It may seem that Ursula von der Leyen shied away from controversy, but Frances Cowell writes that that would miss the least trailed but most contentious of all of her initiatives.
From pandemic to Pangloss? With a hard core of pure realism
Since its catastrophe-driven conception, the EU’s big strides have been mostly crisis-driven. This year Europe was hit early and hard by the Covid-19 crisis. The economic funk that it caused have already led to one of the EU’s most important leaps forward: collective financing of the recovery. So far, so true to form.
Ursula von der Leyen now wants to harness this crisis to ditch the crisis-driven model. If she has her way, future reform will be by design rather than on the hop. That would represent a genuine point of inflection. If, that is, Ms von der Leyen can do it.
NextGenEU, which she set out in her State of the EU speech on 16 September, contains some long-anticipated reforms, some real, innovative initiatives and a surprise entry. Green bonds, the Green Deal, immigration and border policy and foreign and trade relations surprised few. Some of the technology initiatives were reassuringly sensible and innovative and the surprise was, well, a surprise.
Green is good
Together with banking and capital markets unions, the use of green bonds (ordinary government bonds that raise money to finance projects that meet defined environmental criteria) may seem banal, but they could give a big boost to potentially planet-salving projects all around the world. That is because large stocks of high-quality, green bonds, tradable in a large and liquid market, will prompt large investors, such as pension funds – already under pressure from their members to increase the “green-ness” of their portfolios, to hold them. Eurozone-wide, liquid, capital markets and a banking union will make these euro-denominated assets appealing and boost the euro’s role in global capital markets.
Green bonds in turn will help fund the Green Deal, which itself promises plenty of benefits, not least that it can reduce or obviate the need to import energy (presumably including through pipelines from Russia). Of course, the Green Deal doesn’t go far enough for Greenpeace and others, but it goes too far for others, notably in coal-dependent eastern member states. A striking omission in this part of NextGenEU is any mention of battery or other energy storage technology, which is a necessary complement to often unreliable wind and solar energy generation. 5G was similarly conspicuous by its absence. Out of bounds, perhaps for different reasons was nuclear, which may be carbon-free, but is hardly planet friendly.
Few people deny that the EU needs a strong and coordinated policy governing its external borders and immigration. Most agree, too, that the Dublin accord is no longer fit for purpose. But how the benefits and burdens of immigration should be shared out is a much more vexed question, which will not be resolved quickly, not least because economic and geo-political arguments push against many people’s emotional impulses.
But immigration and border security need to be resolved before the EU can move on to a coordinated foreign policy that goes beyond motherhood statements such as support for and reform of multi-lateral institutions, such as the UN, WTO and WHO.
Being squarely in her comfort zone, Ms von der Leyen did go further than this, promising grown-up, assertive relations with other global powers, namely China and the US. The EU will remain an open, trading economy, but, in tune with a realistic geopolitical stance, will not be shy to use the EU’s geopolitical and market heft to protect the rights of Europeans, negotiate attractive trade deals and project EU values to trading partners. The Carbon Border Adjustment Programme and Digital taxation initiatives, both mooted for some years, may be unpopular outside the EU, but if that is what is needed to get trading partners to do their bit for the planet and get their firms to pay fair taxes, then so be it, Ms von der Leyen seems to be saying. It may already be having some effect: Joe Biden now says that, should he become president in November, he would impose a carbon-adjustment fee on those trading partners who fail to live up to their environmental obligations.
The Future is data
A more interesting part of NextGenEU were five technology initiatives, three of which stand out. The first two are about the data economy, which in the context of tech is at least as important as the monetary one. The EU will use its wealth of data to establish common data spaces that make data available for use by SMEs, new high-tech start-ups and for non-profit, research and education purposes. This will help small organisations to serve their communities regardless of their pecuniary circumstances, and challenge the strangle-hold tech mammoths now have on the world’s trove of data. Once established this facility may also see imitators in other parts of the world.
A European e-Identity would hand control of personal data now held in commercial apps and services directly to the individual, whose data it is. These two initiatives recognise that data belong to those who generate them, and that those who merely collect them have no natural right to hoard them or to profit from them without their owners’ permissions.
A robust legal framework to underpin investment in AI may sound dry, but its practical consequences will be real enough. That is because uncertainty about rights and obligations, what constitutes legitimate use of AI and what happens when things go wrong in AI currently hinders investment in and legitimate use of AI everywhere. A robust legal framework will also be another global first for the EU, to be adopted as the standard to match, just as GDPR and other regulatory standards have become models for other jurisdictions.
Somewhere in amongst foreign policy realism sat quietly the (potentially) most powerful and ambitious initiative of all. Qualified majority voting (QMV) is probably the biggest challenge Ms von der Leyen has set herself. That is because, in replacing the need for unanimity in EU Council decisions, it removes the ability of one or two relatively small states to torpedo majority decisions. The aim is of course to speed up decision-making, which it would do. But it would also do away with the need for consensus in the EU Council, which for many is a core EU principle. The difficulty is that it would entail member states voting in the EU Council to undermine their own influence in EU decision-making: a classic Catch-22. Were she able to muster the needed consensus, this would be by far the most far-reaching of her proposals. It is bound to meet stiff resistance and plenty of old Brussels hands don’t like her chances.
Even without QMV, Ms von der Leyen has her work cut out with the rest of her agenda. Time will tell if this State of the EU speech marks an inflection point in how the EU works, to make change happen by design – not by disaster or by diktat from others in the world.