EU-Japan cooperation in Economic Security: ‘If you stand on one foot only, you are shaky’--Economic power demands comprehensive security cooperation including military field

Security trumps economy: the two-leg framework

The central argument is an update on the basic assumption introduced two years ago: that security now overrides economic considerations as the organizing principle of international relations. That assumption has not only been held; it has been further reinforced. This can be considered as analogous to standing on either one or two legs. One leg is the economic and trade leg that both the EU and Japan have long cultivated and on which they have historically relied as the primary instrument of foreign policy. The second leg, which has been chronically underdeveloped, is hard security, encompassing military capacity, cyber, digital, and technological defense capabilities. A country standing on one leg alone is not merely unstable; in the current environment, it is open to blackmail and may be unable to stand at all. The second leg must therefore be strengthened urgently. This is not for the purpose of becoming offensive, but to empower and lend credibility to the first leg. Without the capacity for deterrence and physical defense, economic power cannot be effectively wielded and risks collapsing under multi-domain coercion.

The urgency of this shift is driven by a convergence of structural changes in the international environment. Russia's imperial ambitions, the intensifying U.S.-China rivalry, and the growing risk of nuclear proliferation all put pressure on middle powers to bolster their economic security with hard security. More fundamentally, the rules-based order constructed after World War II is breaking down. Instruments of economic statecraft, such as tariffs, state subsidies, export controls, and sanctions, long constrained by multilateral agreements and intended to be managed through depoliticized mechanisms like the WTO dispute settlement, have seen wide use as coercive tools in the service of domestic political goals. The WTO's dispute settlement system was explicitly designed to depoliticize economic differences; what is now occurring is the opposite. Most significantly, this weaponization of economics is no longer confined to traditional adversaries. The United States has joined China and Russia in using economic instruments coercively, thereby contributing to the destabilization of the post-World War II order and eroding trust within the very alliances it helped to build. This horizontal diffusion of coercive tools across the international system, including among former close allies and partners, demands a fundamental rethinking of traditional security concepts and a departure from the decades-long binary division between economics and hard security.

Shared vulnerabilities of the EU and Japan

The EU and Japan share a set of structural vulnerabilities that make their situations analogous and cooperation imperative. Both remain heavily dependent on Chinese supply chains for process-critical materials, semiconductors, artificial intelligence infrastructure, and renewable energy technologies, including solar panels, windmills, electric vehicles, and batteries. The ballooning trade deficit between the EU and China further weakens European economic leverage. Japan faces additional exposure from Beijing's assertiveness in the Indo-Pacific and has long depended on the U.S. security umbrella. Economic or technological strength built on economic power alone is therefore insufficient for either partner: the lesson that smart power requires credible hard power behind it has been learned the hard way.

Japan is responding to this through measures such as the gradual liberalization of its arms export regime, a significant shift that has opened new perspectives and created more autonomous room to maneuver in an environment where alliances are being severely tested. Japan is already producing Patriot PAC-3 missiles for export to the United States and has signed a contract to supply eleven Mogami-class frigates to Australia. The Japan-UK-Italy cooperation under the Global Combat Air Programme (GCAP) to develop next-generation fighter jets by 2035 is a forward-looking example of security cooperation with European partners. It is worth noting that while the UK has left the European Union, it cannot leave Europe, and its security interests remain deeply intertwined with those of EU member states. France and Finland are already supplying Japan with satellites and infantry vehicles, respectively, showing that additional opportunities are being explored. Both the EU and Japan are pursuing strategies of de-risking rather than decoupling from China, and this makes both attractive partners for Beijing, which has its own interest in stability and prefers a rules-based approach, even if it favors one with Chinese characteristics.

The EU-Japan partnership framework and defense industrial cooperation

The EU-Japan relationship rests on a substantial and broadening framework that provides a solid foundation for cooperation in these challenging times. The cornerstones of this include the Economic Partnership Agreement, association with Horizon Europe for research cooperation including in military technology, the Digital Connectivity Partnership, the Raw Materials Alliance, the Competitiveness Alliance, high-level economic and climate dialogues, annual summits, and business and digital industry roundtables. On the traditional security side, the Japan-EU Security and Defense Partnership, inaugurated at the first Japan-EU foreign ministerial dialogue in November 2024, covers maritime security, space, cybersecurity, hybrid threats, and foreign information manipulation and interference, the latter is an increasingly serious threat to democracies.

Following the first-ever EU-Japan defense industry dialogue, and in anticipation of further openings expected from Japan's new defense strategy by the end of 2026, the scope for deepening defense industrial cooperation is significant. Concrete opportunities include the joint development of missiles, drones, and radar systems. There is also a possibility that Japan might equip its Self-Defense Forces with the Airbus A400M military logistics aircraft by 2027, which would enhance interoperability and deepen supply relationships with the European defense industry. Like defense industries in Europe, Japan faces the need for economies of scale and predictability to reduce costs. This creates opportunities for friendshoring in dual-use technologies relevant to missile defense, radar systems, and electronic warfare. Diversifying procurement away from the United States, which remains the dominant defense equipment supplier in both regions according to the Draghi report, is a shared strategic interest. The two partners need to make space for each other by diversifying their military procurement and addressing the capacity constraints that currently affect both defense industrial bases.

