‘Perfect storm’ of crises threatening EU’s security, economic model

The Perfect Storm: Challenges to the EU’s Security, Economy, and Ideology

The European Union (EU) is grappling with a "perfect storm" of crises that threaten its security, economic stability, and ideological foundations. According to the Munich Security Report 2025, the multipolarization of the international order is increasingly challenging the EU’s liberal vision for the world. This trend is expected to accelerate with Donald Trump’s return to the White House, as his policies and rhetoric are likely to further destabilize the global landscape. The report highlights that the negative effects of this multipolarization are particularly pronounced in Europe, where the cooperative security architecture has been severely damaged by Russia’s ongoing war in Ukraine. The invasion has forced EU member states to increase their defense spending, with many now meeting NATO’s 2% GDP target for military expenditure. However, the report warns that these increases remain insufficient to address Ukraine’s needs and the growing threat of Russian aggression, which could potentially expand into NATO territory within the next five to eight years.

A Wake-Up Call for European Defense

The Munich Security Report emphasizes that the EU must take bold steps to enhance its defense capabilities and industrial base. While the outbreak of war in Ukraine has spurred European countries to invest more in their militaries, the report argues that much more needs to be done. Donald Trump’s return to power has added urgency to this issue, as he has called for NATO members to raise their defense spending target to 5% of GDP—a threshold that no current member meets. Trump has also threatened to encourage Russia to take aggressive actions against NATO allies that fail to meet these spending targets. In response, the EU must overcome the fragmentation of its defense industrial base and deepen cooperation with third countries, such as Norway and the UK. Leaders are currently exploring multiple options to finance these efforts, including expanding the mandate of the European Investment Bank, relaxing ESG rules for private banks, and issuing Eurobonds. The EU is also considering bending its fiscal rules to exclude defense spending from national expenditures. A White Paper on defense, detailing the bloc’s military capabilities and financing options, is set to be released on March 19.

The Erosion of the EU’s Economic Model

The report also highlights the challenges facing the EU’s traditional economic model, as the multipolarization of the international order weakens global trade systems. Donald Trump’s return to office is likely to exacerbate this trend, with the US President threatening to impose tariffs on EU goods, including a 25% tariff on steel and aluminum imports. This move could have significant repercussions for the EU, particularly if it leads to retaliatory measures and further disrupts global supply chains. Additionally, US tariffs on China could have far-reaching consequences for the EU, as Beijing may respond by flooding European markets with cheap, heavily subsidized exports. The report warns that the tit-for-tat trade policies favored by the US, China, and Russia are undermining international organizations such as the World Trade Organization (WTO), which has long been a cornerstone of the global economic order. To mitigate these risks, the EU must diversify its trade relations and forge new partnerships with countries in the Global South. However, this will require the bloc to make difficult compromises, a challenge that has been complicated by internal disagreements over trade deals, such as the Mercosur agreement.

The Ideological Divide Within the EU

The EU is not only facing external challenges but also internal ideological divisions that threaten its cohesion. The far right has gained significant power in several member states, with nationalist and populist parties now in government in seven EU countries. These parties are challenging the liberal democratic model that has defined the EU since its inception, advocating for a more authoritarian and protectionist approach to governance. In France and Germany, two of the EU’s largest member states, far-right parties such as the Rassemblement National and Alternative for Germany are exerting considerable influence over public and political discourse. This ideological splintering poses a significant risk to the EU’s unity and decision-making capabilities, particularly at a time when the bloc needs to present a united front in the face of external threats. The report warns that this internal fragmentation could hinder the EU’s ability to respond effectively to the crises it faces, both at home and abroad.

The EU’s Need for Global Partnerships

In light of these challenges, the EU must prioritize the development of strategic partnerships with like-minded countries and regions. The report emphasizes the importance of diversifying trade relations and building stronger ties with countries in the Global South. This will not only help the EU reduce its dependence on unstable or adversarial partners but also strengthen its position in a multipolar world. However, the report acknowledges that forging these partnerships will require the EU to make difficult compromises and navigate complex geopolitical realities. The bloc’s ability to do so will depend on its willingness to address internal divisions and present a united front on the global stage. The EU must also play a more active role in shaping the rules of the emerging international order, particularly in areas such as trade, technology, and climate change. By doing so, the bloc can help ensure that the multipolar world of the future is governed by principles of fairness, stability, and cooperation.

A Call to Action: Strengthening the EU’s Resilience

The Munich Security Report 2025 serves as a stark reminder of the scale and urgency of the challenges facing the EU. From bolstering defense spending and industrial capabilities to addressing economic and ideological divides, the bloc must take decisive action to strengthen its resilience in the face of a rapidly changing world. The report’s findings will be a key topic of discussion at the upcoming Munich Security Conference, where leaders from the EU, the US, and other countries will gather to address these pressing issues. As the EU navigates this critical juncture, it must remain committed to its core values of democracy, solidarity, and multilateralism. By doing so, the bloc can not only weather the current storms but also play a leading role in shaping a more secure and prosperous future for generations to come.