Table of Contents
Abstract………………………………………………………………………………….3
Introduction……………………………………………………………………………...4
Transatlantic partners: A special alliance………………………...………………….5
Economic Competitors: The Inflation Reduction Act………………………………..6
Liberalism vs. Realism………………………………………………………………….8
The Liberal-Realist Hybrid……………………………………………………………..11
Analysis: Where are we headed?..........................................................................14
Alignment of Interests, but Two Different Paths………………………..……………19
Recommendations……………………………………………………………………....22
Economic Competitors and Systemic Allies
A stance on the U.S. Inflation Reduction Act
Averill Campion, PhD
Founding Director, PHAEDO
April 2023
Executive Summary
The U.S. and EU have always been economic competitors and systemic allies. However, this tension has recently become even more prevalent. In spring 2022, U.S. Secretary of the Treasury Janet Yellen called for a new approach to the global economy, involving a pivot towards increasing economic interaction with trusted partners who share U.S. values. Then, in late summer President Joe Biden signed the Inflation Reduction Act into law, symbolizing a historical stance on an industrial strategy for clean energy. Yet, these two key moves have resulted contradiction and paradox for US allies such as the EU. This report explores how the evolution of responses to the Inflation Reduction Act and the promotion of new concepts like friend-shoring and de-globalization represent a shift in logics of action in the international arena. This report analyzes the departure from neoliberalism and how EU and US will experience different consequences of these new logics. It then provides several recommendations.
Keywords: friend-shoring, rules based order, inflation reduction act, realism, liberalism, de-coupling
1. Introduction
On the one hand, in the past year on the security front, we’ve seen how the EU and U.S. have cooperated strategically over the invasion of Ukraine. But, in the past six months, when we pivot to the economic front, we see that there have been a lot of tensions and contradictions between the US and the EU due to the Inflation Reduction Act, which was passed in the United States in August 2022. The Inflation Reduction Act is the US’s nod to industrial policy and provides billions of dollars in subsidies and tax credits for green technology innovation. In particular, $369 billion in investments. The problem is there are segments in this legislation which violate World Trade Organization (WTO) rules by enabling discrimination against products, in particular for electric vehicles[1]. Normally, WTO rules promote anti-discrimination of products for the purpose of free trade and open markets. So, for example, if France wants to promote a consumer uptake of electric vehicles, it provides tax credits to consumers for purchasing electric vehicles no matter where they are made, in line with these rules.
However, the IRA provides two tax credits for consumers based on final assembly and battery component requirements. A $7,500 tax credit is available for new clean vehicles that undergo final assemble in North America[2]. A tax credit of $3,750 is also available for a battery component requirement if 50% of battery components are manufactured or assembled in North America or with “free trade partners”. Since the EU does not have any specific free trade agreement with the U.S., this is exclusionary and protects Canada and Mexico primarily, who share a free trade agreements. Ironically, the IRA was passed alongside the U.S.’ new trade agenda around de-globalization and the idea of “friend-shoring”[3], which means increased trade cooperation and supply chain sources with trusted countries, e.g. American allies. As a result, the Transatlantic Relationship is currently grappling with what it means to exist as systemic allies, but economic competitors. The analysis will focus on what this shift for the liberal rules based order and how there are very different consequences in choosing new logics of action for the U.S. and EU.
2. Transatlantic partners: A special alliance
Transatlantic cooperation around the invasion of Ukraine is rooted in a systemic alliance between the U.S. and EU. The United States and European Union are united by a belief system in democracy. These liberal ideas and principles, based on democracy, are the foundation of the liberal world order—ideas like collective security, protection of human rights, democratic governance, rule of law, open and free markets. In terms of security, this is the first interstate war on the European continent since WW2. It is a direct threat to the collective security of the EU and has required collective deterrence. It also symbolizes the growing acknowledgement that we have re-entered into a world of ideological blocs[4]: authoritarian regimes and democratic regimes. And so, regions may start to strategize their self-interests in security and power more with those who share similar values of control.
For a long time now, European leaders have discussed the need for European strategic autonomy,[5]which has commonly referred to the areas of security and defense. The desire for Europe to develop and more defense capabilities autonomously from the U.S. stems from the realization that the U.S. has had less of a strategic interest in Europe, especially during the Trump administration[6]. Yet, the invasion of Ukraine brought a renewed interest in EU security from the American perspective. It has also revived the legitimacy of the role NATO plays, in lieu of Trump’s past statements about NATO’s impending obsoletion[7], for instance. Thus, Europe is still divided between those who fear an EU without NATO, knowing their dependence on U.S. security and the role the NATO framework plays for military organization, especially now, and those who still want less NATO and dependency on U.S. security.
