Confessions of a European Optimist

For the first time in decades Europe is facing external threats. Two of them, to be precise; combined, they amount to an existential crisis. From the East, a military threat from Russia that shows signs no sign of abating; from the West, an aggressive American administration using every coercive measure at its disposal to demand complete submission from the rest of the world.

While not completely unexpected this new reality is still shocking to many; indeed, I have found myself in a few conversations recently where I was the most optimistic party. I started writing this to understand the rationale behind my own optimism. I would summarize it in two key points:

• Our European institutions allow us to handle the threat from the US on trade, regulation and monetary policy at European level, meaning discussions with the Trump administration will be on a more or less equal footing. In other words, our boat is large enough to weather the storm.

• The dual threat from Russia and the US and the visible alignment between Trump and Putin is shifting the political balance across the continent, creating more willingness to take riskier bets on the future, and an appetite to shift away from US-centric ecosystems. This creates a wealth of opportunities to build new systems here across many domains (e.g. social media, finance, cloud infrastructure, defense, etc…)

Child of the Fall of the Berlin Wall

I was born in 1990 in the suburbs of Paris, which makes me a child of the fall of the Berlin Wall and of the dividends of peace. During my childhood and teenage years, I only ever heard of conflict in “faraway places”. Some of those, like Bosnia, weren’t actually that far, but the idea that they might ever affect me was so foreign that they may as well have been on Mars.

I remember sitting at our dining table one afternoon as a teenager, regretting having been born in an era in which nothing was left to do for the world. I certainly didn’t see the world as perfect, but the overall picture we were presented with at that time was that of global progress towards peace and democracy. Surely, I thought, the few remaining hotspots would have been sorted out by the time I became an adult, which I felt didn’t leave much in terms of era-defining political goals that I could contribute to – environmentalism was only remotely on my radar back then. I had never heard of Francis Fukuyama and his concept of the end of history at that point, but I didn’t need to; it was simply the zeitgeist that I grew up in, naive as it might have been.

That picture has certainly changed now, as the old curse has come upon us: “May you live in interesting times.”

I believe it helps to acknowledge that this is not just a crisis, which would imply a time-limited disruption before going back to “normal”, but a new state of things which we need to acknowledge and deal with. There is a very real possibility that the year 2028 will see the election of a President Vance, who might be around until 2036 and continue with similar policies as Donald Trump.

Even if that were not the case, there is something deep at play here. The era we have lived through since 1990 has had as a bedrock the absolute confidence that US and European interests were mostly aligned when it came to dealing with the rest of the world, in other words that there is such a thing as “the West” as a geopolitical entity. The mere fact that this alignment may or may exist depending on who occupies the White House makes it irrelevant from a geopolitical perspective. We have lived through the end of an era, and we now find ourselves negotiating a high-uncertainty period, not knowing what the steady-state of tomorrow will look like. The exciting part of being alive now is that we get to build it.

Building Tomorrow

For us in Europe this can feel daunting, used as we have been to taking cues from the US like a younger sibling from an older one. This is evident in the realm of defense and foreign policy, but is not limited to that. Around the turn of the millenium, Silicon Valley companies established dominance in consumer Internet applications; and as the importance of the Internet in our daily lives grew, so too did their ability to export their vision of the world. The digital realm has increasingly become a mediator for our physical world, and this mediation is happening largely through infrastructure, devices, and applications designed in the US. This is not to say that there haven’t been alternative visions proposed elsewhere, but they have not had the same mainstream impact in reshaping the world as Facebook, the iPhone or Uber.

For many of us in Europe and elsewhere, that ability to define the future was fascinating enough to want to join in – I should know, I am one of those people. As an undergrad in France in the early 2010s, I was avidly reading TechCrunch in my dorm room, fawning over the brave new world it advertised to the point of annoying my friends, until I finally moved over to the San Francisco Bay Area in 2013. I interned at file storage startup Box a year before IPO, studied at Stanford right around the time when “deep learning” was the new talk of the town, tried (and failed) to build a startup then joined a larger one as a software engineer for seven years, through all the multimillion-dollar funding rounds – and later the layoffs. In other words I ticked a number of items on the bingo card of tech industry clichés.

Over the years my view of Silicon Valley has become more nuanced, but what will always stay with me from those California years is a strong belief in the practical value of optimism put to good use. And it’s that optimism that fills me today when looking at our situation in Europe.

