economy
May 3, 2026
What's Wrong With Europe?
Europe — 27 countries in the European Union, another 19 outside of it — is rich, educated, with solid institutions and a weighty history. And yet, today the continent seems like a luxury spectator in the world's major crises: in the war in Ukraine it paid more than the United States, did what Washington told it to do, and sat, at best, at the minor negotiation table, without any diplomatic initiative of its own. In the Iran war of 2026 it was informed, not consulted. And in the global technological race, Europe produces first-class science — but almost no first-class companies.
TL;DR
- Europe's GDP has fallen from 85% of the US GDP in 2002 to 70% in 2023.
- The continent lags in global innovation and technology, with no European companies among the top 50 most valuable tech firms.
- Structural issues like bureaucratic hurdles, a fragmented single market, and a lack of unified foreign and defense policy impede Europe's progress.
- A decline in defense spending since the end of the Cold War has left Europe militarily vulnerable.
- Europe's strength lies in specialized industrial niches and 'Hidden Champions' that lead globally in specific markets.
- Potential solutions include implementing a variable geometry EU, completing the single market, and developing strategic alliances in the Global South, especially Latin America.
- Europe needs to abandon its past view of world order management and accept the reality of power politics to avoid irrelevance.