3. Economic Competitors: The Inflation Reduction Act
When we look closely at the new trends of “de-coupling” and “economic nationalization” and “friend-shoring”, it is understandable why some U.S. allies, possess skepticism about the US’s intentions around these terms[8]. Is friend-shoring just an euphemism for the U.S. convincing its allies to accommodate a very self-interested trade agenda? Many are arguing the international rules based order is broken.[9] Both China[10] and the US regularly break the rules, when it is in their economic interest to do so. The big question is: does that mean giving China, a systemic rival, more power and influence in international institutions, so that China can shape the rules too? Or does it mean starting over completely and creating rules that better encompass this variety of norms and values? Or have we gotten to a point where no one will follow rules anyway, whether are not they are re-made[11]? For now, no one has answers yet to these complexities.
EU leadership initially viewed the Inflation Reduction Act as just another example of the U.S. breaking the rules for self-interested reasons[12]. There has been an evolution of responses to the Inflation Reduction Act, first beginning with fear and outrage. Fear was based on whether the Inflation Reduction Act would attract European businesses away from the EU towards the US in order to reap the benefits[13]. Outrage was related more to the violation of World Trade Organization (WTO) rules. More recently, EU responses have consolidated towards pro-activeness, adjustment, and the embrace of inward looking adjustments, through its own interpretation of “economic nationalization”. In the meantime, the U.S. trade representative, Katherine Tai, addressed the misunderstanding about the term “trade partners”, while U.S. leadership made attempts to re-assure EU leaders that the discriminatory text was an error, but unfortunately, that the legislation could not be re-written, per say.
As a result, EU leaders have been working to further loosen EU state aid rules[14] in a way that would enable the EU to pool more resources and subsidies together, without harming the single market, in order to maintain fair competition. For example, the Important Projects of Common European Interest (IPCEI) subsidy framework grants state aid through pooled public resources in areas like batteries, microelectronics, and hydrogen[15]. Another tactic for bolstering EU industrial strength is French President Emmanuel Macron’s promotion of the “Made in Europe” strategy. This strategy aims to promote a change of EU rules about government assistance to companies to unleash more state aid in terms of subsidies or tax credits, especially for strategic projects[16]. Yet, the EU seems to be slightly lost in the potential of a new world order, as it depends heavily economically on the traditional liberal model that supports trade based on open, free markets. The EU has a different balancing act than the US when it comes to the trend of economic nationalism, as individual nations in the EU will of course, not completely disregard their own national self-interest in economic affairs, but must nonetheless still attempt to maintain cross-country cohesion and unity for fair competition within the single market.
4. Liberalism vs. Realism
To really delve into why European leadership is outraged about this behavior is because the Inflation Reduction Act symbolizes a tangible shift in logics of action—a move away from a liberalist mindset towards a realist mindset in international relations. First, it is important to define realism and liberalism. Realism, in international relations, has a long history, beginning with the Ancient Greeks, in which this classical thought emphasized the self-interest or egoism of humans and that relationship with power. The idea being that power and security are most important for state actors in the international arena, since each state is responsible for its own survival, so interactions amongst actors will tend to emphasize conflictual sides due to priorities of security and power. And more cynically, because the survival of the state is the priority, international institutions are ineffective in the sense that actors put their self-interest first, regardless.
Liberalism is a more positive idea that we can use international institutions and multilateralism and diplomatic solutions as a way to cooperate and search for win-win outcomes. The idea is based on emphasizing our common interest and the mutual benefits of cooperating around global challenges like alleviating poverty, improving health, and fighting climate change. Furthermore, liberalism is based on the idea of economic interdependence and that the more deeply our economies are integrated with one another, the less likely we are to go to war with one another because of the economic consequences. The liberal world order began its conception around WW1 with U.S. President Wilson’s promotion of the League of Nations. However, the liberal world order truly materialized at the end of WW2 during the Bretton Woods Accords.
