By
Ricardo Martins
Africa-Press – Mauritius. The EU increasingly embraces its role as a “regulatory superpower,” exporting rules where it struggles to compete in innovation and economic dynamism. Yet regulation without competitiveness or moral authority risks exposing Europe’s decline—economically overshadowed, geopolitically dependent, and morally discredited by Gaza.
The Context
In recent years, European policymakers and commentators have increasingly adopted the term “regulatory superpower” to describe the European Union’s global role. The EU, lacking the economic dynamism of the United States or the industrial scale of China, has positioned its regulatory framework as a means to exert influence worldwide.
From the General Data Protection Regulation (GDPR) to the Digital Services Act and the forthcoming Artificial Intelligence Act, Brussels has become the epicentre of global standards-setting. Still, there was also the EU green regulation.
Yet the embrace of regulatory power can also be read as an implicit admission: Europe has failed to compete in the commanding heights of the 21st-century economy—technology, digital platforms, and advanced manufacturing—and therefore relies on rules rather than innovation as its primary instrument of influence.
This strategy raises two questions: does regulatory dominance compensate for economic weakness, and can it function without the soft power and moral authority that once underpinned Europe’s normative appeal?
Technocrats and the Pride of Regulation
European technocrats take pride in describing the EU as a regulatory superpower. Indeed, the “Brussels effect” (Bradford, 2020) shows how EU rules often become de facto global standards, as multinational companies adjust operations worldwide to meet EU regulations.
However, the downside is also evident. Overregulation has become synonymous with Europe’s lack of competitiveness.
As Prince Michael of Liechtenstein argues, the EU’s penchant for bureaucracy and top-down controls amounts to a “regulatory-technocratic suicide”. Rules such as the European Sustainability Reporting Standards (ESRS)—spanning 400 pages and 1,444 data points—consume business resources that could otherwise be devoted to productivity and innovation.
This suggests that while Europe’s regulatory superpower narrative projects strength, it also masks internal economic fragility, institutional complacency, and undermines democracy.
Innovation and Competitiveness: Lagging Behind
Comparisons with the United States and China highlight Europe’s structural weaknesses. The Lisbon Strategy (2000) once promised to make the EU the “most competitive, knowledge-based economy in the world” by 2010. Yet, as a Bocconi University study observed, EU innovation funding has disproportionately favoured large incumbents rather than dynamic start-ups, entrenching inefficiencies rather than fuelling disruption. The result has been weak innovation ecosystems, low productivity growth, and a steady loss of competitiveness. European innovative start-ups tend to go to the U.S. or the Gulf countries.
The macroeconomic picture confirms this decline:
In 2008, EU GDP per capita was 77% of the US level; by 2023, it had dropped to just 50%.
In 2024, US GDP reached US$ 29.2 trillion, compared with the EU’s US$ 19.4 trillion.
Over the same period, China’s GDP expanded from US$ 4.7 trillion (2008) to US$ 18.8 trillion (2024), nearly matching that of the EU.
This trajectory demonstrates that Europe has not merely failed to close the innovation and productivity gap with its competitors—it has actively lost ground.
Economic Relative Size: From Parity to Precarity
The scale of Europe’s relative decline is stark when examined over a longer horizon. In the 1980s and 1990s, Europe’s GDP was roughly equal to that of the United States and four to five times larger than China’s. Europe and the US each controlled close to 25–26% of global GDP, while China accounted for just 2–6% (World Bank, IMF historical data).
By 2023, this balance had shifted dramatically:
The United States represented about 26% of global GDP, maintaining its centrality.
China surged to roughly 17–18% of global GDP, catching up with and in some measures overtaking the EU.
The European Union fell to 16–17% of global GDP, no longer on par with the US and no longer dominant over China.
In other words, what was once a triangular balance of power tilted in Europe’s favour has become a hierarchy in which Europe risks being relegated to a secondary position. The US economy is now roughly 1.5–2 times larger than the EU’s, while China’s output has grown from a fraction of Europe’s to near-equivalence. By 2050, according to Kishore Mahbubani, it is expected that the EU will have 50% of China’s GDP and about the same as India’s.
This loss of economic weight compounds Europe’s innovation deficit, undermining its ability to sustain global influence. Without productivity renewal and technological leadership, the EU risks cementing its position as a regulatory power without economic muscle—a precarious basis from which to shape the 21st-century world order based on geopolitics and economy or geoeconomics.
