December 8, 2021
Europe in a bipolar tech world
This page is only an excerpt of a technology foresight report in order to give readers an introduction to the topic and the opportunity to browse through alternative futures. To access all content, please download a digital copy of the paper or return to the main report page.
In the run-up to the 2020 presidential election, Biden promised to turn the clock back on Trump’s policy changes. When it came to China, however, Biden piled onto Trump’s hostility toward Beijing. US tariffs on Chinese imports have stayed in place despite Beijing’s call for them to be reduced. The Biden administration, in coordination with the EU, has sanctioned China for its ruthless repression of Uighurs in Xinjiang and taken additional measures to punish the country for cyber hacking. Sino-US tensions continued to build in the South China Sea and over Taiwan. With no sign of Beijing backing down, the US administration lays out a strategy for restructuring NATO to be targeted on Russia and China, combining its allies from Asia and Europe into an enlarged, redefined alliance. Neither European nor Asian allies are keen on these US ideas, but temper their criticism to avoid offending the still predominant superpower.
Squeezed by Sino-US escalating tensions
With both Asians and Europeans less than enthusiastic, Washington puts the enlarged NATO idea on the back burner. Yet Europeans are less able to fend off Washington’s idea of resurrecting the Cold War-era Coordinating Committee for Multilateral Export Controls (CoCom), which was used to embargo exports of sensitive materials to communist countries. The US administration believes the competition over emerging technologies is at the heart of the conflict with China. Many in Washington subscribe to the belief that the Asian country has only become the leading tech competitor through its theft of US intellectual property. Besides export controls of cutting-edge tech, decision makers seek to wean Europe off China’s tech exports. Denying the country’s tech giants market access to Europe and the United States would, American strategists believe, curb Chinese innovation.
Increased US extraterritorial measures mean that the EU finds it hard to proceed with its goal of “strategic autonomy” and finding a “third way” without European businesses incurring restrictions on access to US markets. The US administration says it will offset any harsh anti-Chinese measures by offering greater support to the Europeans against Russia. Northern European export-dependent economies are likely to be conflicted and divided in their reactions to such an anti-Chinese push by Washington. The Baltic states, ever mindful of the Russian threat, are an exception and welcome the increased US commitment. At the same time, the Baltic states have been part of the 16+1 format with China, a platform initiated by Beijing to foster cooperation; although they lack deep ties with China, most of them have been hoping (like other Eastern Europeans) for more Chinese investment and trade. Under pressure from Washington, the countries of the region sign on to the US offer, sacrificing the possibility of strong economic ties with the Asian giant.
By contrast, the Scandinavian nations and Germany find the increased hostility toward China under Biden or any other subsequent US president very unwelcome. Berlin’s most important trading partner is China; Finland is the biggest EU investor in China in proportion to the size of its economy, and China is Sweden’s largest trading partner in Asia. Overall, the EU has become the country’s biggest trading partner and the two sides—EU and China—recently signed an upgraded trade deal, expanding the one that was signed and then halted in 2021. Squeezed between the United States and China, the Europeans—particularly Nordic nations and Germany— would pay a stiff economic price for going along with any US strictures against China and would use their diplomatic power to argue for a course change in US foreign policy.
Other EU countries are less economically dependent on China, but resent US interference and push back against US extraterritorial measures while professing their commitment to strong transatlantic ties. The EU tries to walk a fine line and neither offend Beijing nor Washington, finding it increasingly hard to defy American decision-makers on sanctions and tariffs against China without endangering US/NATO security guarantees.
All European governments on edge
At home, the European social model is under increasing pressure. Like the United States, many EU member states instituted new taxes on the wealthy to cover budget shortfalls. While subsiding during the first waves of the coronavirus, populism is on the upsurge again. After the initial economic surge, European economies slow, giving populism a new lease on life. The EU and immigrants are targets for the renewed surges, and nationalists are gaining election victories in multiple member states. There is a growing sentiment in favor of protectionism and the establishment of more border controls. Eastern Europeans even begin refusing entry to European citizens with immigrant backgrounds.
European split on a single foreign policy
Despite initial efforts to find a united middle ground, Europe splits and wavers in the face of US pressure. France and the Baltic, one or two of the Nordic, and several East European states try to temper growing US antagonism, but share Washington’s worries about a “hyperpuissance” in the East. Since Brexit, the United Kingdom has been trying to open new markets in Asia, including in China, but sees no real alternative to the United Sates remaining its closest ally. London remains the first to always accede to US pressure.
The Baltic and East European governments worry that Russia will take advantage of Western weakness and intervene in their countries. Moscow’s strong ties with China are seen as giving Putin more self-confidence despite Russia playing a junior role to Beijing. Germany and some of the Nordic states become even more adamant in their belief that China is their economic lifeline. With Western markets slowing, Asia looks to be the only outlet. Italy and some of the Eastern European states like Hungary are also eager for new Chinese investments, and hedge their bets.
Out with strategic autonomy, in with hedging
The growing split and mutual attacks by the two internal camps paralyze the EU. The initial rescue package that many observers saw as a step toward greater integration is never repeated. The idea of strategic autonomy is forgotten. Enlargement is at a standstill despite renewed calls from Ukraine, Georgia, and others seeking entry. China’s deteriorating human rights record and saber-rattling against Taiwan angers many European publics, sparking a growing popular movement throughout Europe opposed to China. Germany seeks to mediate, going along with some punitive measures against Beijing and Moscow, but diluting others. Berlin and Paris publicly object to US interference in EU affairs.
Europeans in both camps secretly welcome Chinese efforts to invest in developing countries, hoping the economic assistance can help stimulate economic activity and tamper migration even though they fear the Chinese efforts will end up bolstering authoritarianism throughout the world. Yet European countries don’t have the means to engage even in their traditional backyards. Paris has given up its fight against terrorism in the Sahel. Europe watches as Russia and China increasingly call the shots in Africa and the Middle East. Focused on battling China in East Asia, the US administration puts the blame on Europe for these failures, without wanting to intervene itself. The only united effort that all member states can still agree on is beefing up maritime patrols in the Mediterranean to close the EU’s external southern border.
In Washington, there is finger-pointing over who lost Europe. There’s a growing realization that the United States overreached despite its initial effort to rally the West. While in Europe, there is a worry about the future of the European project. Both the United States and the EU seek to paper over differences, but for China, the transatlantic split is further evidence of Western decline, feeding the hardliners’ appetite for more aggressive actions to expand Chinese influence in the region and beyond.
This page is only an excerpt of a technology foresight report in order to give readers an introduction to the topic and the opportunity to browse through alternative futures. To access all content, please download a digital copy of the paper or return to the main report page.
