PARIS – Donald Trump’s policies are increasingly looking like an end to the era when Madeleine Albright could rightly describe the United States as the “indispensable nation.”
Considering that its geopolitical role costs the U.S. more than it yields — and that being the “exorbitant” locomotive of global growth is a burden in a context of a high dollar and industrial decline — the sound and fury of the Trump administration’s first steps confirm the words of political scientist Ivan Krastev: “Trump is Gorbachev.”
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Drawing a parallel with Mikhail Gorbachev‘s visit to East Germany in 1989, when he said that the future “must be decided in Berlin and not in Moscow,” Krastev points out that Trump likewise seems to regard the United States as “the hostage of the empire rather than its hegemon.”
Faced with this historic shock, Europe seems for now to be taking its destiny into its own hands.
“Whatever it takes…” Germany’s next Chancellor Friedrich Merz’s characterization of the nation’s recovery plan for the next decade paves the way for an abrupt change in the economic strategy that has dominated Europe for the past 15 years. Using the same words as those uttered by Mario Draghi in July 2012 to save the euro single currency, the leader of Germany’s CDU party — Europe’s standard bearer of macroeconomic austerity — is making a political U-turn of a magnitude that cannot be underestimated.
An “obsolete” monetary framework
A few days earlier, in a coordinated interview with the Financial Times, French President Emmanuel Macron declared that the 1992 European budgetary and monetary framework was “obsolete” and should be abandoned. The ambition of a return to European power can only be based on a real growth strategy, freed from the stamp of “stability” inherent in the old “German model.”
The macroeconomic paths of the United States and the Eurozone were diametrically opposed.
This conclusion of obsolescence is unmistakable. Whereas the Eurozone’s GDP expressed in dollars had managed to outperform that of the United States on the eve of the great financial crisis of 2008, Europe’s economic strategy over the past 15 years has led to a historic downgrading of the continent. In the last quarter of 2024, the eurozone’s GDP expressed in dollars was only 55% of that of the United States.
The macroeconomic paths of the United States and the Eurozone were diametrically opposed. Just as the two zones rivaled each other in terms of GDP in 2008, their debt levels amounted to the equivalent of trillion.
Time For ECB to step up
Since then, U.S. debt has risen by trillion under the weight of stimulus packages and tax cuts, while European debt has increased by .4 trillion. As Mario Draghi said at his recent hearing before the European Parliament, “this should make a difference.”
The German turnaround appears to be an opportunity for Europe to resume its upward march. The surge in the euro’s value over the past few days bears witness to the credibility of the project, which is taking shape under the impetus of an upward revision of the entire European economy’s growth potential.
But this change of trajectory cannot be achieved without the European Central Bank (ECB), which will have to play the role of economic driving force, similar to that of the U.S. Federal Reserve. By vigorously supporting the European recovery, the ECB may be able to transform a European plan — which is currently cyclical — into a structural movement, capable of restoring Europe to a position of global economic leadership over the course of a decade.
This transition to adulthood now rests on the shoulders of Europe’s leaders, who must ensure that the ECB supports a strategy of growth, rather than one of stagnation.
