After the Historic JD Vance Speech in Munich: How Will the New US-European Relationship Impact the Economy?
Without a doubt, geopolitical and ideological tensions will have an impact on the US and European economies. However, particularly in Europe, and in several sectors, interesting opportunities lie ahead.
VIENNA / MADRID, update February 15th, 2025, 19:30h CET / Adam Casals
- WHAT HAPPENED IN MUNICH
“The day was very historic because two truths have been shattered. The security partnership and the partnership of values between America and Europe no longer exist in this form. […] We must brace for uncomfortable times”, reported (*1) Ulf Röller, ZDF EU-correspondent, on the evening after US Vice-President JD Vance’s speech at the Munich Security Conference. Patrick Wintour, diplomatic editor at The Guardian, would comment that it “laid bare the collapse of the transatlantic alliance”. “This catches Europe quite unprepared”, said Röller.
Mr Vance did not mention Ukraine, Greenland, NATO, or any specific proposals for increased European defence spending. Instead, he talked about “the threat from within”, citing several examples of alleged wrongdoing regarding freedom of expression, democracy, and rule of law in countries ranging from Sweden and Romania to Germany and the UK. He also mentioned alleged “entrenched interests” opposing those who might express “a different opinion”, “vote in a different way”, or even “win an election”, before denouncing German “firewalls” against any “thoughts and concerns” people might have. According to European analysts, Mr Vance “provocative” statements would show “insensitivity to Europe’s trauma” with its own history.
Following the transcript published by The Spectator, the Vice-President affirmed that “in Washington, there is a new sheriff in town. […] We will defend your right to offer [your views] in the public square”. Could this possibly be understood as an attempt by the new administration to interfere in European democracies? In fact, Mr Vance dismissed any accusations of foreign “election interference”, even referring to Mr Elon Musk, and with some irony, to Ms Greta Thunberg. Instead, Wintour would argue that in his opinion, the speech was “a call to arms for the populist right to be able to seize power in Europe”.
Furthermore, the Vice-President added that “the crisis this continent faces right now […] is one of our own making”, while asking the audience: “What is the positive vision that animates this shared security compact that we all believe is so important?”
Earlier in the day, German President Franz-Walter Steinmeier expressed scepticism: “The new American administration has a different worldview than ours. One that does not consider established rules, longstanding partnerships, and trust. […] Lack of rules must not become the guiding principle for a new world order”.
In the late afternoon, the public broadcaster ARD reported (*2) that German Federal Defence Minister Boris Pistorius (SPD) “sharply attacked” Mr Vance for his remarks. Speaking from the same stage at the MSC, he stated that “German democracy has been called into question for the whole of Europe by the US Vice-President. […] If I understood him correctly, he is comparing the conditions in Europe with those in authoritarian regimes. That is not acceptable”.
Asked by Deutsche Welle, Germany’s likely next Chancellor Friedrich Merz (CDU) affirmed that he is disturbed to see “American interference” in German politics ahead of elections: “It is not the job of the American government to explain to us here in Germany how we should protect democratic institutions”. Earlier, The Wall Street Journal had published an interview in which Mr Merz said that Mr Elon Musk should be “prepared to face consequences” for allegedly meddling in the German election campaign. Politico added that the German government’s response could be political, legal, or might even target Musk’s gigafactory near Berlin.
From Washington, President Donald Trump endorsed Mr Vance. “I heard his speech. He talked about freedom of speech. And I think it’s true in Europe. […] They’re losing their wonderful right of freedom of speech. And he talked about immigration, and Europe has a big immigration problem”, the President told the reporters in the White House.
The EU High Representative for Foreign Affairs and Security Policy, Ms Kaja Kallas, said that “listening to that speech, they try to pick a fight with us and we don’t want to a pick a fight with our friends”, as reported by Reuters.
