Europe in a World of Continental Powers: Why institutional reform has become a geopolitical imperative
The world is changing rapidly. Europe has been at the centre of global economic, scientific and geopolitical life for five centuries, but that position ended in the 20th century, when two self-inflicted world wars exhausted the continent. After 1945, Western Europe stabilised under American protection, as US military power shielded the region from external threats and internal rivalries that had plagued the continent for centuries. Pax Americana reshaped Europe’s security architecture, enabling unprecedented peace, integration and prosperity. With the rise of Asia, however, the global centre of gravity is shifting once again, and Europe will have to reorganise itself if it is to remain successful in the decades ahead.
Read the full Discussion Paper here.
The return of Asia
For much of recorded history, Asia stood at the heart of the global economy. Until well into the 19th century, Asia was home to most of the global population, accounted for more than half of global GDP and maintained a trade surplus with the West. Western industrialisation, technological leadership and colonial expansion temporarily reversed that balance, marking an era of Western predominance. But that period proved historically exceptional rather than permanent.
Following the restoration of their independence, Asian nations embarked on a far-reaching transformation. Sustained investment in education, infrastructure and industrialisation – combined with ambitious populations and growing political stability – propelled Japan, South Korea, Taiwan, and later mainland China into the centre of global growth. China has become the region’s economic heart, having emerged as a technological and industrial superpower within just a few decades.
A world of continental-scale powers
Meanwhile, Europe is no longer the world’s primary strategic theatre as it was in 1945. Its colonial empires have disappeared, other regions – particularly Asia – have developed at an unprecedented pace, and Europe’s relative economic and technological weight has declined.
The United States increasingly recognises that Europe is no longer the central arena of global competition. Europe’s fragmented institutional structure – at times recalling the Holy Roman Empire or Polish-Lithuanian Commonwealth – limits its ability to act decisively, weakening both its economic and geopolitical position. As American resources are not unlimited, Washington is increasingly concentrating its efforts on its own hemisphere and on what it now considers the most consequential region: East Asia. Much as the Romans once withdrew from Britannia, American engagement in Europe is gradually receding, and Europe will increasingly need to assume responsibility for its own future.
In a world defined by continental-scale powers, Europe can remain secure and prosperous only if it organises itself at that same scale – economically as a single entity, militarily autonomous and institutionally able to act with speed. This will lay the foundation for Europe’s future security and economic strength.
Centralising governance
Individually, European countries no longer shape global outcomes. Collectively, however, they possess all the attributes of a major power: a vast internal market, advanced economies, deep capital pools and a highly educated population. Europe’s weakness lies not in its resources, but in how they are organised.
The European Union remains more an institutional framework than a unified political entity. National governments retain decisive authority, while European institutions operate primarily through consensus among 27 member states. Veto rights, divergent legal frameworks and fragmented implementation slow decision-making and dilute outcomes. As a result, national interests often prevail over collective goals, producing compromises that are acceptable to all but rarely optimal for Europe as a whole.
To strengthen its security and competitive position, Europe will need to act at scale. That requires a decisive shift of political authority to the European level. Issues that require continental scale, speed, and coherence – such as security, foreign policy, trade, capital markets and strategic technologies – should be decided primarily at the European level. Policies rooted in social preference, cultural identity and local conditions – including education, healthcare, welfare systems and cultural affairs – should remain the responsibility of member states. Such a reallocation of competences would strengthen Europe’s capacity to act, simplify governance and reduce administrative fragmentation.
Underpinned by democracy
Stronger centralisation can only be sustainable if it rests on stronger democratic support – a principle deeply rooted in Europe’s political culture. Yet many Europeans experience the European Union as distant, technocratic and opaque. Executive authority is exercised by officials not directly elected by citizens. Key decisions emerge from negotiations largely out of public view, and citizens often struggle to understand where responsibility ultimately lies. Although the treaties define citizens’ rights, these remain fragmented and difficult to grasp as a coherent whole.
This democratic gap has fuelled resistance rather than support for integration. Brexit was not simply a rejection of Europe, but an expression of political disempowerment. The EU has evolved beyond a purely economic project into a political and regulatory union, but its democratic structures have not kept apace.
If centralisation is to endure, the Union itself must become more democratic. Only a European Union grounded in clear constitutional authority and democratic accountability can generate the consent required to govern effectively at scale.
