The author is the CEO of Anadolu.

ISTANBUL

The metaphor of the "Sick Man" was first used in the 19th century by Russian Tzar Nicholas I to describe the Ottoman Empire. Over time, the phrase evolved from a historical analogy into an analytical category used to describe states experiencing economic, institutional, and political disintegration. Throughout the 20th century, the label was applied to a wide range of countries, ranging from the United Kingdom to Japan, and from Weimar Germany to Greece. In 2005, The Economist described Italy as Europe’s "real" sick man, and The Daily Telegraph, CNBC, and other US publications have used the same framework in different years for countries including Portugal, Spain, France, Finland, and Greece in different years.

Today, however, the situation has changed fundamentally. The term "sick man" no longer refers to individual countries, but rather, has become a structural metaphor for an entire continent. For decades, Europe was seen as the world’s "civilization of institutions." With its rule of law, welfare state, advanced engineering capacity, and stable institutions, Europe stood as one of the most influential centers of global power. Yet today, Europe is rapidly losing its status as a playmaker under the new parameters of global competition. Europe’s core problem is not just an economic slowdown, but a strategic decline.

Two fundamental structural dynamics stand out as the reasons behind this decline: an aging population and excessive regulation. Together, these factors are transforming Europe into a continent with sluggish decision-making processes, a strong aversion to risk, and limited strategic mobility. This is not an body_abstract assessment, but a reality clearly observable in the data.

Demographic fragility: An aging Europe

According to Eurostat data, the median age in the EU reached 44.7 in 2024. In other words, more than half of Europe’s population is older than 44.7 years old. In Italy, the median age is 48.7. Europe is no longer merely "aging"; it has become structurally old.

The shrinking working-age population is tightening labor markets and contracting the tax base; meanwhile, social spending is surging. Europe’s welfare-state was founded on the dynamism of a young, productive population. Today, however, that same model is becoming increasingly difficult to sustain due to the mounting cost pressures of an aging society.

Health care and the welfare state: An approaching cost shock

As the elderly populations grows, health care and long-term care services are becoming areas of sharp increases in public spending. There are more chronic illnesses and greater care needs, as well as longer life expectancies, while the productive population is declining and economic growth potential is narrowing.

This dynamic is poised to create a significant cost increase for Europe’s health systems, putting an enormous strain on public budgets. Health care is more than just a public service; it is one of the central pillars of Europe’s welfare model. If this pillar cracks under fiscal pressure, it could further fuel political populism, social tensions, and anti-immigration sentiment.

Europe’s mirror: The Draghi Report

One of the most striking confirmations of this assessment came in the form of the European Competitiveness Strategy Report, which was prepared in September 2024 by Mario Draghi, former president of the European Central Bank. Having managed Europe’s financial collapse during the eurozone crisis, Draghi is one of the people most familiar with the continent’s institutional architecture and its limitations. Therefore, the report functions less as external criticism and more as a mirror that Europe holds up to itself.

Draghi’s core thesis is clear: Europe's challenges are not temporary crises but rather the result of accumulated structural competitiveness loss. The report states that the main drivers of this decline are a widening productivity and technology gap with the United States, failure to capitalize on the digital revolution, high energy costs, intensifying competition with China, and insufficient defense investment.

Currently, the European Union’s annual total output is about 40% lower than that of the United States. Private-sector R&D investment reaches only about half of US levels. One of the report’s most striking findings is that over the past 50 years, Europe has not produced a single new company with a market capitalization exceeding €100 billion ($117 billion). The fact that only four of the world’s top 50 technology companies are of European origin clearly illustrates why the continent missed the digital revolution.

Overregulation: Paralyzing a civilization of institutions

Another major problem Europe is facing is a regulatory culture that is suffocating innovation. Europe is increasingly focusing on "governing technology" rather than "producing technology." Although this approach may offer short-term advantages in security and ethical debates, it ultimately undermines long-term competitiveness.

This dynamic is most evident in the field of artificial intelligence. Through the AI Act, the EU introduced the world’s most comprehensive AI regulations, explicitly defining its approach as "risk-based." However, this approach has effectively limited technological development in Europe due to its regulatory reflexes.

Europe today does not regulate because it produces technology; rather, it fails to produce technology because it regulates. This creates an institutional reflex that delays and increases the cost of innovation rather than guiding it. Despite knowing that this trajectory undermines long-term competitiveness, Europe seems stuck on a path that prioritizes regulation over progress.

Chips and manufacturing capacity: Europe’s weak link

Semiconductors are the most symbolic domain of Europe’s technological decline. According to data cited by EE Times, Europe’s share of global chip production has plummeted from 44% in 1990 to just 9% today. This decline indicates that, although Europe has maintained its capacity for generating knowledge, it has lost its manufacturing scale and capability for industrialization.

In an effort to reverse this trend, the European Union introduced the European Chips Act in 2022, setting a goal to achieve a 20% share of global chip production by 2030. However, the European Court of Auditors has deemed this goal unrealistic, emphasizing that Europe would need to rapidly increase its production capacity within a very short timeframe to reach it.

Indeed, serious problems have already begun to emerge in practice. For example, delays in Intel’s high-profile investment in Germany illustrate these structural challenges. Similarly, Wolfspeed’s silicon carbide plant in Germany’s Saarland region, the STMicroelectronics–GlobalFoundries’ capacity expansion projects in France, and Infineon’s investments in Germany and Austria are all progressing far more slowly than expected due to high costs and lengthy approval processes. Most of these projects are only viable due to the extensive public subsidies rather than market dynamics. This represents a strategic rupture for Europe, as semiconductors are synonymous with sovereignty in domains ranging from artificial intelligence to defense.

Defense: The cost of the security umbrella

Europe’s defense industry is also structurally fragile. Decades under the US security umbrella have weakened defense innovation and production capacity across the continent. In the current military era, characterized by a fundamental transformation in warfare due to the proliferation of drones, Europe is grappling with the challenge of achieving a competitive edge. This is largely due to the emergence of advanced technologies such as sensor networks, AI-driven command-and-control systems, and autonomous platforms, which have become crucial elements in modern warfare.

Despite allocating significant budgets to defense, the European Union operates under a fragmented vision shaped by 27 different national priorities. The defense industry is unable to achieve economies of scale due to weak joint procurement mechanisms, a lack of standardization, and lengthy tender processes.

Despite its high engineering capacity, Europe lags behind in strategic reflexes and production scale. In recent years, Türkiye’s rapid ecosystem-based approach to UAVs and UCAVs (drones and armed drones) has generated a level of dynamism absent across much of Europe. By contrast, Europe, remains largely confined to an externally dependent defense procurement structure.

Conclusion

For decades, Europe gained strength through its institutionalism. Today, however, that same institutionalism is hindering its ability to act. An aging population is eroding economic dynamism, and excessive regulation is hindering innovation. From semiconductors to defense and from artificial intelligence to health systems, Europe’s relative decline is no longer merely felt -- it is measurable. European elites are attempting to reverse this trajectory. Yet, much like water slowly brought to a boil, Europe failed to realize for a long time that it was heating up. Consequently, the coming years will likely subject Europe to far harsher tests in social, political, economic, and security domains. The window of opportunity available to Europe may be far narrower than commonly assumed.

*Opinions expressed in this article are the author's own and do not necessarily reflect Anadolu's editorial policy.