All across Europe people, society, and the economy have been facing increased pressures due to the effects of the COVID-19 pandemic, Russia’s unjustified invasion of Ukraine, and now the violent clashes in the Middle East between Israel and Palestine.
In these turbulent times, the European Union has remained steadfast in supporting the economies of its Member States and strengthening the supply chain, while facing the daunting challenge of ensuring energy security.
At this juncture, the EU must demonstrate its capacity for adaptation to the swiftly evolving global landscape. By enabling successful political relations between its Member States and third countries, the bloc can continue to strengthen its efforts in the areas of hard security and collective defence. Moreover, it must secure Europe’s autonomy, security, and prosperity for the foreseeable future. One of the instruments which the EU has implemented towards reaching this goal is the European Economic Security Strategy, published earlier this year.
The EU requires a thorough strategic approach to achieve economic security. Therefore, it is vital that the EU addresses certain risks and enhances its technological preeminence in essential industries. The goal is to maintain and boost our industry while offering a framework for the in-depth assessment and control of risks to economic security at the EU and national levels. Putting this in place is even more crucial now that emerging economic threats are increasingly combining with issues of national security.
Shockwaves from the Middle East
For many decades, the Middle East conflict has frequently triggered periods of instability and sent shockwaves across Europe and the rest of the world. Apart from the unprecedented humanitarian crisis, the Hamas assault on Israel on the 7th of October has indirectly affected many nations economically, both in the Middle East and beyond. For example, global oil market prices have increased for two consecutive weeks and climbed to to $94 a barrel. This rekindled fears among oil traders and economists that the $100 per barrel mark could be surpassed. Many are concerned that an escalation of regional tensions could drive oil prices significantly higher. The reverberations of rising oil costs in Europe could be substantial, particularly as the continent grapples with the recent energy price shock that fueled inflation.
Furthermore, as reported by Bloomberg, European natural gas prices have embarked on a renewed ascent amidst fears that the Middle East conflict could escalate and disrupt global fuel supplies ahead of winter. While the EU is unlikely to face significant supply disruptions this winter, which is expected to be a relatively mild one, the lingering effects of global gas turmoil will maintain elevated prices, a burden that households and businesses will ultimately bear.
The European Union’s role in fostering peace, security, and stability in the Middle East has been and remains indispensable. In order to achieve success in this regard, however, it must adopt unbiased positions that do not erode the confidence of any party in its ability to serve as a credible global actor for peace.
Adjusting swiftly and more effectively
The EU is widely regarded as a leading destination for international business and investment. The performance of Member State economies is built on safe cross-border connectivity, the free movement of goods, services, and people, and investment and cooperation in research and innovation. These components will continue to be vital resources for Europe’s resilience and competitiveness as we move toward an AI- and environmentally-friendly future.
Trade within the Single Market will continue to be essential for fostering competition and ensuring the availability of raw materials, technology, and other inputs that are critical for enhancing our resilience, competitiveness, and ability to support employment and growth.
To maintain security and economic harmony, the EU must guarantee its international partners access to the robust economies within the European market. A lack of unity between the EU Member States and relevant third country nations, however, could imperil this.
If the European Union focuses on achieving technological superiority, supply chain resilience, energy autonomy, and economic security while preserving free markets and raising productivity, it will be able to adjust swiftly and more effectively to the significant shift that is taking place in the global political economy.