![Europe in Age of Global Uncertainty with Jacob Funk Kirkegaard [PODCAST]](https://4liberty.eu/phidroav/2026/03/Liberal-Europe-Podcast-Format-1-1-1-1024x1024.png "Europe in Age of Global Uncertainty with Jacob Funk Kirkegaard [PODCAST]")
How does the war in Iran affect Europeans? What is the impact of the Greenland issue on the Danish view of NATO and the transatlantic alliance? Should the Nordic countries acquire nuclear weapons? And what does Europe’s path to competitiveness look like? Leszek Jazdzewski (Fundacja Liberte!) talks with Jacob Funk Kirkegaard, a Senior Fellow at Bruegel in Brussels and at the Peterson Institute for International Economics in Washington, D.C. His research focuses on European economies, foreign direct investment, geopolitical trends, demographics, migration, and other long-term drivers of productivity and economic growth.
Leszek Jazdzewski (LJ): To what extent does the war in Iran impact Europeans, and what conclusions can be drawn from this conflict at this stage?
Jacob Funk Kirkegaard (JFK): The war clearly and directly impacts the European economy through the price of oil and gas. Europe, as a major oil and gas importer, remains vulnerable and, from a political and national security point of view, has no role or influence. President Donald Trump did not consult Europe when this war started. He subsequently asked European countries to assist in reopening the Strait of Hormuz, but fundamentally, Europe faces the consequences of this war while having no influence over it.
This is a political problem, but there is also both a near-term and longer-term economic challenge. The near-term challenge was addressed recently by the European Central Bank. If the war is not over by the next meeting at the end of April, the base case is that the ECB will start raising interest rates again, with all the potential negative implications that might have for European growth.
Following the Russian invasion of Ukraine, Europe experienced a dramatic energy price shock, which makes the cost of living a major political issue. At the European Council session, the reduction of energy costs in the near term was among the most significant debates among leaders recently. That impact is immediate.
In the longer run, the answer to the challenge is clear. Europe needs to move beyond a dependency on fossil fuels. This requires completing the green transition and electrification to ensure that the electricity supply is non-fossil, utilizing hydro, nuclear, and renewables. This is the goal set for 2050, and this crisis highlights why it is important.
LJ: Do you believe that the war in Iran will have a direct impact on the war in Ukraine?
JFK: The war in Iran has already had a potentially significant impact, with both positive and negative consequences. Regarding the negative implications, the Trump administration has lifted economic sanctions against seaborne Russian crude oil. This allows Vladimir Putin to sell oil to countries such as India at significantly higher prices, resulting in a substantial economic windfall for Russia. Consequently, Russia will be better positioned to finance its military operations than previously expected.
Furthermore, the Gulf Arab states have utilized a large volume of anti-air defense missiles, such as Patriots. These are precisely the weapons that Ukraine desperately needs. While Europe has attempted to purchase these missiles from the United States, production capacity is limited. These stocks will likely be prioritized for the United States or sold at high prices to Gulf nations, meaning Ukraine will have access to fewer advanced air defense missiles.
Conversely, this conflict has highlighted that the military challenge Ukraine faces – specifically the daily saturation of hundreds of drones – is not an issue unique to Ukraine. It is a challenge that countries around the world will face.
Therefore, the lessons, technological expertise, and defense equipment developed by Ukraine (including low-cost interceptor drones, lightweight sonic detection devices, and radars) are in high demand. President Zelensky indicated that three hundred personnel are already in the Gulf to assist in improving air defense. Europe, the Gulf, and likely the United States will seek this technology. This represents a significant medium-term business opportunity for Ukraine and highlights, in a political sense, that the challenges facing Ukraine are universal.
LJ: Is the Danish model of financing military production within Ukraine scalable to the rest of Europe to build our own capacity while supporting Ukrainian defense needs?
JFK: On this issue, the glass is half full. The primary requirement is to finalize the financing, specifically the 90-billion-euro European Union loan to Ukraine. Approximately 60 billion euros of that loan is earmarked for financing the buildup of Ukrainian military industrial production, both within Ukraine and in other parts of Europe.
In addition to the Danish model, there is a joint initiative between Ukraine and several Northern European countries called ‘Build with Ukraine.’ The objective is to take battlefield-tested Ukrainian technology – such as interceptor drones and, eventually, missiles – and manufacture them within Western European countries. This is already occurring in Denmark, Germany, and the United Kingdom, and likely in Poland as well. Initially, these items are built for the Ukrainian battlefield, but in time, they will serve all of Europe’s defense needs.
Rearming Europe requires the ability to deter Russia without the assistance of the United States. Ukraine is a future member of the European Union that is already fighting Russia competently. We know which designs work against the Russian military threat. We must take those designs, complement them with our own technologies, and scale up production. There is cause for optimism on this front.
LJ: What is the impact of recent tensions with the United States regarding Greenland on the Danish perspective of NATO and the transatlantic alliance?
JFK: Previously, the Danish position reflected seventy years of a strongly pro-American defense posture. Denmark was a partner in the Second Gulf War and fought in Afghanistan. There was essentially no space between Denmark and the United States focusing on defense issues. That has completely shifted.
This shift began before the Greenland crisis. Approximately two years ago, a referendum in Denmark removed the defense policy opt-out from the European Union. Since then, Denmark has engaged fully in all European Union defense initiatives and has been a very strong supporter of Ukraine.
