On Wednesday, September 14th, EU Commission Chief Ursula von der Leyen delivered her State of the Union address. Offering precious little in alleviating immediate economic worries for Europeans, she instead called for a united Europe to join democracies worldwide for their safeguarding against autocratic predation.
Fully decked out in Ukrainian colors, von der Leyen took the EU Parliament’s stage, where she delievered her speech as Ukrainian first lady Olena Zelenska looked on. This year, it was not to be business as usual for the Commission head.
Making full use of the good-evil binary to argue her case, von der Leyen went on to say that the EU body had never before debated the state of their union “with war raging on European soil.” Harkening back to that “fateful morning in late February,” she described Europeans “shaken by the resurgent and ruthless face of evil,” “haunted by the sounds of sirens and the sheer brutality of war,” and who in response had “risen in solidarity” with Ukraine.
The Commission President reiterated that Europe had been and ever will support Ukraine. From the bloc, the country has already received €19 billion in aid, on top of that of the military variety. A newly pledged €100 million will go towards the repairing of damaged schools.
Von der Leyen also pushed for more economic cooperation with Ukraine, which she seeks to further integrate into the EU. For example, she wants to bring the country within the European free roaming area, and negotiations are underway to have Ukraine be granted access to its single market. Von der Leyen was to visit Kyiv later that day to discuss these ideas with President Zelensky.
She went on to emphasize that sanctions against Russia will not be relaxed, as that would amount to “appeasement.” And so, the bloc is on a de facto wartime footing. While it might not have formally declared war on Russia, the two powers are very much engaged in a hybrid game of one-upmanship, its two main war theaters being trade and finance.
Therefore, the EU presses onwards as it seeks its full decoupling from Russian oil and gas. Barring significant political shake-ups, Europe’s pivot away from Russia (and in turn, Russia’s from Europe) has now become irreversible, it would seem.
Yet this course of action, in large part, is backfiring on Europe. Instead of an economically crippled Russia, where a much-hoped for regime change has not yet materialized, it is Europe that is now gripped by a historic energy and cost of living crisis. Indeed, Europe is sliding ever further into deindustrialisation, the canary in the coal mine being the EU’s economic motor, Germany (here and here). Simultaneously, the citizenry is hamstrung.
As such, the EU is in a desperate search for an off-ramp so its energy needs can be ensured and its citizens spared from taking the full brunt. This, von der Leyen argued, is to be found through energy deals with partners other than Russia as well as massive investments in ‘renewables’ at home.
Yet these are unlikely to offer immediate relief. To offset the economic pain yet to come this winter, she proposed a ceiling on the income of those companies that produce electricity at little cost. Whatever is skimmed off the gargantuan profits they make would then be redistributed among those who need it most. According to von der Leyen, the measure would yield more than €140 billion.
On the highly controversial proposal for a general price ceiling on gas, von der Leyen remained opaque. Yet, she made clear that talks on the matter are still ongoing. A thorough reform of the electricity market, so as to make it less dependent on the price of gas, is also on the table.
Europe’s main pillar for its energy future remains renewable energy. Hydrogen is expected to play a prominent role in that transition, as the EU marches away from fossil fuels towards its ‘green’ and ‘digital’ future. According to von der Leyen, the EU has doubled its target of producing 10 million tons of renewable hydrogen by 2030. She went on to announce a new European Hydrogen Bank to support future purchases.
Von der Leyen made references to the European Green Deal, but otherwise made no major announcements concerning the EU’s climate goals.
The Commission president also touted the European recovery plan which was set up after the corona crisis. Thus far, €100 billion euros have been paid out to member states, with €700 billion yet in reserve. The recovery package was intended to go towards investment in wind turbines, solar panels, express trains, and other energy-saving renovations. These Europe needs right now, von der Leyen emphasized, suggesting that the money should go “where it is needed.”
She also called for new rules concerning European economic policy, which would offer more flexibility to member states on reducing their national debt, while demanding more accountability.
A support package for SMEs (small and medium-sized enterprises, which represent 99% of all businesses in the EU) is also in the works, which would comprise a revision of tax rules making it easier for these to do business while reducing administrative burdens.
The European directive on late payments will also be revised. “It is simply not fair that 1 in 4 bankruptcies are due to invoices not being paid on time,” von der Leyen said, adding that “for millions of family businesses, this will be a lifeline in troubled waters.”
Von der Leyen also believes that Europe should become as independent from Russia as possible in the area of rare raw materials, such as lithium. It, therefore, wants to conclude new agreements with more reliable countries and important growth countries. She pointed to imminent deals with Chile, Mexico, and New Zealand and to ongoing negotiations with Australia and India.
After the ‘Chips Act,’ aimed to make Europe more independent from the Asian and American chip builders for its semiconductors, there should also be a European ‘Critical Raw Materials Act,’ in her opinion.
Bringing home the major theme of her speech, von der Leyen went on to emphasize that Europe needs to cooperate even more with other democracies, not only those wishing to join the EU, but also those on other continents.
“The nations of the world have built together an international system promoting peace and security, justice and economic progress,” she said while noting that “today, this is the very target of Russian missiles,” which seek to do away with these socio-political ideals. “This is the time to invest in the power of democracies,” she urged, hereby echoing a sentiment U.S. President Joe Biden had voiced in the past.
Finally, von der Leyen took the opportunity to use children’s welfare as a reason to consider not just the EU’s enlargement, but also reform. “Some might say this is not the right time. But if we are serious about preparing for the world of tomorrow we must be able to act on the things that matter the most to people,” she added. While no details were offered, such issues could be discussed during a newly-founded European Convention.
Lack of scope and ambition is not what sours von der Leyen’s speech. Rather, it is the somewhat disconcerting myopic vision being presented, as fervor to preserve Ukrainian interests seemingly blinds those like von der Leyen to the interests of the peoples the EU supposedly represents.
Two questions persist: 1) Given the current situation and outlook, are the proposals for securing Europe’s energy needs truly feasible and 2) even if that be so, to what degree will these bring immediate relief to European citizens?
A healthy dose of skepticism, which is not the same as obdurate pessimism, is perhaps not unmerited.
