Source: cyprus-mail.com
Europe is facing an “existential” question over its place in a world increasingly shaped by artificial intelligence, economic protectionism and the growing power of China and India, former Portuguese minister Bruno Macaes warned.
Addressing the EY Cyprus Future Realised Forum 2026, the former secretary of state for European affairs described the international order as no longer simply multipolar, but “metamorphic”, changing constantly as technology, trade and geopolitics rewrite the rules.
At the heart of that shift, according to Macaes, is a sweeping redistribution of global economic power.
He pointed to China’s emergence as a serious rival to the US, alongside India’s sharp rise in income per head compared with the global average.
Recent trade disputes, he argued, have also shown that China’s rise can no longer be treated as something dependent on Washington’s approval. Instead, Beijing has already proved capable of forcing the US to compromise on important trade questions.
At the same time, Macaes warned that protectionism had returned with considerable force.
Citing figures presented during his address, he said announced US tariffs were approaching an effective global rate of 16.4 per cent, which would place them at their highest level in roughly a century.
The rate currently being felt by businesses was closer to 9.8 per cent, he explained, partly because companies had built up stocks before the measures took effect.
However, Macaes pointed to tariffs announced for Canada, Mexico and China, together with the threat of a 50 per cent levy on the European Union, as evidence of a far more difficult climate for world trade.
For Europe, he argued, the problem goes well beyond tariffs.
Investment in advanced technology is increasingly being concentrated on other continents, while Europe continues to struggle with weak productivity. This, Macaes told the forum, leaves the continent facing an existential question over its economic and political future.
In his view, Europe must now reconsider its place in the world rather than continue relying on the institutions and economic strengths that served it during a more settled period.
Technology, however, was only part of the upheaval described by Macaes.
He also spoke of the “revenge of the physical world”, arguing that geography, natural resources and industrial capacity were once again determining economic and political power.
The rise of the digital economy and ideas such as the metaverse had encouraged the belief that physical distance and geography were becoming less important, he explained.
However, recent wars have demonstrated rather brutally that countries remain dependent on energy, raw materials, secure transport routes and physical access to markets.
Alongside this return of hard geography, Macaes identified artificial intelligence as another force capable of altering the balance of economic power.
He compared the current wave of AI investment with some of history’s biggest technology booms, including Britain’s railway mania of the 1840s, the US canal-building rush of the 1830s, the electrification boom of the 1920s and the dot-com frenzy of the late 1990s.
In each case, investment climbed rapidly as businesses raced to take advantage of a technology expected to transform the economy.
The present AI boom, however, is developing far more quickly, Macaes argued, with its investment curve considerably steeper than those recorded during earlier periods of technological excitement.
Rather than viewing AI as simply another new industry, he presented it as a source of economic and geopolitical power that is already changing the way businesses, economies and societies operate.
Countries with the strongest technology companies, infrastructure and investment capacity would therefore gain a growing advantage, he explained.
This leaves Europe under pressure from both sides. According to Macaes, the continent must compete with the US in technology and access to capital while confronting a China that has become much more confident economically and politically.
He has developed the same argument in his book World Builders: Technology and the New Geopolitics, which examines how technological leadership and geopolitical power are becoming increasingly difficult to separate.
The countries most likely to dominate the future, Macaes maintained, will be those capable of using technology not simply to improve the existing world, but to build new economic and political systems around it.
For Europe, his warning was clear by saying that “the old advantages are no longer enough, and the continent cannot assume it will retain its influence while investment, technology and economic power move elsewhere.”