The peak of the Greenland crisis in mid-January was transformative. Danish combat troops were sent to Greenland with orders to resist a potential invasion. The support played by other European countries – specifically France, Germany, and the other Nordic nations – was critical. Consequently, the Danish role has shifted completely toward a European perspective on defense and the necessity of building Europe’s autonomous defense capability.
LJ: Was an armed conflict between the United States and Denmark over Greenland a realistic possibility? Were the Danish forces actually prepared to engage?
JFK: This was precisely what was planned for. Traditional tripwire forces were sent there with orders to return fire and to destroy the runways at the airports around Nuuk. The necessity of this action was to deny Donald Trump the idea that an invasion would be costless.
While two or three hundred Danish troops could not militarily defeat the U.S. invading force, that was not the point. The objective was to force Donald Trump to give the order to shoot at allied troops and potentially take U.S. casualties in the process. Such a conflict would then trigger a political and constitutional backlash in the United States, forcing the administration to stop. The Danes were serious about this – had an invasion occurred, it would have resulted in a short but definite armed conflict.
LJ: Are we still living in a transatlantic illusion? Or do you think the current tensions represent a temporary departure from normalcy?
JFK: To some extent, we are living in a transatlantic illusion. No matter what happens, the fundamental role, function, and design of NATO are going to change. Until now, NATO has primarily been a United States security guarantee to other member states against the Soviet Union and, subsequently, Russia. That era is over.
Europe will – through ‘coalitions of the willing’ and partnership with Ukraine – be able to deter Russia militarily without the assistance of the United States. In that sense, NATO will be different. The critical question is whether NATO will maintain its interoperability component; even if the United States is no longer a traditional treaty ally that guarantees our security, it will likely see a strategic advantage in remaining interoperable with European defense forces.
NATO does not become completely irrelevant just because it loses its Article 5 logic, but it takes on a different and less important role. Europe must, and will, handle the critical task of deterring Russia on its own because we cannot rely on the United States. Regardless of whether Donald Trump or a future president is in office, we cannot rely on the United States for that essential role.
LJ: Why do you believe it is potentially necessary for stable, democratic Nordic countries to develop their own nuclear weapons, and how could this realistically occur within the next decade?
JFK: This is potentially necessary because the entire Baltic region and all of Europe are under a direct military threat from a nuclear-armed adversary, Russia. The traditional nuclear umbrella provided by the United States is unreliable. Furthermore, there are valid questions regarding the reliability of the French and British nuclear deterrents due to domestic politics.
While French President Emmanuel Macron has proposed expanding the political extent of the French nuclear umbrella, Marine Le Pen has stated that the French deterrent is for France only. In the United Kingdom, the nuclear deterrent is dependent on United States missile technology; moreover, political leaders currently favored in the polls have previously had links to Russian interests. Frontier states bordering Russia and Belarus may find themselves in a situation where they cannot rely on these allies.
Technologically and financially, the Nordic countries are capable of developing these weapons within five to ten years. Regarding the concern of undermining the non-proliferation doctrine, stable democratic states in the Nordic region can more credibly argue that such weapons are purely defensive. This distinguishes them from other nations that have previously breached proliferation standards with less credibility.
LJ: Do the Nordic countries possess the independent means to achieve such a goal without the collaboration of the United States or France?
JFK: If there is a will, there is nothing to prevent the wealthy Nordic countries from achieving this goal. They do not require the collaboration of the United States or France to develop their own nuclear program.
Trade sanctions against economies as robust as the Nordic nations may not be effective. While such a move would undeniably undermine the international norm against nuclear proliferation – and I would not advocate for it from a global policy perspective – it is ultimately a decision for the Nordic countries. They may conclude that, as neighbors of a nuclear-armed Russia, they have no choice but to seek self-insurance. Senior Polish politicians have expressed similar sentiments, as Poland faces the same dilemma as a border state to Belarus.
LJ: In this dangerous climate of rearmament, do you view increased defense spending as a necessary economic cost or as a potential leverage for European international relevance and industrial development?
JFK: Rearmament is clearly a cost, manifesting in government spending on weaponry, garrisons, and training. It also involves the reintroduction of conscription in several countries, which represents a significant shift in the utilization of the labor force. These costs are real and represent a political decision to invest in an insurance policy against a dangerous world.
However, Europe also faces significant economic opportunities. We are rearming in the midst of a military revolution, pioneered by Ukraine and the drone revolution. We are beginning to see the emergence of European defense-related ‘unicorn’ companies. Historically, the relationship between the United States Department of Defense and Silicon Valley has been very close. One could argue that the only true industrial policy the United States possessed was the defense industry funded by Pentagon grants to startup companies.
Ukraine has pioneered platforms like Brave1 to use defense needs to seed a productive and innovative sector. I see no reason why the rest of Europe cannot replicate this. This sector could play an important role in stimulating the entrepreneurial economy, an area where Europe has traditionally lagged behind the United States. With large increases in defense expenditures and a clear threat from Russia, defense may become a sector where companies grow rapidly. Therefore, we should not dismiss rearmament as merely a cost – it offers potentially significant economic benefits for all of Europe.
This podcast is produced by the European Liberal Forum in collaboration with the Movimento Liberal Social and the Fundacja Liberté!, with the financial support of the European Parliament. Neither the European Parliament nor the European Liberal Forum are responsible for the content or for any use that be made of.