pointed to the pain, and to Germany that still stands in the way, for example of a banking merger between UniCredit and Commerzbank. It's so interesting, Friedrich Merz, when he ran for Chancellor, before he entered office, spoke out very, very strongly in favor of capital markets union, and all of these things that he thought needed to be done because he knows the economic impact of the small banking sector. and then of course, at the same time, a merger of UniCredit and Commerzbank needed to be avoided at all costs from his perspective. He can't imagine the narcissism of small differences. You can't let this go as the unions in Germany that fear the job losses, and so on and so forth, and you can't lose face. So, this is the European reality. We all know exactly that this can't go on like this. And yet we can't break out of the mold of small-scale politics. In the end, Merz does not have to face the European voter on banking union, he needs face the German voter. And if he's fearful of the German voter, he will not do the right European thing to overcome this logic is the quintessential problem of Europe in almost all fields.
Rosa Balfour
So I'd like to put to you both, what I call a cheeky question. If I were to answer it myself, it would appear dystopian, but I actually think it's a very real dystopia. But what happens when Trump launched the trade war, all the economists would say this is going to backfire against the United States, and it didn't. Venezuela, the military operation was actually, from the perspective of the stated goals, was actually very successful so far. So, what if Trump does succeed in his plan? What happens to Europe then? Jan, do you want to start with that one? Given that you were the one saying that Trump contains the seeds of its own failure.
Jan Techau
I mean, success is a, is a bit of a wobbly notion here. Does success mean that as a result of all of these policies, Americans will be richer and safer and healthier and smarter and happier. Or does success mean Trumpians will stay in power? Those are two very different kind of metrics.
Rosa Balfour
The latter. The latter.
Jan Techau
If the Trumpians stay in power and stay in power for a long time, then we are in even bigger trouble than the kind of trouble we've kind of spelled out over the last, over the last hour or so. You know, in the end, the world that is emerging has really only three or four powers to offer, you know, that can call the shots, that can create gravity, as my boss, Ian Bremmer would say to move us out of the G0 world in which there's very little gravity. Provide leadership. And if you look at those three candidates the Chinese, the Americans, potentially the Russians, even though they're much weaker, and then us, ourselves, whom do we want to be with? You know, even in America under Trump is still a better partner than Russia or China. That would be my play. Even in America under Trump. If America stays under Trump for a long time, or under Trumpism for a long, long time we the kind of player that needs somebody an ally, because we're not yet there. We will face a very, very uncertain future. We cannot completely give up on the U.S. while at the same time we kind of have to face a future in which the U.S. might be completely gone. And that dilemma we can always say, yes, the result of this needs to be we have to be stronger ourselves but for the time being, we are not. If Trump succeeds and there's a long term Trumpian orientation in the U.S. our problems will become quite big and bigger than the ones that we've discussed today. I think that's my pessimistic outlook on this Cheeky question.
Rosa Balfour
Nathalie, what about? What if Trump is successful?
Nathalie Tocci
Well, I guess I'm both darker and lighter than Jan. So, I'm darker because I think I would define a Trump success, beyond or as a consequence perhaps of Trump remaining in power, as a world in which there is no democracy in America. so, America basically becomes an authoritarian system, in which the multilateral system and the international law that hinged on it is basically torn down, and in which there is indeed this world of empires. And eventually, I think Jan is right. You know, empires would probably end up in a position eventually in which empires clash. But I think there can be a short to medium-term collusion between empires. But that imperial collusion is one in which norms and rules are the basis of international law, is basically out of the window. And so that world is obviously a very dark world. So, I would define success in those very dark terms. But what this means for us as Europeans, and I keep on coming back to this, really depends on us. So we can, in that world, we can either be the little antelope in the jungle which ends up on the colonial menu, or we can be the kind of little elephant in the jungle that can perhaps gang up with some tigers and buffaloes and rhinos, left, right, and center. Maybe not as strong as the lion. But if we kind of all gang up together, we could possibly survive in the jungle and establish some modicum of norms and rules to ensure that that, rocky period is just not as dark as it could alternatively be.
Rosa Balfour
Well, on these jungle metaphors, I'd like to thank you both for a really exciting hour of conversation. I enjoyed this thoroughly.
I would like to thank again Natalie Tocci and Jan Techau for sharing their expertise. You can read their position papers on Carnegie Europe's website where you will also find all our research on Europe's role on the global chessboard. Stay tuned for more from the Europe Head-to-Head series. Next February, our question will be, could a smaller EU be stronger than an enlarged bloc?