New institutional proposals: EU Security Council and EU Economic Security Council

Two new institutional proposals could potentially be significant accelerators of cooperation. The first, advanced by the first-ever EU Commissioner for Security and Space, Andrius Kubilius, is the creation of an EU Security Council, which could serve as a counterpart to Japan's National Security Council and act as a driving force in implementing the 2024 EU-Japan Security and Defense Partnership. The proposal is designed to Europeanize conventional defense and enable rapid crisis response, drawing on the 800 billion euros proposed in the EU White Paper Readiness 2030 to rearm Europe and facilitate the rapid deployment of military troops and assets. To achieve these goals, the Commission proposes activating the National Escape Clause of the Stability and Growth Pact to release sufficient financial resources and launching a 150billion-euro loan instrument called the Security Action for Europe (SAFE) to help member states invest in key defense areas, including missile defense, drones, and cybersecurity. Funds would be raised through capital markets and dispersed to interested member states based on national plans. The European Investment Bank Group could also be mobilized to contribute to financing and attract private capital. Building new factories and production lines simultaneously improves defense capability and generates good jobs, an interest that Japan shares insofar as it creates openings for its own industries.

The second proposal is for an EU Economic Security Council, where the keyword is ‘economic’. Its goal would be to boost efficiency by centralizing decisions on inward and outward investment vetting, supply and production chain management, dual-use policies, and the alignment of currently disparate policy tools, such as trade defense instruments and cybersecurity toolkits, with the necessary funding. Eliminating coordination gaps would allow for more rapid responses to threats and coercion and easier implementation of policies. Notably, this grouping could be larger than EU membership, and majority voting could be incorporated to overcome the blockages that arise from unanimity requirements. This proposal is linked to the 2025 update of the EU's Economic Security Strategy, which calls for faster implementation of trade defense instruments such as the anti-coercion instrument and an intensification of economic and security partnerships. European Commission President von der Leyen's proposal for a more systemic rather than case-by-case approach to China is also situated within this evolving architecture. Enhancing economic security partnerships also means working more closely with regional trade agreements such as RCEP and the CPTPP, where Japan plays a particularly important bridging role, having saved the TPP after the United States withdrew under President Trump.

The resilience of multilateralism and the coalition of the responsible

It is possible to counter the widespread claim that multilateralism is dead by examining a series of concrete examples. Six of nine EU candidate countries are actively engaged in accession negotiations. ASEAN has enlarged from 10 to 11 members. The African Union was admitted to the G20 under Indian chairmanship. Indonesia and Thailand have begun the process of joining the OECD. BRICS Plus has enlarged and established its New Development Bank. The Asian Infrastructure Investment Bank was created by China as part of the Belt and Road Initiative, to which the EU has responded with the Global Gateway. Regional trade agreements, including MERCOSUR, CPTPP, and RCEP, have gained traction. The EU has now completed free trade agreements with approximately 80 states and is negotiating more. Mini-lateral formats such as the Quad and AUKUS are thriving. Even organizations under stress, such as the WTO and the World Health Organization, are being maintained rather than abolished. The conclusion is that multilateralism itself requires transformation and functions increasingly as a practical tool and method rather than as a governing principle, but its death has been greatly exaggerated. Its preservation remains very much in the interest of middle powers, and both Japan and the EU believe in it.

The concept of a coalition of the ‘responsible’ is the preferred framework for organizing cooperation among like-minded partners, deliberately distinguished from the more contingent coalition of the ‘willing’. Responsibility here entails three things: avoiding the resurgence of unrestricted “might-is-right” policies, preserving rather than undermining the achievements of the existing international order, and correcting the mistakes of the past by building a more participatory and inclusive order that brings in the Global South, which has felt neglected by the traditional approach to the Liberal International Order. Most of these potential responsible partners are middle powers. In the emerging multipolar world, the EU and Japan are important poles alongside the United States, China, Russia, India, and emerging regional centers of gravity such as South Africa and Brazil. Reaching out to ASEAN, Australia, Canada, and Mexico, as well as to India, whose vast market, human resources, raw materials, and technological ambitions amplify the trilateral potential of EU-Japan-India cooperation, is a priority task. Japan's potential as a bridge to the Quad grouping covering maritime security, supply chain management, and critical and emerging technologies creates clear synergies with EU interests.

