Achieving a “more assertive” Europe that can improve its competitiveness and sovereignty in an increasingly hostile world. These are the main guidelines of President-elect Ursula von der Leyen to the new College of Commissioners, unveiled on Tuesday (10 September).
Europe is losing ground in the digital race that is reshaping the economy and society at large. China is now considered a “systemic rival”, while the US is no longer a reliable partner since the election of Donald Trump, with preparations underway in Washington to step up the trade war against Europe.
According to Ursula von der Leyen, this is why the protection of Europe’s sovereignty – and its economic might – has to be top of the agenda for her new team of commissioners.
To this end, von der Leyen re-shuffled priorities among the Commissions different directorate-generals, and attributed policies to ensure that Europe’s voice is heard in a more competitive world.
Upholding Europe’s sovereignty was an overarching theme in von der Leyen’s first speech before the European Parliament last July. And the main proponent of this goal is French president Emmanuel Macron, who was one of her earliest supporters.
“I have to say that France fully identifies with all the issues you mentioned in your speech: a more united, more sovereign, more democratic Europe,” Macron said last July when he received the president-designated in Paris.
Macron’s idea found traction as external pressure coming from the US and China, as well as internal outstanding issues, on industry or deepening the economic union, helped set the right conditions.
In her mission letter addressed to Josep Borrell, the EU’s new foreign affairs chief, von der Leyen stresses that the EU needs to be “more strategic, more assertive and more united in its approach to external relations.”
“We must use our diplomatic and economic strength to support global stability and prosperity, as well as making ourselves more competitive and better able to export our values and standards,” she added.
This will be a ‘Geopolitical Commission’, she told her new commissioners.
France’s choice for the new Commission, Sylvie Goulard, will be central to initiatives aimed at protecting Europe’s sovereignty.
She will lead the new strategy for Europe’s industrial renaissance, to protect the internal market against unfair foreign subsidies and other unbalanced practices, for example in relation to public procurement, an obsession for Paris.
She will also lead the Commission’s reflections “on issues such as Europe’s technological sovereignty in key value chains, including in the defence and space sectors, common standards and future trends,” von der Leyen wrote to her.
In addition, she will be in charge of pushing forward the European Defense Industry by strengthening cooperation among member states, another concern for Macron.
Meanwhile, Valdis Dombrovskis will lead the challenging task of keeping the European economy on top of the hill in a fraught global context.
In her mission letter to the Commission’s new executive vice-president, she wrote that he will “ensure a level playing field in our economic relations with other partners, promoting Europe’s competitiveness and strategic autonomy in key value chains.”
“In doing so, you should pay particular attention to our trade and economic relations with our competitors and strategic partners,” she added.
For von der Leyen, Europe’s internal and external dimensions are “two sides of the same coin”, because putting the EU’s house in order would also increase its leverage on the global stage.
For that reason, Dombrovskis will work in priority on deepening the economic and monetary union, by completing the banking union and the capital markets union.
Both priorities, and the creation of an euro safe asset, are seen as crucial to strengthen the international role of the euro as a reserve currency. This goal is one of the most visible attempts to show that Europe wants to flex its muscles beyond its borders, especially in relation to the US economy and the dollar.
Margrethe Vestager, who was promoted to executive vice-president, will also play a crucial role in this respect, both as digital chief and as EU Competition Commissioner for a second mandate.
Her choice could be seen as a blow for those like France who wanted to reform the EU’s antitrust laws in order to enable the creation of ‘European champions’ able to compete with American and Chinese counterparts.
She not only blocked the Alstom-Siemens merger but also opposed the Franco-German proposal to review EU competition rules.
But some members of her Liberal family, including MEP Luis Garicano, called for some leeway to allow European champions in the digital realm to compete with the likes of Facebook, Google, Alibaba or Huawei.
On this point, von der Leyen gave only vague instructions to the Dane.
In her mission letter to Vestager, she said Europe “must focus on maintaining our digital leadership where we have it, catching up where we lag behind and moving first on new-generation technologies.”
“This will be a key part of strengthening our technological leadership and strategic autonomy,” she added, saying competition policy and rules must be fit for today’s economy.
But von der Leyen added that “we need companies that compete on equal terms and consumers that can benefit from lower prices, greater choice and better quality.” European firms should not become more competitive abroad by having less competition at home.
Together with Dombrovskis, Vestager will co-lead the work on the new long-term strategy for Europe’s industrial future, overseeing Goulard’s work.
But Europe’s economic influence abroad will depend on the state of its economy at home.
Former Italian prime minister Paolo Gentiloni is von der Leyen’s choice to police the national budgets, but also to ensure that the application of the Stability and Growth Pact, the EU’s fiscal rules, uses “the full flexibility allowed in the rules” to achieve “a more growth-friendly fiscal stance in the euro area and stimulate investment, while safeguarding fiscal responsibility.”
Gentiloni’s choice as Economic commissioner could raise a few eyebrows, as Italy is one of the worst performing European economies, with a stagnant output. The country is nearing a new sanction procedure due to its high level of debt, which reaches more than 132% of its GDP.
Rome was told by the outgoing Commission to balance its budget further next year. But the new coalition intends to cut taxes and increase spending with a new basic income.
The Italian dossier will be one of the hottest issues awaiting for Gentiloni when he takes over on 1 November.
“Current high debt levels are a source of risk and a constraint on governments offering macroeconomic stabilisation when needed. You should look at how to address debt levels in both the public and the private sector,” von der Leyen wrote in her letter to the Italian politician.
According to the Commission organigram, Dombrovskis, who defended a strict fiscal stance during the previous mandate, will have the last word over Gentiloni, as he earns the title of executive vice-president.
But von der Leyen told reporters on Monday that any final decision will be taken “together” by the college.
Von der Leyen wants to give a big push to the external dimension of her college, with more preparatory work by her commissioners in this regard before their weekly meetings.
As trade commissioner, Phil Hogan will be her man to build new economic relations beyond our borders.
Having one of the largest and wealthiest internal markets turns Europe into a magnet to exporters. Europe wants to better use its leverage as a trading superpower to turn it into a “strategic asset”.
“It allows us to build partnerships, protect our market from unfair practices and ensure our values and our standards are respected,” von der Leyen wrote in the letter to Hogan.
The president-elect wants to use this influence to reform the World Trade Organisation, to better protect Europe from unfair trade practices, and to beef up the EU’s sanction toolbox against illegal measures and subsides adopted by third countries.
This more assertive stance could help Europe achieve a mutually beneficial partnership with a bully Trump administration. It could also rein in China’s unfair practices and help conclude an investment deal with Beijing by the end of the year.
But the biggest and earliest challenge for Hogan will lie across the channel.
The Irish commissioner will be in charge of negotiating a new association agreement with London, just as the UK is nearing a disorderly exit from the EU, bringing closer the risk of a return of a hard border in Ireland which could revive tensions there.
Von der Leyen praised Hogan’s negotiating skills during his current tenure as Agriculture Commissioner.
“I know Hogan is an excellent and very fair negotiator, and this is what I will expect of him as trade commissioner,” she told reporters on Tuesday.
Brexit will test how far the von der Leyen Commission is ready to go to protect its interest and values, its citizens and businesses, in a more fragmented and polarised world.
[Edited by Frédéric Simon]