A Transatlantic Reckoning: Why Europe Needs a New Pact Beyond Defence Spending

The European Union faces an existential choice: succumb to economic nationalism or forge a new transatlantic order.

Emerging from the shadow of the Covid-19 pandemic, the European Union faltered in its quest for a truly federal future. Despite the undeniable success of joint borrowing in fostering continental “resilience” and “recovery”, the promise of a “Hamiltonian leap” towards greater integration remained unfulfilled. Simultaneously, a common thread of fragmentation began to unravel the national unity once spurred by the virus across the 27 Member States, complicating domestic governance and hindering the adoption of budgets vital for public action.

However, the successive eruption of three international conflicts—in Ukraine, Gaza, and Iran—has paradoxically provided a renewed impetus for unity among the 27, even though they are not directly involved in these military engagements. These conflicts have thrust the critical question of war and peace back onto the agenda of every European state, beginning to sway public opinion, even in countries with strong nationalist or regionalist sentiments, towards the compelling argument for pooling security expenditures.

The agreement reached at the North Atlantic Treaty Organisation (NATO) summit in The Hague on 25 June, mandating a uniform military spending target of five percent of GDP for 23 EU member states, could prove to be a pivotal moment. This commitment might foster a convergence of national economies that the over 30-year-old Maastricht criteria have struggled to sustain.

Yet, the implementation of this agreement faces significant threats in several nations. These threats stem from a conflation, or even fusion, of social, anti-American, and potentially nationalist narratives. In 2025, the “left-wing populism” theorised by Chantal Mouffe appears to be adopting a new, composite ideological guise. It draws elements from the “anti-imperialism” of the 1960s and 1970s, coupled with an anti-nuclear pacifism that owes less to the philosophical traditions of Jean Jaurès, Erhard Eppler, or Hans Jonas than to simplistic ecological interpretations from the same era, often subtly encouraged by Moscow.

The drivers behind this reconfiguration of populist discourse, evident within traditional social democratic parties in Germany, Belgium, or Spain, as well as among far-left factions, include the demonisation of the American administration—sometimes extending to Israeli political parties—and the artificial separation of “civil” or “social” security from “military” security. This narrative champions the notion that the future of the European social model hinges on distancing itself from the United States, or even severing economic and military ties entirely.

This reformulation of populist discourse, predominantly articulated by the left in Europe, is fundamentally based on a geopolitical and historical misjudgement. Regardless of their motivations in terms of domestic politics or global strategy, President Donald Trump’s actions on defence and tariffs since his re-election represent a form of shock therapy for the European Union and a crucial test of its 27 member states’ capacity for collective action.

The recent American political moves possess at least two overlapping dimensions. The first is an unequivocal invitation, clearer than at any point since the collapse of the Soviet Union, for Europe to contribute more significantly to the costs of a military alliance for which it has no viable alternative in the face of threats on its territory and in its immediate vicinity.

The second aspect, often depicted in the international press with bellicose language as a “trade war”, serves as a thinly veiled reminder that the economic complementarity between the old continent and the United States is not an innate phenomenon; rather, it is a consequence of deliberate choice. For 80 years, this complementarity has largely been a product of the Marshall Plan, through which the American administration oversaw the reconstruction of states devastated by the Second World War.

It would be a grave error for Europe to consider these two aspects as disconnected or potentially separable. As the American administration has unequivocally indicated, the control—that is to say, the relocation—of the industrial production chain essential for modern warfare constitutes a key element of the new international division of labour that Donald Trump is striving to establish. It has become evident in Europe that the future of a transatlantic security partnership depends not solely on European budgets. It also relies on Europe’s definition of a military procurement policy that would maintain the acquisition of American equipment. While sacrificing the European defence industrial and technological base is out of the question, the 27 member states must recognise that the challenges of military cooperation extend beyond the articulation of staff and troops or the adaptation of national legal frameworks to European involvement in armed conflicts, which are likely to be located around the Mediterranean Sea and in Russia’s neighbourhood.

