World Economic Forum and European Response
The World Economic Forum (WEF) meeting in Davos highlighted pressures from the United States on European nations, especially concerning the potential annexation of Greenland. The US has been leveraging tariffs to align European actions with American priorities.
Dependence on the United States
- Military and economic dependence is acknowledged, particularly in specific industries:
- France's luxury goods, Germany's automotive, Sweden's engineering, and Ireland's pharmaceuticals might face profit reductions if US market access is restricted.
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- German carmakers face existential risks due to electric vehicle transitions and Chinese competition.
- Overall, the European manufacturing sector can endure without the US market.
- Europe can potentially weaponise American service imports and destabilise financial markets by manipulating US Treasuries holdings.
European Commission's Strategic Response
- Ursula von der Leyen, European Commission President, emphasized building a "new form of independence" from the US.
- Strategies include:
- Enhanced military cooperation with regional partners.
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- Domestic reforms to boost competitiveness.
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- Regulatory reforms to utilize internal markets better and fortify against geopolitical shocks.
- Von der Leyen highlighted FTAs with the Mercosur bloc and India as measures to derisk and diversify supply chains.
- Consideration of potential agreements with the Comprehensive and Progressive Trans-Pacific Partnership (CPTPP) for setting trade standards and establishing new supply chains.
Implications for Global Stability
Global disintegration signals in Western alliances increase instability, not favoring India's interests. The Indian government should prioritize restoring global governance and trade continuity. Securing the EU-India FTA during Ms. von der Leyen's visit could significantly benefit India's strategic position.
