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Donald Trump's national security strategy presents a misguided assessment of Europe. It claims that open-border policies and what it terms "woke" policies pose an existential threat to European civilization. Yet, this perspective rests on a fundamental misinterpretation of the situation. The true challenge confronting the EU is not cultural but technological and economic lag.

The Stark Economic Divide Separating the US and Europe

Statistics reveal a stark contrast. Between 2008 and 2023, US GDP grew by eighty-seven percent, compared to a mere thirteen and a half percent growth for the EU. During this period, EU GDP per capita fell from over three-quarters to just half of the American figure. Strikingly, even the poorest US state now has a higher per capita income than several leading European economies like Italy and France.

Today, roughly half of the global top fifty tech companies are American, while only four are from Europe.

The Technological Shortfall: The Core Problem

This widening disparity is driven by superior productivity growth in the US, largely due to technological innovation and higher total factor productivity. The scene of global tech leadership is overwhelmingly American. Over the past five decades, hundreds of American startups have scaled into companies valued at more than $10bn, versus only fourteen in the European continent.

This gap prompts a pressing question: As the competition for tomorrow's sectors like semiconductors, AI, and fusion energy, where does Europe stand? Most analysts agree it is largely a two-horse race involving the United States and China, with European nations entering at a significant disadvantage.

Underlying Factors of Europe's Technological Lag

Several key reasons account for this technological divide.

• Financing Ecosystem: The United States has a far deeper and more dynamic system for funding startups. Europe has yet to establish a true capital markets union, which limits the growth potential of new firms.
• Bureaucratic Hurdles: Excessive and fragmented regulation hamper European business. A US startup can launch a product under a single set of laws to access a market of hundreds of millions. The European Union, despite a bigger population size, is split among twenty-seven separate regimes, creating huge internal barriers.
• Mindset Differences: Attitudes toward entrepreneurial failure differ sharply. In some EU nations, a startup's collapse was once viewed with stigma, whereas in the US, it is often considered a valuable lesson.
• Military Investment: The US benefits from a deeply integrated innovation pipeline linking defense and academia. Europe's long-term lack of spending in defense has eroded its capacity for pioneering research.

A Path Forward: Grounds for Hopefulness

Despite these hurdles, there are reasons for hope. European leaders are increasingly aware of the severe threat and have started to advance serious reform. Key reports on European competitiveness and the internal market highlight the need for sweeping reforms.

With the right incentives and regulatory reforms, Europe's strengths might enable far greater degrees of commercial innovation.

Europe still possesses considerable strengths: high-quality human capital, top-tier schools and universities, and world-class labs. Alongside a large internal market and substantial household savings, these foundations could trigger a new wave of investment and entrepreneurship.

Crucially, even if Europe does not take the lead in developing next-generation tech, it can still dramatically increase economic output by implementing and tailoring advancements from other regions.

A Critical Juncture

Europe now faces a critical moment. To paraphrase a famous line, decline often happens "gradually and then suddenly". So far, Europe's technological decline has been steady. However, without decisive action to address its deep-seated problems, today's slow erosion could turn into a rapid and permanent loss of world influence.