> Why was this decision ever made?

because it wasn't made

the decision which was made was having a digital ID wallet, that this needs hardware attestation (or something comparable) is somewhat of a direct consequence of existing laws/regulations regarding making IDs forgery safe

it also is a phone only application

the huge huge majority of phones runs Googled Android/iOS, so you support them

if there where a relevant 3rd party competition it would (most likely) supported it, too

going back to the "the president .. shut down .." argument: The US can shut down >90% of all smart phones used in the EU. I don't think the US being able to shut down something which in the end is fundamentally just a minor convenience feature is making much of a difference here.

But I also think that whole identity wallet (the regulations behind it) is approaching things from the wrong direction, carrying a credit card sized ID with you isn't really a problem or very inconvenient. So instead of having the whole attestation nonsense it would be more practical to simply not have attestation and in turn allow the digital ID only for usage where the damage it can cause is quite limited. Especially given that device attestation systems have a long history of being circumvented...

As a side note this whole app is distinct from the "use you ID with through your phone/NFC with applications" thing many EU countries have, through that solutions also tend to have attestation issues in most cases. But again most relevant use-case of it can be done just fine, without the security level attestation tries to provide, if approached pragmatically.

They can also shut down all European payment cards.

Is some party or coalition putting forth candidates that stand against this?

I hate to beat a dead horse and have people downvote me but: the EU has always been corrupted. The knowledge and effects are not evenly distributed until it hits each niche group. Then they find out the hard way that they were useful idiots. It’s ok to be wrong/admit. Let’s just move past the infighting and see those in power for the evil that they are.

Corruption. A taboo topic people prefer to downvote and pretend it does not exist.

But even bigger problem is that institutions designed to prevent this from happening are not doing their job.

Thousands security service and civil servants take their wages and look the other way.

We (America) made the decision for them. The EU's member states were either:

1. Explicitly designed as client states for the US

2. Explicitly designed as client states for the Soviet Union, with alliances switching over as the Soviet Union fell apart

3. Great Britain, a country whose electorate would probably only reconsider rejoining if the EU agreed to explicitly become British client states, because the only thing Britain hates more than France is those dastardly American upstarts[0].

The reason why this persists despite an openly hostile American president is the fact that the EU has no real alternative. The EU has a shitton of internal political distrust between member states, and the US was offering a lubricating alternative: "Just trust us." Politically distributed alternatives require balancing coalitions that are far more fragile.

[0] The history of European anti-Americanism is extremely fascinating, because it's effectively a Reactionary meme - as in, "wanting to restore the Ancien Regime" Reactionary, not "funny way to say Nazi Party member" Reactionary. And yet it's jumped across so many incompatible political ideologies that the average European probably had no clue why they hate America until Donald Trump gave them a good reason to.