The Bretton Woods Accords established the international organizations of the International Monetary Fund, World Trade Organization, and World Bank. This was also in concurrence with the creation of the European Union. After the fall of the Berlin Wall, Western leadership then moved from regionally pushing liberal ideology or strategies of containment, to a more intense and general for democracy at the global level, based on the belief that this system had finally defeated other ideologies[17], and that peace was easier to maintain amongst democracies (i.e. democratic peace theory; see: The End of History). The idea was extended to economic integration: the more we are economically interdependent on one another, the easier it is to deter military action. For many, the post-WW2 Europe has been the best example of this. It is logical, therefore, that countries like Germany further incorporated this positive belief in the power of interdependence into their foreign policy with countries such as Russia. The hope of Germany, as seen throughout the Angela Merkel era, was that strong economic integration with Russia would result in Germany’s ability to influence Russian social and political policies[18], for example.
But it appears we are now shifting away from a traditionally liberalist mindset in the global order, towards a more realist mindset with the re-introduction of ideologically driven regional blocs. This shift of interaction creates a liberal-realist hybrid. The U.S. and China have intentionally placed their security and national interest very strategically when it comes to economic competition, understanding the role of economic dependency. The U.S. seems to use the global liberal institutions to advance its own economic interests, discretely or not. While China is attempting to create its own governance and institutions in the global system, in order to also promote its self-interests[19]. Europe, on the other hand, stands by the win-win stance of the liberal ideal, embracing globalism fully, opening up itself and its companies to integration, assuming the best, not expecting the worst. But that is the logic of liberalism, it is optimistic, after all.
5. The Liberal-Realist Hybrid
It is easier for the U.S. to shift away from a liberalist approach to international relations and adopt a more realist approach than it is for the EU. Because of its hegemonic power since WW2 and as a still very young country in terms of age, the U.S. has been able to risk more conflictual pursuits of its self-interest than other actors. For example, the U.S. has comfortably leveraged military and political intervention in the Middle East since the 1991 Gulf War to help American business secure interests like winning contracts in the region[20]. Yet, the realist approach is contradictory to the existence of the EU itself. The EU embodies the greatest institutional experiment in liberalism and its greatest ideal— to create a structure that elevates common interests, where possible, across nation-states in order to create an avenue for dialogue and trade coordination. Because of Europe’s own historical memory with realism, Europe cannot pursue the logic that the state has no higher duty than to maintain itself, because the continent has already lived Machiavellian “by all means possible” war strategies over centuries. And life conditions were poor, nasty, brutish, and short.
However, this does not mean the EU can’t still shift towards more protectionist approaches, and it does not mean that individual nations in the EU will never attempt to leverage their own economic interests abroad. France will always think about what is best for France economically, and so forth. The dilemma is, however, that the nation states of the EU can never subscribe fully to the principles of realism, since EU legitimacy is entrenched in liberalist principles. EU Member States must delicately balance their own self-interests in a ways that would never obstruct the common economic interests of the EU as a whole. As a regional economic bloc, there is a point at which American hegemonic costs outweigh the benefits for Europeans. The EU cannot afford to simply follow the U.S. policy lead of friend-shoring. Just in terms of pure globalization, the top 14 countries in the world with the highest rate of globalization are European Member States, meaning they depend highly on the process of creating networks and connections among actors at multi-border distances for information and ideas, capital and goods[21].
Such mutual interdependence is the desire of the liberal system, and its rules are meant to support and maintain economic integration. According to European Central Bank President Christine Lagarde, “Europe’s integration with global value chains was deeper, with GVC participation roughly 20 percentage points higher than in the United States[22]. COVID-19 and the War in Ukraine exposed the vulnerability of supply chains especially for Europe. As ECB President Lagarde said in a recent speech has called for leaders to figure out how to make trade safer: “the European Commission has found that 34 products used in the EU are extremely exposed to supply chain disruptions given their low potential for diversification and substitution inside the Union[23].” We see through this ECB speech, how the EU is crafting its own path that best suits its own interpretation of de-risking and de-coupling, and is more careful about its rhetoric than the U.S.’ initial posture. Lagarde clarifies that for Europe, making trade safer means shifting from dependence to diversifying suppliers, shifting from efficiency to security, and regionalization.
At the end of the day, the EU almost has a sense of noblesse oblige to liberalism. The entire functionality of the EU is based on multilateralism and the management of competition and free trade within a single market. The original purpose of the Coal and Steel Community was to ensure that the vital resources of coal and steel would be pooled together to reduce the threat of war. Economic competition means something entirely different for the EU than for the U.S. Internally, as a trade bloc, the EU attempts to manage economic competition in a way that controls the self-interested pursuits of member states in attempt to create an economic circumstance that is beneficial for the interests of all members. The idea being the whole is greater than the sum of its parts on a global scale: the EU represents the third largest economy in the world behind the US and China.
