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The recent US national security strategy presents a flawed assessment of Europe. It claims that open-border policies and what it terms "progressive" policies pose an grave threat to the continent's identity. However, this argument is based on a fundamental misinterpretation of the reality. The true danger confronting the EU is not cultural but technological and economic lag.

The Stark Growth Divide Separating the US and Europe

Statistics paint a sobering picture. From 2008 and 2023, US GDP grew by eighty-seven percent, while a paltry 13.5% increase for the European Union. During this period, EU GDP per capita dropped from 76.5% to just 50% of the US level. Remarkably, even the poorest US state now has a higher per capita income than major European economies like Italy and France.

Today, roughly half of the world’s 50 largest technology firms are American, while a mere four are from Europe.

The Technological Deficit: A Critical Question

The growing economic gap is driven by stronger efficiency gains in the United States, fueled by breakthroughs and better use of resources. The scene of world technology leadership is overwhelmingly US-centric. In the last five decades, hundreds of American startups have grown into enterprises valued at more than $10bn, versus only fourteen in the European continent.

This disparity raises a pressing question: In the race for tomorrow's sectors like AI, semiconductors, and fusion energy, what is Europe stand? Experts widely agree it is largely a contest between two involving the US and China, with European nations entering at a significant handicap.

Underlying Factors of Europe's Technological Lag

Several major factors explain this technological divide.

• Venture Capital: The US boasts a far deeper and more dynamic network for financing new ventures. Europe still lacks a genuine capital markets union, which limits the growth potential of new firms.
• Bureaucratic Hurdles: Excessive and fragmented rules hinder European business. A US startup can introduce a service under a single regulatory framework to access a consumer base of over 330 million. The European Union, despite a bigger population size, is divided among 27 separate systems, creating huge internal barriers.
• Mindset Differences: Attitudes toward entrepreneurial failure differ sharply. In parts of Europe, business failure was once met with stigma, whereas in the United States, it is often seen as a valuable lesson.
• Defense Spending: The United States enjoys a deeply integrated academic-military-industrial complex. The continent's long-term lack of spending in military capabilities has weakened its capacity for breakthrough innovation.

A Path Forward: Reasons for Hopefulness

In spite of these challenges, there are causes for optimism. Policymakers are increasingly aware of the existential challenge and have started to advance serious reform. Notable analyses on European competitiveness and the single market point to the necessity of major changes.

With the right incentives and rule changes, Europe's strengths might enable much higher levels of commercial innovation.

Europe still possesses considerable advantages: high-quality human capital, excellent education systems, and premier labs. Coupled with a vast domestic consumer base and high savings rates, these elements have the potential to trigger a surge of investment and entrepreneurship.

Crucially, even if the EU does not become the leader in developing next-generation tech, it can still significantly increase productivity by implementing and tailoring innovations from other regions.

An Inflection Point

Europe now faces a decisive moment. As the saying goes, decline often happens "gradually and then suddenly". So far, the continent's technological decline has been gradual. But, without bold steps to tackle its deep-seated problems, today's slow erosion could turn into a rapid and permanent loss of global economic relevance.