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The recent US national security strategy offers a flawed view of the European Union. The document asserts that open-border policies and so-called "woke" agendas represent an grave threat to European civilization. Yet, this argument rests on a serious misinterpretation of the reality. The actual challenge facing the EU is not cultural but economic and technological backwardness.

A Glaring Growth Gap Between the US and Europe

Statistics paint a sobering picture. From 2008 and 2023, US GDP surged by 87%, compared to a paltry thirteen and a half percent growth for the European Union. Over this time, EU GDP per capita fell from 76.5% to just 50% of the US level. Remarkably, even Mississippi now has a higher per capita income than several leading EU nations like France and Italy.

Today, about 50% of the global 50 largest tech companies are US-based, while a mere four are from Europe.

The Innovation Deficit: The Core Question

The growing disparity is driven by stronger efficiency gains in the US, largely due to technological innovation and better use of resources. The scene of world technology leadership is decidedly American. Over the past five decades, hundreds of American startups have scaled into companies valued at more than $10bn, versus just 14 in the European continent.

This disparity prompts a vital question: As the competition for future industries like semiconductors, AI, and fusion energy, what is Europe positioned? Experts widely agree it is essentially a two-horse race between the US and China, with European nations entering at a clear disadvantage.

Root Causes of Europe's Technological Lag

Several major reasons explain this technological divide.

• Financing Ecosystem: The United States has a far deeper and more dynamic system for financing new ventures. The EU still lacks a true capital markets union, which limits the growth potential of emerging companies.
• Bureaucratic Hurdles: Excessive and fragmented rules hinder Europe. A American entrepreneur can launch a service under a single set of laws to access a consumer base of over 330 million. The European Union, despite a bigger population size, is split among 27 different national regimes, creating significant internal barriers.
• Mindset Differences: Views on risk-taking differ sharply. In some EU nations, business failure was once met with stigma, whereas in the United States, it is often considered a badge of experience.
• Defense Spending: The US benefits from a tightly woven innovation pipeline linking defense and academia. Europe's chronic underinvestment in defense has weakened its capacity for pioneering research.

The Road Ahead: Reasons for Cautious Optimism

In spite of these hurdles, one can find causes for optimism. European leaders are growing more conscious of the severe threat and have begun to advance substantial change. Key analyses on European competitiveness and the internal market highlight the necessity of sweeping changes.

Given appropriate incentives and rule changes, Europe's strengths could support much higher degrees of business-led breakthroughs.

The continent still possesses considerable advantages: high-quality human capital, excellent education systems, and world-class research institutions. Alongside a vast domestic consumer base and substantial household savings, these foundations could trigger a surge of investment and entrepreneurship.

Importantly, even if the EU does not become the leader in developing cutting-edge tech, it can still dramatically increase economic output by implementing and tailoring advancements from other regions.

An Inflection Point

The European Union now stands at a critical moment. To paraphrase a famous line, decline often happens "slowly, then all at once". To date, the continent's technological decline has been steady. But, without bold steps to address its structural weaknesses, today's slow erosion could turn into a sudden and irreversible loss of global economic relevance.