What a difference five years make. In 2019, the first Von der Leyen Commission proudly announced its vision for a Sustainable, Green future led by Von der Leyen herself and Vice President Timmermans. Vice President Vestager and “Super” Commissioner Breton would ensure a level playing field, drive investment in key strategic EU industries and rein in the social media platforms to curb their worst excesses. And despite COVID, the war in Ukraine and the resulting energy crisis, the situation in Gaza, “sofagate” and many other obstacles along the way, the Commission’s five-year track record was, objectively, not bad. But the world has changed…
In 2019, Von der Leyen still saw the Green Transition as her defining legacy. But how successfully she navigates Europe through the next five years, is how history will remember her, if at all.
Last week, the EU Commission unveiled its 2025 Work Program. While this is typically regarded as one of the most significant events on the EU calendar, it hardly attracted any attention this time. EU leaders and media found themselves preoccupied with the increasingly “(un)predictable behaviour” of the new US administration in foreign trade and in foreign affairs. The US “peace plans” for Gaza and Ukraine were not discussed with any allies beforehand, leaving the EU appearing, at best, irrelevant, and, at worst, unnecessary
In this climate, the EU Commission, launched its plan for “A Bolder, Simpler, Faster Union”, outlining its strategic vision for the year(s) to come and listing the priority policy areas to work on (and what plans will be dropped and why).
At first glance, the program appears less ambitious than its predecessor, suggesting that the Commission is backpedalling a bit on the “Timmermans” agenda, aligning with the new political dynamics in the EU Parliament and the EU Council.
So What Simplification?
The goal is to cut administrative costs for businesses by at least 25% (35% for SMEs). But to satisfy European businesses and their representatives, the proof of the pudding will be in the eating. “Just making cosmetic changes to regulations will not move us one inch closer to becoming more competitive,” Siemens’ CEO Christian Bruch already commented adding that “European companies will not become “an inch” more competitive unless the EU radically simplifies environmental regulations”.
So How much Bolder?
As outlined in the Draghi report, enhancing competitiveness and fostering innovation should be the top priority. The Clean Industrial Deal will be a first key flagship initiative focused on streamlining business regulations, fast-tracking permits for clean industrial projects, accelerating investments, and supporting the decarbonization of energy-intensive industries.
Another flagship project was announced in Paris last week, with Mrs. Von der Leyen adding a €200 billion investment in AI, on top of Mr. Macron’s €100 billion commitment. This initiative aims to support innovation-driven technologies, benefiting not just industry giants but also start-ups. In collaboration with the European Investment Bank, the plan seeks to scale up companies in AI and quantum computing.
This might seem a very timid response to the big plans announced by the United States and China, but at least it is a starting point.
And what about the Green Deal? Well, the EU reaffirms its dedication to achieving climate neutrality by 2050, backed by legally binding emission reduction targets. The program includes initiatives to support industries cut emissions and transition to sustainable practices. It is just, maybe not at the top of the agenda any longer..
So What needs to go Faster?
Former U.S. Defense Secretary Robert Gates warned the Europeans as early as June 2011 that without increased defense spending, the US would eventually question its commitment to NATO. However, with defense largely remaining a national competence, nothing much changed. The first Trump presidency barked, but did not bite…
It took a full-scale war on European soil to finally wake up the capitals. The EU Commission was the first to act decisively, swiftly coordinating the initial response to the Russian invasion by crafting a set of comprehensive sanctions packages and uniting all the Member States around them. It also reopened the discussions about the need to establish a European Defense Union. So now the Commission comes up with a plan to subsidize and create a unified market for defense products while initiating key defense projects to bolster Europe’s defense capabilities. Additionally, there is a growing openness to the idea of exempting government defense spending from the old Maastricht criteria, unlocking extra spending.
With no clear leadership from the biggest member states, all in different states of political turmoil, a lot of people are looking at Ursula Von der Leyen to take the lead and keep pushing. She is the undisputed leader of the European Commission and the one who will need to pick up the phone and provide answers. Of course the high representative and the president of the Council will help, but the buck will stop with her. For better or worse, this is Ursula-time.
So What now?
Well, the Brussels insiders, deeply immersed in the EU bubble, will focus on those areas where the European Commission is expected to make progress. That will include:
- A Vision for Agriculture and Food, and corresponding Reform Package (19 February)
- The simplification “Omnibus” packages on sustainability, investment simplification and removal of paper requirements (26 February)
- Clean industrial policy and Industrial decarbonization (26 February)
- Defense and security (19 and 26 March)
- Digital package and adjacent Quantum Strategy and AI Action Plan (Q1-Q2 2025)
Meanwhile, the rest of the world will continue to follow the headlines and hope for the best.
But for now, back to work,
Kristof Doms, Founder AmpersandPartners SRL
Olivier Hinnekens, Founding Partner SoWhatCommunications International