Europe’s Future Hinges on Greater Unity

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• Authors: SIMON NIXON
• Published: June 2, 2025

Crisis framing: three interlocking dimensions

• Europe faces a crisis with three interlocking dimensions: geopolitical, economic, and institutional.
• The crisis cannot be resolved solely by more borrowing or more rules from Brussels; it requires a change in mindset and greater unity among European actors.
• Rising fragmentation and political fragmentation at national and European levels make unanimity harder to achieve and undermine support for EU integration.

Critical minerals and external dependence

• Demand for critical minerals necessary for clean energy technologies is expected to rise fivefold by 2040.
• The EU’s share of global production of critical minerals is less than 7 percent.
• Production of most minerals is highly concentrated in one or two countries.
• China dominates refining and even refines Europe’s own modest mining output.
• Efforts to diversify access via trade agreements remain vulnerable to:
  • trade wars,
  • rising export restrictions,
  • developing economies seeking to capture more of the value chain,
  • absence of a functioning dispute resolution mechanism at the World Trade Organization.
• US policy: Securing access for US companies to critical minerals is a centerpiece of President Donald Trump’s America First foreign policy.
• European business constraints: environmental, social, and governance rules and concerns over political stability and the rule of law have limited European firms’ presence in the critical minerals supply chain.

Deeper economic integration: shortfalls and obstacles

• Reform blueprints by Enrico Letta and Mario Draghi identify shortcomings of the single market and call for cutting red tape and extending the single market into defense, energy, telecoms, and finance.
• Historical reform efforts:
  • Better regulation agenda announced in 2002.
  • Regulatory Fitness and Performance Programme (REFIT) launched in 2015.
  • Giovannini reports proposed financial market integration in 2001 and 2003.
  • Push for a capital markets union in 2015; now reframed as a savings and investment union.
• Market fragmentation statistics:
  • The EU has 18 clearing markets and 21 settlement markets, compared with just one clearing market and one settlement market in the US.
• Gold-plating and protectionism:
  • Member states often add local requirements when transposing EU single-market directives into domestic law (“gold-plating”).
  • The European Commission has promised to counter gold-plating; Koen Lenaerts reminded commissioners in a speech in January that the Commission can bring cases against offending member states.
  • Political willingness of the Commission to take such legal action is questioned.
• Sovereignty concerns hinder deeper integration in defense, energy, telecoms, and finance:
  • A true savings and investment union would require harmonization of national insolvency rules, corporate law, and aspects of tax law, and promotion of pan-European pension vehicles.
  • Political impossibility of such harmonization has led the Commission to resurrect the idea of a 28th legal regime (first proposed in 2009) as an alternative, with little progress so far.
• Banking union neglected:
  • Completion of the EU’s banking union (single banking rule book, Single Resolution Fund backstop, common deposit insurance) is largely absent from current competitiveness discussions.
  • Without cross-border banks underpinning capital markets, a savings and investment union is unlikely to achieve its objectives.
• Risk considerations held by member states:
  • Fears that removal of national protections could expose domestic industries, savings, defense access, telecom infrastructure control, or energy security to new vulnerabilities.

Trust, institutions, and the unity-ambition dilemma

• The third challenge is a lack of trust between member states and in EU institutional processes.
• Fabian Zuleeg’s concept: the unity-ambition dilemma—proceeding by unanimity even when not strictly needed has constrained integrationist goals.
• Greater fragmentation in politics makes unanimity even harder to secure, further weakening support for deeper integration.

Role of non-EU actors and interim arrangements

• Key players outside the EU, notably Britain, have potentially important roles in pan-European defense, capital markets, and energy integration.
• Possible approach: bypass EU institutional processes through coalitions of the willing and improvised intergovernmental arrangements in areas such as defense.
• Risks of such approaches:
  • Need for flexibility to accommodate changes in government.
  • Potential to create new legal complexities and exacerbate fragmentation.

Conclusion and strategic imperative

• Europe has historically advanced integration in response to shocks over the past 80 years.
• To be a pole in a new multipolar world, Europe must forge a unity beyond anything previously contemplated—and act quickly.
• Success depends on overcoming distrust, addressing geopolitical supply vulnerabilities, completing deep economic integration (including banking union elements), and reconciling sovereignty concerns with the need for scale.

Source: Simon Nixon, “Europe’s Future Hinges on Greater Unity,” F&D Magazine, June 2025.

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