How Europe can reduce dependence on the United States
By Francis Ghilès, CIDOB, 20 January 2026
President Donald Trump’s territorial ambitions over Greenland have dealt a serious blow to the internal cohesion of both NATO and the European Union. Trump’s threat —not carried out for now—to put 10% tariffs on the UK and EU (rising to 25%) if they did not accept his plan to take the Arctic island, it has also intensified pressure over the costs of Europe’s dependence on the United States.
For once united, NATO allies have forced Donald Trump to backtrack on his stated intention of annexing Greenland, but the US president will go down in history as the great wrecker of the international order established by President Harry Truman after 1945. Forged in the aftermath of World War II, in response to the threat posed by the Soviet Union, NATO has struggled to overcome its own strategic disorientation since the fall of the Berlin Wall. However, the organization has suffered an unprecedented internal weakening due to Trump’s aggressiveness toward some of its allies —including threats to Greenland’s sovereignty— and the insults hurled by the US president against the role of NATO country soldiers in Afghanistan.
Donald Trump thrashing of multilateral institutions and trade agreements continues a pace, which leads Anatol Lieven to argue that “we will quickly reach the point where the very legitimacy of our (ie British and European states) will be compromised.”
On 18 January, President Emmanuel Macron called for the European Union to activate its most potent trade weapon against the US, the so-called anti-coercion instrument (ACI) that can restrict access to the single market to American companies. But the EU does not have the escalation dominance China enjoys vis a vis the US in the conflict over rare earths. Brussels has not gamed out the situation as well as China had done. To begin with, the US has control over cloud storage and the dollar payment system.
Even if Deutsche Bank has pointed out that “Europe owns Greenland, it also owns a lot of Treasuries” -a reference to the $8 trillion worth of US Treasury bonds and stocks owned by European investors, notably pension funds, a massive sell off is impossible as that would amount to mutually assured destruction. European investors could however reduce their holdings in such instruments as Danish and some Dutch pension funds have started to do. European nations could also lend to themselves, if Brussels created a market for bonds denominated in Euros.
A recently updated study for the Bruegel think tank details how this could work. The EU has already agreed to a one-off experience when it issued its post Covid Euro385 billion worth of Eurobonds, the Next Generation EU Recovery Scheme. Europe could also set up is own rating agency. It is worth remembering that the credit rating agencies, which are American, were at the heart of the 2008 financial crash. That assured investors that the financial products containing US sub-prime mortgages were safe, which proved to be a lie. Reforms on these two points might be a better line of defence than a trade bazooka. In a broader sense, that speels deepening European capital markets which was one of the key recommendations of the Draghi Report on European Competitiveness (2024). What is not in doubt is that the US is squandering its most valuable financial asset: trust.
European leaders failed to see the crisis coming
The last time key Europeans leaders openly disagreed with a US president was in 2003, when French president Jacques Chirac and German chancellor Gerhard Schroeder refused to back the US invasion of Iraq — an operation that Britain endorsed. That invasion made clear that European dependence on the US would impose costs “in terms of the adherence to the international legality the EU had made a cornerstone of its legitimacy.” Lieven links this to what he is not alone in seeing as the fundamental error European leaders made on Russia: “since the issue of NATO membership for Ukraine, and Russia’s absolute opposition to this emerged in 2007, it should have been clear that if European countries once again found themselves enemies of Russia, their dependence on the US risked being total.”
Europe’s acquiescence to Israeli atrocities in Gaza and the US removal of President Nicolas Maduro in Venezuela has “turned European’s claims to defend a ‘rules-based’ order into a fantastically bad joke in the eyes of the rest of the world.”
Many analysts trace the unprecedented crisis in trans-Atlantic relations to Donald Trump’s flawed personality and bully tactics. More fundamentally, it results from the consequence of a domestic political revolution in America since the collapse of the Soviet Union, which was accelerated by the financial crisis in 2008, a revolution which European elites failed to decipher. After the demise of the Soviet Union, Europe suffered a collapse in strategic thinking which Herfried Munkler analysed very presciently: “Europe’s imperial challenge is made up of two distinct, and dissimilar parts.
On the one hand, Europeans must keep up a two-way relationship with the more powerful United States; they must take care that they do not simply provide resources for its operations and step in afterwards to handle the consequences, without having any say in the fundamental political-military decisions. On the other hand, however, Europeans have to concern themselves with their unstable periphery in the East and Southeast, to prevent collapse and war there without being drawn into a spiral of expansion that would overtax Europe as it is presently constituted. Here the paradoxical danger is that they could suffer imperial overstretch without actually being and empire”.
“Europe found no answer to this two-fold challenge – indeed they have not even seen it for what it is.” The irony is not lost on the former head of NATO and Danish Prime Minister Anders Fog Rasmussen who often described the US as “the world’s policeman”. Two weeks ago, he described Trump’s language on Greenland as similar to that of “gangsters in Russia and China”. Rasmussen is the man who oversaw the destruction of Libya as NATO secretary general in 2011 and sent Danish troops to the invasion of Iraq in 2003.
Like so many of his European peers he has acted as craven to the US – from Iraq, Libya and Gaza – at best looking away in distaste and seeing nothing – so long as it was someone else’s house being burned. It is little wonder that European countries have been so bad at co-ordinating geopolitical strategy. Is it possible to co-ordinate something they did not have?
The last two weeks have “ruptured” world order in the words of the Canadian prime minister, Mark Carney speaking at Davos. European leaders could do worse than recall the words of the great 19th century British statesman, Lord Palmerston: “We have no eternal allies, and we have no perpetual enemies. Our interests are eternal and perpetual, and those interests it is our duty to follow.” Sir Keir Starmer, Friedrich Merz Emmanuel Macron and Mark Carney are operating in a century when European international clout is much reduced compared to the mid-19th century.
France for its part has a Gaullist tradition – much reduced today, of healthy scepticism regarding the constancy and good intentions of the US. Success will be hard to achieve unless Europe, Canada and a new coalition of middle ranking nations stand up to Trump, but submission will certainly fail.
Disclaimer
The views expressed in this article are those of the author and do not necessarily reflect the views of CIDOB or CEMAS editorial Team.
