EU’s von der Leyen unveils blueprint for stability and competitiveness in post-COVID world
With the world continuing to battle the COVID-19 pandemic, and the full scale of the economic damage is still unknown, European Commission President Ursula von der Leyen used her first State of the European Union (SOTEU) address to lay out her vision for the year ahead.
In her 79-minute speech before members of the European Parliament, von der Leyen touched on virtually all themes of EU governance: the bloc’s response to the health crisis; economic recovery; climate change and digital innovation; an initiative to combat racism; as well as the need for Europe to find a more assertive voice in foreign policy. While von der Leyen had the right tone in her remarks, she may have set too high of expectations for what the EU can accomplish this year.
Unsurprisingly, the impact of the pandemic and the EU’s place in the post-COVID world was the centre of gravity of her remarks, together with the Commission’s flagship initiatives: the European Green Deal and the Digital Strategy.
The President confirmed plans to raise the bloc’s 2030 emissions reduction target from 40% to at least 55%, as part of a broader European Green Deal aimed at reaching climate neutrality by 2050. To achieve this, the EU’s executive will review all climate policies by June 2021. These include renewable energy, emissions trading and energy efficiency rules.
“I recognize that this increase is too much for some and not enough for others, but our impact assessment clearly shows that our economy and industry can manage this, and they want it,” the Commission chief said.
Von der Leyen further announced that 30% of the €750 billion ($880 billion) recovery fund will be raised through green bonds, of which Europe is the largest issuer. And 37% funding will be dedicated to Green Deal projects — hydrogen, green buildings and 1 million electric vehicle charging points.
In her speech, the President also pushed for a common plan for digital Europe with clearly defined objectives. “Europe must now lead the way on digital or it will have to follow the way of others,” she said, also announcing that the bloc will invest 20% of the recovery fund in digital.
Data, artificial intelligence and infrastructure will be the building blocks of the EUs digital strategy. “Algorithms must not create black boxes, there must be procedures when things go wrong,” von der Leyen said. On infrastructure, she called for a common approach on connectivity to revitalise Europe’s rural areas and announced an €8 billion ($9.4 billion) investment in the next generation of supercomputers and processors.
The President also signaled the Commission will propose a single European e-identity, which citizens may use to buy services and pay taxes, among other things.
However, the SOTEU also drew criticism for failing to address the EU’s ambitious regulation of online services — the Digital Services Act. The package, which aims to create a modern legal framework for digital services and strengthen the Digital Single Market was first announced by von der Leyen in her political guidelines and is seen as the cornerstone of Europe’s digital ambitions.
Some of the Commission’s new proposals came in the health sector, including the creation of the European BARDA — agency for biomedical advanced research and development — to enhance Europe’s capacity to respond to cross-border threats.
Von der Leyen relaunched the idea of rethinking health competence, which is currently in the hands of EU capitals and called for a stronger health union. She further indicated the Commission will focus on bringing the production of medicines and pharmaceutical ingredients back to Europe in the forthcoming EU pharmaceutical strategy. “We need strategic stockpiling to address supply chain dependency from third countries.”
On the economic front, von der Leyen listed the measures adopted to mitigate the impact of the pandemic, such as the €90 billion ($106 billion) SURE scheme to avoid mass unemployment or the flexibility introduced in state aid and fiscal rules. She steered clear of any reference to plans for the new own resources to finance the recovery fund. She only mentioned that the EU’s executive intends to move forward with proposals for a digital tax on internet heavyweights and the controversial carbon border tax.
The President was more assertive on the foreign policy front as she confirmed the EU’s ambition to become a real ‘geopolitical’ player. She called out China for human rights abuses in Hong Kong and against Uighurs. She admonished Russia for the poisoning of opposition leader Alexei Navalny and “meddling in elections.” Additionally, von der Leyen upbraided Turkey for “attempts to intimidate their neighbours,” referring to Turkish ships exploring for energy in waters claimed by Cyprus and Greece.
