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SOTEU: Are von der Leyen’s Ambitious Plans for the EU Realistic?

SOTEU: Are von der Leyen’s Ambitious Plans for the EU Realistic?
 Georgina Wright
Resident Senior Fellow and Deputy Director for International Studies
 Cecilia Vidotto Labastie
Former Project Manager - European Union

The annual State of the European Union (SOTEU) address is an important moment in the EU calendar. It is the chance for the European Commission president to recall the year’s achievements and set out the priorities for the next 12 months. This week’s SOTEU address was no exception.

The EU is in a state of permacrisis. Since 2019, it has had to deal with a global health pandemic, the departure of one of its members, the return of war to the European continent, an energy crisis, internal disagreements and growing US-China rivalry. It has shown itself to be agile and quick to respond – going further than many would have thought possible.

The EU Commission, in particular, has gained more decision-making power.

The EU Commission, in particular, has gained more decision-making power, particularly in areas such as health (where it was responsible for the joint procurement of vaccines), industrial policy (by proposing to relax the EU’s once-sacred state aid rules) and regulating AI. The EU Commission president has been a vocal defender of Ukraine and one of the first EU leaders to publicly support its bid to join the EU.

With 9 months to go until the EU Parliament elections, Von der Leyen – who, many believe, is eyeing a second term in office – wants the EU to go even further to protect the EU’s economic interests, support SMEs and prepare the EU for enlargement.

For that, she will need to get the rest of the EU on board. To pass EU law, the European Commission needs the consent of EU capitals and the EU Parliament, and a good dose of support from business and civil society. But von der Leyen’s Commission has been criticized for tabling legislation too fast, without sufficiently consulting member states (let alone the European Parliament) ; for prioritizing the needs of the big member states, France and Germany, over those of smaller member states (for example, when it decided to relax state aid rules despite the protests of countries like Sweden, Denmark and others); and for being too close to Biden’s White House.

A long to-do list

There are two aims to every SOTEU: first, the chance to highlight the year's achievements and second, to set out what lies ahead. In her speech, von der Leyen defended the EU's ongoing support to Ukraine, new climate and digital packages, gender-equality laws, as well as new measures to boost and protect the EU’s industry from unfair competition and coercion

It also gave a flavor of what her Commission is hoping to achieve before the 2024 European Parliament elections. It will continue its 'de-risking' strategy towards China and has announced a new anti-subsidy investigation into Chinese electric vehicles. Ursula von der Leyen wants to "strengthen EU competitiveness" (and has asked former European Central Bank chief and Italian Prime Minister, Mario Draghi, to lead the review), cut red tape for SMEs and get the EU ready to welcome new countries. 

It will continue to drum up support for Ukraine. So far, the EU and its member states have given a total of €62 billion of financial, humanitarian and military assistance to Ukraine. The EU Commission's role has mostly been limited to supporting national arms industries, coordinating aid to Ukraine (including arms deliveries) and liaising with Washington and other G7 allies over sanctions. But von der Leyen is hoping to go further. 

First, she wants to maintain the same levels of support. Although European public opinion has continued to support Ukraine, some parts are showing signs of "war fatigue". It is also unclear whether the US, which is gearing up for its own election on November 5th 2024, will continue the same level of support in the future.

She wants to maintain the same levels of support. Although European public opinion has continued to support Ukraine, some parts are showing signs of "war fatigue".

During the Republican primary debate in August 2023, all candidates agreed that the US was too focused on Ukraine and that this was "distracting it from addressing its most consequential threat" facing the US: China. 

Second, von der Leyen will want to make some progress on enlargement talks. The EU Commission president was one of the first EU leaders to publicly say that Ukraine’s future belonged inside the EU - but she knows the path towards enlargement won't be easy. Admitting eight new member states will weigh heavily on the EU budget and could slow down EU decision-making. Member states will want to make sure that one country cannot use its veto to hold up progress or to exact concessions.

EU reform is therefore necessary. Von der Leyen has promised to look into reforms, including expanding the use of majority voting for foreign policy decisions and tax issues; a new institutional set-up with fewer Commissioners and a different parliament configuration; a revised EU budget with different financing mechanisms and revenue sources. This won't be easy: EU capitals guard their veto closely and there will be strong resistance to a larger budget. When it comes to influence, every country wants a representative in the EU’s executive branch. This explains why the EU has failed to implement the 2007 decision to reduce the number of Commissioners by one third.

But without reform, there will be no enlargement. Spain has made enlargement a pillar of its six-month EU presidency, with talks scheduled in Granada in October. Germany and France have already set up an expert group to explore what internal reforms could look like. 

From geopolitics to geoeconomics

For some observers, von der Leyen’s speech lacked specifics – she did not, for example, indicate when new countries would be able to join the EU or what EU reforms she thought were necessary to speed up the process. Nor did she speak about regional and cohesion policies. But the reverse holds true: that the EU Commission is thinking bolder and bigger and that a one-hour speech was clearly not long enough to cover the breadth of the EU’s work.

In 2019, von der Leyen promised a "geopolitical Commission" that could act swiftly and with unity. In many ways, this has been achieved. The EU has gone further than many thought it capable (or even authorized to in the EU treaties). In this year’s SOTEU, it felt like the EU Commission was also gearing up to become more "geoeconomic".

Compared to her last four SOTEUs, there is more emphasis on protecting the EU's economic interests.

Compared to her last four SOTEUs, there is more emphasis on protecting the EU's economic interests and, implicitly, the need to respond to economic (and legal) coercion from abroad. In June 2023, the EU Commission unveiled a new "European economic strategy" designed to advance the EU’s economic interests in a world that was becoming increasingly hostile. This won’t be easy either. 

Member states will need to let the EU (Commission) take on more oversight and coordination for some of their investment decisions, especially in critical and sensitive areas like semiconductors. Ursula von der Leyen talked about de-risking, yet the reality is that the EU still has a limited toolbox to respond to it. Similarly, the EU can find new funds to support its industry, but it will need to find a way to do this without disrupting the delicate balance inside the single market. Failure to do so could see businesses close shop and relocate to member states where funding and innovation are more readily available.

Time is of the essence

Von der Leyen’s address did not specify how her EU Commission intended to deliver the ambition(s) she set out. It was, however, consistent with the promise she made almost five years ago: a more agile EU capable of responding to external threats and overcoming internal divisions.

Mrs. von der Leyen has many critics. She does not have the unanimous backing of member states. Meanwhile, parliamentary groupings, such as the center-right European People’s Party, have already threatened to block the implementation of parts of the Green Deal. This partly explains why the Commission president promised more dialogue, including with business and civil society groups, over the next months. Time will tell whether EU capitals and the EU Parliament back her vision in time for June 2024.

This article was written with the help of Enora Morin, Research Assistant in Institut Montaigne's Europe Program



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