How can we Europeans believe in ourselves again? When Europe's political elites met last week at the "European Davos", the annual European Forum Alpbach, the longing for confidence was one of the great aspirations palpable in the discussions. The gathering took up the thread that one of the world's leading economists, Paul Krugman, began before the summer: a call for a drastic rethink of how Europe perceives itself, of the position it wants to take in the world, and of the future it envisions. It is the debate that anticipates the autumn discussions in Brussels and the much-awaited Win-Win Summit in November.

In this essay I argue that Europe has many reasons to believe in itself. Unleashing this confidence, however, is less about better policies or bolder ideas than about daring to face the discomfort of letting go. Europe's paralysis is not merely a political problem. It is a psychological one. It results from an attachment to the old identity and mental models we inherited, which define our understanding of what Europe is, of its purpose and its role in the world. Regaining confidence therefore becomes a psychological act. It requires us to grieve; to let go of the assumptions that keep us stuck in the past. Only then will we open the mental space from which we can imagine the new identity Europe needs to adopt and recover its strength.

Let’s briefly recap why this matters. The last years have been full of proposals what Europe needs to do – be it Mario Draghi, Enrico Letta or the twelve-step compendium for the Electro Union that Olivia Lazard had pulled together earlier this summer. Whether you are an investor, a manager, a start-up leader or a consultant – like it or not – the speed in which Brussels, Berlin or Paris implement these proposals, will strongly affect your and your business’ fate. But let’s be clear. These proposals are more than a checklist. They are a call for political leadership at historic scale resting on “discernment, inventiveness, risk appetite, courage and mobilisation”, as Olivia Lazard had put it. The continent stands at a juncture. And yet, despite this urgency, Europe feels stuck. Understanding why is therefore the question of our time.

I will begin with leadership. Be it in businesses or politics, we all know leadership requires optimism and courage. Yet this attitude stands starkly at odds with how Europe’s leaders have been bathing in self-pity throughout the last years. It started with Mario Draghi. His Competitiveness Agenda – however right and ambitious some of its proposals may be – by now has become the blueprint for presenting Europe as weak. Since then the whingeing didn’t stop. Europe was called an “owned continent” , becoming a “museum” , a naïve “herbivore” in a world of “carnivores” , or “crippled” by over-regulation.  The collective state of depression is no surprise but self-inflicted. And as we all know, depression is fatal: no start-up, no investment, no project has ever taken off in a state of self-pity. This is not different for politics. Depression breeds helplessness and despair, rather than the urgently needed self-confidence and a belief in one’s own ability to act – against all odds. The first question for us as “Europeans” is the one that Alpbach asked: how can we overcome our impostor syndrome; how can we, in a world that seems to be turning against Europe, again believe in ourselves, believe in the strength of Europe and the vision it pursues. Against all odds.

"Europe outperforms the US on almost every single thing that matters to a good life."

This is where Krugman offered help. He challenged one of the key assumptions underpinning Europe’s sense of decline. (For non economists the analysis is not straightforward, I still recommend reading the discussion.). One of Draghi’s key claims was that Europe is in decline because its productivity growth lags behind the US. Krugman questioned this very assessment; not so much whether Europe is falling behind on aggregate productivity (the prime indicator for “competitiveness”), but whether this gap actually constitutes a problem. Because, paradoxically maybe, so far there is no divergence in Europe’s relative GDP to the US, if compared along living standards. His explanation: the US and European economies simply produce different mixes of goods. The Draghi report, read carefully, confirms this: the productivity gap is concentrated in the high-tech sector. In machine-building, biotech, and other industries Europe is strong in, no such gap exists. (Together with Lukas Bertram I have outlined this before, when identifying the sectors that Europe needs to defend).

Europe has many reasons to be proud. This becomes even more evident, if we shift our gaze beyond the narrow notions of productivity. If we view competitiveness through the lens of complexity, for example, and rank countries by their diversity of knowledge, and their ability to combine it in ever new ways, many European countries make it to the global top – not only Germany, but Austria, Czechia, Latvia, Slovenia and Sweden as well. Or look at how the wealth generated by its economy is used. Europe outperforms the US on almost every single thing that matters to a good life: life expectancy, women in the workforce, workplace deaths, equality, health, infant mortality and student debt. Its another way to think of efficiency. Not of outputs, but of outcomes.

