Balancing the risks and benefits of the European Economic Security Strategy

This perspective reflects on the European Union's (EU) approach to economic security, particularly since the release of its Economic Security Strategy (ESS) in June 2023. It examines the case of the electric vehicle (EV) industry.

The structure of the global economy, with its 'hub and spoke' topography, makes it difficult to manage supply chain disruptions, and it is subject to potential economic coercion, weaponised interdependences and overreliance on competing nations. Given these risks, states are seeking to pursue greater economic security to protect their prosperity and strategic interests.

The EU, much like individual states, has embraced this geoeconomic shift, moving away from laissez-faire economic doctrines towards a more interventionist and protectionist approach. Using the EV industry as a case study, the perspective illustrates that the EU has structured its economic security policy instruments along the ESS tryptic of Promote-Protect-Partner to become more competitive on the global market.

This perspective underscores the need for a clear understanding of risks to avoid a 'what does this button do' approach to economic security. As such, it recommends using tools such as tabletop exercises and quantitative models to better anticipate and prepare for the unintended consequences of economic security policies and make well-informed decisions.