Rym Momtaz, Rosa Balfour, and Erik Jones debate whether the EU can act strategically and whether the transatlantic relationship is still its best bet.
The EU-U.S. trade deal concluded in July and the EU-China summit held the same month highlighted Europe’s weakening position on the global chessboard.
Rym Momtaz, Rosa Balfour, and Erik Jones unpack why European leaders struggle to play power politics and explore what it will take for the EU to regain strategic agency.
[00:00:00] Intro, [00:01:54] Europe's Summer of Delusion, [00:14:18] Prospects for EU Institutional Reform [00:24:18] Europe's Quest for a Strategic Vision
Rosa Balfour, April 30, 2025, “Europe Tried to Trump-Proof Itself. Now It’s Crafting a Plan B,” Emissary, Carnegie Endowment for International Peace.
Rosa Balfour, March 25, 2025, “The Case for Europe,” Carnegie Europe.
Rosa Balfour, Sinan Ülgen, November 28, 2024, “Europe’s Fledgling Economic Statecraft and the Trump Challenge,” Strategic Europe, Carnegie Europe.
Rosa Balfour, Erik Jones, et al., November 19, 2024, “Geopolitics and Economic Statecraft in the European Union,” Carnegie Europe.
Erik Jones, July 17, 2025, “Betting on Europe,” Strategic Europe, Carnegie Europe.
Erik Jones, Gideon Rose, June 23, 2025, “Europe’s Two-Front War,” Foreign Affairs.
Erik Jones, November 6, 2024, “How Draghi and Letta May Help in Dealing With Trump,” Encompass.
Rym Momtaz et al., August 28, 2025, “Taking the Pulse: With Trump, Has Europe Capitulated?,” Strategic Europe, Carnegie Europe.
Rym Momtaz, August 26, 2025, “Europe’s Summer of Trump Delusion,” Strategic Europe, Carnegie Europe.
Rym Momtaz et al., July 24, 2025, “Taking the Pulse: Does the EU-China Summit Show a Weakened European Hand with Beijing?,” Strategic Europe, Carnegie Europe.
Rym Momtaz, July 15, 2025, “Europe’s Claim to Geopolitical Power Isn’t Passing the Trump Test,” Strategic Europe, Carnegie Europe.
Rym Momtaz
Hello and welcome to this episode of Europe Inside Out. I'm your host, Rym Momtaz, Editor in chief of Strategic Europe, Carnegie Europe's blog where twice a week we publish punchy short analysis on all things strategic in Europe. We're delighted to be back for a new season of Europe Inside Out. It promises to be filled with much to unpack geopolitically, geoeconomically, on the tech side. And we'll also be bringing you a couple of new formats, so stay tuned for that. To kick off our season, I'm delighted to welcome Rosa Balfour, the director of Carnegie Europe, and Erik Jones, a nonresident scholar at Carnegie Europe, for a 10,000 feet tour de raison of some of the biggest geopolitical and geoeconomic issues that the EU is and will be confronting.
The summer wasn't exactly quiet. There was what I call “Europe's summer of delusion” with U.S. President Donald Trump from the NATO summit onward. That's my take, which I expanded on in a piece for Strategic Europe at the end of August. We'll see if Rosa and Erik have different takes. There was the much-noticed speech by Mario Draghi, the former head of the European Central Bank, at the end of August in Italy, saying that the illusion of the EU as a power was shattered and chastising leaders for not stepping up fast enough one year after his noteworthy report on competition. And finally, there were these two big moments, the EU-U.S. trade deal and the EU-China summit, when the EU's possibly diminishing value on the global chessboard was on display, not because of an inerrant depreciation, but perhaps because of its leader's inability or difficulty in playing power politics.
So let's delve right in. Rosa. Erik, hi.
Rosa Balfour
Hi, Rym. Nice to see you again.
Erik Jones
Hi, Rym.
Rym Momtaz
So, Rosa, I'm going to start with you and you know, let's start with that first point. I called it “Europe's Summer of Delusion with Trump”. Do you think that's harsh?
Rosa Balfour
I think it's a great statement, deliberately provocative. You would like to have a nicely provocative answer. But I'm actually going to unpack it a little bit.
Rym Momtaz
I didn't expect anything less.