That the EU starts to be more confident about what it has to offer, however, is only half the point. Behind the geopolitical posture that Olivia Lazard asks Europe to adopt in her compendium, stands a different question. The same question that also Krugman, raised at a panel in Rotterdam: “the future of the world economic order – whether there is any kind of order at all – depends a great deal on what happens in Europe.”.
What both Krugman and Lazard ask, is how this Union of 27 countries wants to position itself in this new era of power politics: should Europe simply join the muscle-flexing and geopolitical posturing that is increasingly defining statecraft across the globe? 

Following Trump’s erraticism, many have asked whether Europe should turn towards China. It is another form of Europe’s impostor syndrome. The brave move instead would be for Europe to turn towards itself or to reach a hand to other middle-powers. Both are full of potential. Europe has leverage to play the game of power, if it chooses to. At the same time playing to Europe’s non-technological strength points towards another way forward: using the capacity to craft institutions that do not simply project power for power’s sake, but balance unequal powers in ways that benefit everyone and sustain peace. It is a reminder to those who miss a European power model. Europe doesn’t have one because in essence Europe is a power-balancing model - think Germany, France, Italy, Poland and Spain. In times global power disbalances, this capacity to balance becomes a unique strength.

‍

Sure, Europe cannot afford naivety. The EU still requires the stronger geopolitical posture Olivia Lazard has described. But the question behind Europe’s power move becomes one of intention: is Europe acting to protect its own values and interests? Or to position itself as an eye-level mediator among the global community –committed to building trust, fostering understanding, and proposing global institutions capable of enabling a lasting positive peace and holding unequal powers in balance?

All – Europe’s geopolitical survival, its pride in its own achievements and its awareness about its strength – are inseparable as history shows. The Cold War was not merely won because the US simply outmuscled the Soviet Union, but because the inner tensions and fracture lines of the USSR became impossible to contain. Europe would do well to learn a lesson from the man who was standing behind the US grand strategy to defeat the USSR: George Kennan. In the 1960s his prescription was that the US will not merely win because it has more air carriers or tanks, but because of its ability to project “among the peoples of the world generally the impression of a country which knows what it wants, which is coping successfully with the problems of its internal life and with the responsibilities of a world power, and which has a spiritual vitality capable of holding its own among the major ideological currents of the time.” Kennan offers a stark reminder, that there is more to geopolitics than material strength.

China is already adopting this success model. One year after Fukuyama declared the end of history, Wang Huning – today China’s “crown theorist” – spent six months travelling the US. The result was a book called America Against America. Faced with the inherent contradictions of American capitalism and the high levels of inequality, his argument was that the US system - built on individualism and hedonism - is working against itself, “clearly losing out to a system of collectivism“. China is playing for time, waiting for America to dismantle itself.

Europe’s path – of course – is not Chinese collectivism. But neither should it be the extreme individualism and blind techno-optimism of the US – which has, somewhat alarmingly, become the default reference point for much of Brussels’ and Mario Draghi’s economic thinking as we can see in the praise of the very tech monopolies have become the biggest danger for freedom and democracy today. Europe needs its own identity. One that is grounded in balance: a continent that carefully holds in balance freedom and social responsibility, innovation and social security, individual ambition and community, military strength and a commitment to peace, the interests of today and of generations not yet born. Philosophically speaking, it is a continent built to hold in tension the very forces that – pushed to extremes – tear societies apart: chaos and order, change and stability, the decentral and the centre. That is what Europe was built to do and that is what it has the potential to become.

"The answer lies in no-longer understanding Europe’s crisis as economic or political. It is stuck in an identity crisis."

Crafting this identity is not simple. The steps required have been laid out in Olivia’s Electro Union compendium. In some areas, it means simplify regulations and get rid of outdated demands that no longer serve any purpose. But – as I said in the beginning - the obstacle is not only regulation or political support. It is ideology – not in the pejorative political sense, but understood in philosophical terms: the set of ideas that shapes how we as “Europeans” see ourselves, each other, and the world around us. A friend once told me, ideology is when you don’t know you’re thinking. That is exactly the point. The market-liberal, rules-based-order playbook that underpins the EU we know today has become the subconscious mental infrastructure that guides our actions today. It is a process similar to when we are brushing our teeth: we act without thinking. It is reflected in the labels we attach to Europe – a single market, a bureaucratic monster, an economic project, a regulatory superpower. From what we believe is possible to what we treat as sound economic policy – the scope of political feasibility and desirability is defined by assumptions about how to produce prosperity, progress and peace – and the roles politics, business and society are each supposed to play. These mental routines have become an automatism, but we no longer are aware how they limit us in what we do.

