|

Europe on the back foot yet again

The acceleration in Ukraine diplomacy has put Europe on the back foot yet again, forcing it to scramble for a response. A French presidency official admitted as much ahead of Monday’s informal talks in Paris, saying Europe “needs to do more and in a better way.” But let’s be real—this isn’t about stepping up, it’s about catching up.

President Trump stunned European leaders last week when he revealed he had already spoken with Putin to kickstart peace talks—without giving NATO or Ukraine’s European backers a seat at the table. The reaction? Panic, confusion, and the usual round of hand-wringing. Instead of being involved in the process, European capitals were handed a questionnaire—yes, an actual questionnaire—asking what they could contribute to Kyiv’s security guarantees. If that doesn’t sum up the continent’s diminished geopolitical influence, nothing does.

The harsh reality is that Europe, despite all its economic might, remains a rudderless ship with key leaders too busy putting out fires at home to mount a unified foreign policy strategy. And now, with the U.S. taking the lead in Ukraine diplomacy, Europe is left once again reacting rather than shaping events.

In the board game Axis & Allies, nobody really respects European leaders—just as in real life, where even many rational European citizens don’t hold their own politicians in high regard. When it comes to crisis management, the EU has built a reputation for being slow, indecisive, and overly bureaucratic, while the US—whether you like its methods or not—moves with purpose. From energy security to defense spending, and now with Trump’s looming Russia-Ukraine negotiations, Europe has consistently played the role of a spectator rather than a key player.

Brussels has mastered the art of writing DEI policies, tightening ESG regulations, and crafting symbolic resolutions, but when it comes to real geopolitical strategy, it punches well below its weight. Diplomacy at the highest level is a ruthless game of leverage, economic muscle, and military backing—none of which the EU wields effectively. Its economic power exists, but it’s rarely put to strategic use, making it more of a financial hub than a geopolitical force.

So why should the US even bother inviting them to the table? History suggests they’ll bring more red tape, more delays, and more self-righteous virtue-signaling while the real decisions are made elsewhere. By the time Brussels finishes drafting a “strongly worded” resolution, the deal will have already been inked.

This raises a deeper question—can Europe ever be a true superpower? Unlike China, or Russia, Europe’s political structure is uniquely fragmented. It’s not a state, not even a federal entity, and nothing indicates that it ever will be. Its very foundation, built on cooperation and balance rather than dominance, makes the pursuit of power an unnatural fit. As Jean Monnet once put it: “Cooperation between nations solves nothing. What we need to strive for is to merge European interests, not simply balance them.” That mindset may have worked for economic integration, but in the brutal world of great power politics, it’s a recipe for irrelevance.

Author

Stephen Innes

Stephen Innes

SPI Asset Management

With more than 25 years of experience, Stephen has a deep-seated knowledge of G10 and Asian currency markets as well as precious metal and oil markets.

More from Stephen Innes
Share:

Editor's Picks

EUR/USD: US Dollar to remain pressured until uncertainty fog dissipates

Unimpressive European Central Bank left monetary policy unchanged for the fifth consecutive meeting. The United States first-tier employment and inflation data is scheduled for the second week of February. EUR/USD battles to remain afloat above 1.1800, sellers moving to the sidelines.

GBP/USD reclaims 1.3600 and above

GBP/USD reverses two straight days of losses, surpassing the key 1.3600 yardstick on Friday. Cable’s rebound comes as the Greenback slips away from two-week highs in response to some profit-taking mood and speculation of Fed rate cuts. In addition, hawkish comments from the BoE’s Pill are also collaborating with the quid’s improvement.

Gold: Volatility persists in commodity space

After losing more than 8% to end the previous week, Gold remained under heavy selling pressure on Monday and dropped toward $4,400. Although XAU/USD staged a decisive rebound afterward, it failed to stabilize above $5,000. The US economic calendar will feature Nonfarm Payrolls and Consumer Price Index data for January, which could influence the market pricing of the Federal Reserve’s policy outlook and impact Gold’s performance.

Week ahead: US NFP and CPI data to shake Fed cut bets, Japan election looms

US NFP and CPI data awaited after Warsh’s nomination as Fed chief. Yen traders lock gaze on Sunday’s snap election. UK and Eurozone Q4 GDP data also on the agenda. China CPI and PPI could reveal more weakness in domestic demand.

Three scenarios for Japanese Yen ahead of snap election

The latest polls point to a dominant win for the ruling bloc at the upcoming Japanese snap election. The larger Sanae Takaichi’s mandate, the more investors fear faster implementation of tax cuts and spending plans. 

XRP rally extends as modest ETF inflows support recovery

Ripple is accelerating its recovery, trading above $1.36 at the time of writing on Friday, as investors adjust their positions following a turbulent week in the broader crypto market. The remittance token is up over 21% from its intraday low of $1.12.