Europe wants to be less dependent on other power blocs, but cannot produce or develop everything itself. Strategic autonomy therefore is all about choices: where do you build capacity yourself, and in what areas do you remain dependent on others? As geopolitical relations shift, the pressure to make those choices grows. For the Netherlands, this means reflecting on position, scale, and collaboration within Europe. ‘So you can’t be blackmailed.’
– Production capacity and industrial knowledge have disappeared from Europe over the past decades, creating dependencies.
– ‘We must focus on crucial points in international value chains.’
– In practice, the European internal market functions in a fragmented manner.
– Energy is a prerequisite for industry, growth, and geopolitical position.
Dependencies put European revenue model under strain
After World War II, Europe built a new economic model. A model in which trade, collaboration and regulation formed the basis for growth and stability. ‘We saw ourselves as the enlightened party’, says TNO executive Tjark Tjin-A-Tsoi. ‘Based on soft power and through regulations and moral behaviour, we were going to be a shining example for the rest of the world. Because countries would only be able to trade with Europe if they adhered to our rules.’
That model worked as long as the world order remained stable and the preconditions were right: cheap energy from – primarily – Russia, access to global production chains and an ally in the US that guaranteed security. ‘But that European self-image was in fact an illusion’, according to Tjin-A-Tsoi. ‘Militarily, we amounted to little because we had crawled under the American security umbrella and systematically neglected our own defence efforts for decades. In fact, no matter how low they were, for a very long time, we felt those investments could be reduced even further.’ It was also economically vulnerable. ‘Look at Germany, a global economic power after all, and what has happened now it can no longer get cheap gas and cheap oil from Russia.’
From 80 to 300 years
According to Ron Stoop, strategic geo-economics analyst at The Hague Centre for Strategic Studies, the shifts Europe is currently experiencing fit into a longer trend. ‘You have to view this in a process of 200 to 300 years’, he says. ‘We’re no different in this from the rest of the world.’ It’s called the Great Divergence. Mechanisation and the use of fossil fuels created an enormous lead. Until about fifteen years ago, Europe and the United States held that dominant position.’
Those power relations created a world in which free trade became the norm. ‘If you’re at the top of the food chain, then it’s fine to say: just open everything up’, Stoop explains. ‘We take what we want, trade, and everyone benefits from it. That has been the system for a very long time, and we’ve benefited greatly from it.’
Slave labour
Food tech entrepreneur Wouter de Heij puts it more acutely: ‘Production mainly moved to the Far East because wages were lower there, so we could get our goods cheaply. We’ve lived off Chinese monthly salaries of 400 euros, while production staff often worked under conditions that we in the Netherlands absolutely don’t want. Indirectly, we have purchased slave labour. That should have sparked discussions twenty years ago.’
De Heij also emphasises that it has gone further than just production capacity. Knowledge and experience also disappeared from Europe. ‘What we’ve allowed to happen in parallel is that we have gradually cut back on all production knowledge and IP’, he states. ‘This means we’ll continue to grow.’ And in the slipstream, the know-how to run or build a factory also disappears. That’s not something you can easily retrieve.’
No internal market
The dynamics changed when other countries started using that same system differently. ‘China in particular has rolled out a strategy in which it participates in the global market, but at the same time protects its own economy and strengthens it in a targeted manner’, according to Stoop. ‘It’s a form of state capitalism. They’ve made use of the benefits of free trade, but have shielded themselves where necessary. And within that, built their own companies into global players.’
‘It’s not realistic to do everything within Europe itself’
From a Western perspective, the system therefore no longer works, Stoop explains. ‘We may be reaching the end of the period of Western supremacy. For generations, we thought we were the smartest and strongest, and that it would always remain that way. Now that that certainty is disappearing, you see that countries are starting to organise themselves differently. They’re going to think about security, jobs and strategic dependencies.’
Because Europe has become significantly dependent on other regions for production, energy and technology. At the same time, the internal structures turn out to be less robust than expected. ‘The EU should be an internal market’, says Stoop. ‘But in practice, it doesn’t work as intended. There are still many barriers for companies to operate across borders. That hinders the development of European companies and, consequently, their competitiveness relative to the US and China.’
Autonomy(?)
Europe responds by focusing on strategic autonomy, but when the term comes up, Tjin-A-Tsoi immediately emphasises that it is not entirely correct. ‘It’s not realistic to do everything within Europe itself and completely detach from international dependencies’, he says. ‘For example, it really won’t be possible to bring the entire semiconductor value chain to Europe. You won’t get TSMC here for production, and European variants of Nvidia or Qualcomm won’t suddenly emerge either. That’s not how that world works.’