I started with asking, why Europe is so stuck. The answer lies in no-longer understanding Europe’s crisis as economic or political. It is stuck in an identity crisis. And we are all part in it. The provocation of this essay is that it is our attachment to the old beliefs on which the EU has been built that stand in the way of reenvisioning the role Europe wants to play as Krugman demands; that block every single move that Olivia Lazard calls for and that the Electro Union requires – industrial policy, the capital markets union, a scaled-up European budget, a refreshed relationship with middle powers, a new offer to the global south, a responsibility toward future generations, a renewed social contract. We see the iron grip of the impostor syndrome these beliefs breed every time our politics proves incapable of imagining a Union that reaches beyond narrow metrics of technocratic competitiveness; every time trade and competition hawks pick apart European industrial policy; every time political leaders flirt with new free trade agreements rather than articulating an approach to global partnership grounded in geopolitical coalitions.

"What Europe lacks is the political will to risk something genuinely new, to define a new role, a new vision and a new identity."

Understanding Europe’s political paralysis as an identity crisis changes what the next step must be. It is not another white paper, another dataset, another roadmap that we need. As psychology tells us, confidence doesn’t emerge from better arguments alone, but when people let old ideas die. Recovering Europe’s agency requires a process of detachment – from Europe’s past identity and the ideas, assumptions and the ideology that sustained it. It is a psychological process. And this is why the next steps can be best captured by the five-stages of grief as the psychologist Kübler-Ross had coined them: denial, anger, bargaining, depression, and acceptance. Mourning our past is the method of overcoming Europe’s impostor syndrome; of releasing what we hold dear – in the case of Europe, of an inward-looking economic project centred around the single market.

Some of you may find this take surprising or misguiding. You may want the better argument, a to-do list, an agenda. But if Lazard’s compendium has shown one thing it is that we don’t lack ideas. What Europe lacks is the political will to risk something genuinely new, to define a new role, a new vision and a new identity. And daring to become something new requires to be willing to let the old self go. It is through this liberation that we rediscover the agency, the optimism and the courage this time demands; that we get to the point where we will are able again to reimagine that the Electro Union is not only possible, but grounded in a European identity built on balance, openness and peace.

If you are, instead, someone who resists my proposal because you feel there is little to mourn about the past, I invite you to pause for a moment. I understand the urge to blame Europe’s model as having done too little to reduce for example global inequalities and instead having driven power concentration and externalized environmental destruction. But put yourself in the shoes of the many liberals, who have spent their career building the world, the institutions, and the rules that the European project rests on. The five stages of grief are not there to vindicate that project, they are here to explain why letting go and moving on is so hard.

In any way, none of this is comfortable. Grief never is. The uncertainty of the unknown is full of fear. But the alternative - clinging to an identity that no longer holds, to assumptions that no longer work, to promises that no longer hold, is nostalgia. It is the path away from confidence and strength, towards the “slow agony” that Draghi warned Europe about, the path to slow collapse. And as the one political leader – Mark Carney – who has successfully navigated the stages of grief has said in Davos this year: “Nostalgia is not a strategy.”

This is why Part 2 begins where grief always begins. With accepting what we held dear is dead. With escaping nostalgia and denial; as the first step towards liberation and towards the courage and optimism that building a strong Europe needs.
‍

Part 2 of this essay, published on the 10th of September, walks us through the five stages of grief towards a new European identity. A self-help paper for Europe’s continental development journey.

‍
Jonathan Barth is a Visiting Fellow at the Institute for Sustainability Leadership at the University of Cambridge and an affiliate of the Bennett School of Public Policy. He is the co-founder of various Think Tanks, including the Geostrategic Europe Taskforce, where he served as Executive Chair until June 2026, and ZOE institute for future-fit economies where he served as Policy Director until June 2024. He is a Fellow at Think Tank 30 of the German Society of the Club of Rome.

‍

‍