Rosa Balfour
Yeah. So I think we need to look at the events of the summer and to me there's sort of three blocks to it. The first is Ukraine and European support for Ukraine. The second is the so-called trade deal between the EU and the United States. And the third is what's perhaps a little bit more upcoming and it's how Europe is positioning itself on digital with respect to the United States. So I think these three elements, why do I put them together? Because I think the calculus in Brussels among the leaders, among the national leaders and the Brussels institutions was actually to create some dependencies between these three dossiers because that is basically what Donald Trump is doing. So if you want to break it down, I think on security and supporting Ukraine yes, pragmatism prevailed but I actually think it was remarkable that they all managed to sing from the same hymn sheets.
And this is actually quite unprecedented. So you had, you know, Alex Stubb whispering in Trump's ear the same message that maybe Macron was delivering in a different way, or Keir Starmer in another way. So to be honest, by comparison to any past European performance, that was pretty good. And they did manage to influence Trump a little bit. How long that will last is another question.
Rym Momtaz
But let me jump in here. Did they put the level of ambition at the right level? Was it about just holding on to dear life and keeping the U.S. engaged at any level? Or was it about trying to build something that would help end this war?
Rosa Balfour
So, yeah, you're absolutely right. I think they were buying for time and that was the goal. And we can perhaps talk about what the strategic end of all this is. And also my broader point is that Europeans are still transatlanticists and they're still stuck in that mindset. And I think that is a real problem. But so there's a sort of long term issue there. There's an issue of how international relations and the transatlantic relationship is viewed and felt in Europe and in the U.S. as well. And then they're the sort of, you know, policy decisions that Europeans had to make. I wouldn't say quickly because it was all on the cards, but, you know, things did move rather quickly over the summer. On trade, I think, and this is certainly how the EU leadership has sold this. They said we've had to give in on trade because we needed the U.S. for security reasons. And this is how they've sold it. Here, I think it was rather humiliating. I think the EU decided deliberately not to use its power, which it has with respect to the United States. I would also say that a lot of Europeans are not very happy with this. They feel a sense of humiliation. So I think that's, that's something, you know, to watch out for.
Rym Momtaz
I think what you're saying is very true because we heard it, you know, when Ursula von der Leyen, the Commission president, gave her State of the EU, the State of the Union address. You heard that, that anger with regards to the EU-U.S. trade deal, very much, uh, in the interventions of even by the way, party leaders in her own coalitions. I thought that was interesting.
Rosa Balfour
Yeah, I think this is really a space to watch, especially as political leaders in Europe, uh, you know, going through periods of crises and France is the latest, with the resignation of Bayrou and the protests. Um, so this is something I think that is actually going to linger on longer perhaps than European leaders, uh, thought. And then the third bit is on digital. And here the EU seems to be holding to its guns. And I wouldn't have bet on this. So I think that's an interesting development. So we're seeing, you know, different types of behavior and security. Europe is perhaps overly aware of its dependencies. My question would be, fine, go ahead. But to what extent are you moving and thinking strategically about preparing Europe to support Ukraine, you know, steel, porcupine, etc, etc, and be able to address its security deficits in the near future? On trade, a bit of a submission there. And on tech, maybe not. So that's. That would be my sort of unpacking.
Rym Momtaz
So what I take from Rosa is that there's a tactical and a strategic level that the EU and European member states are trying to, to work on and, and operate on. Erik, do you see it the same way?
Erik Jones
I mean, obviously there's. There is this tactical and strategic distinction that we have to make when we look at particular conversations that take place. I think there's a bigger issue, which is, you know, when we talk about Europe, what is the level of agency that we're talking about? Are we talking about individual member states? Are we talking about the European Union? And I think that that comes out clearly at the end of Ursula von der Leyen’s State of the Union address when she says in quite forceful terms, it's time to break free from the shackles of unanimity. If we were able to do that, it would have been a very different trade conversation. If we were able to do that, it would have been a very different security conversation. And the fact that we're having a different digital conversation reflects the greater ease with which we're able to manage the shackles of unanimity in that particular space. So, you know, where we go with Europe as an institution is the real question of whether the political will exists to lift the level of agency up to that level remains unanswered.
Rym Momtaz
Can you unpack how having the ability to move on qualified majority voting when it comes to questions of security, foreign policy would have been different in trade would have been different. Let's play out that scenario. What kind of different outcomes you think may have come out?
Erik Jones
So let's start with trade. The, the big question is, Rosa quite rightly points out that the EU did not use all of the leverage that it has. But I think that's because at the member state level, there was simply not political consensus to empower the Commission to use that leverage. So no one was going to activate the anti-coercion instrument, this simple but very powerful piece of enabling legislation that allows the European Commission to move on its own authority.
