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Donald Trump's security policy document presents a flawed view of Europe. It claims that open-border policies and so-called "woke" agendas pose an existential threat to European civilization. However, this argument rests on a serious misinterpretation of the situation. The actual challenge confronting the EU is not societal but technological and economic backwardness.

The Stark Growth Divide Separating the US and Europe

The data reveal a stark contrast. From 2008 and 2023, US GDP surged by eighty-seven percent, while a paltry thirteen and a half percent growth for the European Union. Over this period, European income per person dropped from over three-quarters to just 50% of the US level. Remarkably, even the poorest US state now has a greater average income than major EU nations like Italy and France.

Currently, about half of the world’s 50 largest tech companies are US-based, while only four are from Europe.

The Technological Shortfall: The Core Question

The growing economic gap is driven by stronger efficiency gains in the US, fueled by breakthroughs and better use of resources. The landscape of world technology dominance is overwhelmingly American. Over the past five decades, hundreds of American startups have scaled into enterprises valued at over $10bn, compared with only fourteen in the European continent.

This disparity raises a pressing question: As the competition for future industries like AI, semiconductors, and fusion energy, where does Europe stand? Most analysts agree it is largely a two-horse race involving the United States and China, with Europe starting at a significant disadvantage.

Root Causes of Europe's Technological Lag

A number of major reasons explain this technological divide.

• Venture Capital: The US boasts a far deeper and agile network for funding startups. The EU has yet to establish a true unified investment market, which limits the scale of emerging companies.
• Regulatory Fragmentation: Excessive and fragmented rules hinder Europe. A American entrepreneur can launch a product under a single regulatory framework to access a consumer base of over 330 million. The EU, despite a bigger population size, is divided among 27 separate systems, creating significant internal barriers.
• Mindset Differences: Views on entrepreneurial failure differ sharply. In some EU nations, a startup's collapse was once met with penalties, whereas in the US, it is often seen as a valuable lesson.
• Military Investment: The United States enjoys a deeply integrated academic-military-industrial complex. The continent's long-term lack of spending in defense has eroded its capacity for breakthrough innovation.

The Road Ahead: Grounds for Hopefulness

In spite of these challenges, one can find causes for hope. Policymakers are increasingly aware of the severe threat and have started to advance serious reform. Notable analyses on EU competitiveness and the internal market highlight the need for sweeping changes.

Given appropriate policies and rule changes, these assets could support far greater degrees of business-led breakthroughs.

Europe still possesses significant advantages: high-quality workforce, excellent schools and universities, and premier research institutions. Alongside a vast domestic consumer base and high savings rates, these foundations could unleash a new wave of venture creation.

Importantly, even if the EU does not become the leader in creating cutting-edge technologies, it can still significantly increase economic output by adopting and adapting innovations from elsewhere.

An Inflection Point

Europe now stands at a critical crossroads. As the saying goes, decline often happens "slowly, then all at once". To date, Europe's slide in innovation has been steady. But, if it fails to take bold steps to address its deep-seated problems, today's gradual weakening could give way to a sudden and irreversible loss of world influence.