ING Monthly: Europe’s Arnold moment – why strategy over spectacle matters

A confession: I have always been a secret fan of Arnold Schwarzenegger. More than his acting career – the Terminator, Kindergarten Cop, even those dodgy Conan movies – it’s his entire trajectory that fascinates me. Schwarzenegger is living proof that, beyond superficial posturing, the combination of strong will and a clear strategy is ultimately what can take you from a bodybuilding studio in Graz, Austria, to the governor’s mansion in California.

Why write about Arnold here? The first month of 2026 has confirmed we’ve entered a new era – one of political muscle flexing. The initial tensions over Greenland and threatened tariffs may have subsided, but the episode was a stark reminder of how fragile transatlantic relations have become. Invading or purchasing a NATO ally? Threatening tariffs because 13 German soldiers are exploring Greenlandic territory? Unthinkable until recently. Now increasingly plausible.

This wasn’t just trade brinkmanship. We’ve reached a new level of escalation, where tariffs serve any policy objective and where European opposition to Washington is suddenly fashionable. For now, the flexing has worked. But it’s playing with fire. My gut sympathises with Europe’s threatened counter-measures; my head asks what exactly drove this newfound courage besides desperation.

The fundamentals haven’t changed since last summer, when Europe accepted an unfavourable trade deal simply to avoid worse. Europe remains more dependent on the US than vice versa – through digital services, energy, and security. Yes, Europe could inflict economic pain. But American leverage is still significant. Muscle flexing can prove effective, but only until those muscles are actually put to the test. How confident are we that Europe would have pulled the trigger on its trade bazooka? And how sure are we that it wouldn’t have turned out to be a water pistol? Good thing we didn’t have to find out.

This episode will leave lasting damage. It’s been one more wake-up call – perhaps the loudest yet – that Europe needs to think and act differently. 2026 has become decisive: either we’ll celebrate milestone improvements in integration, simplified regulation, and reduced bureaucracy. Or, in September, we’ll mark the second anniversary of the Draghi report and conclude that it looks handsome on bookshelves but nowhere else.

The trade agreements with Mercosur and India signal awareness. Closing decades-old negotiations is an achievement, likely impossible without Trump’s prodding. But let’s be clear: both deals bring minimal near-term economic relief. They preserve Europe’s export-driven growth model – a risky bet when Chinese industrial competition dominates even the Indian market. And the ratification struggles around Mercosur show that not everyone has heard those wake-up calls.

Arnold Schwarzenegger regularly sends out a motivational newsletter. In his latest edition, he talks about vision: “I always say a pilot who takes off with no idea where he is going will eventually crash.” Better still: “Hope is not a strategy.” He recommends translating vision into plans and working at them daily.

Concluding trade deals is fine. But where is Europe’s actual strategy? Muscle flexing without a plan to back it up is just posturing. Arnold didn’t hope his way to Sacramento. He had discipline, knew when he had leverage, and executed it relentlessly. Does Europe? Right now, I see flexing. I see wake-up calls. I see Draghi reports on shelves.

What I don’t see yet is a clear, deliberate strategy. And when push comes to shove, as Arnold reminds us, mere hope isn't going to cut it.

Carsten Brzeski

United States: We had been forecasting that the Fed would cut rates at the March and June FOMC meetings, but given the solid growth backdrop, we now think the timeline will be pushed back three months. A March rate cut would require consecutive drops in employment, which isn’t something we’re forecasting.

Eurozone: The economic recovery is continuing, despite renewed geopolitical uncertainty. The bar for another ECB rate cut remains high.

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