The EU’s Evolving Approach to Open Strategic Autonomy: a Critical Perspective on the Competitiveness Compass for the EU and Other Recent Policy Developments

Open Strategic Autonomy (OSA) has emerged as a defining concept in the evolution of European policy, shaped by an increasingly complex economic and geopolitical landscape. Two key dimensions stand out: (i) the central role of industrial policy and (ii) the integration of competitiveness with sovereignty and security concerns. The guiding principle—“as open as possible, as autonomous as necessary”—reflects the EU’s cautious shift toward unilateralism in response to the decline of multilateralism and rising geopolitical tensions.

For scholars, OSA remains a contested concept. Some argue that EU policy documents fail to clarify how openness safeguards autonomy and vice versa. Others critique OSA as inherently contradictory, vulnerable to opportunistic interpretations by member states, or as a form of “decoupling à la carte,” allowing selective policy applications as needed.

However, recent policy developments—particularly the European Commission’s 29^th January 2025 Communication, A Competitiveness Compass for the EU—indicate a decisive shift toward prioritizing autonomy over openness. While reaffirming the importance of global economic integration, the EU is reconfiguring industrial policies with a stronger emphasis on self-sufficiency and security.

The EU’s De-Risking Strategy

Section 1.3 of the Competitiveness Compass, Reducing Excessive Dependencies and Increasing Security, outlines four major risks identified in the Joint Communication on European Economic Security Strategy (20^th June 2023):

1. Risks to the resilience of supply chains, including energy security.
2. Risks to the physical and cyber-security of critical infrastructure.
3. Risks related to technology security and technology leakage.
4. Risk of weaponization of economic dependencies or economic coercion.

To mitigate these risks, the EU is implementing a series of de-risking measures:

Trade and Foreign Investment

While maintaining pressure for WTO modernization and rulebook updates, the Commission proposes strengthening both defensive and offensive economic measures. Defensive actions include stricter screening of inbound foreign direct investment, whereas offensive measures encompass export controls and the monitoring of outward investments. Additionally, economic security standards for critical supply chains will be developed in collaboration with like-minded partners.

To reduce overreliance on a single or limited number of suppliers, the Commission promotes supply chain diversification through bilateral and multilateral agreements with trusted partners. Simultaneously, it advocates for greater self-sufficiency through measures with protectionist undertones, including “recycling, innovation and research, targeted financial support for domestic processing and manufacturing capacities, and the establishment of back-ups and stockpiles.”

A European preference in public procurement for strategic sectors and technologies is also being proposed to counteract unfair competition from third countries that engage in systematic over-investment and targeted subsidies. Such aggressive market strategies put European producers under increased pressure in an already unlevel playing field, posing a risk to Europe’s production capacities and technological expertise.

R&D and Innovation

The Commission highlights mounting risks to Europe’s technological progress, competitiveness, and leadership in cutting-edge technologies due to malicious actions by third countries, such as espionage and illicit knowledge leakage —particularly in dual-use technologies such as quantum computing, advanced semiconductors, and artificial intelligence. These risks raise concerns about the potential military and intelligence applications of leaked innovations, posing a direct threat to European security.

In response, the EU is recalibrating its international research cooperation policy. Moving away from a traditionally open, liberal approach, the new strategy prioritizes selective partnerships with like-minded countries that share EU values, emphasizing sovereignty and protection against foreign influence. Notably, in early 2024, the European Commission released an updated version of the Horizon Europe Strategic Plan for 2025–2027. This revision elevates “open strategic autonomy and ensuring Europe’s leadership in critical technologies” from one of four strategic priorities to an overarching principle guiding the other three priorities (green transition, digital transition, and building a more resilient, competitive, inclusive, and democratic Europe).

The EU Defense Industry

For the first time, the Competitiveness Compass explicitly addresses the role of the EU defense industry, recognizing it as a key driver of competitiveness and innovation across the European economy. The document stresses that market fragmentation across member states has led to excessive reliance on non-EU suppliers, creating a material risk that Europe could lag in developing advanced weapons systems. Such a gap could have negative spillover effects on dual-use technologies.

To address these challenges and support increased defense investment by member states, the Commission has announced a forthcoming White Paper on the Future of European Defense. This initiative aims to define concrete actions to strengthen the EU’s defense sector, enhance technological sovereignty, and reduce strategic dependencies.

A Critical Reflection on the Commission’s Approach

A critical examination of the EU’s evolving approach to OSA is essential. To do so, I build on insights from a recent paper of mine.

