A Green Deal turned industrial policy in the name of security. A ‘geopolitical Commission’ entrenched. The centre-right in the driving seat but the far right in the passenger seat.
These are the three trends one can see emerging from the yet-to-be confirmed new European Commission team under a second Ursula von der Leyen term.
The president nominated her new team only days ago – in a move that looks like an attempt at shaping the institution she runs in her own image. But the glaring contradiction between the goals pursued and the political reality in the EU will lead the bloc into an ever growing tangle of trade, economic and security dilemmas.
Drifting gradually away from the WTO rule-book
First and foremost one can now expect an even greater drift away from the legal niceties set by the World Trade Organization-centric multilateral trading system, despite its mention in von der Leyen’s mission letter to Maroš Šefčovič, the nominated EU trade and economic security chief.
Of course, in the current geopolitical climate, anything can be considered legal from a WTO perspective, as long as it is justified by national security or public morals. But this is not what the institution was set up for.
In most letters to her nominees Ursula von der Leyen enjoins the members of her new team to follow the recommendations made in four recent EU reports: the Draghi report on European competitiveness, the Letta report on the future of the EU’s single market, the ‘strategic dialogue’ on the future of Europe’s agriculture and the Niinistö report on the EU’s civilian and defence preparedness.
These various reports one way or another herald an entrenchment of the path recently taken. They embrace more boldly policies that diverge from the WTO rule-book.
These include a full endorsement of industrial policy with calls for local content requirements in areas such as public procurement or the Net Zero Industry Act (Draghi Report) – which are questionable under WTO norms.
They also include calls for greater trade ‘reciprocity’, de facto ‘mirror clauses’ and less imports in the area of agriculture and fisheries. This too is problematic under WTO norms.
In the area of carbon abatement, the Draghi report takes over the brief of industrial lobbyists calling on the EU to compensate for an expected loss of export markets induced by the coming into force of CBAM and its related introduction of paid-for carbon allowances under the Emissions Trading Scheme.
This possible coming mercantilist twist to the CBAM – a review is planned in 2026 – could also put the EU on a collision course with WTO members.
Von der Leyen’s brief for the prospective agriculture commissioner Christophe Hansen emphasises “food security”, “food sovereignty” and “ways to further diversify and reduce imports of critical inputs and commodities”.
‘Economic security doctrine’
Secondly, Ursula von der Leyen is now trying to entrench the “geopolitical commission”, which she announced on taking her job in 2019. That type of commission has clearly emerged under her watch – a new strategy was formulated in 2023, and new legal tools such as a much-discussed anti-coercion instrument were developed.
This was under the pressure of events such as the war in Ukraine, the support and drive of powerful member states such as France and growing questions about Europe’s relationship with China and to some extent the United States.
But it appears that Ursula von der Leyen – rightly – found during her first term to which she was parachuted without much prior Brussels experience, that the commission’s forte is not geopolitics. After all it was mainly established with a domestic focus, aimed at regulating a common market. Security was the remit of another institution in the same town: the NATO headquarters.
Von der Leyen further appears to have found – also rightly – that the EU has started to act on its security – economic or otherwise – without a clear vision or definition of what this means and what the EU executive can actually do about an ill-defined policy area where EU capitals have the final say and the unanimity rule prevails.
Hence the call, in Kaja Kallas’ mission statement, to organise “regular [Commission] College debates on geostrategic issues”.
The foreign policy brief for the former Estonian prime minister who is set to take the reins of EU foreign policy is clearly focused on strengthening the EU-US relationship and ties to the military alliance NATO.
The brief does not mention what should happen if candidate Donald Trump wins the US elections in November – but one can reasonably expect that the EU will seek to accommodate Washington more than antagonise it in the coming years.
