Europe is paying €800 billion a year to rebuild the industries it gave away

When Europe could not source protective masks in 2020 and Russian gas pipelines went dark after the invasion of Ukraine, a question became politically unavoidable: which industries had European governments quietly handed to others, and at what price?

The EU’s answer goes by a deliberately hedged name—open strategic autonomy. Coined around 2017 and elevated to a first principle under Ursula von der Leyen’s second Commission, the doctrine sets a line the bloc had long refused to draw: “as open as possible, as autonomous as necessary.”

The intervention runs across three fronts. The European Chips Act aims to double the EU’s semiconductor share to 20% by 2030. The Critical Raw Materials Act, adopted in March 2024, requires the EU to domestically extract at least 10% and process at least 40% of its needs for lithium, cobalt and the rare earths that batteries and defense require. ReArm Europe, launched in March 2025, commits €800 billion to a defense-industrial base that shrank through three decades of post-Cold War budget cuts.

The pharmaceutical supply chain shows how quickly strategic dependency forms—and how slowly it reverses. MCM’s reporting on Sandoz’s bid to repatriate antibiotic production documents a pattern repeated now in semiconductors, batteries and computing capacity; Europe’s JUPITER supercomputer is as much a sovereignty exercise as a science project.

Mario Draghi’s competitiveness report, published in September 2024, priced the gap. To meet its own industrial, climate and defense targets, the EU would need to close an annual investment shortfall of €750–800 billion—around 4–5% of GDP. No current EU budget mechanism can deliver that.

The concrete results are uneven. TSMC’s plant in Dresden is under construction, but Intel walked away from its Magdeburg facility after €11 billion in German state subsidies could not make the economics work. Northvolt, meant to anchor Europe’s battery industry, filed for bankruptcy in November 2024. China supplies 87% of EU battery purchases.

Critics—including the EU’s own economists—note that several strategic autonomy instruments sit awkwardly against WTO commitments. In Washington, the phrase has become shorthand for European protectionism.

The underlying logic is hard to dispute. Europe’s ability to set AI rules, enforce climate standards and negotiate trade on its own terms all depend on whether the bloc actually controls the supply chains and industrial capacity those positions require. Strategic autonomy is the EU’s argument that sovereignty, in the twenty-first century, is an industrial question first.

The first real test arrives in 2026, when the TSMC Dresden plant begins production and the Critical Raw Materials Act’s second funding round delivers its decisions.

Tags: semiconductors, supply chain, EU, European industrial policy, Mario Draghi, strategic autonomy