Brussels: Europe and the Arabs
European Commission President Ursula von der Leyen declared that the economy has become the central instrument of power in today's world. She announced a plan to reduce dependence on China for rare earth materials. She noted that new partnerships open emerging markets, enhance economic security, and avoid bottlenecks in supply chains. In her speech at the Berlin Global Dialogue conference, which was included in a European statement distributed in Brussels, she added,"In today's world, speed and urgency are the keys to competitiveness. We need a long-term vision and speed in action. We see this with the United States, China, and other emerging economies and sectors. Europe's key in this world is to move faster, making it easier to do business and invest in what differentiates us and makes us stronger. That's why we have developed a plan to radically accelerate the completion of our single market. That's why we are targeting the barriers that hinder our competitiveness—from energy prices to investment and private capital. That's why we have launched a massive campaign to simplify procedures. We need fewer complicated rules, fewer overlaps, and fewer forms to fill out. We need acceleration in all areas. A mindset of urgency must guide all our actions.
There is no doubt that we have strengths! The stability of our unique single market. Our industries and our innovators. Precious and sought-after commodities in today's turbulent world. Europe is already an increasingly attractive destination for investors. This is, for example, thanks to the many high-potential startups in key technologies such as quantum, artificial intelligence, and biotechnology. But Europe's appeal goes far beyond its investment potential: it lies in its strong institutions, its commitment to the rule of law, excellence in comprehensive education and outstanding research, its skilled workforce, and its advanced infrastructure. This makes the European Union a uniquely balanced model in the world. But we all know we have a scale problem. As our startups grow, limited venture capital often forces them to turn to foreign investors. This means that wealth and sovereignty go elsewhere. But we want that investment to choose Europe. And we want to invest in the best of Europe. Are you an innovative startup? So, we have to make it easier for you to expand across all 27 European member states. But not through 27 different regulations. That's why we're developing the so-called Regulation 28 for innovative startups. A single, simple rule for the entire European Union. Because we want to invest in the best of Europe, we are accelerating our work on private capital. That's why we are working on new financing models, for example with private investors through the new Scale Up Europe fund. We must keep up with the pace we started. In a world where others are moving fast, Europe is keeping up. And that is my first and most important message to leave you with today.
This sense of realism and urgency is also driven by a fundamental and fundamental reshaping of the global economy. We are in the midst of a systemic transformation in how states operate with—and against—each other. Every day, we see how traditional instruments of governance are being used to weaponize interconnections and leverage alliances. To create suffocating constraints on states and industries. To impose control and coercion on others. This is the essence of the title you chose for this year's Berlin Global Dialogue—"Transforming Power, Shaping Responsibility." The starting point here is that, over the centuries, while economic power has always mattered, power has always been measured by military might and territorial influence. Those who controlled borders and armies also controlled the balance of power in relations between states and continents. It would be a mistake to say this idea is outdated. Because we know that hard power is more important than ever in today's world. We've seen how countries like Russia or its authoritarian allies use conflict as a tool to build empires and gain supremacy over others. Europe has learned how imperial ambitions, wars, and the undermining of others' sovereignty ultimately lead to disaster. Our project is different, but we cannot be naive and weak. That's why Europe is investing heavily in our military capabilities and in strengthening our defense industries. We will allocate up to €800 billion to defense spending by 2030. Focusing on deterrence and peace through power is more important than ever.
But at the same time, we are witnessing a shift toward something much more complex to understand and defend against. This is the new geoeconomics. Economics has become the central instrument of power in today's world. Those who control the economic levers are the ones who can exert control over others: global supply chains; disruptive new technologies; capital flows and key inputs for our industries and societies. As the dawn of globalization promised, all of these tools can be used to create wealth, jobs, and partnerships between nations. Indeed, this was the spirit that ultimately led to the creation of the World Trade Organization 30 years ago. When China joined the WTO a few years later, most of us hoped for a new dawn of low tariffs, security, and shared prosperity. This did, in many ways, bear fruit for a time, even if its benefits were not equally distributed. But the cooperative global order we all expected, or at least hoped for, 25 years ago is being replaced by a confrontational global economy. Technology theft, hostile investments, export controls, and subsidies are no longer the exception, but rather tools of coercion and competition.