The question is: what should we want to be able to do ourselves, and in what areas do we accept dependence? ‘Strategic autonomy doesn’t mean that you do everything yourself’, Stoop also states. It means you can make your own decisions and bear the consequences. And that you can’t be blackmailed. You can approach that in many ways but ultimately, it comes down to choices: which sectors do you find so important that you want to have capacity there yourself?
Too broad, too slow
‘There’s slowly more awareness for critical sectors’, Stoop observes. ‘Which technology do you want in your systems, and which materials? Who’s in control of them? That applies to energy, defence and digital infrastructure. Steps are now being taken there. At the same time, Europe remains a trading continent. We want to let trade flow, but within that openness, maintain a grip on the places that really matter.’
De Heij: ‘One day, you wake up and say: we need to have more autonomy. But you should have looked at that strategically ten or twenty years ago. It’s not something you can just organise with a few reports and a few policy measures. That’s a long line.’
That timeline clashes with the way policy is made. ‘The government’s reflex is to want to do everything’, says Tjin-A-Tsoi. ‘To make a thousand flowers bloom. That fits with fundamental research, where you don’t know what will work. But when it comes to innovation that needs to reach market, you have to make choices. Then you need to look at where you have a competitive advantage and focus strongly on that.’ And according to him, that edge is still lacking too often. ‘The government tends to spread resources across far too many initiatives. Whereas you should invest like a company does: strategically, with the expectation of a return. Don’t do everything at once; focus on the areas where you can really make a difference.’
Don’t plan, do
At a European level, another layer is added. ‘The European Union has multiple goals at the same time’, says Tjin-A-Tsoi. ‘On the one hand, it wants to increase competitiveness and stimulate innovation. On the other hand, it wants to support regions that are lagging behind. This leads to resources sometimes being distributed in a way that doesn’t align with where the economic power lies.’
Stoop concurs: ‘You see it reflected in the fragmentation of Europe. Countries still very much think nationally, whereas for scale and impact, you actually need to operate at a European level. That makes it difficult to make acute choices. Everyone wants a piece of the pie, and that means policy often becomes a compromise.’
The combination of all those factors leads to a pattern in which the direction is identified, but the implementation lags behind. ‘We don’t need any more ideas in the Netherlands. We have enough reports and analyses’, says Tjin-A-Tsoi. ‘What we need is to set things in motion. To actually make decisions and implement them. Within fixed timeframes, with clear goals.’ De Heij concurs: ‘It’s not about even more plans, it’s about doing. In practice. And that requires a different approach. Less upfront control, more trust in the people who have to implement it. Because as long as you want to regulate everything down to the last detail and prove in advance that it’ll work, nothing will happen.’
Energy, technology, trade
If Europe wants to strengthen its position on the world stage, according to Stoop, it starts at the grassroots. ‘Energy first’, he says. ‘Energy is the beginning of your prosperity. If you plot energy consumption per capita against GDP per capita, it’s almost a straight line. Without sufficient and affordable energy, you can’t keep industry running or achieve growth.’ That’s not easy. ‘You have to adjust your system and keep the lights on at the same time. That calls for speed. Expand faster, invest faster, choose faster.’
‘Technology second’, Stoop continues. ‘Europe holds good cards: highly educated people, strong knowledge institutions, an open society. That makes us suitable for technological development. But what are you aiming for? What are you expanding on? And how do you ensure that such technology actually leads to companies and industry?’
The third pillar is trade, Stoop states. ‘We can’t make everything ourselves in Europe. We simply don’t have the people for that. Bear in mind that by 2040, we’ll lose approximately 2 million people from the workforce in Europe per year. So you need to focus on strategic partnerships. Trade remains important, but you need to be more conscious about who you enter into dependencies with and how you spread them.’
Control points
According to Tjin-A-Tsoi, the key lies in influence, in indispensable links in a chain. ‘We must focus on crucial points in international value chains’, says the TNO director. ‘Control points: places others depend on. That’s where your power lies.’ One example of that is ASML. ‘Veldhoven technology is indispensable in the most advanced chips. But it’s one peak. If you look at that at a macro level, we in the Netherlands are heavily dependent on a single company and single technology. We should develop a range of control points across various value chains where we already have a strong foundation. By taking technological leadership in specific areas. Not everywhere, but very targeted. Examples are aspects of quantum technology, in photonic chips, in other parts of the semiconductor chain such as metrology or packaging, and in materials. There, we have a foundation on which we can build.’