Rym Momtaz
Also known as the bazooka
Erik Jones
Yeah. And why did they not want the Commission to do that? And the answer is because they wanted to retain agency at the national level, because they didn't want to have these fights with the United States, particularly on a sector-by-sector basis. So what leverage did Ursula von der Leyen really have? I mean, she was welcome to push back with threats of secondary sanctions or counter sanctions, but even those threats ring hollow when you consider how many different veto points she has to navigate, even just to put bourbon on the list, for example.
And so if we're going to do trade negotiations where the member states are the key veto players, we should not be surprised if Europe is weak vis-a-vis the United States, because Europe in quotation marks “doesn't really exist.” In Germany, in France, in Italy are all too dependent on U.S. markets as individual countries to be able to push back. And that's just one illustration. We could talk about security and tech and all the rest.
Rosa Balfour
Can I just say, one of the big debates of the summer was like, did Europe capitulate or was it being pragmatic? The other one in Brussels is, is it von der Leyen’s fault or is it the member states? That's what Erik said. Just goes directly in that, you know, in that direction.
Rym Momtaz
And I guess that's part of, you know, what is so difficult about the EU. Everyone knows the famous quote by Kissinger “Who do I call When I need to speak to the EU.” Well, now we know. I mean, maybe it's von der Leyen, although sometimes it's not. But I think in a way, maybe it raises a more fundamental question, which is, is the EU, and that's maybe something that we'll be tackling as, as callers for you know, the next year or more, which is, is the EU in its current form and in, in the way it conceived of, is it actually adapted to this return of great power competition and, and this world where there are no rules and where, you know, it's about power dynamics more than anything else? And can you do that? And can you have the malleability, the flexibility, the reactivity, the speed when you have 27 decision makers plus another two, and sometimes one delegates, and sometimes it doesn’t. I just wonder if that isn't going to become a bigger issue. And I'm looking at you, Erik, in particular.
Erik Jones
Well, I mean, it is a bigger issue. That's why von der Leyen finished her speech on that. She starts the speech with the, with a human story about Ukraine, and she ends her speech with, with her own version of Independence Day. So you could, you could just hear the resonance. The challenge, and I think this is where Rosa and also you will have a lot to say. The challenge is, let's say we actually gave Ursula von der Leyen this authority. Let's say we said to her “yeah, sure, do a deal with Mercosur, right.” What would happen in French domestic politics if you know, French politicians were allowed to say “yeah, sorry, but now you have to face Brazilian agricultural producers, um, because somebody in Brussels decided that that was the right way to go.” I mean, I just don't think that's, that's going to be a great outcome. And we could say the same thing about Ukraine. Right? I mean, the litmus test is always Poland. Poland has been so generous receiving Ukrainian displaced persons and placing them under temporary projection and bringing them into Ukrainian society. They've been so generous, but, you know, they also have farmers and they're completely obsessed with what is going to happen to the Polish farming community if Ukraine is integrated into Europe. So on the one hand, you would think, okay, Poland would love to have Ukraine integration in the European Union. And in social, cultural terms, they would. But on the other hand, you can understand that in domestic political terms, bringing Ukraine into the European Union would be absolutely toxic for the current government. And so how do we reconcile these tensions? I think this is the dilemma that Europe faces. And whether they find the political will to bring the domestic and the European together in a way that is actually cohesive and resilient is the heavy lift.
Rym Momtaz
So, Rosa, you've worked a lot on the Draghi report and all the other, the slew of reports that came out last year and earlier in 2025, relating to all the ways that the EU has to change and has to get with it and get faster at doing certain things. You know, I was struck by that speech by Draghi. I didn't expect him to be that harsh and that blunt and that publicly on the record. You know, when he says the illusion of EU powers shattered, he's not saying it's shattering. He's not saying it's in danger. He said it's shattered. I really want your take on that. What did you think when you first heard it, and what have you thought about it since?