Of course, this is not an entirely new trend we are discovering today. We have already seen over the past decade how the lines between the imperatives of national security and economic security have blurred. In fact, they have now fundamentally merged. So, this is not new, but it is a clear acceleration and escalation in the way interconnections are exploited and weaponized. In the past weeks and months alone, we have seen an increase in stringent export controls on essential inputs. We have witnessed the systematic use of tariffs and non-trade measures.  We have seen global supply chains used as a tool of pressure. We have seen all sectors targeted—from energy to data, from food to technology. Europe understands the risks involved. It was a painful crisis when our overreliance on Russian oil and gas was exposed following Putin's war on Ukraine. This is a lesson we cannot ignore or forget. We are now in the age of geoeconomics.
For Europe, this means that business as usual is no longer an option. We must rethink our view of our economic and national security challenges. This means better anticipating events and acting faster. It means ensuring that our economies and systems are able to absorb and adapt to shocks. Achieving this requires adopting a strategic mindset and a new approach. For example, by assessing the scope of our assets, opportunities, and risks, and adjusting policies to enhance our assets, seize opportunities, and address risks. It also involves preparing our European institutions to anticipate developments, act decisively, and coordinate all our tools in a coherent and strategic manner. We have begun this work in earnest. That's why we're pushing forward with a "Made in Europe" strategy that focuses on a select group of sectors vital to our economic and national security. Whether that's through radically changing military spending and investment, completing the necessary reforms to our energy systems and supply chains, rethinking our industrial policy, or forging new economic and investment partnerships around the world. In short, we're reducing risks in the most sensitive areas and making Europe more independent.
Speaking of independence, there are many areas I could touch on. But today I want to focus on one particularly sensitive example, which is happening at this very moment. In recent weeks and months, China has significantly tightened export controls on rare earths and battery materials. This is, at least to some extent, part of a broader economic dispute between China and the United States. But it has a significant impact on us here in Europe. We all recognize the importance of rare earths to our industries—whether for cars, semiconductors, or military equipment. The decisions announced by the Chinese government on October 9 pose a significant risk. In essence, these measures will severely hamper other countries' ability to develop their rare earth industries. This threatens the stability of global supply chains and will have a direct impact on European companies. Considering that over 90% of our consumption of rare earth magnets comes from China, you'll understand the risks facing Europe and its most strategic industrial sectors, from automotive to industrial engines, from defense to aerospace, from AI chips to data centers. In the short term, we're focusing on finding solutions with our Chinese counterparts. But we're ready to use all the tools at our disposal to respond when needed. We will work with our G7 partners to coordinate our response.
But we must also view this as a structural challenge. Our response must be proportionate to the scale of the risks we face in this area. That's why I can announce that we are working on a new RESourceEU plan—similar to the REPowerEU initiative that helped us overcome the energy crisis together. The goal is to secure access to alternative sources of essential raw materials in the short, medium, and long term for our European industry. It starts with a circular economy. Not for environmental reasons, but to exploit the essential raw materials already present in products sold in Europe. Some companies can recycle up to 95% of the primary raw materials used in batteries. This means extracting valuable raw materials, reducing waste, and promoting sustainable resource management. We will focus on everything from joint procurement to storage. We will boost investment in strategic projects to produce and process primary raw materials here in Europe. We will accelerate work on primary raw materials and invest in projects that Europe can benefit from around the world through a “global gateway.” A “global gateway” is in our own interest, but it is also in the shared interest of our partners and our global commons. This represents a departure from Europe’s traditional caution, but the world we face today rewards speed, not hesitation. Because today’s world is unforgiving. And the global economy is very different from what it was even a few years ago. Europe can no longer do things the same way. We learned this lesson the hard way with energy; we will not repeat it with primary materials. So, now is the time to accelerate action and take the necessary measures. Whether in energy or raw materials, defense or the digital sphere, Europe must strive for independence. And this is our moment to do so.  The picture I paint today is bleak. The rapid fragmentation of the global economy should be a cause for alarm. But Europe has a plan, and it represents a credible and attractive economic opportunity for partners around the world. In an era of geoeconomic uncertainty, the EU's offer to the world stands out. Last year, we concluded new trade agreements with Mercosur, Mexico, Indonesia, and Switzerland. We are also in talks with India and aim to conclude them before the end of the year. We are making progress with the Philippines, Thailand, Malaysia, the United Arab Emirates, and others. These new partnerships will open up emerging markets, enhance economic security, and avoid bottlenecks in our supply chains. The important point here is that Europe must use its geoeconomic weight to its own advantage, to pursue its own interests. This is how Europe can finally find its place in today's global economy, and this is how it can thrive in this new era of confrontational geoeconomics. Europe has everything it takes to make this happen.