Strengthened Through Crises

The first reason for this optimism is my belief in the power of European integration, and trust in the robustness of European institutions. While they are certainly not perfect, the truth remains that if we didn’t have the euro, and if trade discussions with the US were split between the twenty-seven member states rather than handled by the European Commission, we’d all be in a much weaker negotiating position. I would also argue that those institutions are facing this difficult moment at the “right” time, strengthened as they were by the four major hurdles we have cleared in the past fifteen years: the euro area crisis, Brexit, Covid, and the Russian invasion of Ukraine.

The eurozone crisis of 2009 marked the first moment when it appeared that a fragmentation of the EU could credibly happen, as the perspective of a possible Greek exit from the euro was seen as a threat to the entire eurozone. This was avoided by creating new financial mechanisms in support of eurozone members, as well as through decisive action from the ECB.

Ten years later, Brexit and the ensuing negotiations presented the risk of cheapening access to the single market, another pillar of EU integration. It reminded all member states how much they value that pillar, and common discipline was kept throughout the negotiations. Additionally, the difficulties that the UK faced post-Brexit silenced any talk of other national exits from the Union, which before then were still familiar calls, in particular from far-right parties.

Shortly thereafter, the Covid pandemic was a moment when EU institutions showed they could act fast and get creative. Even though health is not an exclusive competence of the EU, most member-states agreed to drive vaccine purchase at the European level, and the first-ever issuance of common debt broke a taboo.

Finally, the full-scale invasion of Ukraine in 2022 rebalanced relations across the continent. First, it pushed historically neutral countries such as Sweden, Finland and Austria closer to their neighbors on defense and diplomatic matters. Second, it showed that the Eastern European and Baltic countries had been entirely right in the assessment of the threat from Russia. This got other members, and in particular France and Germany, to shed some of their sense of superiority in diplomatic matters.

Crucially, the events of 2022 changed Germany’s outlook completely. The German economic model of the past decades had been relying on cheap Russian gas to power a strong export-oriented industry. With global trade declining and Russian gas inaccessible, Germany now needs to reinvent itself. During the boom years under Chancellor Merkel, it seemed the Germans had limited appetite to engage with their European neighbors, looking instead inwards or outwards to the broader world. The year 2022 brought self-doubt to Germany, and with it more willingness to get creative and engage it with its neighbors again.

Trade, Money and Defense

Against this backdrop of a gradual alignment, Trump’s second term is acting like a sudden catalyst, with his no-holds-barred approach that does not differentiate between friend and foe. However, it is worth looking beyond Trump’s own unpredictability to try and understand the logic behind his administration’s approach.

A good source for that is the lengthy paper that Stephen Miran published in November 2024, just after the election and before he was appointed as chair of Trump’s Council of Economic Advisors. Obviously, we don’t know how much influence he actually has within the administration or with Trump himself, but his article is still a good starting point.

In his view, the US provides the world with two major services without receiving adequate compensation:

• A global military presence that ensures global stability, in particular the safety of shipping lanes.

• A currency that serves as the world’s reserve currency and powers global trade; in particular his view is that the US dollar’s status as a global reserve currency creates near-infinite demand for it, causing both their trade deficit and budget deficit.

In his view, the rest of the world should pay for those services. While that view seems to be widely shared with other members of the Trump administration, the favored modalities differs between different people. Some view tariffs as an end in themselves, a sort of domestic tax on foreign manufacturing. Others, like Miran take the view that tariffs are primarily a negotiation tool, to get other countries to do either of the following:

1. Let their currency rise against the US dollar as was done before with the Plaza and Louvre Accords in 1985 and 1987. This would make US exports comparatively cheaper and would make the US debt easier to finance.

2. Strike a deal whereby other countries would get reduced tariffs in exchange for buying long term US bonds at a reduced rate. This wood be akin to the 1974 agreement between the US and Saudi Arabia whereby the latter got military assistance and equipment in return for investing billions in US treasury bonds .

Two major topics are involved here: trade policy and monetary policy. The good news is that in Europe both of those are handled at the EU level, not the national level – with the European Central Bank in charge of monetary policy for Eurozone countries, and the European Commission having exclusive competence on trade. Europe tends to be weak when it’s fragmented and strong when it remains united and speak with one voice, which is why it matters that those particular themes that the Trump administration cares most about fall within the competence of EU institutions, making it easier to speak with one voice. And I would argue that Trump knows this: I see it as telling that he had avoided meeting EU Commission President Ursula von der Leyen until they had a conversation on the sidelines of Pope Francis’s funerals. What makes me optimistic here is that holding only bilateral discussions with individual EU member states is the strategy that Boris Johnson tried to take during the Brexit negotiation, without success.