Rosa Balfour
Yeah, I have to say I wasn't surprised because I've been watching Draghi get increasingly irritated in every public speech that he gives. And it's. I think irritation really is the right word because, you know, he's come up with this long list of policy recommendations which, you know, perhaps have even been too uncontroversial in the sense everybody says “yeah, we've got to do this.” And very, very little has been done. And it's been estimated that only 10% of those recommendations are in the beginning phase of being implemented. Now, I think it goes back, you know, is it the member states or is it the Commission? And it also partially goes back a little bit back to what Erik was saying and to von der Leyen's speech. You know, there is a joint responsibility in the inability of Europeans to upgrade, innovate the political economic model. It's not just about competition with the United States. It is about the fact that, you know, Germany has been subsidizing for decades an automobile sector but has failed to innovate and to meet the climate challenge. So now we have problems with, you know, Chinese EVs. Well, it's not surprising, right? Who do we want to blame for this? And a lot of people will blame the commission. The commission will say, no, it's the member states. So, you know, there's an issue there. These things, you know, we talk about Ukraine, we talk about trade deal, we talk about, you know, all sorts of, you know, big topics that really upset people. But unless Europe actually manages to do something about its economic growth, about its demographic problem, its declining demography. There's no Europe to speak of in the future. So, you know, whether it is qualified majority voting or something else, you know, the risk is that the European Union really becomes irrelevant. And that's why I'm a little bit perplexed by von der Leyen's speech yesterday that Erik was referring to, because her solution seems to be appealing for unity and compromise. We need to get over the various differences that are holding back Europe from what it needs to do. This is certainly the case, but I'm not hearing from her, nor from anyone else a real positive case for why it is that if we do certain things together, we'll get better results, number one. Number two, I'm not hearing a debate about what really needs to be done at the European level and what could be done at other levels. And von der Leyen in her speech talks a lot about housing. And I just don't get what the EU has to do with housing. To me, housing is very much a local problem. And where the EU can perhaps be helpful is putting some financial resources so that local authorities can address housing questions. So maybe actually, instead of proposing more of the same policy solutions or more of the Draghi report, we actually need to start thinking about how to rethink the social and political contract in Europe to make it fit for the 21st century. I just don't see that debate happening. I don't even see it in sort of our circles, think tank circles or academic circles. Maybe we just need to change the terms of the debate and come up with some more compelling ideas that will draw European citizens a bit more interested, get them more interested in questions of governance and where it is the appropriate level to make decisions. Decisions, be it about Ukraine or be about housing.
Rym Momtaz
You know, I'm really struck by what you just said, which is that decades into this EU project, you know, construction, we still have, I mean, member states among themselves in their discussions, whether it's in the Council or at the Commission level, they still have to make the case for why being together is better than doing things alone. I think that's a fundamental weakness in many ways, and it's perhaps not necessarily always articulated in these. In these terms. I'm just very struck by this way that you, you articulated it. And it's definitely food for thought. I wanted to, you know, take an opportunity here to just remind our, our listeners who may not have the Draghi report in mind what he had said. Basically he put forward a plan to boost competitiveness and as Rosa just said, it wasn't very controversial, it was ambitious. So he was talking about continental scale invest, investments in infrastructure, a revamped energy grid, coordinated military procurements to start weaning the block off of U.S. arms dependence, given the, let's say, varying reliability levels of the U.S. Administration right now and then a unified financial sector that can pour capital into Eurotech startups. And I was struck and Erik, I'd love to get your, your take on this in, in his speech he basically said the EU was made for a world of free markets and opening new markets and it hasn't adjusted to a world where geo economics and security and the security and stability of supply chains is more at the heart of trade, international trade relations. Do you think that's a fair assessment?
Erik Jones
So I, I think I would say two different things. One is I'm going to punish your listeners by saying, you know, when we read the Draghi report, we have to remember to read the Draghi report in the context of the whole trilogy, right? You can't just read the two Towers. You've got to start with the Fellowship and you got to end with the Return of the King, right? And, and so you've got to start with the Letta report on the internal market, which is all about explaining how Europe is more than just an economic entity. Then you get to the Draghi report where he says if we want to compete as an a hybrid entity that does lots of different things, we have to break what our standard economic rules. We can't just have a competitiveness policy that assumes the functioning of a level playing field, we have to move that policy to allow us to have concentration in defense industries so that we can protect ourselves. And we have to move that policy to do the things you were talking about, Rym. Have an industrial policy so that we can compete in areas that have the most value added. Otherwise if other countries aren't playing by the rules, we will lose out. And then there's the third in the triptych, which is the sort of Return of the King version, which is Sauli Niinistö's report on resilience where he says, and he does this quite explicitly, that we have to address what Rosa laid as the question: Why do we need Europe? Why do we need to come together? What is the strategy here? What's the vision? And how do we see ourselves in that vision and assume responsibility for the roles that we as individuals play?