Externally, the EU seeks to manage economic competition in a way that sets rules to maintain free and open markets and uphold liberal values, which are connected to its drive to ensure strict standards around digital privacy for individuals, food safety, and agriculture to name a few. And those standards are reflect the best possible situations for consumers. That is its way of protecting the individual and why it has developed a reputation of the world’s “regulator”[24] to ensure individuals in Europe have the highest quality of life derived from the pursuit of standards.
For the U.S., externally, economic competition seems purely a pursuit of self-interest, and its aim to protect its national interest, first. Recent political moves grounded in protectionism, also reflect a more conflictual side of affairs, as the U.S. has been carefully provoking China in strategic areas of trade, like microchips. Through ensuring national interests is protected abroad, and that it dominates as much as possible the economic front, that is, internally, the U.S.’ way of protecting its citizens. Ideally, then, American businesses and citizens alike have the best possible economic environment to thrive in and to succeed as a result. Perhaps, this is rooted in the opportunism that arose from WW2 and the unique position of economic power the U.S. had over the world after WW2. The idea was to help others in the way that most benefitted the U.S. interests. And the creation of the liberal world order was the proposed institutional arrangement for doing so.
6. Analysis: Where are we headed?
But is the passing of the Inflation Reduction Act merely of another example of the US’s power move to “do as I say, not as I do” …bending of the rules when it is most beneficial? Clearly, it is a protectionist move, aimed to safeguard the American green tech industry from Chinese competition, who are already strong in battery and solar panel production, and currently control the production of many metals used in high technology needed for solar and wind production, for instance. Furthermore, it important to place the IRA within the context of U.S. leadership’s push towards more “economic nationalization” and “de-globalization”. In general, the idea of de-coupling from the global system in order to trade more closely with trusted allies is perhaps at best, political rhetoric. Friend-shoring is filled with paradox and contradiction.
Ownership
To specify, European politicians and business alike are upset about the electric vehicle and battery reference in the IRA text. It is normal that the EU would like open and fair access to the electric vehicle market, especially as friends, who share a similar belief system and values; and in the context of the liberal world order. However, it is obviously extremely tricky for the EU to align itself with the U.S. stance of overt de-coupling from China, even as a systemic ally. The mere existence of car companies themselves, nowadays, can involve complex, global financial structures that involve the ownership and investments of entities across multiple countries, especially China.
For example, Germany’s biggest global export is cars[25]. In particularly, Germany’s biggest export to China, is cars, and China is its main trading partner. Moreover, when we think about the common European car brands Americans might buy: its Volvo, Mercedes Benz, BMW; French presence in the U.S. car market would be more known through the alliance between Renault and Nissan. To unravel this more: we also know that Volvo, the Swedish brand which is popular in America, is owned and manufactured by a Chinese holding group, Zhejiang Geely. Geely acquired this “Swedish” brand from Ford Motor Company in 2010. And if we look at the structure of German brands: Mercedes-Benz Group AG is owned 9.98% by Chinese BAIC group in terms of voting rights, making the Chinese group the largest individual shareholder[26]. Chinese investor Li Shufu via Tenaciou3 Investments also owns another 9.68%, resulting in 18% of its shares of ownership being Chinese. In terms of shares “by region”, China owns more shares in Mercedes-Benz than Germany. This makes sense in a globalized world. The point of globalization is integration. Economic integration and globalization have worked really well. Car companies, even American car companies like GM, view China as its largest single target market in 2022, and must form joint ventures with Chinese groups in order to sell automobiles in mainland China.
Yet, when it comes to automobiles, in the U.S. two out of three main automobile parent companies in the U.S. still remain in American ownership: General Motors (which owns the brands GMC, Chevrolet, Cadillac, Buick), Ford Motor Company (which owns Ford and Lincoln). Stellantis, an Italian multinational automotive corporation acquired Chrysler, Dodge, Jeep and RAM. The ownership of brands like Dodge and Jeep are still in the hands of a “trusted” partner with supposedly similar democratic values. So, as car brands start to venture into the electric vehicle market, if the U.S. leadership were to be serious about the commitment de-globalization away from non-trusted partners, then it would have to consider not only supply chains, but ownership itself.