Semiconductors, private sector integration, and the path to comprehensive security

Semiconductors are a strategically critical area in which both Japan and the EU must make decisive investments. In 1988, Japan held approximately 50% of the global semiconductor market; today that figure stands at around 10%. Japan has responded with the ambitious Rapidus project aimed at rapidly closing the gap, and the approximately 20 billion dollars of investment attracted to Kyushu through TSMC, effectively creating a semiconductor hub in the region. This is a model of putting your money where your mouth is: decisive public commitment combined with close cooperation with the private sector. On the European side, the EU CHIPS Act provides a potential basis for complementary cooperation.

Establishing the nexus between security, economics, and technology is a structural imperative, since these areas are thoroughly intertwined. Regulating dual-use goods and services has become a major challenge, and partners must ensure that they do not inadvertently close off each other's access. The call is for the inclusion of security-vetted private sector representatives and technological experts in the security planning process itself from the earliest conceptual stages. This would accelerate decision-making by allowing for some consultation layers to be skipped and would improve the quality of risk assessments by ensuring the required expertise is present from the outset. Governments, in turn, must explain clearly to companies the political and supply-side risks they face, including the principle that security sometimes trumps economics: short-term costs may be outweighed by long-term security gains, and decisions cannot always be built on economic efficiency alone. The concept of resilience, closely linked to economic security, has become central precisely because it captures this trade-off.

In closing, drawing these threads together around the concept of ‘strategic responsibility’ is explicitly preferred over ‘strategic autonomy’. Strategic responsibility means not merely freedom to maneuver but an active commitment to maintaining the institutional, normative, and material conditions that make a rules-based order possible. A more comprehensive approach integrating the economic, military, and technological and research dimensions of security into a single coherent strategic partnership between the EU and Japan is both feasible and necessary. The geopolitical imperative is clear: in an era of universal weaponization, military and technological credibility renders political action credible. Only the pursuit of a comprehensive security policy that operates across all strategic domains will allow Japan and the EU to sit together at the table, rather than be on the menu.

Q&A

TAMURA Aki:
First, what is the main goal of your proposition on EU-Japan strategic cooperation? Specifically, is the aim to build supply chain resilience against weaponization, or to restore a reformed rules-based international order?
Second, what concrete value is added by integrating economic and security pillars rather than strengthening them separately and in parallel?
Third, do you have any new, personal proposals beyond the institutional structures already on the table?
Fourth, what is the timeline you envisage for these activities, and do you have any tactical suggestions to manage the relationships between the U.S. and China to allow time for implementation?
Fifth, it appears that difficulties related to implementing your proposal lie more on the European side than the Japanese, such as obstacles to EU-level collaboration and emergence of EU skeptical political forces. How can this difficulty be overcome?

Michael REITERER:
Things have become more complicated on the one hand, and the world has lost the luxury of time for reflection, coordination, and planning on the other hand. European institutions have recognized the need to accelerate decision making and become more efficient. The proposals are made based on this recognition. It will also be important to start working on areas that have been neglected in the past, and new areas such as the fighter jet project GCAP. The European Union is providing a framework for cooperation to take place between the companies in each country, as is the Japanese government, so that projects can flourish.

Part of the difficulty lies in financing. Since the pandemic, the EU has developed tools for issuing bonds and raising money, which will also be spent on necessary areas of defense. There are now more reports showing the importance of implementation.

On the subject of China: both Japan and the EU are committed to de-risking and avoiding decoupling. The EU has a ballooning trade deficit with China, highlighting an area where a comprehensive approach needs to be utilized. Systemic issues must be addressed with systemic solutions. At the same time, China has an interest in working with reliable partners, and Japan and the EU will have advantages here as two parties that consistently uphold rules-based systems. The EU continues to conclude free trade agreements, investment agreements, connectivity partnerships, and digital partnerships. The EU is also reaching out and forming agreements with other regional powers such as India, ASEAN, South Africa, and Brazil to maintain a rules-based order in the face of a “might-is-right” mindset.

Q:
Is there a difference of opinion among the 27 member states of the EU regarding accepting your proposition? Also, on EU-Japan collaboration that integrates security and economy, are you making the same proposition to other like-minded countries, such as Australia and Canada?

Michael REITERER:
Many countries share an interest in a stable order and have the same sense of responsibility, which is why they are actively concluding free trade and other agreements. The EU and Japan could become a driving force for broader cooperation of responsible players.

On the opinions of the EU member states: there are 27 members, but decision-making needs to be done through majority or unanimous agreement. However, the member states are aware of the new challenge they face, as demonstrated by the proposal by President Macron of France to extend the nuclear umbrella. While individual member states may have differing views, the Strategic Compass of the EU has a unified understanding of the potential threats. The proposal of a diversification instrument by President von der Leyen is already on the agenda of the European Council, and it is hoped that the Council will reach an agreement that provides the necessary tools to allow it to be used in the public interest.

It is also important to remember that the interests of the private sector are an essential part of economic security, and so closer collaboration will be needed to address issues in various fields. Governments must provide the right framework and incentives to advance the right initiatives and ensure that change can occur where it is needed.