Europe at a Crossroads

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Hardly a year passes when we are not urgently reminded of the pressing need for greater European unity. From the COVID-19 pandemic that strained healthcare systems and exposed supply chain vulnerabilities, to Russia’s invasion of Ukraine that threatened continental security, to coordinated tariff negotiations in response to Trump-era protectionism – each crisis has demonstrated that a fragmented Europe is ill-equipped to face 21st-century challenges. Against this relief, Europe stands at a critical juncture where greater future relevance depends on stronger cohesion.

Europe’s greatest vulnerability starts with its inability to defend itself, a fundamental need sine qua non to any other. We must after all first survive before we prosper. But Europe’s vulnerability extends to economics. For the first time in modern history, Europe (and Switzerland) lack meaningful, let alone leading, players across vast swathes of the digital value chain. American tech giants dominate transistors (Nvidia, Broadcom, AMD), cloud computing (Amazon Web Services, Microsoft Azure), search (Google), AI (Anthropic, OpenAI, Perplexity) and operating systems (Apple, Google, Microsoft). Meanwhile, Chinese companies like Alibaba, Baidu, ByteDance (TikTok), DeepSeek, Huawei, and Tencent  demonstrate their competitive prowess, even superiority.

«We must after all first survive before we prosper.»

This technological gap represents more than economic underperformance. National security becomes symbiotic with economic and technological innovation. As digitalization penetrates every sector from autos, defence to healthcare, Europe risks becoming an antiquated economy, relegated to consuming foreign exports and regulating external threats rather than creating the technologies that will drive future growth, profits, and research.

A Swiss-Inspired Solution

I argue that the European Union would benefit from reimagining itself around a Swiss-inspired architecture with several key modifications. Switzerland’s success stems from its decentralized governance that encourages bottom-up company formation and innovation. The system even encourages internal competition where cantons compete with lower taxes and better infrastructure. Zug, once among Switzerland’s poorest cantons, has become its richest, demonstrating how healthy internal competition can drive innovation and economic dynamism across a federated system.

This decentralised model allows capital and talent to flow to their optimal use, creating natural economic diversity. Such diversification helps insulate federated systems from synchronized cycles of crisis. When economic shocks occur, they typically affect different sectors and regions unevenly, allowing stronger areas to support recovery in struggling ones. The watch industry or tourism may falter but pharma or commodity trading compensate.

However, implementing this vision requires addressing several sticky points. Defense represents a particular challenge that likely requires maintaining NATO’s structure while increasing European investment. Member states should commit to a minimum 2% GDP defence allocation and consider strategic partnerships with technologically advanced allies like Israel to gain access to crucial defensive technologies it is not yet in a position to provide.

Several caveats merit attention. Europe’s generous social contracts face mounting demographic pressures that threaten their affordability. Health care and pension costs are exponentially levered to age so retirements must be deferred to have any chance to balance the books. The continent must undertake a comprehensive «fitness contest» to optimize economic competitiveness, including reducing excessive government debt, and market participation that crowds out private enterprise. A uniform points-based immigration system could help attract high-value immigrants to fill the massive job shortages anticipated as populations age, while ensuring newcomers contribute positively to host societies.

Achieving these reforms will not be easy. National self-interest makes intermediating socio-political consensus exceptionally challenging. Yet necessity remains the mother of invention in all forms of innovation, including politics.

The alternative to deeper integration is continued relative decline. Without unity, Europe risks becoming a museum of past glories rather than a laboratory for future   innovations. The continent that gave birth to the Enlightenment, the Industrial Revolution, and the modern democratic state now faces perhaps its greatest test: Can it reinvent itself to thrive in a world where scale, technological capability, and strategic autonomy determine not just prosperity but survival?

The Swiss model, with its emphasis on decentralisation, diversification and a lean central government, is a model worth studying and emulating if Europe wishes to secure its rightful place in tomorrow’s world order.