Freezing times seem to be upon the US-European relationship. Ulrike Franke, from the European Council on Foreign Relations, summarised the situation on Bluesky: “Snow in Munich: political commentary via weather.”
2. IN EUROPE, THE NEW ECONOMY, AMID RISING TENSIONS
Without a doubt, geopolitical and ideological tensions will have an impact on the US and European economies. However, particularly in Europe, interesting opportunities lie ahead in several sectors.
The EU in particular — and the whole Western-oriented part of the continent — will need to adjust as quickly as possible to this new reality. Big investments have already been announced in the defence and cybersecurity sectors, as well as in AI development. Others will follow in energy, logistics, and other critical infrastructures. Industries like robotics will experience a significant boost in investment too.
The fight against terrorism and illegal immigration, alongside increased investments in fostering legal immigration in an ageing continent with persistently low fertility rates, will also play a central role.
It is possible that mainstream European politics will demonstrate the willingness to design, implement, and enforce mechanisms that guarantee more robust institutions at both national and EU levels, thereby detecting and combating vulnerabilities within the democratic system. This may pose additional opportunities for contractors working with the public sector.
Governance issues might be on the rise within the EU, especially if other countries — such as Austria, perhaps in the midterm — decide, or are persuaded, to follow the Hungarian approach led by Mr Viktor Orbán. While these countries might enter into a kind of privileged relationship with the US and/or Russia, the rest of the EU might opt to strengthen their mutual ties in a continuation of the concept of one Europe with varying speeds of integration and/or cooperation.
The possibility of tariffs and trade wars with the US might pose additional challenges, adding to the uncertainty of future threats emanating from Russia and its allies, or from commercial interests concerning China.
The EU’s external neighbourhood will also be the focus of attention regarding partnerships in international development and cooperation policies, in an environment defined by the acceleration of the climate crisis and the resulting successive migration crises.
3. FINDING ANSWERS
In Munich, mainstream media described a shocked audience after Mr Vance’s speech. Europe must prepare for hardships. Out-of-the-box thinking and mindset change might be the key to preserve our values, liberal democracies, statehood and rule of law.
It is too soon to know whether Europe, its societies, and their elected governments, will rise to their responsibilities in delivering the framework enabling successful, sustainable growth for their citizens and corporations, in these challenging times.
From the Bavarian Hanns Seidel Foundation, with ties to the conservative CSU, Dr Alexander Wolf noted on LinkedIn “the importance of a sovereign and measured counter-response”. However, “despite all the justified criticism of Vance, we should not shy away from taking seriously the few points where he has touched on a sensitive issue. Germany’s security responsibilities have grown, yet our defence capability remains a work in progress. Acknowledging this does not tarnish our reputation — on the contrary, true sovereignty is shown by not reflexively rejecting criticism but by accepting it where justified and translating it into prudent policy”.
Geopolitical expert Prof Velina Tchakarova published on ‘X’ that “at the end of the day, European citizens expect their leaders to take responsibility for safeguarding and guaranteeing the stability, prosperity, and security of the continent — both internally (addressing the link between terrorism and uncontrolled migration) and externally”. The core issue here would be to find out if “politics and institutions are failing the European citizens in this fundamental duty”.
Without a doubt — given that the security partnership and the partnership of values between America and Europe, founded for obvious reasons after World War II, may “no longer exist in their previous form” — Mr Vance’s speech raises a question that Europe — indeed, all of us — should be asking: “What is the [new] positive vision that animates this shared security compact that we all believe is so important?”
Let us recognise and embrace the opportunity presented by this question: given the changing geopolitical landscape, and in order to remain viable, Europe needs to find answers. It is time to develop a new narrative.
(*1) Heute, ZDF, 14.02.2025; (*2) Tagesschau, ARD, Liveblog (Newsticker), 14.02.2025
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About Adam Casals
Adam Casals is an expert in international relations who provides consultancy services to public organizations, corporations, and international bodies. He is a regular contributor to media outlets in Spain and abroad.
