Merz Calls on Europe to Rearm and Cut Red Tape as Global Power Shifts Intensify

Moneylife Digital Team 23 January 2026

Economy & Nation

German Chancellor Friedrich Merz on Thursday urged European leaders to bolster military strength, reduce bureaucratic burdens and close ranks politically, warning that the foundations of the international order have been destabilised by the actions of Russia, China and the United States.

Speaking at the World Economic Forum in Davos, Switzerland, Mr. Merz said Europe and like-minded mid-sized powers must adapt to a harsher global environment defined by power politics rather than rules. He called for renewed investment in national defence, a strong commitment to free trade and sweeping deregulation to help European businesses remain competitive in an increasingly protectionist world.

“This new world of great powers is being built on power, on strength, and when it comes to it, on force. It’s not a cozy place,” Mr. Merz said. He added that Europe was not condemned to accept this reality. “We do have a choice. We can shape the future — but only if we face harsh realities with clear-eyed realism.”

In remarks aimed squarely at Brussels, the German leader renewed his criticism of European Union regulation, arguing that excessive rules were stifling growth. “We have become the world champion of overregulation,” he said. “That has to end.”

Mr. Merz also appeared to rebuke U.S. President Donald Trump for his confrontational rhetoric toward European allies, including comments made during Mr. Trump’s own address at Davos a day earlier. “Democracies do not have subordinates,” Mr. Merz said. “They have allies, partners and trusted friends.”

Calling for greater European unity, the chancellor welcomed a reported understanding reached between Mr. Trump and NATO Secretary General Mark Rutte on strengthening security in the Arctic, which appeared to ease recent tensions over Greenland. Mr. Merz said Europe would not have accepted any attempt to seize the Danish territory by force, nor economic pressure through tariffs to compel a sale.

Despite his generally close relationship with Mr. Trump, Mr. Merz warned that a world governed solely by power ultimately endangers even the strongest nations. “The world where only power counts is a dangerous place,” he said, “first for small states, then for middle powers, and ultimately for the great ones.”

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