Some barbed comments aimed at the current US administration were subtly left for the Parliament to decode, as she challenged Washington to renew its partnership with Europe. But on Brexit, the Commission chief was less shy. She said the UK was destroying its reputation with the government’s plan to break international law by violating the Brexit Withdrawal Agreement.
The President further called for multilateralism and the global rules-based order and for Europe to lead the reform process as “great powers either withdraw from institutions or take them hostage for their own interests.”
She then listed other initiatives her Commission intends to put forward, such as the review of migration rules, the first ‘Rule of Law’ report, the LGBTI strategy or the action plan for a fully non-racial union, including a proposal to extend the list of EU crimes to forms of hate speech.
In her speech, von der Leyen’s showed great ambition for a forward-looking Commission, particularly when she called to strengthen the Internal Market, to invest in digitalisation, to enhance Europe’s industrial strategy and build up resilience. The question remains how to ensure effective implementation of those policy plans, which require strong public-private partnerships to build a competitive and sustainable future.
Furthermore, in a time of COVID-imposed transformation, the EU seems to be pushing to strengthen its sovereignty in strategic value chains by building on the economic fabric of its companies and supporting European SMEs to survive, innovate and become more sustainable. And while the prospect of ‘decoupling’ seems premature, the pandemic is prompting a reappraisal of reliance on third countries.
Now more than ever, Europe’s industries must make their voices heard to ensure that the EU’s ‘strategic autonomy’ does not undermine the bloc’s commitment to openness. Europe must remain a champion of open international trade, resists protectionist tendencies and robustly addresses market access barriers, which are likely to increase in the current economic downturn.
An open, well-functioning and appropriately regulated Single Market is a crucial driver of long-term economic growth and competitiveness in Europe and will play a key part in financing the bloc’s recovery, in areas such as green and digital infrastructure.
On climate, policy makers need to put in place not only targets but also the required supportive policies, without which these targets will simply not be achievable. For example the Commission proposal to raise the EU’s 2030 emissions reduction target from 40% to at least 55% will require massive additional investments from the auto industry, at the very time when the industry has been rocked by the coronavirus crisis. Automakers should therefore step up their advocacy efforts.
With regards to SMEs, the Green Deal can be realized only if SMEs are able to master the enormous need for innovation and investments. Therefore, the required financial instruments for the necessary investments have to be provided by European and national programs. The Council agreement scrapped the Solvency Support Instrument to channel guarantees from the EU budget in support of European companies that suffer from solvency issues due to the COVID-19 crisis. SMEs should therefore engage with the Commission to ensure that this Instrument will be replaced by similar measures supporting the recapitalization of SMEs, when implementing the European Recovery and Resilience Facility.
Finally, retail and wholesale was recognized by the European Commission as an essential ecosystem in driving the European recovery. But retailers need investments and the right policies. They should therefore make their voices heard to ensure that national recovery plans help retailers and wholesalers step up their efforts to go digital and make their operations sustainable across the board, as well as support to develop the skills of their workforce to meet the challenges posed by the post-COVID world.
Edited by Jillian Nystedt
Want to work with us? For inquiries, please reach out to Ellen DeMunter at Edemunter@powelltate.com.
About Weber Shandwick Public Affairs
Our global public affairs expert counselors, spanning 25 countries & 36 cities, work with brands to navigate the convergence of government, business, technology and culture. We collaborate with corporate and marketing teams to assess and shape policy issues that drive sales and reputation.
We create impactful, data-driven, breakthrough campaigns that shape the debate, build advocacy and effect change on issues that matter most, from environmental stewardship to access to healthcare to human rights. We also bring political diversity to our work, with global experts coming from the highest levels of government, political campaigns, corporations, media, law firms, NGOs and regulatory agencies.
For more information, visit: https://www.webershandwick.com/expertise/public-affairs/
Our Specialty Public Affairs Unit in Washington D.C. is also known as Powell Tate. For more information, visit: www.powelltate.com