Deeper integration therefore requires the following parallel democratic reforms:
Direct election of the President of the European Commission
As European governance becomes more centralised, the executive role functions as the continent’s de facto political leadership. To reflect this reality, Europe must introduce the direct election of its executive leader, providing clear political leadership and granting citizens a direct mandate over Europe’s direction. A directly elected President would strengthen democratic legitimacy by giving citizens a tangible sense that they themselves choose Europe’s course, while empowering the leader responsible for carrying it out.
Strengthening the European Parliament
At the same time, the European Parliament must develop into a fully empowered legislature, equipped with legislative initiative and strong oversight powers. European elections should become genuinely transnational, allowing citizens to vote for candidates from across the continent rather than only within national lists, and helping transform the Parliament into a truly European political arena rather than a forum of national delegations.
Binding referenda
As national vetoes recede under deeper integration, binding referenda can anchor major decisions in direct popular consent. Switzerland offers a proven model. The country once operated under a system in which cantons held veto powers. To improve collective decision-making among diverse regions, it gradually replaced rigid cantonal vetoes with stronger common institutions combined with direct democratic participation. Binding referenda became a central element of this system, and today, major changes require both a majority of voters and a majority of cantons, ensuring democratic legitimacy while preserving the voice of individual regions.
A single European Constitution
The current patchwork of treaties should be replaced by a single document, defining Europe’s citizens’ rights, delineating competences – clearly specifying which areas fall under exclusive European authority and which remain the exclusive domain of the nation states – and establishing institutional limits.
Centralising security
In order to build an effective security organisation, Europe will also need to centralise its defence structure for two reasons.
First, effective security cannot be achieved through 27 separate armed forces. Strategic effect requires an integrated military capability able to act decisively as a single political entity. This requires unified command structures, shared strategic objectives, joint procurement and standardisation, and an integrated defence-industrial base. Fragmentation undermines deterrence, slows crisis response and weakens Europe’s capacity to act.
Second, international politics operates in an anarchic environment, lacking a central authority capable of guaranteeing security. Historically, European states ensured their safety through relative power, often at each other’s expense. This balance-of-power logic defined the continent for centuries and repeatedly led to rivalry and war. The postwar period marked a historic exception: under the American security umbrella, internal arms competition was neutralised. But as the United States pivots away from Europe, this arrangement can no longer be assumed.
Without a centralised European authority, a renewed wave of national rearmament would risk a return to political and military competition among its own states – a dynamic the 20th century showed to be catastrophic.
Economic scale as a foundation for growth
Europe’s centralisation also provides the foundation for economic growth far beyond what fragmented national policies can achieve. Strategic autonomy in economic affairs requires industrial and technological investment at a continental scale, as global competition now operates at that level.
To that end, Europe should:
Integrate capital markets and forge a single corporate legislation
Divergent corporate, insolvency and securities laws still prevent firms from scaling across Europe. Full integration would unlock economies of scale, deepen capital pools and allow companies to easily expand within Europe, massively boosting innovation and scale-ups as a result.
Create a European Treasury with fiscal capacity
A common Treasury empowered to levy European taxes, issue permanent debt and stabilise the economy would enable large-scale investment in infrastructure, energy systems and strategic industries while providing the EU with the fiscal capacity to respond to economic shocks.
Centralise the continent’s industrial and technological approach
Global competition is increasingly driven by large-scale public investment in sectors such as semiconductors, artificial intelligence, energy, defence and critical raw materials. Centralised coordination would allow Europe to identify strategic sectors, mobilise capital at scale, align regulation and procurement, and use infrastructure and defence spending as engines of technological progress.
Centralised governance, integrated defence and economic scale are not isolated reforms. They are different expressions of the same strategic necessity: the ability to act at continental scale in a world shaped by continental powers. Together, they define the institutional threshold Europe must cross to remain secure and prosperous.
Changing institutions, remaining European
Europe’s long and rich history has shaped its identity, institutions and political culture. That heritage fosters continuity, which can make adaptation in a rapidly changing world more difficult. Yet by organising itself to act at scale where necessary and aligning its institutions with its own democratic principles, Europe can preserve its identity while equipping itself for the demands of the 21st century. In doing so, Europe would emerge as a cohesive political actor, capable of shaping its own destiny in an increasingly competitive world.
Rogier Vergouwen is a strategist and founder of Laurier Management & Advisory. He writes on geopolitical and economic transformation in Europe, with a focus on long-term competitiveness and strategic sovereignty.
The support the European Policy Centre receives for its ongoing operations, or specifically for its publications, does not constitute an endorsement of their contents, which reflect the views of the authors only. Supporters and partners cannot be held responsible for any use that may be made of the information contained therein.