Such a commitment does not involve having your cake and eating it too: friend-shoring means the U.S. would have to better incorporate market access for EU in a fairer way that is akin to the benefits other free trade partners will enjoy. Yet, the entire concept of ownership, if we look at the European automobile industry, reflects just exactly how much European companies opened themselves up to globalization: the willingness to place ownership of traditional EU brands in the hands of others for economic benefits. Therefore, following this logic, by allowing its European allies to have more access to the U.S. electric vehicle market, even if those companies were to make final assemblies in North America, they still will benefit Chinese shareholders, at the end of the day. And because of close links between Chinese business and government, benefiting shareholders is a direct benefit to the CCP.
If the U.S. intends to hold true to its commitment to “punish” China and protect itself, then allowing key Chinese industrial players to indirectly benefit from this access would likely contradict such an intention. Thus, the question of ownership presents a key conundrum and focus for the transatlantic relationship, especially if the IRA can be adjusted to incorporate more “friends” into its partnership terms the future. Because of the European automobile industry’s close links to China, especially in terms of ownership, China possesses a particular position of power. It is unknown what kind of pressure China can exert on key EU auto-makers if they attempt to make significant efforts in diversifying the midstream and downstream processes of EV raw material supply chains in the name of economic nationalization and protectionist style policies. China possesses the world’s main capacity for midstream processing[27] of critical raw materials needed for batteries.
We already know due to the 2008 financial crisis, China owns most of Portugal’s power grid[28], as well other numerous key infrastructure[29]. So we can see how everyone has to be extremely careful about approaching de-coupling because there are plenty of economic pressure points and chokeholds. And so the real question then when it comes to economic competition and the shifting order, how exposed is Europe and can it actually risk the implications of the de-coupling strategy promoted by the U.S. in the name of a trusted partnership based on beliefs and values? Because it doesn’t matter what your belief system is or what your values are if another country owns you economically. That is a major power position and a security dilemma. As some international relations scholars have suggested, the weaponization of our interdependencies can become even more intensely applied[30].
The Ukraine war shows us how effective economic coercion can be as a tool of hard power, that we don’t have to use military might, directly. Weaponized interdependence and economic warfare is the perfect manifestation of the liberal-realist hybrid, using globalization as a means to exploit vulnerabilities. This path though will slowly de-couple and fragment the global system, as adversaries will seek to create their own institutional answers to their vulnerabilities[31] for security purposes. So if future interactions amongst global powers truly adopt a liberal-realist hybrid, and we start to focus on exploiting the asymmetric interdependencies in the name of power and security, then rules don’t really matter anymore. And when it comes to economic competition, Europe, as the vessel of liberalism, may take the most hits due to its exposure and dependency on the globalized order. What is best for the U.S., is not necessarily best for the EU, even as systemic allies.
The amount of power the U.S. can exert in such an economic alliance model[32] could for the Transatlantic relationship to consider the point at which the costs outweigh the benefits, from the European perspective. In conclusion, the U.S. and EU can agree on adopting a more protectionist strategy for re-shoring the critical raw material supply chain of batteries, in attempt to mitigate vulnerabilities to a critical industry. Yet, the EU must be more careful in its rhetoric around de-globalization and antagonization of China, especially when individual member nations have different delicate relationships and dependencies, while the U.S. can afford take a more abrupt and conflictual stance. Finally, the U.S. must be careful of friction between so called value-based alliances and economic competition, because while the EU cannot push a more conflictual approach in the international arena, it still can make subtle, but significant decisions to maintain closer interdependencies with China than the U.S. prefers, especially if rubbed the wrong way too much by the Americans. Nonetheless, at the end of the day, both American and European leadership understand the importance of de-risking supply chains that are strategically critical to national security as much as possible and this will be a key driving motivation for future economic strategy.
7. Alignment of Interests, but Two Different Paths
Overall, the main takeaway of this report is that two paths are emerging due to variances in logics of action between the EU and U.S. due to power positions, and the historical evolution of approaches to power in the international arena. Europe must remain loyal to a liberal rules based order, while the U.S. will more easily play around with alternatives like a liberal-realist hybrid model. Despite these different models, we can see policy alignment when it comes to protecting key strategic industrial interests, as both regions have declared their efforts to re-shore supply chains in relevant areas. In particular, the U.S. and EU have similar outlooks for their green industrial strategies: both have potential to re-shore the critical raw material supply chains for batteries, both offer similar grants, subsidies and tax credits, and both will attempt to make the regulatory process for permitting faster and more efficient.
