Economic Security: Yet Another Paper?

Hello! Today is 12 January 2026, and here is the EU news you need this week. Feel free to share this newsletter with friends and colleagues, and follow us on LinkedIn. As part of a new editorial partnership, you will now find regular briefings written by experts from Institut Montaigne featured in What’s up EU.

François Chimits is the Project Manager for Europe at the Institut Montaigne. He specializes in issues related to economic security, EU trade policy, and the EU–U.S.–China triangle. He previously worked at the Mercator Institute for China Studies (MERICS) in Berlin and Brussels, and at the French Treasury Department in Singapore, Beijing, and Paris.

A month before the kidnapping of Nicolás Maduro and the renewed threats to conquer Greenland, the Commission published a communication on “strengthening the EU’s economic security.”

Not So Much a Doctrine as Another Working Paper

Long awaited for over a year, what had been described in the Trade and Economic Security Commissioner’s mission letter as a doctrine turns out to be an update of the 2023 strategy. Far from the American fire and fury, the European approach risks losing momentum in an accelerating world.

This new work plan brings coherence to the many ongoing initiatives, confirms a few new ones, and hints at adjustments to some tools. While this comprehensive review is organized around six high-risk areas, it falls short on prioritization—something called for by attentive observers.

Governance and Digital Finally in the Spotlight

Though perhaps the least headline-grabbing aspect, the communication invests heavily in the collective organization of governance and digital issues.

It delves into both EU‑27 governance and information‑sharing, including with the private sector. These dimensions are essential to understanding a topic that is as pervasive as it is complex.

The Commission therefore proposes developing a classified information system built around an Economic Security Network involving Member States.

This network would rely on an Information Centre for Economic Security and a group bringing together business representatives—valuable participants in these often highly technical discussions.

Another notable, if expected, addition is the full inclusion of digital issues. As our entire economy now depends on such tools, this shift merely formalizes what was already happening in practice.

The concrete adjustments are less about rupture than about confirmation of recent trends—implementation of cybersecurity standards, preferences for certain European products, and new support for semiconductors and quantum technologies.

Along the same lines, several priorities from Ursula von der Leyen’s second mandate feature prominently:

• European preference for critical products.
• Conditioning foreign investments on their effective value to the continent.
• Exclusion of “risky partners” from industrial and research programs.
• Formal integration of trade and competition policies into economic security.
• Developing and maintaining leadership in key critical technologies.
• Supporting defence industrial capacities.

While some new initiatives do appear in the document, they often take the modest form of feasibility studies or good‑practice guides—with uncertain medium‑term consequences.

Resources and Capabilities Still up in the Air Despite Growing Urgency

This attractive panorama should not obscure the fact that, despite numerous reforms, Europe’s economic security is actually more fragile today than in 2023.

Our dependencies have deepened, our footprint in critical sectors has become more precarious, and our partners are more willing to use coercion—while becoming ever more committed to reducing their own vulnerabilities.

The Commission’s communication implicitly reveals our persistent shortcomings:

• Economic security standards and new partnerships to safeguard key supplies are once again mentioned, but neither advanced nor refreshed—same goes for G7 formats.
• The EU’s supposed ability to respond firmly to foreign economic coercion remains more of an aspiration than a fact.
• Our slow pace in reacting to mounting threats stems from two factors outside the Commission’s control: the additional economic and political costs we are willing to bear, and how those costs and associated risks are distributed among Europeans.

The Commission rightly notes that Europeans “will have to be ready to accept economic costs in exchange for reducing vulnerabilities.” Yet ultimately, it is Member States that must foot the bills and shoulder the risks. Faced with economic hardship, budgetary pressure, and political polarization, such trade‑offs are anything but simple.

Preoccupied with urgent defence issues and the ongoing support for Ukraine, European leaders have been dragging their feet on economic security—both in terms of funding and staffing, and in deciding which powers might be pooled.

With some immediate crises now behind us, one can only hope that—unlike the 2023 document—European heads of state will fully embrace these new orientations and give Europe the means to ensure its security in an ever more threatening world.

Without decisive action, the Commission will remain stuck producing surveys of our shortcomings, and Europeans condemned to the “slow agony” on the geopolitical front that Mario Draghi already foresees for the economy.

MERCOSUR • On January 9, the Council of the EU — representing Member-State governments — gave the green light for the signing of the EU-Mercosur free-trade agreement.

The text passed by qualified majority, meaning that at least 15 of the EU’s 27 Member States, representing 65% of the bloc’s population, backed it. France, Poland, Hungary and Austria reportedly voted against, while Belgium is said to have abstained, according to the FT.

In December, Italy’s government had secured a delay to the vote, seeking more time to finalise its position. Rome ultimately sided with the pro-agreement camp, helping secure a qualified majority in the Council.

In the days leading up to the vote, the European Commission pulled out all the stops to win over remaining waverers — Italy in particular.

It notably offered to allow governments to mobilise up to 45 billion euros for farmers in the EU’s next long-term budget (2028–34), by reallocating part of a budgetary reserve initially presented as a “rainy-day fund” designed to respond to future geopolitical, economic or health shocks.

Ursula von der Leyen is now due to travel to Paraguay to sign the agreement. However, this will not yet mark the agreement’s formal conclusion by the EU.

The Council has authorised Ursula von der Leyen to sign two separate agreements with Mercosur, splitting the deal into two texts.

The first is an interim trade agreement covering the strictly trade-related aspects of the agreement. As trade policy falls under the EU’s exclusive competence, this agreement will ‘only’ require the European Parliament’s approval (by a simple majority); it will then be deemed concluded by the EU.

The second is the broader EU-Mercosur Partnership Agreement, which touches on shared competences (such as the environment or transport). This text will have to be approved by the European Parliament, but also ratified individually by each Member State in line with national procedures — most often involving a vote in the national parliament. The agreement will then be deemed concluded by the EU.

Finally, it is worth noting that if a Member State fails to ratify the broader partnership agreement, the EU-only trade agreement will still apply.

INFLATION • Eurozone inflation eased to 2.0% in December, down from 2.1% in November, according to Eurostat — the first time since summer that it returns to the ECB’s 2% target.

Core inflation (excluding energy and food) also edged lower, to 2.3% from 2.4%. Services inflation dipped to 3.4%, after reaching in November its highest level since April.

The ECB kept its policy rate unchanged at 2% in December, making its fourth consecutive meeting on hold.

Álvaro Santos Pereira, governor of the Bank of Portugal, said the ECB “has done its job” and that there is no reason to move rates so long as inflation stays close to 2%. Most economists polled by the FT do not expect a rate cut this year.

Still, services inflation — which remains relatively high — should keep the ECB on its toes.

• For the FT, Laura Dubois questions the EU’s ability to manage migration.