Brussels wants to secure the EU’s sovereignty by improving the autonomy, competitiveness, and resilience of its industrial sector to reduce its dependence on other global players

The EU’s industrial sector still accounts for more than 20 per cent of its economy, generates some 35 million jobs and is equivalent to 80 per cent of exported goods. Yet, it is in danger of lagging behind the world’s two major powers, China, and the United States, which are promoting massive reindustrialisation processes.

The disruption of the raw materials and semiconductor supply value chains caused by the pandemic and the sanctions on Russia highlighted the need to reflect on how to promote reindustrialisation policies that guarantee the strategic autonomy of the 27 member states.

It was evident that the structural base in key sectors, such as dual-use high technology, energy supply, raw materials, rare earth and the defence industry, had to be strengthened while favouring the energy transition towards a new economic model less dependent on hydrocarbons.

Financing technological sovereignty and energy transition

In this context, the EU’s Next Generation funds were launched, a programme agreed as an economic response to the COVID-19 pandemic and endowed with 800 billion euros to finance the digital and ecological transitions.

However, much of the allocation of this funding has been hampered by bureaucracy. By December 2023, only around 30% of available grants and loans had been disbursed, according to EU figures. This disastrous management of the programme’s aid is making it difficult to transform the economic model that was intended to be changed.

Also in December, EU ministers agreed to increase the production of green technologies through the Zero Emissions Industry Regulation. The aim is to cover 40% of the EU’s needs in strategic technology products, such as solar photovoltaic panels or wind turbines, to be able to compete with China.

Likewise, the “Chips for Europe” initiative was launched to boost the continent’s technological sovereignty, ensuring that Europe meets its digital decade target of doubling its share of the global semiconductor market to 20%. A project that has been reinforced by state initiatives such as Spain’s PERTE or Germany’s subsidies of more than 22 billion euros to semiconductor manufacturers to set up production plants in its territory.

Sovereignty means acting as a sovereign entity

One point that European institutions cannot ignore is that ensuring industrial sovereignty must not only be based on the use of subsidies but also a change of mindset in the geopolitical sphere. Europe needs to impose its own foreign policy rather than acting as an entity subservient to US economic interests.

The economic sanctions imposed by the US on Russia, Iran and China in recent decades, but especially on Russia in the wake of the war in Ukraine, call into question the ‘cui bono’ behind the economic interests of the actors involved in these conflicts. These economic sanctions have greatly benefited the US and have had devastating consequences for the economies of EU member states.

The growing tensions between the United States and China are the prelude to a repetition of the geopolitical tug-of-war seen with Russia, which has led to war in Europe and has greatly damaged the European industrial sector. The European Union economic bloc has enough bargaining power to look after the interests of its industrial sector vis-à-vis the major global players, but this means facing up to an inescapable fact: the European Union will either act as a sovereign entity or it will cease to be.

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