As to the EU’s approach to China, von der Leyen’s brief to Šefčovič is clear: “de-risking not decoupling”. The new trade and economic security commissioner’s mission is to pursue the “core objectives of competitiveness, security and sustainability”,
”It is essential that a security-oriented approach to be embedded in our work,” von der Leyen tells Šefčovič. “You will lead the work on a new economic security doctrine,” she enjoins him.
Far-right lurk
This second von der Leyen commission will not have a commissioner whose role is to safeguard “the European way of life”. The move shocked many liberal minded Europeans when the job was created in 2019.
But “progress” – so to speak – on this was made on that front in the last five years. The EU signed a range of formal and engaged in informal migrant return schemes with questionable human rights consequences in Africa. It finalised a new migration pact that emphasises repression and deportations over legal migration.
Whether one considers them wise men or dismisses them as ageing ‘White Male’ EU establishment figures: the likes of Mario Draghi and Enrico Letta with an impeccable track record of great service to Europe, called on to propose fixes to its woes, are incapable of harnessing squarely the migration question.
As yours truly noted in a column this spring, the Letta report leaves out migration altogether in his discussion of the future of the EU single market – how is that possible with Europe’s ageing population and parlous demographics? How can the EU export, produce, re-industrialise without a non-EU labour force being pro-actively factored in and without the resulting societal and civic matters harnessed rationally and humanely to make this work? We can’t have tribalist politics and a prosperous economy: this must be made clear to voters.
The Draghi report does say, hidden away in page 263 of the text, that legal pathways for skilled migration need to be strengthened. But that comes after more than two hundred pages of focus on industry-specific “competitiveness” issues which smack of talking to lobbies more than looking thoroughly into economic analysis.
The economic diplomacy side of the migration question is set to bubble up in the coming term.
The EU’s unilateral trade preferences for developing countries under the GSP regime are due to be reviewed this term.
With the new parliament and trade committee that was voted in this year, migration conditionality is likely to make it into EU law. During the last political term, the commission introduced a condition for continued benefits asking for individual countries to abide by their bilateral commitments with the EU or individual member states. Under the last parliament the centre-left managed to stop the process: but that dyke has now been ripped apart.
This raises a range of WTO law, namely individual country discrimination, international law and general ethics questions. It also comes at a time when the EU will need Africa and South (East) Asia as a source of raw materials and location for diversified supply chains.
More perniciously perhaps for the EU’s security itself, the increasingly populist politics in EU member states is endangering the very foundation of whatever “soft” and “economic” power it has had so far: a well-functioning single market and an unquestionably common customs union since 1968.
The regular undermining of Schengen rules for free movement of people within the EU for almost a decade now – with its latest iteration coming from Germany – erodes the single market.
The loose handling by the first von der Leyen commission, bent on not alienating the local populists, of Central European countries’ unilateral violations of the customs union in the face of imports from Ukraine has set a precedent.
Why would this commission, which relies even more on not alienating the nationalist and far right forces across Europe, some of which are represented in person with commissioners designated by governments run by populist parties – will likely be soft once again too should such an episode repeat itself. The track record so far – see the Schengen area erosion since 2015 – shows that such episodes do repeat themselves.
This new configuration will also make if more difficult to reform the EU institutions in a way that makes it able to act more coherently and effectively in matters that affect its security, including economic: think of its export controls and sanctions policy. The inability of the Council to stop Hungary’s Viktor Orbán’s pro-Russian and pro-China policies is symptomatic.
The Draghi report says that the EU needs to move towards more qualified voting majority decision-making to harness its growing challenges – not least geo-economic.
But with the political configuration we are in – a rightward nationalist lurch in the European Parliament in this year’s June elections and the commission president’s reliance on implicit or explicit support from capitals and political groups in parliament hailing from these groups means the path towards greater centralisation and ‘federalism’ for greater effectiveness in key areas is more difficult than ever to tread.
All this is certainly not conducive to EU’s greater economic security, however it is ultimately defined by Maroš Šefčovič.
Iana Dreyer is founder and editor of Borderlex.