And this is the arc of the narrative that we have to complete. And you know, the problem for Draghi is that Draghi gave lots of great advice, but he didn't give us any reason to take that advice because there's no wider image of Europe involved. It's just assumed, right. In the wider image of Europe being just assumed is also in this speech by Ursula von der Leyen. You look at the last movement in her speech, she says, you know, honorable members, this is Europe as one community. This is the Europe that I love. This is the Europe that we must protect at all costs and we must do that together. But in the preceding pages of the speech, there's nothing that's going to bind people in and believe that this is Europe. Housing policy is not something that makes people go “oh yeah, housing Europe.” And so we have to come up with a vision that binds people in if we're going to get to accept the different challenges and changes that are required for Europe to compete in this absolutely different, and I think you're absolutely right here, Rym, global economy, it's not a market based global economy anymore. So a market based Europe is not going to be able to compete. It's going to lose. Why? Because the non-market-based parts of the global economy are precisely defined or designed to defeat a market based entity.
Rym Momtaz
I just think it's interesting you say there's no like, you know, unifying vision or maybe they, they think it's, it goes without saying, Draghi and von der Leyen. To me it seems clear that their assumption is the unifying vision is, you know, Europeans have to be stronger, they have to use more power in this new world of where the language is the language of power. And they're not succeeding in that. And you know, just to round out our discussion, to me it was very much on display with the EU-China summit in July, where I felt like the Chinese attention and engagement on that was perfunctory and they did like the strict minimum to get away with it. And it was a big contrast with past recent years where you felt Like China wanted more engagement, was asking for more from the EU. This year, it just felt like they didn't really care what came out of it. Rosa, was that your impression?
Rosa Balfour
Yeah, very much so. But I have to say we've had. We've had a huge display. Let's try and be a little bit more positive, shall we? At least try and end with a positive note, because otherwise we're going to get even more depressed than what we are already. We've had a huge display and this is clearly the moment for performative politics, for a display of power, that the centers of power are moving away. We saw the Shanghai Cooperation Organization meeting when Modi joined and you know, traveled to China, despite the fact that Chinese-Indian relations have never been very good. We've seen obviously, Putin travel to Alaska, then to China. A big display of revisionist powers. And of course Europeans are still hoping that the United States will not join the club. But with Donald Trump, we have seen plenty of signs that that might well be the direction the U.S. will want to take. So, it really raises the question "Where can Europe go?" My fear is that there is a plurality of European political leaders who say “Whatever happens, we need to stick to the transatlantic relationship because that's our best bet.” And that's the submission question you started this conversation with. And that’s the risk, therefore is that Europe becomes some kind of vassal state of the United States. Conversely, the flip side could also be, well, this display of power and bonhomie among these autocratic leaders and revisionist powers actually has its cracks. It is not sustainable. There will be challenges. Nothing can beat the degree of interdependence that exists on the European continent. We do need to focus on carrying out some reforms and read some success and be confident that if Europeans do find some solutions to some of their problems, success will breed success. And it will continue to be a model also for other countries. And I think a model or, you know, potential part of interest, attractive. And I think one of my issues with the trade deal with the United States is also, it's not just what does it mean for Europe, but it's also what does it tell other countries. Is Europe going to be an organization that is going to continue promoting, for instance, WTO rules and the rules-based order or not. Does Europe have the ability to, for instance, you know, engage in a conversation with India, which is the big rising power? It's not China anymore. India is the big rising power. Or will its own contradictions put off the Indians from deepening the relationship with Europe? So I think there are silver linings, of course, and I think perhaps looking at it this way will force European leaders to focus on what really needs to be done in the short term to prevent Europe from becoming a vassal of the United States.
Rym Momtaz
So, you know, the point of having this discussion at the beginning of this season was to leave our listeners with paradigms or prisms to look through throughout the year to read the various unexpected and expected events that are going to happen. And just to wrap up a bit, you know, is it better to be working on a tactical level or do they need to always be operating on a strategic level? Can they do both at the same time? Is there a unifying vision for Europe? Do we need to still be making the case for why working together on some of these things is better? Is there a need to move to qualified majority and to have more flexibility and give more power to the Commission on some things? All of these questions are big questions that we don't have answers to. And our aim isn't to answer all of them, but we hope that we've given our listeners a way to think through the year and we'll go back to all of these themes as the year goes on.
Thank you so much, Rosa and Erik for joining me and for sharing your insights with our listeners. And thank you listeners for joining us on this episode of Europe Inside Out.
For those who are interested in learning more about Europe's role on the global stage, I encourage you to follow the work of Carnegie Europe on X and LinkedIn. Our producer is Mattia Bagherini.