Europe in Denial
By Jaffa Levy
The Long Read
Europe in Denial: Moral Rhetoric and Strategic Decline
The continent clings to the language of virtue as its energy arteries are severed, its industries hollowed out, and its financial credibility questioned.
Reading time: ~18 minutes
For more than five centuries, Europe commanded the centre of world affairs. Its empires shaped the map, its currencies financed global commerce, and its armies fought wars that reshaped continents. That era has ended. The centre of gravity in politics, economics, and industry has shifted inexorably eastward, while Europe gradually recedes to the periphery. The tragedy is not only Europe’s loss of primacy, but the unwillingness of its leadership to acknowledge how far the shift has gone.
European political language has retreated into moral refrains. Across Brussels and many national capitals, virtue trumps interest: immigration must be humanised, climate policy must be framed in moral terms, gender and diversity are moral touchstones, and foreign policy is deployed through slogans like “democracy” or “freedom.” Virtue is safer than specificity. It can unite twenty-seven states—yet it leaves Europe voiceless against powers that speak in the language of resources, power, and strategic calculation.
Moral Appeals and Their Hypocrisy
This dynamic played out in Washington this summer. Ursula von der Leyen declared, “we must save the children.” She was referring to Ukrainian children taken from occupied territories—thousands, according to Ukrainian and independent investigations—transported into Russian custody under the guise of evacuation. Kyiv and much of the West regard it as abduction. During that summit, both Trump and von der Leyen raised the issue: she pressed for their return; he replied curtly that this was not the main point of discussion, and promptly shifted the agenda. Moral appeals, she discovered, do not move strategic purposes.
The rhetoric was familiar. Two years earlier, in the aftermath of NATO’s withdrawal from Afghanistan, Western leaders struck the same chord, insisting that “girls must be allowed to go to school.” Yet during two decades of occupation, more than half of Afghan children suffered permanent stunting from malnutrition. Their mothers, also women and girls, bore the brunt of poverty and famine while Western governments proclaimed a mission of emancipation. To speak of girls’ education while presiding over hunger on such a scale was not merely hypocrisy, it was self-delusion.
That contradiction has carried into Europe’s conduct over Ukraine. Leaders cloak their policies in moral language, but the substance—the loss of energy security, the decline of industry, the mounting fiscal burden—is pushed aside. In both Kabul and Kyiv, lofty rhetoric has substituted for strategy, and virtue signalling has disguised a failure to account for consequences.
The Frozen Assets Mirage
In early 2022, immediately after Russia invaded Ukraine, the G7, the EU, and Britain froze approximately $300 billion in Russian central bank reserves. The United States holds only a sliver of that sum; the bulk is parked in Euroclear in Belgium, with significant shares in France and Britain.
The assets in question are not Europe’s to dispose of; they are the sovereign property of another nation. Yet Europe has frozen them, diverted the interest they generate, and used those proceeds to finance Ukraine. However carefully officials describe this as “extraordinary revenues,” in practice it is confiscation by another name. The precedent has not gone unnoticed. Governments from Riyadh to New Delhi, Beijing to Brasília—many of which keep reserves in London, Paris, or Brussels—now worry: if Russia’s funds can be immobilised and skimmed, what security do our own deposits enjoy? What was done once can be done again, and Europe’s supposed financial custodianship is no longer neutral but a political instrument.
In principle, if the war ends and sanctions lift, these assets must be returned to Russia. But another possibility looms. Trump has hinted he might strike a deal with Moscow: unfreeze the assets if they are reinvested in the United States. It would mirror his earlier pitches to Gulf monarchs, positioning America as the safest destination for capital. If that happens, Europe loses everything—not just leverage over Putin, but also the financial cushion it counted on to rebuild and rearm. Europe would watch helplessly as those assets dry up and flow across the Atlantic.
A Contrast in Growth
Russia’s economy has defied the expectations of collapse. Its GDP grew 4.3 percent in 2024, up from 4.1 percent the year before, lifting its economy to around $2.41 trillion. This expansion was fueled by construction, war-driven production, and elevated commodity revenues—even as inflation surged.
Germany, by contrast, contracted twice. Its GDP fell 0.3 percent in 2023 and 0.2 percent in 2024, marking the worst performance among advanced economies. Once the continent’s industrial engine, Germany now sees energy-intensive firms relocating to the United States or Asia.
Britain did slightly better. It stood 2.2 percent above its pre-pandemic GDP by end-2023, yet grew only 1.1 percent in 2024. Simply stated, during a time of war, Russia expanded faster than both Germany and Britain. The prevailing narrative—that Russia is economically collapsing while Europe holds firm—is fundamentally inverted.
Germany’s Dead End—and Nord Stream’s Role
Cheap Russian gas once fuelled €2 trillion in German exports. That arrangement is gone. Nord Stream, the symbolic conduit of that supply, was torn apart in September 2022. The explosions deprived Germany of its primary source of cheap energy. Veteran journalist Seymour Hersh directly accused the United States of orchestrating the sabotage, while critics pointed to President Biden’s earlier threat that Nord Stream would be “brought to an end” if Russia invaded Ukraine. Washington has denied involvement, but the suspicion remains.
The pipeline’s destruction severed Germany’s most important artery of affordable energy. Russia, able to redirect its oil and gas to Asia and the Middle East, ultimately profited from higher global prices, while Germany was left stranded. Berlin compounded the damage by shutting its last nuclear plant in 2023. Its energy-intensive manufacturers are now fleeing, drawn by tolerable electricity prices and subsidies in the United States. Meanwhile, Berlin’s €100 billion Bundeswehr fund is largely earmarked for purchasing American weaponry, reinforcing dependency even as its industrial base unravels. Friedrich Merz visited Washington to advocate for a ceasefire—but offered no energy plan, no industrial strategy. His vagueness reassured no one.
Britain’s Weak Link
Britain, similarly, is not in the clear. Among major Western economies, its bond market has suffered the steepest collapse. Since 2021, U.S. Treasuries are down ~13%, German Bunds ~24%, but British gilts have crashed over 30%. Market confidence in Britain’s fiscal stability is evaporating. Yet London, with limited counterbalance, continues to double down on Ukraine, positioning itself to win a protective nod from Washington.
Denial at the Table
That Europe’s leaders traveled to Washington armed with platitudes instead of plans was symptomatic of the wider malaise. “Save the children.” “Democracy must prevail.” “We need a ceasefire.” These refrains betrayed a retreat from substance. Notably, Trump reportedly asked von der Leyen to leave the room while he met with state leaders directly. Symbolically telling: European institutions had become irrelevant in the substantive negotiations.
What Comes Next
Europe now faces stark choices. It may choose denial and drift—propping up conflict with borrowed money, virtue-signalling without structural strategy, while its industrial base erodes. It may rely more heavily on Washington, mutualising debt and importing more U.S. arms. It could attempt a realist pivot—reconnect with Moscow, relaunch nuclear power, build an independent security architecture—but that risks alienating its dominant ally. Or it could fragment, as populism rises and fiscal pressures crack Brussels.
For now, denial is the default. Europe’s leaders understand the crisis they face, but their language obscures it. They speak virtue, but have forgotten how to speak in the language of national interest—megawatts, bond spreads, tonnage. That may preserve unity briefly, but it also seals Europe’s irrelevance.
Wars can benefit their victor. For Europe, this war has been ruinous: bad loans, inaccessible assets, energy collapse, deindustrialisation. Worse than losing the war is to lose your voice while preaching virtue. Europe speaks of righteousness—but the vessel is sinking.