‘If you don’t have a clear competitive advantage, you have to ask yourself whether you still want to invest heavily in it’, Tjin-A-Tsoi continues. At the same time, according to him, the greatest weakness lies not in devising those directions, but in realising them. ‘The one thing we’re not good at in the Netherlands is bringing technology to market. We’re strong in fundamental research, but weaker in marketing. And that’s where economic value is created.’
Entrepreneurial freedom
De Heij, on the other hand, recognises the risk of too much concentration. ‘One of the most important elements in innovation management is that you never put all your eggs in one basket’, he says. ‘It’s better to have ten projects of ten million than one project of one hundred million. And you have to accept that a large part will fail. That’s just the way it goes. But those few that do succeed make the difference.’ And that requires a different approach, according to him. ‘You have to do that in practice. No more academic exercises, but teams with experienced entrepreneurs who’ll actually build. That gives you room to make mistakes and maintain speed.’
This approach requires a different role for the government and knowledge institutions. ‘Innovation almost always comes from practice, from entrepreneurship’, says De Heij. ‘There’s nothing wrong with investing in technology development, but you have to let it go afterwards. Give entrepreneurs the space to get started with this, without getting bogged down in regulations, co-financing, or discussions about intellectual property. Otherwise, you’re blocking the activity you need to bring that technology to market.’
Coalitions of the willing
For the Netherlands, the biggest challenge lies in scale. ‘If you want to grow as a Dutch company, you must be able to enter the European market immediately’, says Tjin-A-Tsoi. ‘In the US and China, you have one large domestic market. In Europe, you have 27 systems, with different rules, taxes, and barriers. That makes scaling up a lot more complex.’
Stoop sees that movement is emerging in this area. ‘Work is being done on ways to make it easier to operate at a European level’, he says. ‘Consider initiatives to enable companies to register at a European level more quickly, and the harmonisation of rules regarding, for example, VAT and reporting. Those are the first steps towards a true internal market. In addition, countries cooperate more often in smaller groups, in coalitions of the willing. Don’t wait until all 27 agree, but move forward with a group. That can help countries like the Netherlands pick up the pace.’
Baton
De Heij reiterates, again: ‘In the Netherlands and Europe, we’ve lost the ability to actually build things. You see that not only in factories, but also in large infrastructure projects. Take nuclear energy, for example. Everyone has an opinion about it, but if you choose to build a nuclear power plant, there are hardly any companies or engineers left who can actually make it happen. That knowledge has simply dissipated over the past few decades.’
De Heij is also critical of the way policy is structured. ‘The government thinks in terms of structures and control mechanisms’, he says. ‘But innovation requires speed and space. It requires you to accept that things fail. In practice, projects are tightly regulated, and there must be certainty regarding return and risks in advance. That’s taking out the dynamic needed for something new to emerge.’ De Heij sees friction in the collaboration between public and private parties: ‘Universities, and especially knowledge institutions, want to scale up towards the market, but that’s the domain of entrepreneurs. You’ll see overlap and sometimes even rivalry. But what you want is for those roles to complement each other and for the baton to be passed on.’
No block is perfect
The crucial question is not only what needs to be done, but also whether Europe and the Netherlands are capable of setting the necessary pace. According to Tjin-A-Tsoi, there are good opportunities: ‘We still have a strong starting position’, he says. ‘We have knowledge, businesses, capital, and a well-educated workforce. But we do have to make choices and implement them consistently. And we need to get better at scaling up and marketing technology. That’s where our earning potential ultimately lies.’
Stoop adds: ‘No block is perfect. The US and China also have their own problems and challenges. Europe still has an open economy, a wealth of knowledge, and a strong position in world trade. If we succeed in getting our energy supply in order, developing the right technologies, and properly structuring strategic partnerships, then we can remain relevant.’
European autonomy and the role of the Netherlands
Europe is at a tipping point. While the continent could for years rely on open markets, stable international relations, and access to external resources, that foundation is becoming less and less self-evident. Companies are facing scarcity, geopolitical pressure, and increasing uncertainty in supply chains. This shifts the playing field from optimisation to positioning: what do you, as a region, still want to maintain control over, and where do you accept dependence? For the Dutch manufacturing industry, too, that is not an abstract debate, but a daily reality. Investments, innovations, and collaborations are increasingly determined by strategic considerations at a European level. Whoever does not take a position now will let others determine it later.
