Veronika Grimm: Europe Needs an Emergency Economic Plan to Shield Itself from a War with Iran

The recent strikes by Israel and the United States inside Iran mark a dangerous new phase in an already fraught Middle East. Veronika Grimm, a member of Germanys Council of Economic Experts, warns that the conflicts implications extend far beyond regional security. They could reshape global power balances and inflict significant economic harm on Europe unless governments prepare concrete emergency measures. Grimm stresses that the conflict raises acute strategic concerns. Western intelligence assessments suggest Tehran was nearing the technical capacity to produce weapons-grade nuclear material. Coupled with Irans projection of power through proxies including Hezbollah, Hamas, and militias in Iraq and Yemen a nuclear-armed Iran would pose an existential threat to Israel and heighten the risk of wider escalation across the region. That, in turn, would reverberate through global politics and markets. The strategic picture is complicated by increasingly close ties between Iran and other revisionist powers such as Russia, China and North Korea. Grimm points out that the deepening alignment of these Eurasian power centers risks entrenching a new geopolitical configuration that could be destabilizing for the global balance of power. In the long term, a nuclear-armed Iran integrated into that axis could harden that shift and limit Western leverage. For Europe, the threat is not only geopolitical: it is economic. Escalation in the Middle East would likely disrupt energy and shipping routes, add volatility to commodity markets, and impose higher risk premia on financial markets. Even if direct spillovers to European soil are limited, uncertainty alone can slow investment, push up insurance and shipping costs, and weaken demand across export-dependent sectors. Grimm argues that these are plausible near-term outcomes that policymakers must treat as credible economic risks. But the current escalation also contains uncertain pathways. A managed containment of proxy conflicts could reduce immediate security pressures and create opportunities for regional reconstruction and economic cooperation. Likewise, heightened internal and external strategic pressure on Iran might trigger domestic adaptations. These positive scenarios, however, are far from guaranteed. The more immediate concern is the prospect of market turmoil and supply-chain shocks. Given the stakes, Grimm calls for a clearly defined European emergency plan. Such a plan should not be limited to military or diplomatic contingencies; it must include economic and financial measures to reduce vulnerability. Suggested elements include targeted macroeconomic buffers, contingency arrangements for energy supply and currency stability, measures to protect critical supply chains, and coordinated fiscal responses to cushion an economic slowdown. Financial-market measures for example, liquidity support arrangements and stress-testing of banking and corporate sectors for geopolitical shocks should also be part of the toolkit. Crucially, Grimm emphasizes coordination. Europes economies are highly interlinked; national responses taken in isolation risk being ineffective or even counterproductive. A coordinated EU-level framework would enable faster, more credible action to stabilize markets, secure energy alternatives, and support firms and households hit by price shocks. Preparing now is both prudent and cost-effective. The financial and humanitarian costs of reacting belatedly to a full-blown regional war would likely far exceed the expense of prearranged safeguards. An emergency plan would buy time, reduce panic, and preserve policy space to respond flexibly as events unfold. In short, Veronika Grimms message is a clear warning and a practical call to action: the current escalation in and around Iran is not just a security crisis; it is an economic risk that could quickly become a European problem. Policymakers should treat it that way designing and coordinating economic contingency plans today to protect growth, jobs and stability tomorrow.