1. Trump’s Fake Narrative
It is a huge fake news for Trump to tell us in Europe that we are stealing America's money and jobs, because while the trade surplus in goods - it's true - is around $300b, what he doesn't tell you is that this is nothing compared with Europe's trade deficit in services; and still more important is the threat to Europe's sovereignty caused by this dependence on American service providers, especially in the area of b2b software, the cloud and cyber security.
When you think about the rise of the American empire and its increasing dominance and cruelty over its allies, the vassals, and its disregard for human rights or freedoms, you might think in military milestones - the collapse of the Soviet Union, the Iraq war, the twin towers, all the forever wars from Yugoslavia through ro Ukraine, and now ongoing with Gaza, Iran (Armenia), Pakistan, Cambodia.... intrigue, murder and mayhem everywhere.
2. The Cyber Space Empire
But what about in the world of cyber space?
When people talk of our cyber network on the cloud, it's not really appreciated that all we see is the tip of the iceberg, how the software collects, processes, stores and distributes information held "in the cloud".
But is it in the sky? In fact, the cloud is a very concrete, heavy and expensive thing, not in the sky but in underground cables and data centres, by land and by sea.
And of expenditure on things digital, b2b, we just see 15% of the cost in the cloud and SaaS. We don't appreciate the data centers being built, the Blackwell GPUs, just consider the energy to the point where for example Microsoft is apparently reopening end extending Three Mile Island.
3. Real Estate Without Borders
For those of us who think in geopolitical terms, where borders and frontiers are lines on a map, this cyber "real estate", if you like to call it that, doesn't stop at borders, but continues right up to your smart phone, laptop, or more importantly, to your business IT hardware, and right up to the CPU itself.
Yanis Varoufakis considers that the new cyber real estate is owned by the new landlords, and they rent it out through software-as-a-service. Should we consider a bit more deeply what he is saying?
4. Europe’s Digital Dependence
Here are some interesting figures, figures that few people realise, on American domination of the cyber world (so not military physical domination, but cyber digital).
5. Market Power and Geopolitics
European expenditure on software and cloud goes 83% to American suppliers, generating two million high-paying jobs for Americans, while draining Europe of innovation skills and the possibilities of self-reliance.
That's €264 billion a year, that's just European b2b, but can you imagine how much that might be worldwide? And is it any wonder that the Mag7 (8 with Palantir), spending many hundreds of billions of dollars, if not trillions, are draining Europe of the ability to compete, and that these American tech companies should so completely dominate the S&P 500, which in turn dominates world stock markets?
Of course, people worry about this concentration of dominance in their portfolio and can see why it could be a good idea to diversify into - just an example - SPKL 65%, XMWX 25%, PRAN 10%... that's a personal choice.... but this is how the American economy becomes hyper-financilised.
6. The Cost of Dependency
Europe's expenditure on American tech, focusing exclusively on commercial software as a service and the cloud, is about the same as its expenditure on oil and gas, and the same as Europe's goods' trade surplus with America. ... and a figure that is expected to double in the next 7 years. 83% of Europe's expenditure as we have seen goes to American companies.
And I read that if just 15% of this extraordinary budget could be repatriated to Europe, it would create half a million jobs. And with all the tax receipts and the velocity of money, imagine what that would do to Europe's economies and prosperity.
7. The Security Risk You Don’t See
But considering that technology dominates all other sectors of any economy, and that this technology is largely American, it's a good idea to be aware of the evolution of tech and its strategic consequences - security of data, trade, innovation - in the context of risk to our independence. We witness America's use of increasingly brutal forms of dominance and all the jagged technological, economic and military uncertainty this creates.
In the past, the company would buy a software license, after which it would own the software and manage its data unsynced from the software company. Today, the company buys an annual subscription service to software that sits on the server. It no longer has the control of its data processing, and its data can be accessed / collected in all legality by American economic intelligence. Again, not many members of the public are aware of this.
8. First-hand Reality
Most companies with some sector importance will be aware of hundreds, if not thousands, of attempted invasions of their network daily...of course we are told it was all the Russians or the Chinese, but - for example - Airbus, Thales and Athos know otherwise. They recruited exceptional talent to write encryption and sniffing software, from Paris-Saclay (ranked #1 worldwide), the Ecole Normale Superieure (ENS) Paris, and Sorbonne University, and find these students are now being recruited into American companies.
So the loss of STEM post-grads is a real threat, a threat to European security and competitiveness today; and to our sovereignty in the next ten to fifteen years.
9. The Tax and Transparency Black Hole
Another point that is little appreciated is that this money for services, for American services paid for by Europe, transits through Ireland and off to so-called offshore "fiscal paradises". So that not only is it not taxed, but also, not open to inspection.
10. Leadership Vacuum
Point being, there's plenty of scope for independent minded leadership in Europe to take up Europe's defense.... This is not feasible, Europe's leadership has been dumbed down and bought out.
How to re-equilibrate all this, particularly now that there are the tariffs and protectionism?
Supping in the cafe at the end of the empire.
[END]
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