The topic of defense should be the US’s natural bargaining chip, since the EU has no common policy on military matters and all European countries are dependent on the US to varying degrees (64% of arms imports to the EU come from the US). However, through his actions in the past two months, Trump has significantly decreased the value of that chip: while the US military is as mighty as ever, in a military alliance that might only worth as much as the credibility of the US’s commitment to use it on behalf of its allies. That credibility is all but gone, as Trump and his Vice-President JD Vance do not seem to see the alignment of interest between Europe and the US that was previously self-evident, as exemplified by Trump’s quip in a February 2024 speech:

I would encourage the Russians to do whatever the hell they want [to any NATO country that doesn’t meet spending guidelines]

Even countries with a history of staunch Atlanticism are taking note. A weak signal here is Poland’s reported interest in buying a stake in Airbus, which would give it a renewed economic incentive to invest in European military gear–which matters as Poland has been one of the most reliable buyers of American weapons on the continent. An stronger signal is the words uttered by now-Chancellor Friedrich Merz on the night of his victory in the last German parliamentary election: “Strengthening Europe as fast as possible must be an absolute priority, so that we effectively become independent from the USA”.

The defense industry is also a good illustration of the reasons why I’m optimistic: the fact is that we have the capabilities to shake off our dependence. While US companies represent roughly 43% of worldwide weapons exports, the combined exports from there three largest European exporters (France, Germany and Italy) account for about 20%, and the share goes up to 25% when adding the UK and Spain. European countries have delivered just over half of military aid to Ukraine, despite a combined military budget equal to only 40% of that of the US. In other words despite having neglected our defense capabilities for decades we have been able to meet the challenges posed by the invasion of Ukraine. “Where there’s a will, there’s a way”; it’s our will that we’ve been finding, slowly then suddenly. Polish Prime Minister Donald Tusk put it best when he declared on March 1st:

Five hundred million Europeans are asking three hundred million Americans to defend them against a hundred forty million Russians. If you know how to count, count on yourself, start relying on yourself. Not in isolation, but with full awareness of your potential. In Europe, if there is something we lack today, it is not economic or demographic power, but the belief that we truly are a global force.

In essence, I’m optimistic because I see that belief that we Europeans can and should act as a global power starting to take hold.

A world of opportunity

American politicians often use the image of the United States as a “shining beacon on the hill”, drawing people from the world over to its shores with its promise of freedom and prosperity. There is some truth to that: since 1945 the country has enjoyed an unparalleled power of attraction, due to its image as a place where everything is possible.

The fall of the Soviet Union could have taken deprived the US of their sense of purpose and their reason for wanting to push forward their vision for the future. In hindsight, it seems as though the advent of the Internet gave them a new outlet for that vision and a new sense of purpose –if you take Hollywood movies as an insight into the collective psyche of Americans, they went from The Hunt for Red October (1990) to The Social Network (2010). Their success in the online world only increased their power of attraction; in 2013, the year I moved to California, I was one of an estimated 60,000 French people living in the San Francisco Bay Area, with many more from other countries in Europe. Many successful European tech entrepreneurs either built their company in the US or moved it there to attract capital (e.g. Dataiku, DataDog or HuggingFace). Why deal with the complexity and fragmentation of the European market when you could move to the US? That decision made sense on a professional level, and on a personal level too as San Francisco, New York or Boston are all quite enjoyable places to live in. This mix of cultural soft power and underlying economic dynamism combined to form the US’s strong gravitational pull.

However, Donald Trump’s second term is changing the equation in a fundamental way. The economic leg of that rationale is getting wobbly, and the pull of soft power is getting weaker. While moving to the US in 2013 was a no-brainer; moving there now is not so obvious, and I have had multiple conversations with people who had been considering relocating for a few years and are now changing their minds. A reverse movement out of the US might actually take place, particularly among life scientists who are facing an administration that is reportedly censoring grant applications using words they don’t like, with such subversive terms as “woman” or “ethanol” on the exclude-list.

Therein lies a wealth of opportunities to build things here in Europe. Absent the US gravitational pull, some of the talent, capital and ideas that would probably have left our continent will now instead remain here. More importantly, the current political shift in the US forces us to ask ourselves a question we seemed to have forgotten: what is the future that we, as Europeans, want to build? That question is at the heart of politics. Donald Trump has successfully sold an America First story to his fellow citizens, and he is now reshaping the US position in the world accordingly. The one I see emerging here in Europe is simply: “We are alone; but that is sufficient.” In my view, that’s good enough to remain hopeful about our future.