Latest news with #ApostolosThomadakis
Euractiv
5 hours ago
- Business
- Euractiv
Europe must stop playing middleman and start leading on Ukraine
Apostolos Thomadakis is Research Fellow and Head of the Financial Markets and Institutions Unit at the Centre for European Policy Studies (CEPS), and Head of Research at the European Capital Markets Institute (ECMI). The latest revelations about Ukraine's proposals to Washington are telling. Kyiv is preparing to pledge $100 billion in American weapons purchases, financed largely by the EU, in exchange for US security guarantees after a peace deal with Russia. On top of this, Ukraine has offered a $50 billion drone production partnership with US firms. These proposals are designed to appeal to President Trump's transactional instincts, but they also expose an uncomfortable truth: Europe pays the bill while Washington writes the script. The same imbalance is visible in trade. The EU has just concluded a tariff deal with the US that many in Europe regard as a capitulation . Facing the threat of 30% tariffs, Brussels accepted a 15% tariff on most goods, kept 50% tariffs on steel and aluminium and pledged hundreds of billions in US gas purchases and investments. The outcome may have prevented an immediate trade war, but it reinforced a pattern: Washington sets the terms, Europe absorbs the costs. Taken together, these two developments point to a dangerous trajectory. On both security and trade, the EU has drifted into the role of payer and middleman, financing arrangements that serve US priorities while limiting its own ability to act independently . In Ukraine, Europe risks being reduced to financing American weapons and underwriting Trump's 'deal-making', rather than defining the conditions of peace and stability on its own continent. In trade, Europe has accepted asymmetric concessions that weaken its negotiating leverage and signal vulnerability. The ceasefire discussions show how dependent Europe has become. In Washington, German Chancellor Friedrich Merz was reduced to pleading with President Trump to secure a ceasefire with Russia, presenting Europe's position as reactive and dependent. Ukraine, for its part, rightly insists that any settlement must not rest on concessions to Moscow. But the fact that Kyiv courts Washington rather than Brussels for security guarantees reveals how absent the EU remains from the geopolitical table. Europe must break this cycle. By playing the middleman – between Washington and Kyiv, between Washington and Moscow, between Washington and its own member states – the EU abdicates its role as a shaper of outcomes and confines itself to footing the bill. What would leadership look like? Europe should no longer limit itself to financing other people's strategies. It must set its own. That means designing a European security framework for Ukraine, anchored in EU and NATO commitments, with American support but not American primacy. It means pursuing trade policy from a position of strength, resisting coercion and diversifying energy and technology partnerships so Europe cannot be held hostage. It also means unity of purpose: a coordinated diplomatic initiative that frames the ceasefire and peace process in terms of Europe's own security order, not America's electoral calendar. For years, the EU has spoken about becoming less dependent on others for its security – what policymakers call 'strategic autonomy'. The twin challenges of war in Ukraine and economic coercion from the US show that this must move from rhetoric to reality. The Ukrainian document itself notes that 'lasting peace shall be based not on concessions and free gifts to Putin, but on a strong security framework that will prevent future aggression'. Europe must ensure that framework is European-led – otherwise, it risks financing an American-designed settlement that leaves its own security fragile. The tariff deal offers a parallel lesson. A Union that cannot defend its own economic interests will struggle to defend its security interests. History will not judge Europe kindly if it remains a middleman – paying, pleading and reacting – rather than leading. At stake is not only Ukraine's sovereignty but Europe's credibility as a geopolitical actor. The time has come for the Union to stop paying for other people's strategies and start writing its own.
Euractiv
31-07-2025
- Business
- Euractiv
Europe dodged a trade war, but its electricity market is broken
Apostolos Thomadakis is Research Fellow and Head of the Financial Markets and Institutions Unit at the Centre for European Policy Studies (CEPS), and Head of Research at the European Capital Markets Institute (ECMI). This week's EU-US tariff deal has been spun as a diplomatic success. But beneath the surface, the outcome is sobering. Washington keeps its 15% tariffs on key European exports while Europe pledges closer trade and investment ties with a country whose industrial strategy is increasingly dictated between rounds of golf. The real question isn't whether Europe avoided a trade war – it's whether it gave away too much, and whether the trade-offs made are consistent with any serious long-term competitiveness strategy. Because accepting structural tariffs while simultaneously rolling back parts of the EU Green Deal is not strategic patience. It's strategic incoherence. And nowhere is this contradiction more evident than in Europe's electricity market, the very foundation of its green transition. Despite years of reform talk, the core design of Europe's power market remains dangerously outdated. Wholesale electricity prices are still dictated by the marginal cost of gas-fired plants. This means that even when wind and solar provide the majority of supply, consumers still pay prices shaped by the most expensive generator on the grid. In 2022, when gas prices exploded following Russia's invasion of Ukraine, this mechanism pushed power prices to record highs, forcing entire industries to shut down and households into energy poverty. This is not just a bug. It's a feature of a market architecture that was never built to deliver resilience – only efficiency under stable conditions that no longer exist. Today, Europe is in the paradoxical position of producing record amounts of clean energy while remaining shackled to fossil fuel price volatility. Every time gas prices jump, electricity follows; jeopardising the electrification of transport, heating and industry that lies at the heart of the Green Deal. Yes, reform is on the table. But it remains incremental, buried in consultations and bogged down in jargon. The fundamental truth remains: Europe's electricity market cannot enable a 21st-century transition while operating on 20th-century principles. This isn't just an energy story. It's a powerful and direct parallel to the core flaw in the financial system. In finance, just as in the energy market, long-term sustainable investment is constantly held hostage by the logic of short-term, speculative gains. In both cases, the solution is architectural. We need to redesign the 'software' of these markets to correctly price risk and reward long-term resilience. In other words, ensure the 'price' of capital is no longer dictated by the most destructive parts of the system. The same principle must now be applied to energy. Europe needs to decouple electricity prices from gas, expand the use of long-term contracts (like power purchase agreements and contracts for difference), and build out the grid infrastructure that allows low-cost renewable power to flow across borders. Countries like Spain have shown it's possible – their use of long-term contracts and domestic renewables helped buffer them from the 2022 crisis far more effectively than markets like France or Germany, where the link between gas and power prices remains entrenched. Meanwhile, the US (once Europe's green partner) is backtracking. Critical clean energy support under the Inflation Reduction Act is under pressure, with projects stranded and investment pipelines drying up. Yet this moment presents Europe with a rare opportunity: to attract viable US projects with targeted relocation incentives and industrial policy tools it already possesses. If done strategically, this could reinforce Europe's leadership in clean technology while accelerating its energy independence. What Europe doesn't need is more high-risk, high-cost LNG from hurricane-prone regions with gutted climate science and forecasting capacity. Studies already show the EU is well on track to meet its energy needs through accelerated renewables deployment, not new fossil dependencies. Doubling down on fossil-based import dependencies is not resilience. It's regression. Ultimately, this is about power – both electrical and geopolitical. In a fractured world, fossil fuel geopolitics cannot be the foundation of future partnerships. Climate cooperation can. By aligning Europe's foreign, trade, investment, and innovation policies with its climate agenda, the EU can rebuild multilateralism around shared challenges – not extractive competition. The electricity market is just one piece of this puzzle. But it is a foundational one. Without a functioning pricing system that rewards resilience, Europe will continue to pay strategic premiums for tactical mistakes. Avoiding a trade war is not enough. Avoiding a self-inflicted energy crisis must now be the priority.
