Understanding the EU’s new economic security playbook – European Council on Foreign Relations

Problem

On 3rd December, the European Commission released a communication to the European Parliament and the European Council, signalling a shift toward a more forceful European posture against coercion, industrial decline and rising dependencies. But strategy is only as good as its execution. Europe will be judged on its ability to deal with economic security challenges in its most critical sectors and supply chains.

These challenges sit on three uncomfortable truths. First, de-risking has not worked. Despite political declarations, Europe’s exposure has grown across almost all fronts at least since covid-19: dependencies have deepened, its position in advanced tech has weakened, and vulnerabilities in digital, defence and critical infrastructure have multiplied. The tools to confront these issues exist, but the political will to wield them does not.

Second, Europe now operates in a power-based economic order. States compete through leverage, control of chokepoints and the ability to coerce. Market forces and rule books no longer dictate outcomes among great powers. Merely acting as a risk manager in a world dominated by power brokers is not a viable strategy.

Third, Europe has so far tackled economic security as a series of micro-problems. That approach falls short of confronting systemic economic rivalry with China—where state power and securitisation intertwine with unmatched industrial scale—or tensions with the US. Europe’s siloed risk-management approach cannot offset such a complex challenge.

Solution

The Commission’s new communication acknowledges these weaknesses and seeks to broaden the EU’s economic security perimeter. It puts trade, competition, cybersecurity, anti-coercion, sanctions, standards and funding tools under one strategic framework. It identifies six high-risk domains for immediate action. It calls for stronger economic and supply-chain intelligence and for deeper alignment between Brussels, national capitals and the private sector.

While these are useful steps towards a “small yard, high fence” approach, the more interesting action is happening elsewhere. ReSourceEU, published alongside the communication, is not just another vision statement, but an operational plan to turn Europe’s de-risking ambitions into reality. It sets measurable de-risking targets of 30–50% by 2029 for batteries, rare earths and defence-critical raw materials. It imposes 12- and 36-month urgency timelines. It mobilises €3bn in EU funding within the next year. It introduces demand-side measures, including the option of a price floor to boost non-Chinese supply. And it creates a European Critical Raw Materials Centre to build system-wide intelligence, coordinate stockpiling and joint purchasing, and steer investment efforts.

This is the right direction. Europe will not achieve economic security through strategy papers alone; it will gain it by implementing real-world action plans in sectors where the stakes are highest. Critical minerals and rare earths are a particularly well-suited testing ground, given that coercion threatens the industrial and military base. Market failures in this sector are glaring and there are eager partners ready to collaborate. If this model works, it should be replicated across other priority supply chains, from pharmaceuticals to legacy semiconductors.

Finally, Europe must fix its credibility gap. Deterrence, coercion-resilience and leverage are the currencies of the power-based order. The communication rightly identifies this shift, but it is yet to build the machinery to deploy it. The EU must clarify how escalation will be managed, determine which measures belong to each rung of the escalation ladder, and decide how it will use economic power to shape negotiations. Much of this playbook will remain confidential—but it must exist.

Context

The Commission’s new economic security communication arrives around two years after the release of its economic security strategy, in a context of mounting coercion, industrial atrophy and deepening dependencies. While the 2023 strategy and subsequent policy packages focused primarily on addressing narrow national security risks and placed heavy emphasis on proactive tools, the new communication points to a more integrated approach.