Who is the United States siding with? Alliances are strained due to doubt

[WORLD] In the late 19th century, British politician William Harcourt offered young Winston Churchill a piece of patrician wisdom: “Nothing ever happens.” That phrase now reads like a relic from a lost century. In 2025, war, political upheaval, and strategic recalibration dominate European headlines. Poland has elected a nationalist president hostile to the European Union. Britain’s new defense strategy reads more like a wartime playbook than a bureaucratic white paper. Meanwhile, Ukraine’s long-range drone attacks have exposed Russian vulnerabilities and Europe’s own defense gaps. The assumption of peace—once the foundational logic of EU integration—is eroding. A generation of European leaders who built institutions around soft power now faces hard power realities. This is no longer a crisis to observe. It’s a test of whether Europe is still capable of strategic seriousness.

Context: The Illusion of Stability Is Breaking

For decades, Europe operated under the premise that conflict was an aberration. Economic interdependence, NATO’s deterrent posture, and EU expansion were supposed to lock in peace. The 2004 “big bang” enlargement, which brought in former Eastern Bloc states like Poland and the Baltics, was the high-water mark of that logic. Even after Crimea in 2014, many Western capitals treated Russia’s aggression as containable. That strategic illusion no longer holds.

This year alone has shattered multiple assumptions. Ukraine’s deep-strike drone attacks on Engels, Shaykovka, and three other Russian air bases mark a new phase of asymmetric warfare—one that doesn’t require air superiority or NATO backing. These weren’t symbolic operations; they temporarily grounded Russia’s long-range bombers and disrupted nuclear deterrence routines. As one Ukrainian defense official bluntly told Politico, “We’re fighting on Russia’s terms now, but on their territory.”

In parallel, Britain’s newly released defense review—its most radical since the Cold War—calls for “war-fighting readiness” across the armed forces. Prime Minister Keir Starmer justified this stance by citing the “near inevitability” of future large-scale conflict. Meanwhile, Poland’s election of a right-wing populist president—openly skeptical of Brussels and NATO leadership—raises questions about European coherence at the very moment it is needed most.

What we’re seeing isn’t episodic volatility. It’s systemic disruption. The model of passive security backed by American military leadership is fraying.

Strategic Comparison: Europe Can’t Outsource Strategy Anymore

Compared to its geopolitical peers, Europe’s strategic drift is stark. The US, despite its domestic divisions, maintains a forward posture with global assets and bipartisan support for defense funding. China, while facing economic headwinds, continues to project power through the South China Sea and Belt and Road. Even India is recalibrating its military doctrine, investing in both conventional and cyber warfare capabilities.

Europe, by contrast, has long preferred to act through economic leverage and multilateral forums. That’s no longer sufficient. The EU’s €8 billion European Peace Facility looks underwhelming next to the tens of billions committed by Washington. Germany’s long-promised “Zeitenwende” (turning point) in defense spending has moved at a glacial pace. France, the continent’s only nuclear power, remains diplomatically assertive but militarily stretched.

Worse, populist politics now threaten to hollow out Europe’s strategic response from within. Poland’s pivot mirrors Hungary’s nationalist stance, weakening the EU’s collective voice. If a Trump-led US returns in 2025, transatlantic security guarantees could become contingent or transactional.

As historian Timothy Snyder warned recently, “European security is now directly tied to Ukraine’s capacity to resist.” But even as Ukraine innovates on the battlefield, many European capitals remain stuck in bureaucratic slow motion.

Implication: Investors and Leaders Must Prepare for Hard Power Risk

This strategic shift carries profound implications not only for policymakers, but also for businesses and capital markets. Defense and dual-use technologies—once niche—are becoming investment-grade sectors. From drone warfare to satellite imaging, battlefield innovation is driving demand in adjacent civilian markets. Venture firms and sovereign funds alike are moving toward defense-adjacent tech portfolios.

Simultaneously, the geopolitical premium on energy security, semiconductors, and rare earths will only grow. Companies reliant on Eastern European supply chains or energy corridors must reassess their risk exposure. Political fragmentation within the EU, especially in Central and Eastern Europe, increases the probability of regulatory unpredictability and cross-border friction.

Corporate leaders, especially in sectors like logistics, infrastructure, and insurance, must incorporate geopolitical scenario planning into board-level decisions. The assumption that Europe will remain a low-volatility operating environment is no longer tenable.

As former NATO secretary general Anders Fogh Rasmussen recently stated: “The world’s democracies need to start thinking more like wartime economies—even in peacetime.” That mindset shift hasn’t yet materialized across Europe’s business and political class. But it must.

Our Viewpoint

Europe is approaching a strategic breaking point. The post-Cold War consensus—peace through integration, stability through deterrence—is crumbling under the pressure of asymmetric threats and internal political fragmentation. Poland’s political shift and Ukraine’s battlefield innovation are two sides of the same message: Europe can no longer afford to be strategically passive.

Business leaders, investors, and policymakers must now operate under a new baseline assumption—conflict is not theoretical. It is already reshaping the map, the market, and the mindset. Whether Europe rises to this challenge depends on how quickly it can rewire its institutions and recalibrate its risk tolerance. The old continent is running out of time to stop acting like peace is the default.