High energy costs (exacerbated by Germany’s failed Energiewende and the fallout of sanctions on Russia), demographic decline, too few engineers, and labour rigidities further compound the economic challenge. Europe risks marginalisation if it cannot restore productivity growth and adapt to technological change.
Soft Power and Moral Authority: Hollowed Out
A crucial precondition for regulatory influence is the use of soft power: others must respect and accept rules as legitimate. Historically, the EU enjoyed significant moral authority by positioning itself as a champion of democracy, human rights, and multilateralism.
This authority has now been severely eroded. The EU’s support for Israel and complicity in Israel’s war in Gaza, widely described in the Global South as genocidal, has destroyed its credibility as a normative actor. By supplying arms, intelligence, and political backing, Europe stands accused of complicity in atrocities, including war crimes and ethnic cleansing.
Its migration policies—outsourcing asylum to Libya, where migrants face slavery-like conditions—further discredit its preached values.
As a result, for much of the Global South, Europe increasingly appears not as a normative leader but as a former colonial power defending a 21st-century new kind of colonialism. In the Global South, it is always remembered that European values were never in place during colonialism in Congo, Vietnam, Algeria, and elsewhere.
This reputational decline undermines Europe’s ability to wield regulatory influence globally. Rules require legitimacy; without moral authority, Europe’s regulations may be seen as coercive rather than attractive.
Europe’s Geopolitical Position: Vassal to the US?
The Gaza war and the Ukraine conflict also reveal Europe’s deep strategic dependency on the United States. Despite calls for “strategic autonomy” (EU Global Strategy, 2016; Strategic Compass, 2022), Europe continues to rely on NATO and Washington for its security and is willing to accept deals that may not be in its favour—such as the trade agreement celebrated at a private property of Donald Trump in Scotland—to maintain the U.S. security umbrella.
Some describe Europe’s current posture as one of appeasement and subordination: “paying and praying” to satisfy US demands on tariffs, military purchases, and geopolitical alignment. Such dependence has eroded sovereignty, reducing Europe to what the German philosopher Jürgen Habermas calls a “post-sovereign entity.”
Unless Europe develops an independent defence capacity and diversifies its economic dependencies, it risks geopolitical irrelevance.
Possible Ways Out: Toward Renewal
To avoid insignificance, Europe must confront structural weaknesses:
Reduce overregulation: streamline reporting standards, simplify compliance, and allow markets greater room to innovate.
Revitalise innovation ecosystems: channel funds to startups, build risk-tolerant capital markets, and embrace experimentation rather than deterministic regulation.
Rebuild moral authority: adopt consistent positions on human rights, end complicity in genocide like Gaza, and reform migration policies to align with humanitarian values.
Pursue strategic autonomy: invest in defence capacity, diversify energy sources, and build partnerships beyond Washington’s shadow.
Embrace core values: rediscover the European tradition of freedom, responsibility, and civic accountability, as noted by the Bocconi University report and Prince Liechtenstein’s comments.
Beyond the Brussels Bubble: Is Optimism Warranted?
The Brussels bubble—bureaucrats, think tanks, and consultants—often perpetuates the status quo, focusing on compliance and institutional self-preservation and their financing rather than breakthroughs. Critical analyses, such as Mario Draghi’s 2024 EU Competitiveness Report and Enrico Letta’s reflections on the single market, have come from outside this bubble.
While structural decline is evident, Europe retains significant assets: educated populations, world-class universities, SMEs with global reach, and cultural wealth. With political courage and institutional reform, it could recover competitiveness and credibility.
But without reform, Europe risks drifting into geopolitical insignificance, neither a genuine superpower nor a respected regulator, but an open-air museum with fantastic capacity to attract tourists from all around the world.
Some concluding facts :
Europe’s self-definition as a “regulatory superpower” reflects weakness rather than strength: regulation compensates for innovation and competitiveness deficits.
Its economic relative size has shrunk dramatically since the 1990s, with the US pulling ahead and China catching up.
Overregulation stifles productivity and innovation, burdening businesses with excessive compliance.
Europe’s soft power and moral authority have collapsed, particularly in the Global South, due to complicity in Gaza and incoherent migration policies.
The EU has become strategically dependent on the US, undermining its sovereignty and credibility.
Renewal requires cutting bureaucracy, fostering innovation, rebuilding moral authority, and embracing genuine strategic autonomy.
Without reform, the “regulatory superpower” label risks becoming the epitaph of a continent that traded creativity and sovereignty for rules and dependence.
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