U.S. Inflation Reduction Act
The IRA set the financial motive for companies in the U.S. to attempt to de-risk their supply chains amongst trusted partners. In terms of supply chains, the US Bipartisan Infrastructure Law has allocated $2.8b[33] to 20 companies across 12 states in domestic battery supplies, with $1.5b allocated towards materials separation and processing, and $1.3b to component manufacturing. Overall, funds have been provided through the Infrastructure Investment and Jobs Act, with $125 million in grants for battery and critical minerals mining and recycling, $320m for earth mapping resources, another $200m for electric vehicle battery recycling programs, and the IRA with $10b in credits for qualifying advanced energy projects, $30b in tax credits for advanced manufacturing production, to name a few. Funds from legislation represents unique support in re-shoring the critical minerals supply chain for midstream process, in addition to other financial efforts to support downstream and upstream processes. The IRA presents commitment to increasing domestic U.S. supply of critical[34] minerals: lithium, nickel, manganese, graphite.
EU: The Green Deal Industrial Plan
The Green Deal Industrial Plan is Europe’s response to the IRA, and allocates more funds to subsidize its green technology industry. In terms of supply chain, policies have also been mobilized for facilitating downstream processes like extraction, midstream processing and recycling, and upstream production of components. The EU had already made available EUR 250b for green industry, and in response to the IRA, state aid schemes have been approved for EUR 51b to enhance green energy production capacity.
Through REPowerEU, additional RRF grants EUR 20b will be available to Member States, with 225B in loan options. Like the U.S., there is some potential for re-shoring critical raw materials needed for batteries in downstream activities as mines could be made active in Germany Sweden Norway, Finland for different sources of materials. Midstream processes also have the potential, but one set back for refinery investments is the cost of energy in Europe which can make the production and processing of these minerals very expensive. For upstream processes, significant efforts have been made to secure production of batteries with Gigafactory efforts underway in countries like France.
As allies, the U.S. and EU should learn from one another and continue to adapt in order to advance. The EU has decided to follow the American subsidy lead and has adjusted its funding opportunities through the Green Deal Industrial Plan. Perhaps now, the U.S. should take the opportunity to adjust its aggressive trade rhetoric, as a hint from the EU, and practice more sensitivity about framing the delicately entrenched economic system out of respect for its friends and out of realization of its own benefits of open trade. As the vessel of liberalism, maybe Europe can exemplify to the U.S. what more cooperative international dialogue looks like from a regionalist perspective, in case the U.S. has forgotten in the its blind pursuit of power based provocation as a global hegemon. ECB President Christine Lagarde stated recently, “Europe has the potential to implement a positive sum form of regionalization that also makes the global economy more robust.” A positive friendship doesn’t mean that there aren’t differences; the point of friendship is to serve as a compass for guidance of values towards the most positive path possible, so that those differences can be respected in a non-destructive way.
By placing the IRA within the political context of friend-shoring, de-globalization, this report recommends that:
· If the U.S. is serious about increasing bonds of trade with trusted partners, any future industrial policy must explicitly embody this sentiment. Domestic legislators must be more up to date and considerate of the consequences and implications industrial policy has for European friends and other allies. The passing of the IRA in its current state indicates a serious disconnect between domestic and international politics. The U.S. can better adapt itself strategically to the logic of the realist-liberal hybrid, which would mean placing U.S. interest first, without harming its allies from unintended consequences, due to the understanding of the multi-lateral, globalized world we live in.
· Second, if European leadership is serious about strategic autonomy, it must continue to promote its strengths, which is to serve as a standard setter and regulator to maintain an open world, which means not always pleasing the U.S. and listening more to its own instincts whenever possible. As a friend, the EU can continue to positively counter U.S. power moves related to de-coupling and the reality vs. expectation of such ambition. This would be a positive step towards its own strategic autonomy.
· Third, the U.S. and EU should learn from one another—each has its own strengths—the EU understands how to manage regional pursuits of fragmentation, while the U.S., as a hegemonic power is used to setting the vision for others to follow. This vision and strategy can be better synthesized to support a meaningful systemic alliance to exemplify our shared values and beliefs.
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