The European Union is facing an unprecedented convergence of crises that threaten its security, economy, and ideological foundations, according to the Munich Security Report 2025. The annual report, released on Monday, warns that the shift towards a multipolar world is challenging the EU’s liberal vision—and that a second Donald Trump presidency could accelerate this trend.
The findings come just days before world leaders, ministers, and defense executives convene for the Munich Security Conference from February 14-16, where discussions will focus on the bloc’s response to these emerging threats.
Defense Concerns and NATO Pressures
The report highlights the impact of Russia’s war on Ukraine, stating that it has “destroyed Europe’s cooperative security architecture.” While European nations have ramped up defense spending, with many now meeting NATO’s 2% GDP target, the report warns that these increases are still insufficient.
Furthermore, Trump’s potential return to the White House is seen as a major concern. The former president has called for NATO members to increase spending to 5% of GDP—a target no ally currently meets. He has also suggested he would allow Russia to “do whatever the hell they want” to NATO countries that fail to contribute enough to their defense.
With an estimated €500 billion needed for European defense investment over the next decade, EU leaders are considering various funding mechanisms, including:
- Expanding the European Investment Bank’s mandate
- Relaxing Environmental, Social, and Governance (ESG) rules for banks to allow more investment in defense
- Issuing Eurobonds to raise capital
- Adjusting EU fiscal rules to exclude defense spending from national budget constraints
A White Paper on defense, detailing necessary military capabilities and potential funding solutions, is set to be released on March 19.
Economic Turmoil and Trade Challenges
The report also underscores growing economic uncertainty, warning that Trump’s return could worsen tensions between the EU and the US. Trump has threatened to impose new tariffs on the EU and announced a 25% tariff on steel and aluminum imports, which could significantly impact European exporters.
Additionally, the report warns that escalating US-China trade disputes could harm the EU, as China may flood the European market with heavily subsidized, low-cost exports in response to American tariffs. This situation, coupled with the deterioration of global institutions like the World Trade Organization (WTO), could force the EU to diversify its trade relationships—potentially requiring difficult concessions in negotiations with the Global South.
Political and Ideological Divisions
Beyond economic and security concerns, the report highlights the growing ideological divide within the EU. The rise of far-right parties, now in government in seven member states, is challenging the liberal democratic principles on which the bloc was founded. France and Germany, the EU’s two largest economies, are also witnessing a surge in support for nationalist parties, with the Rassemblement National and Alternative for Germany (AfD) gaining influence.
The report warns that these internal divisions could weaken EU unity and decision-making at a crucial moment in its history.
Key Leaders to Meet in Munich
The Munich Security Conference will see participation from top EU officials, including European Commission President Ursula von der Leyen, Defence Commissioner Andrius Kubilius, and EU foreign policy chief Kaja Kallas.
From the US, Vice President JD Vance and Ukraine-Russia envoy Keith Kellogg will attend, while Ukrainian President Volodymyr Zelenskyy is also expected to take part.
With Europe at a crossroads, the conference is set to be a defining moment for discussions on the bloc’s security, economic resilience, and geopolitical future.
