Europe and Polycrisis

Each historical period is defined by its own challenges. After World War II, Europe had to find a way to end the recurring and relatively independent crises related to market cycles, domestic politics, and competition between major powers that had torn it apart for decades. It met this challenge by building stable nation-states and effective welfare systems in a context of strong European and international structures.
Since the turn of the century, Europe has been facing a new challenge: responding to a highly complex polycrisis, comprising a wide range of interconnected crises. Many of these crises could, by themselves, turn out to be catastrophic, due to self-reinforcing and cumulative processes, such as the tipping points of climate change and the snowball effect of public debt.
But none of them are unfolding in a vacuum. On the contrary, today's crises are interconnected and mutually reinforcing. For example, a demographic crisis destabilises the welfare state, undermining economic welfare, which in turn fuels social and political disintegration. A significant and lasting decline in social and political cohesion can contribute to other types of crises, such as the current crisis of liberal democracy, while hampering the ability of states to respond to other threats, such as climate change.

The general inability to effectively address the escalating polycrisis has contributed to a sense of impending doom in a European public that feels increasingly powerless. But the existential threats we face, from armed conflicts to catastrophic climate change, can be overcome - not by 'taking back control', as populist political leaders promise, but by learning to control what is not yet under control.Our political, financial and international institutions tend to be linked to the management of past cyclical crises, which makes them ill-suited to respond to the current polycrisis, which requires robustness and flexibility. Europe faces a further challenge: its institutions, which depend on consensus, coherence and compromise, struggle to manage narrow, complex and diverse interests.But while Europe is most in need of institutional transformation to meet today's existential challenges, it is also particularly well equipped to deliver them, thanks to its considerable experience in evolving through crises and balancing solidarity and freedom.

The key will be to develop a clear vision of the future, deepen cooperation in key areas and define a new organisational framework.Let us start with the vision. Europe needs an explicit strategy to deal with polycrisis that synchronises time horizons in order to improve short-term crisis management (essential to break the self-reinforcing mechanisms of crises) and establish shared long-term goals (essential to maintain momentum).Smaller, more autonomous and more flexible units should be responsible for implementing this vision, in cooperation with independent actors - often from civil society - specialised in consensus building, developing long-term strategies and monitoring their implementation and effects. A culture of decision-making and accountability is essential.The long-term component of the vision should reflect generational ambition. India has a roadmap to become a developed economy by 2047, a century after independence. China plans to achieve 'national rejuvenation' by 2049, the centenary of the People's Republic.

Europe should anchor its strategy to the year 2045, 100 years after it started from the horrors of World War II. In elaborating this new vision, Europe should learn from the strengths of others; for example, America's strategic thinking capacity, exemplified by the work of the Defense Advanced Research Projects Agency in researching and developing emerging technologies.The second imperative is to build new solid structures covering three critical elements of European security: finance, defence, and social welfare. The new financial architecture must aim to increase investment in Europe to boost productivity and support technological innovation in critical sectors. Given its small investor base and structural fragmentation, Europe will need to improve the efficient allocation of capital and mobilisation of savings. The completion of the capital market union should be the main task of the new European Commission.As far as defence is concerned, the war in Ukraine has highlighted the weakness and slowness of the current European architecture. A new reference framework - capable of managing procurement on a continental level, supporting interoperability between security forces, and giving Europe a technological edge - is badly needed.

Likewise, the new design for social welfare must be coherent, fiscally sustainable and responsive to the needs of modern societies. In recent decades, Europe has allowed liabilities and financing deficits to increase in a number of areas - including health care, housing, education and energy - due to a lack of consensus on what the modern welfare state should look like. This cannot continue, as the preservation of the European way of life is essential for long-term social solidarity.The third key imperative for Europe facing polycrisis is to devise a new organisational model, based on flexibility, adaptability and subsidiarity. Issues must be addressed at the level at which they arise. Global challenges - such as climate change, nuclear proliferation, artificial intelligence and financial stability - require more structured international cooperation and regulation.Challenges that should be handled at EU level include modernising the European economic model, increasing productivity and competitiveness and managing trade policy. Nation states, for their part, must promote solidarity and, together with local communities, manage the concrete implementation of policies.