The shift toward an autonomy- and security-driven industrial policy is rooted in the sharp deterioration of the global landscape. Decades of globalization have generated deep-seated contradictions—both between countries and within societies—exacerbating economic imbalances and social inequalities. The crises and slowdown of the world economy have reinforced a win-lose dynamic in international integration, where nation-states and geopolitical blocs increasingly adopt a confrontational stance. This phase is characterized by intensifying firm-to-firm competition, now deeply intertwined with geopolitical rivalries, as states seek to emerge as relative winners, often at the expense of mutual economic gains.

While globalization has created intricate and irreversible interdependencies that bind national economies together, the international system remains fundamentally anarchic. As Dani Rodrik put it: “there is no global anti-trust authority, no global lender of last resort, no global regulator, no global safety nets, and, of course, no global democracy...global markets suffer from weak governance, and therefore from weak popular legitimacy.” In this context, the central challenge lies in reconciling two conflicting imperatives: leveraging the benefits of global resource allocation while mitigating the vulnerabilities and security risks arising from states’ coercive strategies to maximize their own absolute and relative advantages. This challenge has been aptly described as “impossible decoupling, improbable cooperation” and carries a high probability of triggering a security dilemma, where one nation’s pursuit of security inadvertently diminishes the security of others—even in the absence of hostile intentions.

The Munich Security Report 2024 warns of precisely this risk: “as more and more states define their success relative to others, a vicious cycle of relative-gains thinking, prosperity losses, and growing geopolitical tensions threatens to unfold. The resulting lose-lose dynamics are already playing out across multiple policy fields and regions.” And the security dilemma becomes more acute when it is difficult to distinguish between offensive and defensive security postures. When intentions are unclear, rationality and prudence push states toward preemptive security investments, leading to an escalation that—if unchecked—could result in unintended conflict.

In other words, without voluntary cooperation—or at least cooperation enforced by credible and committed supranational institutions—collective rationality does not automatically prevail. Instead, a fragmented international order risks yielding suboptimal and destabilizing outcomes. In this light, OSA must be carefully calibrated to avoid reinforcing dynamics that deepen geopolitical tensions and push the global economy toward an “epic fail”.

Preserving Multilateralism and Economic Openness

First, OSA will falter if it undermines the EU’s longstanding commitment to multilateralism. The EU’s trade and industrial policies should reinforce—not weaken—existing international institutions such as the WTO while also working to establish new ones, including global antitrust and regulatory authorities. This would revive stalled initiatives, such as those derailed in 2004 when the WTO deemed conditions unfavorable for advancing the Doha Development Agenda.

Second, the virtuous aspects of globalization must not be sacrificed on the altar of economic sovereignty. Historically, globalization was sustainable because even its “losers” benefited from the externalities generated by the “winners:” improved efficiency in resource allocation, lower consumer prices, and the free flow of ideas, data, knowledge, and technology. Disrupting these dynamics risks slowing technological progress, dampening productivity, and constraining global economic growth—ultimately reducing collective welfare and intensifying geopolitical competition.

The Risks of Techno-Nationalism in R&D and Innovation

The shift toward “techno-nationalism” in EU industrial policy presents a particularly acute risk. The world of science and technology thrives on openness, yet the EU’s evolving stance could undermine precisely the kind of international cooperation that drives innovation.

In a critical editorial, Nature described the EU’s shift in the Horizon Europe Strategic Plan as “ominous.” The journal warned that “a security mentality cannot be embedded in what is fundamentally an open and autonomous research cooperation fund,” emphasizing that research programs should foster trust rather than create barriers. The concern is that the OSA principle may restrict collaboration with researchers from countries that lack formal defense and security agreements with the EU, ultimately stifling scientific progress.

Scholars have long reaffirmed that open science and techno-globalism are key drivers of long-term prosperity, technological acceleration, and global economic convergence. Restricting these principles risks slowing innovation, exacerbating global inequalities, and, paradoxically, weakening Europe’s technological edge by limiting its access to cutting-edge research beyond its borders.

Avoiding Unilateralism and Internal Fragmentation

If European industrial policy fails to account for these risks, the consequences will extend beyond global competition to the EU’s own internal cohesion. A more unilateral and protectionist OSA could encourage individual member states to pursue their own nationalist industrial strategies, undermining EU unity and exacerbating internal fragmentation.

Balancing autonomy and openness is a complex challenge that demands a carefully calibrated strategy, combining diplomatic engagement with strategic assertiveness in relations between nation-states and economic blocs. In this light, recognizing the previously outlined risks is essential to ensuring that OSA strengthens European resilience without fueling global economic instability or intensifying geopolitical tensions.

Note of the Editors: the paper mentioned by Professor Mariotti is available in open access at Mariotti, S. “Open strategic autonomy” as an industrial policy compass for the EU competitiveness and growth: The good, the bad, or the ugly? Journal of Industrial and Business Economics (2024). https://doi.org/10.1007/s40812-024-00327-y