Another mistake would be to assume that a Europe maintaining an Atlanticist orientation can, as its sole medium-term commercial outlook, implement a series of retaliatory measures in response to aggressive customs tariffs imposed by the USA. Beyond reciprocal tariffs, retaliations that would imply a reorientation of privileged economic relations towards China are likely to be perceived across the Atlantic as the ultimate provocation.

In 2025, confronted with Donald Trump’s profound disruption of previous power and economic balances, the European Union possesses limited room for manoeuvre, yet also significant resources.

The narrowness of this margin stems from two missteps made in already distant international contexts. One was France’s opposition, in the early 1950s, to the establishment of a European Defence Community linked to NATO—an opposition that originated from communist and Gaullist forces, both now largely diminished. The other was the scant attention paid, with the notable exception of François Mitterrand, to Mikhail Gorbachev’s proposals in the 1980s to reconsider the architecture of international relations from a pan-European perspective. While the USSR clearly aimed to decouple Europe from the USA by promoting the concept of a “Common Home”, this objective of shaping the emerging post-communist landscape from 1991 onwards opened the door to a normalisation of relations between the EU and an independent Russia. However, this normalisation did not reach the point of Russia’s integration into a European organisation based on the “concentric circles” model theorised by Jacques Delors to permit different levels of association. As the EU was undergoing rapid geographic expansion to the East, such a normalisation primarily manifested as the facilitation of economic exchanges, particularly favoured by Germany.

Consequently, the combination of an insufficient autonomous military capacity and lingering doubts about Russian intentions concerning the Baltic and Balkan States results in a difficult and ambivalent EU-USA relationship. It is defined as much by a shared commitment to liberal values inherited from the French and American revolutions of the late 18th century as by a degree of reluctant pragmatism.

Concretely, Europe faces a stark alternative: either haphazardly navigate a state of chaos conducive to centrifugal economic nationalism, which is already straining its political institutions, or negotiate with the USA the economic foundation of a new Atlantic order. Given that a scenario of perpetual conflict, even commercial, is unsustainable for all actors, negotiation is indeed the obligatory stage of any dispute.

A stage of negotiation between the USA and Europe might benefit from exploring the pluralism within the American Republican Party and its internal debates on the options available to the USA in the conduct of international economic relations. Elon Musk, for his part, has already expressed to an Italian audience his hope for the establishment of a free trade zone between the USA and Europe.

Ursula von der Leyen’s recent stance also provides a positive sign. On behalf of the Commission, in early April, she responded to the American announcement of a 90-day suspension of new customs duties with a reciprocal suspension of the same duration for measures envisaged at the level of the 27 member states.

However, the relaunch of negotiations, modelled on the Transatlantic Trade and Investment Partnership (TTIP), between the EU and the USA has not yet been placed on the agenda. While the failure of the original TTIP should not serve as a deterrent, its core objectives—partnership, trade, and investment—remain critically relevant for both parties today. Moreover, the current global agenda encourages a broadening of the 2017 TTIP project’s scope to encompass issues of technology, military production, as well as monetary parity and energy security.

Such negotiations will require both partners to uphold their shared commitment to freedom by refraining from interfering in each other’s internal policies. However, these negotiations would be facilitated if the EU simultaneously and rapidly implemented the recommendations of the Draghi and Letta reports, which urge the old continent to finally unify the European community market so many years after the Treaty of Rome and the Single Act. Such an implementation would increase the similarities between the two continental markets by eliminating residual interstate barriers to trade in Europe and replacing a bureaucratic culture of control with regulatory practices.

For neither party can the negotiation of a new TTIP signify an exclusive partnership in an increasingly multipolar world. For Europe, as for the USA, the challenges of international trade presuppose periods of both conflict and association with other parts of the world.

Nevertheless, a new TTIP would promote a long-neglected rationalisation of international economic relations. If the option of free trade between nations solely under the aegis of the World Trade Organisation is no longer favoured by populations and their elected representatives, then economic negotiation between regional political organisations represents a factor of stability. It offers a partial alternative to the anarchy induced by the proliferation of bilateral interstate agreements. Due to their size or federal constitution, the USA, China, Russia, the United Arab Emirates, and Brazil are inherently among these regional players. By consolidating its institutions and strengthening its common market, Europe can also reach this stage of organisation and thereby revitalise the transatlantic alliance.